PROPOSED RULES
Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the Texas 
Register at least 30 days before action is taken. The 30-day time period gives 
interested persons an opportunity to review and make oral or written comments on 
the section. Also, in the case of substantive action, a public hearing must be 
granted if requested by at least 25 persons, a governmental subdivision or 
agency, or an association having at least 25 members.
Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of bold text. [Brackets] indicate deletion of existing 
material within a section.

TITLE 4. AGRICULTURE
PART I. Texas Department of Agriculture
CHAPTER 19.Quarantines
SUBCHAPTER A.General Quarantine Provisions
4 TAC sec.19.7
The Texas Department of Agriculture (the department) proposes an amendment to 
sec.19.7, concerning violations and penalties. The amendment to sec.19.7 is 
proposed to address violations and penalties for failing to comply with the 
terms of a compliance agreement. 
David Kostroun, plant quality coordinator, has determined that for the first 
five-year period the rule is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the rule. 
Mr. Kostroun also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be to minimize, reduce, or eliminate the spread of known or 
potentially harmful pests or diseases to Texas Agriculture. There will be no 
effect on small businesses and to persons required to comply with the rule as 
proposed. 
Comments on the proposal may be submitted to David Kostroun, Coordinator, Plant 
Quality Programs, P.O. Box 12847, Austin, Texas 78711. Comments must be received 
no later than 30 days from the date of publication of the proposal in the Texas 
Register. 
The amendment is proposed under the Texas Agriculture Code, sec.12.020, which 
provides the Texas Department of Agriculture with the authority to assess 
administrative penalties for violations of quarantine rules; and sec.71.007, 
which authorizes the department to adopt rules necessary for the protection of 
agricultural and horticultural interests. 
The Texas Agriculture Code, Chapters 12 and 71, are affected by the proposed 
amendment. 

sec.19.7.Violations and Penalties.
(a)- (b) (No change.) 
<nl>(c)<ol> <nl>Failure to perform according to the terms of a compliance 
agreement is a violation of this subchapter and may result in the rescission of 
the compliance agreement and the assessment of administrative penalties by the 
department. <ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 3, 1997.
TRD-9700120
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7583

CHAPTER 20.Cotton Pest Control
SUBCHAPTER C.Stalk Destruction Program
4 TAC sec.sec.20.22
The Texas Department of Agriculture (the department) proposes an amendment to 
sec.20.22, concerning authorized cotton stalk destruction methods. 
The department is amending its cotton stalk destruction schedule to clarify what 
destruction methods are appropriate for destruction zones by adding to the 
schedule references to methods of destruction which were inadvertently omitted 
in the of last adopted publication of the schedule. The department currently has 
in effect an emergency amendment to the schedule for Zone 8 for Johnson, Ellis 
and Navarro counties only. The emergency amendment has extended the November 30 
deadline for those counties to January 15 for this year only. That emergency 
amendment will expire on January 15, 1997. 
The department is also acting on behalf of cotton farmers in Houston County to 
delete reference "d" in the schedule which specifies the destruction method for 
that county. The current destruction method for Houston County only is shred and 
plow. With the deletion of reference "d", the proposed destruction method will 
be shred and/or plow. 
Leslie McKinnon, coordinator for pest management programs, has determined that 
for the first five-year period the rule is in effect there will be no fiscal 
implications for state or local government as a result enforcing or 
administering the rule. 
Ms. McKinnon also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be the reduction in producer confusion concerning regulation 
requirements and the facilitation of effective cotton pest control. There will 
be no effect on small businesses. There will be no anticipated economic cost to 
persons who are required to comply with the rule as proposed. 
Comments on the proposal may be submitted to Leslie McKinnon, Coordinator for 
Pest Management Programs, Texas Department of Agriculture, P. O. Box 12847, 
Austin, Texas 78711. Comments must be received no later than 30 days from the 
date of publication of the proposal in the Texas Register. 
The amendment is proposed under the Texas Agriculture Code, sec.74.006, which 
provides the Texas Department of Agriculture with the authority to adopt rules 
as necessary for the efficient enforcement and administration of Chapter 74, 
Subchapter A; and sec.74.004, which provides the department with the authority 
to establish regulated areas, dates, and appropriate methods of destruction of 
stalks, other parts, and products of host plants for cotton pests. 
The code sections that will be affected by the proposal are the Texas 
Agriculture Code, Chapter 74, Subchapter A.

sec.20.22.Stalk Destruction Requirements.
(a) Deadlines and methods. All cotton plants in a pest management zone shall be 
destroyed, regardless of the method used, by the stalk destruction dates 
indicated for the zone. Destruction shall be accomplished by the methods 
described as follows:
Figure: 4 TAC sec.20.22(a) 
(b)-(c) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 3, 1997.
TRD-9700121
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7583

TITLE 22. EXAMINING BOARDS
PART XXV. Structural Pest Control Board
CHAPTER 593. Licenses
22 TAC sec.593.24
The Texas Structural Pest Control Board proposes an amendment to sec.593.24 
concerning criteria and evaluation of continuing education. The amendments 
reduce the time for keeping course records from three to two years and eliminate 
the course evaluation form requirement for all participants.
Benny M. Mathis, Executive Director has determined there will not be fiscal 
implications as a result of enforcing or administering the rule. There will be 
no effect on state or local government for the first five year period the rule 
will be in effect. 
Roger B. Borgelt, General Counsel, has determined that for each year of the 
first five years the rule as proposed is in effect, the public benefits 
anticipated as a result of enforcing the rule as proposed will be reduced record 
keeping and paper work for continuing education providers. There is no 
anticipated economic cost to individuals who are required to comply with the 
rule as proposed. 
Comments on the proposal may be submitted to Roger B. Borgelt, General Counsel, 
Structural Pest Control Board, 1106 Clayton Lane #100LW, Austin, Texas 78723. 
The amendment is proposed under Article 135b-6, which provides the Texas 
Structural Pest Control Board with the authority to license and regulate 
structural pest control services. 
The following is the (statutes, articles or codes) that are affected by this 
rule: 
Rule Number Statute, Article or Code 
22 TAC 593.23

sec.593.24. Criteria and Evaluation of Continuing Education. 
(a)-(c) (No change.)
(d) Each continuing education program submitted for approval will be accompanied 
by:
(1)-(2) (No change.) 
(3) a statement that the sponsor agrees to maintain attendance records for 
<nl>two<ol>[three] years and that a list of participants will be forwarded to 
the Board within 14 days of completion of the training course. 
(4) (No change.) 
(e) (No change.) 
[(f) Effective upon its adoption by the Board, an evaluation form must be 
completed by each participant and submitted by the course sponsor for each 
participant for whom course credit is claimed].
<nl>(f)<ol> [(g)] Videotapes, slides or other media presentations shall not be 
approved by the Board unless accompanied by a qualified speaker and course 
outline, as required by subsections (a) and (c) of this section.
<nl>(g)<ol> [(h)] Personnel of the Texas Structural Pest Control Board are 
exempt from any fee charged for a continuing education program if they are 
monitoring the program as a part of the duties of their employment.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 2, 1997.
TRD-9700016
Benny M. Mathis, Jr.
Executive Director
Structural Pest Control Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 451-7200

CHAPTER 595. Compliance and Enforcement
22 TAC sec.595.11
The Texas Structural Pest Control Board proposes an amendment to sec.595.11 
concerning schools. The Amendments alter the component products of the green, 
yellow and red lists, extend the number of applications allowed for yellow list 
products and require prior approval for the use of Red List Products. The 
amendments also narrow the use of green list products indoors.
Benny M. Mathis, Executive Director has determined that there will not be fiscal 
implications as a result of enforcing or administering the rule. There will be 
no effect on state or local government for the first five year period the rule 
will be in effect. 
Roger B. Borgelt, General Counsel has determined that for each year of the first 
five years the rule as proposed is in effect the public benefits anticipated as 
a result of enforcing the rule as proposed will be better compliance through 
simplification of the classification of products and increased use of green and 
yellow rather than Red List Products.  There is no anticipated economic cost to 
individuals who are required to comply with the rule as proposed  
Comments on the proposal may be submitted to Roger B. Borgelt, General Counsel, 
Structural Pest Control Board, 1106 Clayton Lane #100LW, Austin, Texas 78723. 
The amendment is proposed under Article 135b-6, which provides the Structural 
Pest Control Board with the authority to license and regulate structural pest 
control services. 
No other statutes, articles, or codes are affected by the proposed amendment.

sec.595.11. Schools. 
<nl>(a)<ol> <nl>Pesticide applications shall not be made within a school 
building if such an application will expose students to unacceptable levels of 
pesticides.<ol> 
<nl>(1)<ol> <nl>Insect and rodent baits in tamper-resistant containers or bait 
stations that are on the Green List, or non-containerized baits or gels that are 
on the Green List, as well as botanical insecticides which are on the green list 
may be applied at anytime if students are not present in the room at the time 
the treatment is occurring. These products may be applied to an open area or 
multi-purpose room if the area within ten feet of the location is secured and no 
students are present within the secured area during the time of application.<ol>
<nl>(2)<ol> <nl> All other Green List products and Yellow List products may be 
applied to a room only if students are not expected to be present in the room 
for the next twelve hours, or the specified re-entry on the pesticide label, 
whichever is longer.<ol> 
<nl>(3)<ol> <nl> Red List products may be applied to a building only if students 
are not expected to be present in the building for the next twelve hours, or the 
specified re-entry on the pesticide label, whichever is longer<ol>.
[(a) Pesticide applications shall not be made within a school building if such 
an application will expose students to unnecessary physical drift within the 
next 12 hours.] 
[(1) Green list products may be applied at any time if students are not present 
in the room at the time the treatment is occurring. Green list products may be 
applied to an open area or multi- purpose room if the area within ten feet of 
the application site is secured and no students are present within the secured 
area during the time of application.] 
[(2) Yellow list products may be applied to a room if students are not expected 
to be present for the next 12 hours.] 
[(3) All other products may be applied only if students are not expected to be 
present in the building for the next 12 hours]. 
<nl>(b)<ol> <nl>Pesticide applications shall not be made to outdoor school 
grounds if such an application will expose students to physical drift of 
pesticide spray particles or unacceptable levels of pesticides.<ol> 
<nl>(1)<ol> <nl>Green List products may be applied if students are not expected 
to be present within ten feet of the application site at the time of 
application.<ol> 
<nl>(2)<ol> <nl> Yellow List products may be applied if students are not 
expected to be present within ten feet of the application site for the next 12 
hours, and if the treated area is clearly marked to discourage entry, or secured 
by means of a fence or similar barrier.<ol> 
<nl>(3)<ol> <nl> Red List products may be applied if students are not expected 
to be present within 50 feet of the application site for the next 12 hours, and 
if the treated area is clearly marked to discourage entry, or secured by means 
of a fence or similar barrier. Red List products may be applied only if there 
are not wind conditions that would disperse the chemical beyond the marked or 
secured zone<ol>. 
[(b) Pesticide applications shall not be made to an area on school grounds if 
such an application will expose students to unnecessary physical drift within 
the next 12 hours.] 
[(1) Green list products may be applied if the area within ten feet of the 
location is secured and students are not expected to be present in the secured 
area at the time of application.] 
[(2) Yellow list products may be applied to a localized area of treatment if the 
area within ten feet of the application site is secured and students are not 
expected to be present in the secured area for the next twelve hours.] 
[(3) All other products may be applied in a low pressure application to a 
localized area of treatment if there are no wind conditions which would disperse 
the chemical, the area within 50 feet of the application site is secured and 
students are not expected to be present within the secured area for the next 12 
hours].
(c)-(g) (No change.)
<nl>(h)<ol> <nl>Pesticides approved for use on school property must be mixed 
outside student occupied areas of the buildings and are classified as 
follows:<ol>
<nl>(1)<ol> <nl>Green List. All products must be one of the following: inorganic 
pesticides (i.e., boric acid, disodium octoborate tetrahydrate, silica gels, 
diatomaceous earth); insect growth regulators; insect and rodent baits in 
tamper-resistant containers or for crack and crevice placement only; microbe-
based insecticides; botanical insecticides (not including synthetic pyrethroids) 
containing not more than 5% synergists; biological (living) control agents. 
Green list products may be used at the discretion of the licensee.<ol> 
<nl>(2)<ol> <nl> Yellow List Products. All EPA Category III and IV pesticides 
(i.e., products carrying a CAUTION signal word) not included in the Green List, 
with the exception of restricted-use or state limited-use pesticides as defined 
under the Federal Insecticide, Fungicide, and Rodenticide Act and/or the Texas 
Agricultural Code. Use of Yellow List products shall require written approval 
from the Certified Applicator. A copy of the approval must be sent to the IPM 
Coordinator. Yellow List approvals shall have a duration of no longer than six 
months or six applications per site, whichever occurs first.<ol>
<nl>(3)<ol> <nl> Red List. All Category I and II pesticides (i.e., products 
carrying a WARNING or DANGER signal word), not included in the Green List or 
restricted use pesticides, or state limited-use pesticides as defined under the 
Federal Insecticide, Fungicide, and Rodenticide Act and/or the Texas 
Agricultural Code. Use of Red List products requires prior written approval from 
the Certified Applicator and the IPM Coordinator. A copy of the approval must be 
kept in a separate file in the pest control use records for the school and 
clearly marked as Red List Approvals. Red List approvals shall have a duration 
no longer than three months or three applications per site, whichever is first. 
<ol> 
[(h) Pesticides approved for use on school property must be mixed off-site or 
outside student-occupied areas of buildings and are classified as follows:] 
[(1) Green List. All products must be from the following list: Inorganic 
pesticides (i.e. boric acid, silica gels, diatomaceous earth, disodium 
octoborate tetrahydrate) Non-containerized baits and gels for crack and crevice 
use only; Insect growth regulators for crack and crevice or containerized bait 
station use only; Insect and rodent baits in tamper-resistant containers or bait 
stations; Microbial-based or fungal insecticides; granular baits used in void 
areas; Biological (living) control agents; insecticidal soaps and oils. Green 
list products may be used at the discretion of the licensee.]
[(2) Yellow List. All EPA Category III and IV pesticides (i.e., products 
carrying a CAUTION signal word) and insect growth regulators which are 
formulated as dusts, wettable powders, micro-encapsulated products, and granular 
products for use in a localized area of treatment, Botanical insecticides, other 
than synthetic pyrethroids, containing not more than 5.0% synergists. Use of 
yellow list products require approval from the certified applicator. A copy of 
the approval must be sent to the IPM Coordinator. Yellow list approvals shall 
have a duration no longer than three months or three applications per site, 
whichever occurs first.] 
[(3) Red List. Category I and II pesticides (i.e., products carrying a WARNING 
or DANGER signal word) not included in the green list,or any Category III or IV 
(Caution signal word) pesticides not included in the green or yellow lists or 
restricted-use pesticides or state-limited use  pesticides as defined under the 
Federal Insecticide, Fungicide, Rodenticide Act and/or the Texas Agriculture 
Code. Use of Red List products require written approval from the certified 
applicator and IPM Coordinator. A copy of the approval for the Category I or II 
Red List Product applied indoors must be sent to the Texas Structural Pest 
Control Board no later than 14 days after the application. Red List approvals 
shall have a duration no longer than three months or three applications per 
site, whichever is first]. 
(i)-(k) (No change.)
Issued in Austin, Texas, on January 2, 1997.
TRD-9700018
Benny M. Mathis, Jr.
Executive Director
Structural Pest Control Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 451-7200

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART X. Texas Water Development Board
CHAPTER 371.Drinking Water State Revolving Fund
The Texas Water Development Board (board) proposes new sec.sec.371.1-371.4, 
371.11-371.21, 371.31-371.39, 371.51-371.52, 371.61-371.62, 371.71-371.72, 
371.81-371.89, and 371.101-371.102, comprising Chapter 371, concerning the 
creation, capitalization by federal grant and state match, purposes and 
administration of the drinking water state revolving fund (dwsrf). The fund will 
provide low interest loans to eligible applicants of the state pursuant to 42 
United States Code 300f et seq. and the Texas Water Code, sec.sec.15.601-l5.609 
and 17.0821. 
Sections 371.1-371.4, concerning introductory provisions, describe the scope of 
the new chapter, give definitions to the terms used in the chapter, policy 
declarations of the board regarding the operation of the fund and the term of 
applicability of the rules. 
Program requirements for the dwsrf are detailed in sec.sec.371.11-371.19. 
Section 371.11 provides that public hearings be held to consider adoption of the 
priority list and intended use plan. Section 371.12 describes the type of 
assistance for which the dwsrf may be used. Section 371.13 provides for the 
projects that are eligible for dwsrf assistance. Section 371.14 lists eligible 
project costs. In sec.371.15, provision is made for capitalization grant 
applications to be submitted annually to the Environmental Protection Agency 
(EPA). Requirements for projects which received assistance from capitalization 
grants are listed in sec.371.16. The process for rating projects to be included 
in the intended use plan is described in sec.371.17. Section 371.18 provides for 
the intended use plan to identify projects proposed to receive assistance and 
information about each project. Section 371.19 describes the criteria and 
methods for distributing dwsrf funds among projects, including ranking and 
categorizing of projects and requirements to timely submit applications and 
enter into commitments for assistance. 
In sec.371.31, prospective applicants are instructed to schedule preapplication 
conferences with the board to receive information on application procedures. 
General application submittal requirements are given in sec.371.32. Fiscal data 
required for submittal are addressed in sec.371.33. Required legal submittals 
are given in sec.371.34. Section 371.35 provides for environmental review and 
determination by the board. It establishes three possible levels of 
environmental determinations: categorical exclusion, finding of no significant 
impact, and record of decision. It also establishes the criteria and procedures 
for making each of the determinations, criteria and procedures for modifying the 
determinations, and describes the extent and nature of the information needed to 
support the environmental decisions. The section also provides for authority to 
construct a portion of a project in advance of receiving an appropriate 
environmental determination when conditions warrant. Public participation 
requirements for making each of the environmental determinations are specified 
in this section. The contents of an engineering feasibility report are given in 
sec.371.36. The section describes the process for approval of the report and the 
need for additional information if the project changes. The requirement for a 
water conservation plan is described in sec.371.37, and two different procedures 
for submittal and approval are given. Section 371.38 includes an explanation of 
the requirements and procedures for an application using the Pre-Design Funding 
Option. Section 371.39 requires the executive administrator to review 
applications, states the review criteria, and specifies the conditions for 
presenting an application to the board.
Board actions on applications are given in sec.371.51, including placement on 
the board's agenda, public notice, conduct of the board meeting, and the 
possible actions and criteria for actions by the board. Section 371.52 sets 
interest rates for loans from the DWSRF. 
Engineering design requirements for projects are given in sec.sec.371.61-371.62. 
Section 371.61 lists required elements of the contract documents. Section 371.62 
identifies requirements to be met for approval by the executive administrator.
Section 371.71 includes instruments needed for loan closing, the requirement for 
a certified transcript following the final release of funds, instructions for 
refinancing construction loans, conditions for closing a portion of a loan for 
phased construction, and other closing requirements. Section 371.72 explains the 
release of funds for planning, design and permits, pre-design funding, release 
of funds for building purposes, release of funds for projects constructed 
through one or more construction contracts, and escrow of funds. The building 
phase requirements are discussed in sec.sec.371.81-371.89. Section 371.81 
requires loan recipients to comply with appropriate laws and procedure when 
advertising for bids and awarding construction contracts. Provision for 
inspection of construction by the project engineer and executive administrator 
is made in sec.375.82. Section 371.83 requires that alteration during 
construction must be approved by the board. Section 371.84 makes  provision for 
contractor bankruptcy. Section 371.85 requires submission of as-built drawings. 
Sections 371.86-371.87 provide for the withholding and release of retainage. 
Section 371.88 provides for a certificate of approval to be issued by the 
executive administration upon project completion. Section 371.89 provides for 
progress payments for authorized project costs. Elements of accountability which 
remain after project completion are discussed in sec.371.101. Final accounting 
is required upon completion of the project in sec.371.102. 
Pamela Ansboury, the Director of Finance, has determined that for the first 
five-year period the sections are in effect the estimated additional cost for 
state government as a result of enforcing or administering the sections will be 
$65,963 for 1997, $671,345 for 1998, and $781,550 for each of 1999, 2000, and 
2001. There will be an equivalent estimated reduction in cost for the first five 
year period the sections are in effect as the additional cost will be absorbed 
from two sources: (1) the 4% administrative component of the annual federal 
capitalization grant; and (2) a projected administrative cost recovery fee for 
loans. The impact on local governments will be a reduction in borrowing costs to 
finance capital projects, although the amount of savings cannot be quantified at 
this time. 
Ms. Ansboury also has determined that for each year of the first five years that 
the sections are in effect the public benefit anticipated as a result of 
enforcing the sections will be to provide low interest loans for drinking water-
related projects to eligible applicants of the state pursuant to 42 United 
States Code 300f et seq. and the Texas Water Code, Chapter 15, Subchapter J, 
sec.sec.15.601-15.609 and Chapter 17, Subchapter C, sec.17.0821.
There will be no effect on small businesses. There are no anticipated economic 
costs to persons who are required to comply with the new sections as proposed. 
Comments on the proposed sections will be accepted for 30 days following 
publication and may be submitted to Gail L. Allan, Assistant General Counsel, 
Texas Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231.

Introductory Provisions
31 TAC sec.sec.371.1-371.4
The new sections are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State and specifically the SRF Program. 
The statutory provisions affected by the new sections are Texas Water Code, 
Chapter 15, Subchapter J, sec.sec.15.601-15.609 and Chapter 17, Subchapter C, 
sec.17.0821. 

sec.371.1. Scope of Rules.
These sections, adopted pursuant to the Texas Water Code, sec.6.101, shall 
govern applications for financial assistance from the Drinking Water State 
Revolving Fund (DWSRF) that are needed to satisfy the federal requirements as a 
prerequisite to the State's receipt of capitalization grant funds.

sec.371.2. Definitions of Terms.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. Words 
defined in the Texas Water Code, Chapter 15 and not defined here shall have the 
meanings provided by Chapter 15. 
Act - The Safe Drinking Water Act Amendments of 1996, 42 USC 300f et. seq.
Administrative costs - All reasonable and necessary costs of administering any 
aspect of the DWSRF program, including the cost of servicing debt obligations of 
recipients of DWSRF financial assistance. 
Administrator - The chief officer of the Environmental Protection Agency 
appointed by the President of the United States.
Applicant - An eligible applicant which files an application with the board for 
financial assistance or associated actions. 
Application for assistance - All the information required for submittal in: 
sec.371.32 of this title (relating to Required General Information), sec.371.33 
of this title (relating to Required Fiscal Data), sec.371.34 of this title 
(relating to Required Legal Data), sec.371.35 of this title (relating to 
Required Environmental Review and Determinations), sec.371.36 of this title 
(relating to Required DWSRF Engineering Feasibility Report), and sec.371.37 
(relating to Required Water Conservation Plan), or sec.371.38 of this title 
(relating to Pre-Design Funding Option) for those applicants choosing the pre-
design funding option. 
Authorized representative - The signatory agent of the applicant authorized and 
directed by the applicant's governing body to make application for assistance 
and to sign documents required to undertake and complete the project, on behalf 
of the applicant. 
Board - The Texas Water Development Board. 
Bonds - All bonds, notes, certificates, book-entry obligations, and other 
obligations issued or authorized to be issued by any political subdivision. 
Building - The erection, acquisition, alteration, remodeling, improvement or 
extension of a water project. 
Capitalization grant - Federal grant assistance awarded to the state for 
capitalization of the Drinking Water State Revolving Fund. 
Closing - The time at which the requirements for loan closing have been 
completed pursuant to sec.371.71 of this title (relating to Loan Closing) and an 
exchange of debt for funds to either the applicant, an escrow agent bank, or a 
trust agent has occurred. 
Commission - The Texas Natural Resource Conservation Commission.
Commitment - An action of the board evidenced by a resolution approving a 
request for financial assistance from the fund.
Construction - Any one or more of the following activities:
(A) preliminary planning to determine the feasibility of a water project; 
(B) engineering, architectural, environmental, legal, title, fiscal, and 
economic or other pertinent studies; 
(C) surveys, designs, plans, working drawings, specifications, procedures; 
(D) building or the inspection or supervision thereof; and 
(E) activities authorized under sec.371.14 of this title (relating to Other 
Authorized Activities).
Construction fund - A dedicated source of funds, created and maintained by the 
applicant at an official depository, or a designated depository approved by the 
executive administrator, used solely for the purposes of construction of a 
project as approved by the board. 
Contaminant - any physical, chemical, biological, or radiological substance or 
matter in water. 
Contract documents - The engineering description of the project including 
engineering drawings, maps, technical specifications, design reports, 
instructions and other contract conditions and forms that are in sufficient 
detail to allow contractors to bid on the work. 
Cost-effectiveness determination - A determination based on engineering, 
environmental, and financial analyses that a proposed project or component part 
will result in the minimum total monetary (resources) costs over time, but 
without overriding adverse social, economic and environmental considerations. 
Debt - All bonds issued or to be issued by any political subdivision. 
Delivery - The time at which payment is made by the board to the loan recipient 
against the purchase price of the loan recipient's debt and at which the board 
takes possession of the instruments evidencing the loan recipient's debt. 
Delivery may occur simultaneously with a release of funds, or without release of 
funds pursuant to an escrow agreement. 
DWSRF - Drinking Water State Revolving Fund, a program of financial assistance 
administered by the board for water projects pursuant to the Act and Texas Water 
Code, Chapter 15. 
Eligible applicant - A political subdivision as defined pursuant to Texas Water 
Code, Chapter 15.  
Environmental determination - A finding by the executive administrator regarding 
the potential environmental impacts of a proposed project and describing what 
mitigative measures, if any, the applicant will be required to implement as a 
condition of financial assistance. 
Environmental information document - A written analysis prepared by the 
applicant describing the potential environmental impacts of a proposed project, 
sufficient in scope to enable the executive administrator to prepare an 
environmental assessment to allow an environmental determination to be made by 
the executive administrator. 
Environmental review - The process whereby an evaluation is undertaken by the 
board, consistent with the National Environmental Policy Act and other federal, 
state, and local laws and requirements, to determine whether a proposed project 
may have significant impacts on the environment and therefore require the 
preparation of an environmental impact statement, as detailed in sec.371.35 of 
this title(relating to Required Environmental Review and Determinations). 
EPA - The Environmental Protection Agency. 
Escrow - The transfer of funds to a custodian of the funds which will act as the 
escrow agent or trust agent. 
Escrow agent - The third party appointed to hold the funds which are not 
eligible for release to the loan recipient. 
Escrow agent bank - The financial institution which has been appointed to hold 
the funds which are not eligible for release to the loan recipient. 
Executive administrator - The executive administrator of the board or a 
designated representative. 
Financial assistance - Loans by the board from the DWSRF to eligible applicants. 
Fund - The DWSRF created pursuant to the Texas Water Code, Subchapter J, Chapter 
15. 
Funding year - The particular federal fiscal year (October 1 - September 30) for 
which funds are made available to the DWSRF. 
Intended use plan - A plan identifying the intended uses of the amount of funds 
available through the DWSRF for financial assistance and administrative costs 
for each fiscal year as described in the Act, sec.1452.
Lending rate - Interest rate assessed to loan applicants for loans through the 
DWSRF. 
Market interest rates - Interest rates comparable to those attained for 
municipal securities in an open market offering. 
Municipality - A city, town, or other public body created by or pursuant to 
State law, or an Indian Tribe. 
Population - That number of people who reside within the territorial boundaries 
of or receive wholesale or retail water service from the applicant as determined 
by: 
(A) information in the DWSRF engineering feasibility report or latest official 
census for an incorporated city; or 
(B) the population for which the project is designed, where the applicant is not 
an incorporated city or town. 
Primary drinking water regulation - a regulation promulgated by EPA which: 
(A) applies to public water systems; 
(B) specifies contaminants which, in the judgment of the Administrator, may have 
any adverse effect on the health of persons;
(C) specifies for each such contaminant either: 
(i)<ol> a maximum contaminant level, if, in the judgment of the Administrator, 
it is economically and technologically feasible to ascertain the level of such 
contaminant in water in public water systems, or 
(ii)<ol> if, in the judgment of the Administrator, it is not economically or 
technologically feasible to so ascertain the level of such contaminant, each 
treatment technique known to the Administrator which leads to a reduction in the 
level of such contaminant sufficient to satisfy the requirements of the Act, 
sec.300f; and 
(D) contains criteria and procedures to assure a supply of drinking water which 
dependably complies with such maximum contaminant levels; including quality 
control and testing procedures to insure compliance with such levels and to 
insure proper operation and maintenance of the system, and requirements as to: 
(i)<ol> the minimum quality of water which may be taken into the system; and 
(ii)<ol> siting for new facilities for public water systems. 
Priority list - A list of projects, ranked according to priority order, for 
which DWSRF assistance may be requested. 
Project - The scope of work describing a construction endeavor for which 
financial assistance is sought. 
Project engineer - The engineer or engineering firm retained by the applicant to 
provide professional engineering services during the planning, design, and/or 
construction of a project. 
Public water system - 
(A) In General. The system for the provision to the public of water for human 
consumption through pipes or other constructed conveyances, if such system has 
at least fifteen service connections or regularly serves at least twenty-five 
individuals. Such term includes: 
(i)<ol> any collection, treatment, storage, and distribution facilities under 
control of the operator of such system and used primarily in connection with 
such system; and 
(ii)<ol> any collection or pretreatment storage facilities not under such 
control which are used primarily in connection with such system. 
(B) Connections. A connection to a system that delivers water by a constructed 
conveyance other than a pipe shall not be considered a connection, if: 
(i)<ol> the water is used exclusively for purposes other than residential uses 
(consisting of drinking, bathing, and cooking, or other similar uses); 
(ii)<ol> the Administrator or the Commission determines that alternative water 
to achieve the equivalent level of public health protection provided by the 
applicable national primary drinking water regulation is provided for 
residential or similar uses for drinking and cooking; or 
(iii)<ol> the Administrator or the Commission determines that the water provided 
for residential or similar uses for drinking, cooking, and bathing is centrally 
treated or treated at the point of entry by the provider, a pass-through entity, 
or the user to achieve the equivalent level of protection provided by the 
applicable national primary drinking water regulations. 
(C) Irrigation Districts. An irrigation district in existence prior to May 18, 
1994, that provides primarily agricultural service through a piped water system 
with only incidental residential or similar use shall not be considered to be a 
public water system if the system or the residential or similar users of the 
system comply with subparagraph (B)(ii) and (iii) of this definition. 
(D) Transition Period. A water supplier that would be a public water system only 
as a result of modifications made shall not be considered a public water system 
until two years after August 6, 1996. If a water supplier does not serve 15 
service connections or 25 people at any time after the conclusion of the 2-year 
period, the water supplier shall not be considered a public water system. 
Release - The time at which funds are made available to the loan recipient. 
Secondary drinking water regulation - A regulation promulgated by EPA which 
applies to public water systems and which specifies the maximum contaminant 
levels which, in the judgment of the Administrator, are requisite to protect the 
public welfare. Such regulations may vary according to geographic and other 
circumstances and may apply to any contaminant in drinking water:
(A) which may adversely affect the odor or appearance of such water and 
consequently may cause a substantial number of the persons served by the public 
water system providing such water to discontinue its use; or 
(B) which may otherwise adversely affect the public welfare.
State - State of Texas. 
State allotment - The sum allocated to the State of Texas for a federal fiscal 
year, from funds appropriated by congress pursuant to the Act. 
Trust agent - The party appointed by the applicant and approved by the executive 
administrator to hold the funds which are not eligible for release to the loan 
recipient. 
Water conservation plan - A report outlining the methods and means by which 
water conservation may be achieved in an area, as further defined in sec.371.37 
of this title (relating to Required Water Conservation Plan). 
Water conservation program - A comprehensive description and schedule of the 
methods and means to implement and enforce a water conservation plan.

sec.371.3. Policy Declarations.
The DWSRF is intended to be a perpetual fund to provide financial assistance to 
political subdivisions to help the political subdivisions meet Federal drinking 
water requirements. 

sec.371.4. Date of Applicability of Rules.
This chapter shall apply to all applications for assistance from funds 
appropriated for federal fiscal years 1997 through 2003. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 3, 1996.
TRD-9700130
Craig D. Pedersen
Executive Administrator
Texas Water Development Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7981

Program Requirements
31 TAC sec.sec.371.11-371.21
The new sections are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605, which provides the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State and specifically the SRF Program.

sec.371.11. Public Hearings.
In accordance with the Act, the board shall hold public hearings to consider 
adoption and approval of the priority list and amendments thereto and shall 
either hold public hearings or allow a period for public review and comment 
before adoption and approval of the annual intended use plan. 

sec.371.12. Types of Financial Assistance.
The fund may be used for the following purposes: 
(1) to make loans on the condition that: 
(A) the interest rate for each loan is less than or equal to the market interest 
rate; 
(B) principal and interest payments on each loan will commence not later than 
one year after completion of the project for which the loan was made, and each 
loan will be fully amortized not later than 20 years after the completion of the 
project; 
(C) the recipient of each loan will establish a dedicated source of revenue for 
the repayment of the loan; and 
(D) the fund will be credited with all payments of principal and interest on 
each loan; and 
(2) to buy or refinance the debt obligation of a municipality or an 
intermunicipal or interstate agency within the State at an interest rate that is 
less than or equal to the market interest rate in any case in which a debt 
obligation is incurred after July 1, 1993; 
(3) to guarantee or purchase insurance for a bond (all of the proceeds of which 
finance a project eligible for assistance under this section) if the guarantee 
or purchase would improve credit market access or reduce the interest rate 
applicable to the bond; 
(4) as a source of revenue or security for the payment of principal and interest 
on revenue or general obligation bonds issued by the board if the proceeds of 
the sale of the bonds will be deposited into the fund; and 
(5) to earn interest on the amounts deposited into the fund.

sec.371.13. Projects Eligible for Assistance.
(a) Projects are eligible for assistance if they will facilitate compliance with 
the primary drinking water regulations applicable to the public water system or 
otherwise significantly further the health protection objectives of the Act. 
Such projects include: 
(1) capital investments to upgrade or replace infrastructure in order to 
continue providing the public with safe drinking water, including projects to 
replace aging infrastructure; 
(2) projects to correct exceedances of the health standards established by the 
Act; 
(3) projects to consolidate water supplies where the supplies have an inadequate 
quantity of water, the water supply is contaminated or the system is unable to 
maintain compliance with the national primary drinking water regulations for 
financial or managerial reasons and the consolidation will achieve compliance; 
(4) purchase of capacity in another system if the purchase is part of a 
consolidation plan and is cost-effective considering buy-in fees and user fees; 
(5) projects to restructure a system if the system is not in compliance with the 
primary drinking regulations or the applicant lacks the technical, managerial 
and financial capability to maintain the system, if the restructuring will 
return and maintain the system in compliance with the Act, sec.1452 (a)(3)(B). 
(b) Projects proposed for public water systems for which applicants do not have 
the technical, managerial, and financial capacity to maintain the system are not 
eligible for assistance unless the requirements of subsection (a)(5) of this 
section are met. 

sec.371.14. Other Authorized Activities.
(a) In General. In addition to projects funded under sec.371.13 of this title 
(relating to Projects Eligible for Assistance) the board may take each of the 
following actions. 
(1) Provide assistance to eligible applicants only in the form of a loan, for 
one or more of the following. 
(A) Any public water system described in sec.371.2 of this title (relating to 
Definition of Terms) to acquire land or a conservation easement from a willing 
seller or grantor, if the purpose of the acquisition is to protect the source 
water of the system from contamination and to ensure compliance with national 
primary drinking water regulations. 
(B) Any community water system to implement local, voluntary source water 
protection measures to protect source water in areas delineated pursuant to the 
Act, sec.1453, in order to facilitate compliance with national primary drinking 
water regulations applicable to the system under the Act, sec.1412 or otherwise 
significantly further the health protection objectives of this title. Funds 
authorized under this clause may be used to fund only voluntary, incentive-based 
mechanisms. 
(C) Any community water system to provide funding in accordance with the Act, 
sec.1454(a)(1)(B)(I). 
(2) Provide financial assistance to any public water system as part of a 
capacity development strategy developed and implemented in accordance with the 
Act, sec.1420(c). 
(b) Limitation. For each fiscal year, the total amount of assistance provided 
and expenditures made by the board under this subsection may not exceed 15% of 
the amount of the capitalization grant received by the board for that year and 
may not exceed 10% of that amount for any one of the following activities. 
(1) To acquire land or conservation easements pursuant to subsection (a)(1)(A) 
of this section. 
(2) To provide funding to implement voluntary, incentive-based source water 
quality protection measures pursuant to subsection (a)(1)(B) of this section. 
(3) To provide assistance through a capacity development strategy pursuant to 
subsection (a)(2) of this section. 

sec.371.15.Activities Fund.
The board may provide financial assistance under this chapter for one or more 
elements of construction as defined in sec.371.2 of this title (relating to 
Definition of Terms). 

sec.371.16. Eligible Land Costs.
Eligible land costs include the purchase of land if the land is necessary to 
locate the project and the sale is from a willing seller. Acquisition of real 
property or real property interests are not eligible costs unless the 
acquisition is integral to an authorized project.

sec.371.17. Capitalization Grant Application.
After the board approves the intended use plan and priority list, the executive 
administrator shall submit these items with an application for the 
capitalization grant for that fiscal year to EPA. 

sec.371.18. Capitalization Grant Requirements for Applicants.
All projects which receive assistance from the fund under this chapter shall 
satisfy the following federal requirements as they apply: 
(1) National Environmental Policy Act of 1969, PL 91-190; 
(2) Archeological and Historic Preservation Act of 1974, PL 93-291; 
(3) Clean Air Act, 42 U.S.C. 7506(c); 
(4) Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq.;
(5) Coastal Zone Management Act of 1972, PL 92-583, as amended; 
(6) Endangered Species Act, 16 U.S.C. 1531, et seq.; 
(7) Executive Order 11593, Protection and Enhancement of the Cultural 
Environment; 
(8) Executive Order 11988, Floodplain Management; 
(9) Executive Order 11990, Protection of Wetlands; 
(10) Farmland Protection Policy Act, 7 U.S.C. 4201 et seq; 
(11) Fish and Wildlife Coordination Act, PL 85-624, as amended; 
(12) National Historic Preservation Act of 1966, PL 89-665, as amended; 
(13) Safe Drinking Water Act, sec.1424(e), PL 92-523, as amended; 
(14) Wild and Scenic Rivers Act, PL 90-542, as amended;
(15) Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, 
as amended; 
(16) Section 306 of the Clean Air Act and sec.508 of the Clean Water Act, 
including Executive Order 11738, Administration of the Clean Air Act and the 
Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, 
or Loans; 
(17) Age Discrimination Act, PL 94-135; 
(18) Civil Rights Act of 1964, PL 88-352; 
(19) Section 13 of PL 92-500; Prohibition against sex discrimination under the 
Federal Water Pollution Control Act; 
(20) Executive Order 11246, Equal Employment Opportunity;
(21) Executive Orders 11625 and 12138, Women's and Minority Business Enterprise; 
(22) Rehabilitation Act of 1973, PL 93-112 (including Executive Orders 11914 and 
11250); and
(23) Uniform Relocation and Real Property Acquisition Policies Act of 1970, PL 
91-646.

sec.371.19. Rating Process.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Acute chemical violation - A violation of the maximum contaminant level 
established for nitrate or nitrite as defined in 30 TAC Chapter 290 (relating to 
Water Hygiene). 
(2) Acute coliform bacteria violation - A violation of the maximum contaminant 
level for coliform which is defined as an acute risk to health, as specified in 
30 TAC Chapter 290 (relating to Water Hygiene).
(3) Carcinogen violation - A violation of the maximum contaminant level 
established for any carcinogenic contaminant listed in the following table: 
31 TAC 371.19(a)(3). 
(4) Chronic chemical violation - A violation of the maximum contaminant level 
established for any of the contaminants listed in the following table:
Figure 2: 31 TAC 371.19(a)(4) 
(5) Chronic coliform bacteria violation - A violation of the maximum contaminant 
level for total coliform as specified in 30 TAC Chapter 290 (relating to Water 
Hygiene). 
(6) Compliance period - A three-year period for assessing compliance as defined 
in 30 TAC sec.290.102 (relating to Definitions).
(7) Maximum contaminant level - The maximum allowable level for any 
bacteriological chemical or radiological contaminant specified in 30 TAC Chapter 
290 (relating to Water Hygiene). 
(8) Ninetieth percentile copper/lead level - The level of lead or copper in a 
water system determined by the method specified in 30 TAC Chapter 290 (relating 
to Water Hygiene). 
(9) Secondary chemical constituent exceedance - An exceedance of the constituent 
level established for any secondary chemical constituent listed in the following 
table:
Figure 3: 31 TAC 371.19(a)(9) 
(10) Treatment technique violation - A violation of any surface water treatment 
technique as specified in 30 TAC Chapter 290 (relating to Water Hygiene). For 
the purposes of this rating, these will include all 5% exceedances of the 0.5 
NTU standard. 
(b) Health and Compliance Factors. Health and compliance factors for rating 
purposes will be calculated as follows. 
(1) The microbiological factor will be equal to the sum of: the total number of 
coliform bacteria violations occurring within the preceding 12 months; the total 
number of acute coliform bacteria violations occurring within the preceding 12 
months; and the total number of treatment technique violations occurring within 
the preceding 12 months, minus one. 
(2) The filtration factor of 12 points will be awarded to any system with one or 
more sources of water identified as surface water, or groundwater under the 
direct influence of surface water for which no filtration is provided as 
identified by records maintained by the TNRCC. 
(3) The chronic chemical factor for each contaminant listed in the following 
table will be equal to the average value of chronic chemical violations 
occurring within the most recent compliance period for which data exist, divided 
by the maximum contaminant level listed.
Figure 4: 31 TAC 371.19(b)(3) 
(4) The acute chemical factor will be equal to three times the quotient of the 
average value of nitrate or nitrite violations occurring within the most recent 
compliance period for which data exist, divided by the maximum contaminant level 
for nitrate or nitrite established by 30 TAC Chapter 290 (relating to Water 
Hygiene). 
(5) The carcinogen factor for each contaminant listed in the following table 
will be equal to twice the quotient of the average value of carcinogen 
violations occurring within the most recent compliance period for which data 
exist, divided by the maximum contaminant level listed. 
Figure 5: 31 TAC 371.19(b)(5) 
(6) The lead/copper factor will be equal to the product of 2 times the greater 
of: the 90th percentile lead level divided by 0.015, or, the 90th percentile 
copper level divided by 1.3, as established in 30 TAC Chapter 290 (relating to 
Water Hygiene). 
(7) The population factor shall be based on the current population served by the 
system in accordance with the following table:
Population-Factor 
Zero to 100-0 
101 to 1,000-1 
1,001 to 10,000-2 
10,001 to 100,000-3
Greater than 100,000-4
Current population will be based on population data maintained by the 
Commission.
The population factor will be used only when the sum of the factors listed in 
this paragraph and paragraphs (1)-(6) of this subsection is greater than zero. 
In that event, the population factor will be added to the sum of the factors 
listed in this paragraph and paragraphs (1)-(6) of this subsection.
(8) The secondary chemical factor for each constituent so designated in the 
following table will be equal to one half the quotient of the average of the 
secondary chemical constituent exceedances occurring during the most recent 
compliance period for which data exists, divided by the secondary chemical 
constituent level listed in this section. A maximum of 2 points may be assigned 
to this factor.
Figure 6: 31 TAC 371.19(b)(8) 
(9) The total health and compliance factor for each applicant shall be the sum 
of all individual factors calculated according to this paragraph and paragraphs 
(1)-(8) of this subsection. 
(10) The health and compliance factors for chronic coliform, acute coliform and 
treatment technique will be calculated based on data maintained by the 
commission from the most recent consecutive 12 months for which data are 
maintained by the commission, resulting from monitoring conducted by the 
commission or from public water system monitoring required by 30 TAC Chapter 290 
(relating to Water Hygiene). 
(11) The health and compliance factors for chronic chemical, acute chemical, 
secondary chemical and carcinogen will be calculated based on data maintained by 
the commission from the current compliance period, resulting from monitoring 
conducted by the commission or from public water system monitoring required by 
30 TAC Chapter 290 (relating to Water Hygiene). 
(12) The health and compliance factor for lead/copper will be calculated based 
on data maintained by the commission from the most recent complete compliance 
period, as defined in 30 TAC Chapter 290 (relating to Water Hygiene), resulting 
from monitoring by the commission or from public water system monitoring 
required by 30 TAC Chapter 290 (relating to Water Hygiene). 
(c) Affordability Factor. A project having a service area in which the per 
capita income averaged 25 percent or more below the state average based upon the 
most recent census data available shall have an affordability rating factor of 
1. 
(d) Combined Rating Factor. The combined rating factor for a project shall be 
the sum of the affordability factor and the total health and compliance factor. 
Projects which did not receive either a health and compliance factor or an 
affordability factor shall have a combined rating factor of zero. 
(e) Consolidation. In the event a project proposed for funding is to further 
consolidation of two or more water systems, the combined rating factor will be 
the sum of the combined rating factors for each of the systems to be 
consolidated if the resulting consolidated water system will be wholly 
responsible for the operation and maintenance of the entire system; or will be 
one half the sum of the combined rating factors of each of the systems to be 
consolidated if the consolidated system will be responsible only for supplying 
wholesale water to the individual systems and not be responsible for the 
operation and maintenance of the individual systems. 
(f) Physical Deficiency Rating Criteria. All projects which receive a combined 
rating factor of zero will be evaluated for the existence of physical 
deficiencies based on information maintained by the commission. If the existence 
of physical deficiencies is confirmed the projects will receive physical 
deficiency rating scores based on the following criteria. 
(1) If the system has experienced documented instances of water distribution 
outages or water distribution pressures of less than 20 pounds per square inch 
the project will receive a rating score of 3. 
(2) If the system is not providing disinfection the project will receive a 
rating score of 3. 
(3) If the documented water production capability is less than 85% of the 
minimum required by the commission the project will receive a rating score of 1. 
(4) If the documented treated water storage capacity is less than 85% of the 
minimum required by the commission the project will receive a rating score of 1. 
(5) If the system has experienced documented instances of water distribution 
pressures between 20 and 35 pounds per square inch the project will receive a 
rating score of 1. 
(6) If the water system is experiencing documented water distribution system 
losses of greater than 25% the project will receive a rating score of 1. 
(7) If the water system exceeds any secondary constituent listed in the 
following table and is not designated as a secondary chemical factor, the 
project shall receive a rating score of 1. 
Figure 7: 31 TAC 371.19(f)(7) 
(8) The total physical deficiency rating score for a project will be the sum of 
all of the individual deficiency rating scores for that project. 
(9) The physical deficiency rating scores will be used only for rating and 
ranking of projects with a combined rating factor equal to zero. In no instance 
will a project which receives a physical deficiency rating score be ranked 
higher than a project with a combined rating factor greater than zero. 
(g) Combination of Funding Sources Factor. If an eligible applicant for project 
funding, at the time of the yearly solicitation for intended use plan project 
information, documents access to other funds equaling not less than 10% of the 
total project cost that will be applied to the total cost of the project, that 
project will have added to its combined rating factor or in the event the 
combined rating factor is not greater than zero, its physical deficiency rating 
criteria score, a combination of funding sources factor of 1.

sec.371.20.Intended Use Plan.
(a) Each fiscal year the board shall prepare an intended use plan to meet the 
requirements of the Act and to assist the board in its financial planning. The 
intended use plan will identify projects anticipated to receive assistance from 
that year's available funds. The list of projects by priority ranking included 
in the intended use plan may also serve as the comprehensive project priority 
list required by the Act. 
(b) The process for listing projects in the intended use plan, will be as 
follows. 
(1) On or before 1 April each year the executive administrator will solicit 
project information from eligible applicants desiring to have their projects 
placed on the subsequent year's intended use plan. The required information will 
consist of: 
(A) a description of the proposed project; 
(B) county map showing location of service area; 
(C) estimated total project cost, certified by a registered professional 
engineer; 
(D) estimated project schedule; and 
(E) population currently served by the applicant. 
(2) To be included in the draft intended use plan, the applicant must submit the 
required information signed by a representative of the applicant not later than 
June 1 of each year. 
(3) After a public hearing, the intended use plan and project priority list will 
be presented to the board for consideration at a regularly scheduled meeting. 
(c) Applications for funding from a particular fiscal year may be considered for 
funding at any time between the date of establishment of the funding line for 
that year's intended use plan as described in sec.371.21 of this title (relating 
to Criteria and Methods for Distribution of Funds) and the date of establishment 
of the funding line for the subsequent year's intended use plan. 
(d) Any funds from a particular intended use plan which have not been committed 
by board action when the funding line for a subsequent intended use plan is 
established will be included in the funds available to the committed from the 
subsequent intended use plan.

sec.371.21. Criteria and Methods for Distribution of Funds.
(a) After the executive administrator determines the amount of funds available 
for a fiscal year and assigns all reserves, the remaining funds will be applied 
to the list of projects designated to receive funding in the intended use plan. 
The list will be divided into population classes of systems that serve 10,000 
persons or less, and systems that serve over 10,000 persons. Projects will be 
listed in priority ranking order with funds required and totaled by class. 
Projects having either identical combined rating factor scores, or identical 
physical deficiency rating scores, or including rating scores of zero, will be 
listed in alphabetical order. Funds required by all projects with combined 
rating factors greater than zero in all classes shall then be totaled. A 
percentage of the total funds required by each class shall be computed based 
upon the ratio of funds required by all classes. The portion of the available 
funds will be assigned to the classes based on this computed percentage. 
However, to the extent eligible applicants are available, a minimum of 15% of 
the funds will be made available to small communities (systems serving 10,000 or 
less). 
(b) After population class percentages have been assigned and available funds 
distributed among the classes, a line will be drawn within each class according 
to 2 times the available funds to each class. Project costs will be based on 
cost estimates, acceptable to the executive administrator, contained in the 
intended use plan solicitation described in sec.371.20 of this title (relating 
to Intended Use Plan) used to establish the project list. The executive 
administrator may adjust the location of the funding line upward or downward to 
avoid placing the line within a group of applicants having identical rating 
scores. 
(c) Projects above the line shall be eligible for assistance. After the funding 
line is drawn, the executive administrator shall notify in writing all potential 
applicants above the funding line with a combined rating factor greater than 
zero of the availability of funds and will invite the submittal of applications. 
If after 6 months, all available funds are not committed, the Executive 
Administrator shall notify the remaining eligible applicants over the funding 
line to submit applications in accordance with this subsection and subsections 
(d)-(f) of this section. 
(d) Applications for assistance may be submitted at any time after notification 
by the executive administrator of the availability of funds and will be funded 
on a first come, first served basis. Funds shall be committed to a project 
designated to receive assistance upon board approval of the application. 
(e) If the amount of funds required to fund all applications which are complete 
and ready for scheduling for board action exceeds the amount of funds available 
for commitment, a fund shortage is considered to exist. 
(f) Applications which are ready for scheduling for board action at the time a 
fund shortage occurs will be presented for board action in order of their 
priority ranking in accordance with sec.371.19 of this title (relating to Rating 
Process). Funds will be made available to applicants in priority order until all 
available funds have been utilized. If a tie for commitment of funding exists 
among applicants with identical rating scores, the applications will then be 
funded based on the date and time of receipt of a complete application for 
assistance, as defined. 
(g) If funds are available after the executive administrator is able to make a 
determination that all applicants in a population class have had the opportunity 
to be funded, the remaining funds will be made available to the other population 
class. 
(h) If funds are available after the executive administrator is able to make a 
determination that all eligible applicants above the funding line have had an 
opportunity to be funded, the executive administrator may after written notice 
invite the submittal of applications from all eligible applicants listed on the 
IUP, having either a combined rating factor score greater than zero or a 
physical deficiency rating score greater than zero, in accordance with 
subsections (c)-(f) of this section. 
(i) If funds are available after the executive administrator is able to make a 
determination that all eligible applicants having a combined rating factor score 
greater than zero or a physical deficiency rating score greater than zero have 
had an opportunity to be funded, the Executive Administrator may after written 
notice invite the submittal of applications from all eligible applicants listed 
on the IUP in accordance with subsections (c)-(f) of this section. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 3, 1996.
TRD-9700131
Craig D. Pedersen
Executive Administrator
Texas Water Development Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7981

Application for Assistance
31 TAC sec.sec.371.31-371.39
The new sections are proposed under the authority of the Texas Water Code, 6.101 
and 15.605, which provides the Texas Water Development Board with the authority 
to adopt rules necessary to carry out the powers and duties in the Water Code 
and other laws of the State and specifically the SRF Program. 

sec.371.31. Preapplication Conferences.
An applicant requesting information on financial assistance will make an 
appointment with the staff of the board for a preapplication conference. At a 
minimum, the preapplication conference should be attended by a member of the 
governing body of the applicant, the consulting engineer, and the financial 
advisor. The primary purposes of the meeting are: to establish basic eligibility 
of the project and applicant for financial assistance; to acquaint the applicant 
with the general, legal, and fiscal requirements of an application for funding; 
and to assist the applicant in completing an application. 

sec.371.32. Required General Information.
An application will be in the form and numbers prescribed by the executive 
administrator. The executive administrator may request any additional 
information needed to evaluate the application and may return any incomplete 
applications. 

sec.371.33. Required Fiscal Data.
The applicant shall submit financial information, the form and content of which 
shall be specified by the executive administrator.

sec.371.34. Required Legal Data.
(a) Bond election results. If a bond election is required by law to authorize 
the issuance of bonds to finance the project, such election should be held prior 
to consideration of the application by the board. The applicant shall provide 
the executive administrator with the election date and election results as to 
each proposition submitted. 
(b) Resolution. The applicant shall submit a certified copy of a resolution of 
its governing body requesting financial assistance from the board, authorizing 
the submission of the application, and designating the authorized representative 
for executing the application and appearance before the board. 
(c) Utilities service. If the applicant provides or will provide water supply 
and/or treatment service to another entity, or receives or will receive water 
supply or sewage collection and/or treatment service from another entity, the 
applicant shall submit the actual or proposed agreements, contracts, or other 
legally binding instruments which establish this service relationship. Before a 
loan is closed an executed copy of such agreement shall be required. The 
executive administrator may waive this requirement in whole or in part in the 
case of a project where the applicant is the supplier of water, sewage 
collection, and/or treatment services to other municipal entities, provided the 
applicant can demonstrate that its financial strength is adequate to continue 
the project even if one of the proposed customer entities fails to participate. 
(d) Other contracts. If financing of the project will require contractual loan 
agreement or the sale of bonds to the board payable either wholly or in part 
from revenues of contracts with others, the applicant shall submit a copy of any 
actual or proposed contracts under which applicant's gross income is expected to 
accrue. Before a loan is closed, an applicant shall submit certified copies of 
such contracts to the executive administrator.
(e) Affidavit. The applicant shall submit an affidavit executed by the 
authorized representative stating that the facts contained in the application 
are true and correct to the best knowledge and belief of the representative. 
(f) Construction contract. The applicant shall submit a copy of any existing 
construction contract. 
(1) All contracts shall have provisions assuring compliance with the board's 
rules and all relevant statutes. 
(2) The applicant shall be represented by a registered professional engineer who 
shall inspect the project at each phase of construction to assure construction 
in substantial compliance with the contract documents and in accordance with 
sound engineering principles and the terms and provisions of the construction 
contracts. 
(3) The applicant shall submit such other provisions as may be deemed necessary 
to provide to the board and the applicant adequate control to ensure that 
materials furnished or work performed conform with the provisions of the 
construction contracts. 
(g) Consultant contracts. The applicant shall submit copies of any proposed or 
existing contracts for consultant services necessary for construction of the 
proposed project and included as part of the total cost of the project. 
Contracts for engineering services should include the scope of services, level 
of effort, costs, schedules, and other information necessary for adequate review 
by the executive administrator. 
(h) Compliance with state law. The applicant shall submit a certification by the 
authorized representative of the applicant in a form acceptable to the board 
which warrants compliance by the applicant with all representations in the 
application, all laws of the State, and all rules and published policies of the 
board. 
(i) Ordinance for prior lien bonds. If bonds to be sold to the board are revenue 
bonds secured by a subordinate lien, then a copy of the authorizing instrument 
of the governing body in the issuance of the prior lien bonds shall be 
furnished. 
(j) Other information. The applicant shall submit other information requested by 
the board or the executive administrator which is reasonably necessary for an 
adequate understanding of the project. 
(k) Sites and easements. The applicant shall submit a description of all real 
property interests (sites, easements, rights-of-way, or specific use permits) 
necessary for construction of the project. 
(1) The applicant shall submit a statement explaining the status and means of 
obtaining the property interests. 
(2) The applicant shall provide certification that it has the necessary legal 
powers and authority to obtain the property interests.
(3) The applicant shall submit a copy of any proposed or existing lease or other 
agreement transferring interests in any land acquired or to be acquired for the 
project. 
(l) Compliance with DWSRF capitalization grant requirements. The applicant's 
authorized representative shall certify in a form acceptable to the board that 
the applicant will comply with all federal laws, regulations, and rules which 
apply to the DWSRF loan program. 

sec.371.35. Required Environmental Review and Determinations. 
(a) General. The applicant's preparation of the environmental information and 
the executive administrator's review and issuance of a determination forms an 
integral part of the planning process required of any potential applicant to the 
fund. There are three levels of environmental information required, varying 
according to the nature and scope of the project and the environment in which it 
is proposed. Correspondingly, the appropriate level of review will be conducted 
by the board and formal determinations documenting the review are issued. The 
categorical exclusion (CE) is directed toward those applicants proposing only 
minor rehabilitation or functional replacement of existing equipment. Although 
the environmental information required is small, the proposed project must fit a 
narrow range of criteria defined in paragraph (1)(A) of this subsection. The CE 
must be revoked and an environmental information document (EID) must be prepared 
if the project is subsequently modified so as to exceed the limits of the 
criteria. The majority of applicants will prepare an EID, developed in 
accordance with guidance available from the board. In addition to a greater 
amount of information to be supplied by the applicant, a public hearing must be 
held on the proposed project and the determination, a finding of no significant 
impact (FNSI), is also subject to public comment for a period not less than 30 
days following its issuance. All applicants whose proposed projects do not meet 
the criteria for either a CE or environmental impact statement (EIS) must 
prepare an EID. Although there are other criteria involved, as described in 
paragraph (1)(C) of this subsection and subsection (d)(3) of this section, an 
EIS is usually required of those projects that are so major in scope or involve 
such environmentally sensitive areas (i.e., floodplains, endangered species 
habitat, etc.) that the proposed project may have significant adverse social or 
environmental impacts. An EIS requires close coordination and involvement of the 
board and other agencies in its preparation and results in a record of decision 
(ROD). The board's staff shall endeavor to provide guidance as to the 
appropriate level of environmental information to applicants during the pre-
planning process. All applicants are urged, however, to review the criteria and 
contact the board's staff, particularly if there is doubt as to the level of 
environmental information that is appropriate to the proposed project. Based on 
the environmental information, the executive administrator will conduct an 
independent and interdisciplinary environmental review consistent with the 
National Environmental Policy Act (NEPA) of all projects funded through the 
DWSRF. This review will further insure that the proposed project will comply 
with the applicable local, state, and federal laws and board rules relating to 
the protection and enhancement of the environment. Based upon the staff's 
review, the executive administrator will make formal determinations regarding 
the potential social and environmental impacts of the proposed project. As 
necessary, the determinations will include mitigative provisions recommended to 
be applied as a condition of receiving financial assistance. Funds will not be 
released for building until a final environmental determination has been made. 
Proposed projects using the pre-design funding option will follow the 
environmental review procedures described under paragraph (2)(C) of this 
subsection. 
(1) Basic environmental determinations. There are three basic environmental 
determinations that will apply to projects proposed to be implemented with 
assistance from the fund. These are: a determination to categorically exclude a 
proposed project from a formal environmental review, a FNSI based upon a formal 
environmental review supported by an EID, and a determination to provide or not 
provide financial assistance based upon a ROD following the preparation of an 
EIS. The appropriate determination will be based on the following criteria. 
(A) The CE determination applies to categories of projects that have been shown 
over time not to entail significant impacts on the quality of the human 
environment. 
(i) Proposed projects which meet the following criteria may be categorically 
excluded from formal environmental review requirements.
(I) The proposed project is directed solely toward minor rehabilitation of 
existing facilities, functional replacement of equipment, or toward the 
construction of related facilities adjoining the existing facilities that do not 
affect the degree of treatment or the capacity of the works. Examples include 
replacement of existing distribution lines within the same rights-of-way or 
easements, rehabilitation of existing equipment and structures, and the
construction of structures on existing sites.
(II) The proposed project is in a community of less than 10,000 population and 
is for minor expansions or upgrading of existing systems.
(ii) CE's will not be granted for proposed projects that entail:
(I) the construction of new distribution lines; 
(II) providing capacity for a population 30% or greater than the existing 
population; 
(III) known or expected impacts to cultural resources, threatened or endangered 
species, or other environmentally sensitive areas; or 
(IV) the construction of facilities which will not be, or apparently will not 
be, cost-effective or are likely to cause significant public controversy.
(B) The FNSI will be based upon an environmental review by the staff supported 
by an EID prepared by the applicant in conformance with guidance developed by 
the executive administrator. Based upon its review, the staff will prepare an 
environmental assessment (EA) resulting in the issuance of either a FNSI or a 
public notice that the preparation of an EIS will be required. All applicants 
whose projects do not meet the criteria for either a CE or EIS will be required 
to prepare an EID. The executive administrator's issuance of a FNSI will be 
based upon an EA documenting that the potential environmental impacts will not 
be significant or that they may be mitigated without extraordinary measures. 
(C) The ROD may only be based upon an EIS prepared in conformance with the 
format and guidelines described in subsection (b)(3) of this section. An EIS 
will be required when the executive administrator determines any of the 
following: 
(i) the proposed project will significantly affect the pattern and type of land 
use or growth and distribution of the population; 
(ii) the effects of a proposed project's construction or operation will conflict 
with local or state laws or policies; 
(iii) the proposed project may have significant adverse impacts upon: 
(I) wetlands; 
(II) floodplains; 
(III) threatened and endangered species or their habitats;
(IV) cultural resources including parklands, preserves, other public lands, or 
areas of recognized scenic, recreational, agricultural, archeological, or 
historic value; 
(iv) the proposed project will displace population or significantly alter the 
characteristics of existing residential areas; 
(v) the proposed project may directly or indirectly (e.g., through induced 
development) have significant adverse effect upon local ambient air quality, 
local noise levels, surface and ground water quantity or quality, fish, 
shellfish, wildlife or their natural habitats; 
(vi) the proposed project may generate significant public controversy; or 
(vii) the water supply is proposed to be obtained from a surface or groundwater 
source where the characterization of quality and/or quantity is being challenged 
or for which the proposed withdrawal might adversely affect the quality or 
quantity. 
(2) Other determinations that are required of the board. 
(A) Recognizing that a project may be altered at some time after an 
environmental determination on the proposed project has been issued, the 
executive administrator will provide that, prior to approval of the alterations, 
the contract documents, loan application, or related documents will be examined 
for consistency with the environmental determination. If minor inconsistencies 
are found and the amended project will not entail adverse environmental impacts 
different from those previously identified, the project may be allowed to 
proceed without additional formal environmental review. When substantive 
inconsistencies are found or new adverse environmental impacts may result, the 
executive administrator will revoke a CE and require the preparation of an EID 
or an EIS, consistent with the criteria of paragraph (1) of this subsection, or 
require the preparation of amendments to an EID or supplements to an EIS, as 
appropriate. Based upon the staff's review of the amended project, the executive 
administrator will: 
(i) reaffirm the original environmental determination through the issuance of a 
public notice or statement of finding; 
(ii) issue a FNSI when a CE has been revoked, or issue a public notice that the 
preparation of an EIS will be required; 
(iii) issue an amendment to a FNSI, or revoke a FNSI and issue a public notice 
that the preparation of an EIS will be required; or 
(iv) issue a supplement to a ROD, or revoke the ROD and issue a public notice 
that financial assistance will not be provided. 
(B) When five or more years have elapsed between the last environmental 
determination and the submittal of an application to the fund, the executive 
administrator will re-evaluate the proposed project, environmental conditions 
and public views, and prior to presentation of the application to the board, 
proceed in accordance with subparagraph (A) of this paragraph.
(C) For projects using the pre-design funding option, board staff will use 
preliminary environmental data provided by the applicant, as specified in 
sec.371.38 of this title (relating to Pre-Design Funding Option), and make a 
written report to the executive administrator on known or potential significant 
social or environmental concerns before an application for pre-design funding is 
taken to the board. Prior to release of funds for design, these projects must 
have approval by the board after the appropriate level of environmental review 
has been conducted during planning, as provided under this section. 
(3) Other determinations that are available to the board. 
(A) The executive administrator may adopt previous environmental determinations 
issued by the EPA and other federal agencies whose determinations may be 
considered to be current and applicable under the environmental review 
requirements of this section. In so doing, the executive administrator will 
insure that all mitigative measures specified in the previous determinations are 
applied as conditions of the loan agreement and that such adoption will be 
consistent with the requirements of these rules. The executive administrator 
will adopt the previous determination by means of a statement of findings, when 
the proposed project and its previous determination are to be adopted without 
substantial modifications, or in a FNSI which will explain modifications to the 
proposed project, potential environmental impacts identified during an 
environmental review, and any mitigative measures proposed in addition to those 
included in the federal environmental determination to be adopted.
(B) In order to better inform the public, the executive administrator may issue 
a statement of findings to interested agencies and public groups describing the 
outcome of a mitigative condition required by an environmental determination. 
(b) Required environmental information. A minimum of three copies of all 
information required in this subsection shall be submitted to the executive 
administrator. 
(1) Applicants seeking a CE for their proposed projects will provide the 
executive administrator with sufficient documentation to demonstrate compliance 
with the criteria of subsection (a)(1)(A) of this section. At a minimum, this 
will consist of: 
(A) a brief, complete description of the proposed project and its costs; 
(B) a statement indicating that the project is cost-effective and that the 
applicant is financially capable of constructing, operating and maintaining the 
facilities; and 
(C) a plan map or maps of the proposed project showing: 
(i) the location of all construction areas, 
(ii) the planning area boundaries, and 
(iii) any known environmentally sensitive areas. 
(2) An EID must be submitted by those applicants whose proposed projects do not 
meet the criteria for a CE and for which the executive administrator has made a 
preliminary determination that an EIS will not be required. The executive 
administrator will provide guidance on both the format and contents of the EID 
to potential applicants prior to initiation of planning. 
(A) At a minimum, the contents of an EID will include: 
(i) the purpose and need for the project; 
(ii) the environmental setting of the proposed project and the future of the 
environment without the project; 
(iii) the alternatives to the project as proposed and their potential 
environmental impacts; 
(iv) a description of the proposed project; 
(v) the potential environmental impacts of the project as proposed including 
those which cannot be avoided; 
(vi) the relationship between the short term uses of man's environment and the 
maintenance and enhancement of long term productivity;
(vii) any irreversible and irretrievable commitments of resources to the 
proposed project; 
(viii) a description of public participation activities conducted, issues 
raised, and changes to the project which may be made as a result of the public 
participation process; and 
(ix) documentation of required public participation activities and coordination 
with appropriate governmental agencies. 
(B) Prior to the applicant's adoption of the DWSRF engineering feasibility 
report, the applicant will hold a public hearing on the proposed project and the 
EID, and provide the executive administrator with a verbatim transcript of the 
hearing. The executive administrator will provide guidance to the applicant 
regarding the contents of the hearing notice and of the hearing. The hearing 
will be advertised at least 30 days in advance in a local newspaper of general 
circulation within the area to be impacted by the proposed project. Notice of 
the public hearing and availability of the documents also will be sent at least 
30 days in advance of the public hearing to all local, state, and federal 
agencies and public and private parties that may have an interest in the 
proposed project. Included with the transcript will be a list of all attenders, 
any written testimony, and the applicant's responses to the issues raised. 
(C) The applicant will provide copies of the EID to all federal, state, and 
local agencies and others with an interest in the proposed project. The 
executive administrator will provide guidance to the applicant regarding 
coordination requirements. 
(3) The format of an EIS will encourage sound analysis and clear presentation of 
alternatives, including the no action alternative and the preferred alternative, 
and their environmental, economic, and social impacts. The following format must 
be followed by the applicant unless the executive administrator determines there 
are compelling reasons to do otherwise:
(A) a cover sheet identifying the applicant, the proposed project(s), the 
program through which financial assistance is requested, and the date of 
publication; 
(B) an executive summary consisting of a 10 to 15 page precis of the critical 
issues of the EIS in sufficient detail that the reader may become familiar with 
the proposed project and its cumulative effects. The summary will include: 
(i) a description of the existing problem; 
(ii) a description of each alternative; 
(iii) a listing of each alternative's potential environmental impacts, 
mitigative measures and any areas of controversy; and 
(iv) any major conclusions; 
(C) the body of the EIS, which will contain the following information: 
(i) a complete and clear description of the purpose and need for the proposed 
project and objectives; 
(ii) a balanced description of each alternative considered by the applicant. The 
descriptions will include the size and location of the facilities and pipelines, 
land requirements, operation and maintenance requirements, and construction 
schedules. The alternative of no action will be discussed and the applicant's 
preferred alternative(s) will be identified. Alternatives that were eliminated 
from detailed examination will be presented with the reasons for their 
elimination; 
(iii) a description of the alternatives available to the board including: 
(I) providing financial assistance to the proposed project;
(II) requiring that the proposed project be modified prior to providing 
financial assistance to reduce adverse environmental impacts, or providing 
assistance with conditions requiring the implementation of mitigative measures; 
and 
(III) providing no financial assistance; 
(iv) a description of the alternatives available to other local, state, and 
federal agencies which may have the ability to issue or deny a permit, provide 
financial assistance, or otherwise effect or have an interest in any of the 
alternatives; 
(v) a description of the affected environment and environmental consequences of 
each alternative. The affected environment on which the evaluation of each 
alternative will be based includes, as a partial listing, hydrology, geology, 
air quality, noise, biology, socioeconomics, land use, and cultural resources of 
the planning area. The executive administrator will provide guidance, as 
necessary, to the applicant regarding the evaluation of the affected 
environment. The discussion will present the total impacts of each alternative 
in a manner that will facilitate comparison. The effects of the no action 
alternative must be included to serve as a baseline for comparison of the 
adverse and beneficial impacts of the other alternatives. A description of the 
existing environment will be included in the no action section to provide 
background information. The detail in which the affected environment is 
described will be commensurate with the complexity of the situation and the 
significance of the anticipated impacts. 
(4) The draft EIS will be provided to all local, state and federal agencies and 
public groups with an interest in the proposed project and be made available to 
the public for review. The final EIS will include all objections and suggestions 
made before and during the draft EIS review process, along with the issues of 
public concern expressed by individuals or interested groups. The final EIS must 
include discussions of any such comments pertinent to the project or the EIS. 
All commentors will be identified. If a comment has led to a change in either 
the project or the EIS, the reason should be given. The board's staff will 
always endeavor to resolve any conflicts that may have arisen, particularly 
among permitting agencies, prior to the issuance of the final EIS. In all cases, 
the comment period will be no less than 45 days. 
(5) Material incorporated into an EIS by reference will be organized to the 
extent possible into a supplemental information document and be made available 
for public review upon request. No material may be incorporated by reference 
unless it is reasonably available for inspection by interested persons within 
the comment periods specified in subsection (b)(4) of this section. 
(6) Preparation of the EIS will be done, at the discretion of the executive 
administrator: directly by its own staff; by consultants to the board; or by a 
consultant, contracted by the applicant subject to approval by the executive 
administrator. In the latter two cases, the consultants will be required to 
execute a disclosure statement prepared by the executive administrator 
signifying they have no financial or other conflicting interest in the outcome 
of the project. When an EIS is prepared by contractors, either in the service of 
the applicant or the board, the executive administrator will independently 
evaluate the EIS prior to issuance of the ROD and take responsibility for its 
scope and contents. The board staff who undertake this evaluation will be 
identified under the list of preparers along with those of the contractor and 
any other parties responsible for the content of the EIS. 
(7) The following public participation requirements are the minimum allowable to 
the applicant and the board. 
(A) Upon making the determination that an EIS will be required of a proposed 
project, the executive administrator will publish in the Texas Register and 
distribute a notice of intent to prepare an EIS. 
(B) As soon as possible after the notice of intent has been issued, the 
executive administrator will convene a meeting of the affected federal, state, 
and local agencies, the applicant, and other interested parties to determine the 
scope of the EIS. A notice of this scoping meeting may be incorporated into the 
notice of intent or prepared and issued separately. In no case will the 
notification period be less than 45 days. As part of the scoping meeting the 
board will, at a minimum: 
(i) determine the significance of issues and the scope of those significant 
issues to be analyzed in depth in the EIS; 
(ii) identify the preliminary range of alternatives to be considered;
(iii) identify potential cooperating agencies and determine the information or 
analyses that may be needed from cooperating agencies or other parties; 
(iv) discuss the method for EIS preparation and the public participation 
strategy; 
(v) identify consultation requirements of other laws and regulations;
(vi) determine the relationship between the preparation of the EIS and the 
completion of the DWSRF engineering feasibility report and any necessary 
arrangements for coordination of the preparation of both documents.
(C) Following the scoping process, the executive administrator will begin the 
identification and evaluation of all potentially viable alternatives to 
adequately address the range of issues developed in the scoping. A summary of 
this, including a list of the significant issues identified, will be provided to 
the applicant and other interested parties. 
(D) The draft EIS will be the subject of a formal public hearing and any other 
public participation activities determined to be appropriate during the scoping 
process. Both the draft EIS and final EIS will be distributed and made available 
for public review in a fashion consistent with the requirements of paragraph 
(2)(B) of this subsection except that the advertisement period for the public 
hearing and comment periods for the draft EIS and final EIS will be no less than 
45 days. The executive administrator will publish, in the Texas Register and a 
newspaper(s) of general circulation in the project area, a notice of 
availability of the EIS giving locations at which it will be available for 
public review at least 45 days prior to making any environmental determination. 
(c) Environmental Review. 
(1) When the executive administrator has determined that an applicant's proposed 
project may be excluded from a formal environmental review or has determined 
that a CE is to be rescinded, the executive administrator will prepare a public 
notice of the determination and the availability of supporting documentation for 
public inspection. The notice will be published in a local newspaper of 
community-wide circulation by the applicant. The executive administrator, 
concurrent with the publication, will distribute the notice to all interested 
parties. 
(2) An environmental review of the proposed project, supported by the 
applicant's EID, will be conducted by the executive administrator to determine 
whether any significant impacts are anticipated and whether any changes may be 
made in the proposed project to eliminate significant adverse impacts. As part 
of this review, the executive administrator may require the applicant to submit 
additional information or undertake additional public participation and 
coordination to support the environmental determination. Based on the 
environmental review, the executive administrator will prepare an EA, 
describing: 
(A) the purpose and need for the proposed project; 
(B) the proposed project, including its costs; 
(C) the alternatives considered and the reasons for their rejection or 
acceptance; 
(D) the existing environment; 
(E) any potential adverse impacts and mitigative measures; and 
(F) any proposed conditions to the provision of financial assistance and any 
means provided for the monitoring of compliance with the conditions. 
(3) Based upon this EA, the executive administrator will issue a FNSI or issue a 
notice of intent to prepare an EIS. The FNSI will include a brief description of 
the proposed project, its costs, any mitigative measures proposed for the 
applicant as a condition of its receipt of financial assistance, and a statement 
to the effect that comments supporting or disagreeing with the FNSI may be 
submitted for consideration by the board. The EA will be attached to the FNSI 
when mitigative measures are specified by conditions of the financial 
assistance. The FNSI will be distributed to all parties, governmental entities, 
and agencies that may have an interest in the proposed project. No action 
regarding approval of the DWSRF engineering feasibility report will be taken by 
the executive administrator for at least 30 days after the issuance of the FNSI. 
Additionally, except for projects utilizing the pre-design option under 
sec.371.38 of this title (relating to Pre-Design Funding Option), no funds for 
building will be released for at least 30 days after the issuance of the FNSI. 
For projects utilizing the pre-design option, approval of the release of funds 
for planning will be made prior to the issuance of the FNSI, but no approval for 
release of funds for design or building will be made until at least 30 days 
after the issuance of the FNSI. 
(4) Except for projects utilizing pre-design funding under sec.371.38 of this 
title (relating to Pre-Design Funding Option), the executive administrator will 
prepare a concise public ROD following the public hearing on the draft EIS and 
the comment period on the final EIS and before the decision to approve the DWSRF 
engineering feasibility report or to provide or deny financial assistance to the 
proposed project. The ROD will describe those mitigative measures to be taken 
which will make the selected alternative environmentally acceptable. For 
projects utilizing the pre-design funding option under sec.371.38 of this title 
(relating to Pre-Design Funding Option), the ROD shall be made prior to the 
board's approval of the release of funds for design. 
(d) Application of other laws and authorities. In addition to the requirements 
of state law and rules, the Act, and the NEPA, the board must, as required by 
the initial guidance for the state water pollution control revolving fund and 
the drinking water capitalization grant agreement, insure that each project 
proposed to receive DWSRF financial assistance complies with the following 
federal laws and authorities respecting the human environment: the Archeological 
and Historic Preservation Act of 1974, Public Law 93-191; the Historic Sites 
Act; the Clean Air Act, 42 United States Code 7506(c); the Coastal Barrier 
Resources Act, 16 United States Code 3501 et seq., the Coastal Zone Management 
Act of 1972, Public Law 92-583, as amended; the Endangered Species Act, 16 
United States Code 1531 et seq.; Executive Order 11953, Protection and 
Enhancement of the Cultural Environment; Executive Order 11988, Floodplain 
Management; the Flood Disaster Protection Act of 1973, Public Law 93-234; 
Executive Order 11990, Protection of Wetlands; the Farmland Protection Policy 
Act, 7 United States Code 4201 et seq.; the Fish and Wildlife Coordination Act, 
Public Law 85-624, as amended; the National Historic Preservation Act of 1966, 
Public Law 89-665, as amended; the Safe Drinking Water Act, sec.1424(e), Public 
Law 92-523, as amended; and the Wild and Scenic Rivers Act, Public Law 90-542, 
as amended. Because particular federal and/or state agencies are charged with 
the enforcement of or permitting under many of these laws and authorities, the 
executive administrator will provide guidance to applicants to the fund 
regarding consultation requirements and will encourage proper coordination of 
project planning with the appropriate agencies. Because of their complexity and 
critical importance to the board's administration of the fund, the board has 
adopted the following sections to effect proper compliance with the requirements 
of the Flood Disaster Protection Act of 1973, the Coastal Barrier Resources Act, 
and Executive Order 11988. 
(1) The board will not provide financial assistance from the DWSRF for any 
project element that is proposed to be constructed in a floodplain when the 
applicant's community is sanctioned by the Federal Emergency Management Agency 
(FEMA) in its administration of the National Flood Insurance Program, pursuant 
to the requirements of the Flood Disaster Protection Act of 1973, Public Law 93-
234. 
(2) The board will not provide financial assistance from the fund to any entity 
proposing construction in or extension or expansion of water service into any 
area within the Coastal Barrier Resources System other than those permitted by 
the Coastal Barrier Resources Act, 16 United States Code 3501 et seq. 
(3) Pursuant to the requirements of Executive Order 11988, the board will avoid 
direct and indirect support of development in floodplains wherever there is a 
practicable alternative. Therefore, both to preserve the significant natural 
functions and values of floodplains and to protect human health and safety. 
(A) The board may provide financial assistance from the fund for the 
transportation or treatment of drinking water in a floodplain only when the 
proposed project will provide service to: 
(i) areas of existing development in a floodplain; 
(ii) facilities such as marinas which, by their nature, must be located in 
floodplains; 
(iii) areas of projected growth if an EID demonstrates that the proposed 
development will be consistent with FEMA's floodplain management criteria for 
flood prone areas (40 Code of Federal Regulations 60.3) and will have no 
significant impacts on natural functions and values of floodplains;
(iv) areas of projected growth if an EIS demonstrates that there is no 
practicable alternative to such growth, that such growth will be consistent with 
the floodplain management criteria cited in clause (iii) of this subparagraph 
and that the benefits of such growth outweigh its costs to the natural functions 
and values of the effected floodplains or risks to human health and safety. 
(B) When regional systems are proposed, the board will require the regional 
authority and the member entities to demonstrate compliance with these rules. 
(C) For the purposes of this subsection, the following definitions will apply: 
(i) Areas of existing development - All or part of the project planning area 
which, at the time of the board's issuance of its environmental determination, 
is: 
(I) occupied by existing structures or facilities; 
(II) substantially surrounded by existing structures and facilities and which 
serves no significant independent natural floodplain function; or 
(III) characterized by substantial investment in public infrastructure (e.g., 
roads and utilities are available to individual users) but which is only 
partially occupied by structures or facilities. 
(ii) Floodplain or 100-year floodplain - Those lowland, relatively flat areas 
usually adjoining inland or coastal waters that have a 1% or greater chance of 
flooding in any given year. In determining these areas, the applicant will use 
flood insurance rate maps or flood hazard boundary maps approved by FEMA. Where 
these maps are unavailable, the applicant should produce its own map(s) 
delineating the 100-year floodplain and showing 100-year flood elevations. Such 
maps should be prepared in accordance with FEMA's Guidelines and Specifications 
for Study Contractors. 
(iii) Natural functions and values of the floodplain include:
(I) maintenance of water quality; 
(II) transport, storage, and absorption of floodwaters; 
(III) groundwater recharge; 
(IV) flow of debris; 
(V) wildlife habitat; 
(VI) cultural and historical resource repository; 
(VII) agricultural resources; and 
(VIII) aesthetic resources. 
(D) The board will, as appropriate and consistent with the requirements of these 
rules and Executive Order 11988, require assurances or include conditions to the 
provision of DWSRF financial assistance to insure compliance with these rules.

sec.371.36. Required DWSRF Engineering Feasibility Report.
(a) Applicant shall submit an engineering feasibility report signed and sealed 
by a professional engineer registered in the State of Texas. The report, based 
on guidelines provided by the executive administrator, shall provide: 
(1) description and purpose of the project; 
(2) entities to be served and current and future population;
(3) the cost of the project; 
(4) sufficient information to evaluate the engineering feasibility; and 
(5) maps and drawings as necessary to locate and describe the project area. The 
executive administrator may request additional information or data as necessary 
to evaluate the project. 
(b) Approval of DWSRF Engineering Feasibility Report. The executive 
administrator will approve the DWSRF engineering feasibility report after 
determining that the items listed in subsection (a) of this section have been 
completed, the appropriate environmental determinations have ben completed in 
accordance with sec.371.35 of this title (relating to Required Environmental 
Review and Determinations), the project has been determined to be cost 
effective, and the loan recipient has agreed to incorporate all mitigating 
measures directed by the executive administrator. 
(c) Changes to DWSRF Engineering Feasibility Report. If changes occur in the 
project after approval of the engineering feasibility report, the executive 
administrator may request additional engineering and/or environmental 
information in order to ascertain that the loan commitment and environmental 
determination continues to be appropriate. 

sec.371.37. Required Water Conservation Plan.
(a) The applicant, if not eligible for an exemption, shall submit either with 
its application or separately under subsection (b) of this section two copies of 
a water conservation plan for approval. The executive administrator shall review 
all water conservation plans submitted as part of an application for financial 
assistance for a project, shall determine if the plans are adequate, and shall 
present information to the board on the water conservation plan when the 
application is considered by the board.
(b) An applicant may elect to submit the required water conservation plan after 
the board approves its application for assistance but before any funds are 
released. In such case, the applicant shall submit the conservation plan to the 
executive administrator for review. The executive administrator shall make a 
preliminary determination as to whether the plan is adequate, and shall submit 
the plan to the board for consideration. The board will approve, disapprove, or 
approve with modifications the applicant's water conservation plan during an 
open meeting. The board may revise the amount and conditions of its financial 
commitment after considering the water conservation plan. 
(c) The water conservation plan required under subsections (a) or (b) of this 
section shall include an evaluation of the applicant's water and wastewater 
system and shall set goals to be accomplished by water conservation measures. 
The plan shall include a long-term water conservation plan and an emergency 
water demand management plan. In addition to any elements deemed appropriate by 
the applicant, the long-term plan shall include the following: 
(1) measures to determine and control unaccounted for water including universal 
metering of both customer and public uses, periodic meter testing and repair, 
and distribution system leak detection and repair; 
(2) non-promotional retail water rate structures which do not promote the 
excessive use of water by retail customers; and 
(3) a continuing program of education and information which provides water 
conservation information directly to each residential, industrial and commercial 
customer annually, includes at least one other type of annual educational water 
conservation activity, and provides water conservation literature to new 
customers when they apply for service. 
(d) The board may not require an applicant to provide a water conservation plan 
if the board determines an emergency exists, the amount of financial assistance 
to be provided is $500,000 or less, or implementation of a water conservation 
program is not reasonably necessary to facilitate water conservation. 
(1) An emergency exists when: 
(A) a water system has failed, causing the health and safety of the citizens 
served to be endangered; 
(B) sudden, unforeseen demands are placed on a water system (i.e., because of 
military operations or emergency population relocation);
(C) a disaster has been declared by the governor or president; or 
(D) the Governor's Division of Emergency Management of the Texas Department of 
Public Safety has determined that an emergency exists.
(2) The board shall review an application for which an emergency is determined 
to exist six months after the board commits to financial assistance, and also at 
the time of any extensions of the loan commitment. If the board finds that the 
emergency no longer exists, it may then require submission of a water 
conservation plan satisfactory to the board, before making any further 
disbursements on the commitments. 
(3) Submission of a plan is not necessary to facilitate water conservation if 
the applicant already has a program in effect that meets the requirements of 
this section. 
(e) If the political subdivision will utilize the project financed by the board 
to furnish water services to another political subdivision that in turn will 
furnish the water services to the ultimate consumer, the requirements for the 
water conservation plan may be met either through contractual agreements between 
the political subdivisions providing for establishment of a water conservation 
plan, which shall be included in the contract at the earliest of the original 
execution, renewal or substantial amendment of that contract, or by other 
appropriate measures. 
(f) The long term water conservation plan may also include other measures that 
the political subdivision deems appropriate. These may include, but are not 
limited to, measures such as: 
(1) codes and ordinances which require the use of water-conserving technologies; 
(2) measurement and control of excessive pressure in the distribution system; 
(3) ordinances to promote efficiency and avoid waste;
(4) commercial and residential conservation audits for indoor and landscape 
water uses; 
(5) plumbing fixture replacement and retrofit programs;
(6) recycling and reuse of reclaimed wastewater and/or gray water; and 
(7) other measures as may be applicable. 
(g) The emergency demand management plan shall include trigger conditions, 
demand management measures, initiation and termination procedures, means of 
implementation, and measures to educate and inform the public. 
(h) The board will accept a water conservation plan determined by the commission 
to satisfy the requirements of 30 TAC Chapter 288 (relating to Water 
Conservation Plans, Guidelines, and Requirements).

sec.371.38. Pre-Design Funding Option.
(a) This loan application option will provide an applicant that meets all 
applicable board requirements an alternative to secure loan proceeds for 
planning, design or building costs associated with a project. Under this option, 
a loan may be closed and funds released to complete planning activities. If all 
required planning has been completed and approved, design funds may also be 
released at the time of closing and building funds will be escrowed. If planning 
requirements have not been satisfied, design and building funds will be escrowed 
and released in the sequence described in this section. After planning and 
environmental review, the board may require the applicant to make changes in 
order to receive the board's approval and proceed with the project. If the 
portion of a project associated with funds in escrow cannot proceed, the loan 
recipient shall use the escrowed funds to redeem bonds purchased by the board in 
inverse order of maturity. General procedures and requirements for pre-design 
funding are described in this section. 
(b) The executive administrator may recommend to the board the use of this 
section if, based on available information, there appear to be no significant 
permitting, social, contractual, environmental, engineering, or financial issues 
associated with the project. An application for pre-design funding may be 
considered by the board despite a negative recommendation from the executive 
administrator. 
(c) Applications for pre-design funding must include the following information: 
(1) for loans including building cost, an engineering plan of study which will 
include at minimum: a description and purpose of the project; area maps or 
drawings as necessary to fully locate the project area(s); a proposed project 
schedule; estimated project costs and budget including sources of funds; current 
and future populations and projected flows; alternatives considered; and a 
discussion of known permitting, social or environmental issues which may affect 
the alternatives considered and the implementation of the proposed project; 
(2) contracts for engineering services; 
(3) evidence that an approved water conservation plan as required under 
sec.371.37 of this title (relating to Required Water Conservation Plan) will be 
adopted prior to the release of loan funds or the applicant's election to submit 
the water conservation plan under sec.371.37 of this title (relating to Required 
Water Conservation Plan); 
(4) all information required in sec.sec.371.32-371.34 of this title (relating to 
Required General Information, Required Fiscal Data, and Required Legal Data, 
respectively), and 
(5) any additional information the executive administrator may request to 
complete evaluation of the application. 
(d) After board commitment and completion of all closing and release 
prerequisites as specified in sec.371.71 of this title (relating to Loan 
Closing) and sec.371.72 of this title (relating to Release of Funds), funds will 
be released in the following sequence: 
(1) for planning and permitting costs, after receipt of executed contracts for 
the planning or permitting phase, and after approval of a water conservation 
plan if still outstanding under sec.371.37 of this title (relating to Required 
Water Conservation Plan); 
(2) for design costs, after receipt of executed contracts for the design phase 
and upon approval of an DWSRF feasibility report as specified in sec.37l.36 of 
this title (relating to Required DWSRF Engineering Feasibility Report) and 
compliance with sec.371.35 of this title (relating to Required Environmental 
Review and Determinations) and after board approval under subsection (e) of this 
section; and 
(3) for building costs, after issuance of any applicable permits, and after bid 
documents are approved and executed construction documents are contingently 
awarded. 
(e) Board staff will use preliminary environmental data provided by the 
applicant, as specified in subsection (c)(1) of this section and make a written 
report to the executive administrator on known or potential significant social 
or environmental concerns to allow the executive administrator to make a 
recommendation to the board on pre-design funding. Prior to release of funds for 
design, these projects must have the board's approval based upon an 
environmental review conducted during planning under the standards of sec.371.35 
of this title (relating to Required Environmental Review and Determination) as 
applicable. 
(f) Prior to the board's approval of release of funds for design, the executive 
administrator shall summarize the project's environmental review and shall 
inform the board of any environmentally related special mitigative or 
precautionary measures recommended for the project. The board may elect to 
affirm or alter the conditions of the original commitment to the applicant or 
withdraw the commitment to the applicant.

sec.371.39. Review of Applications by the Executive Administrator.
(a) Review criteria for loans. The executive administrator will review the 
applications and request any modifications or additional information as may be 
required for consistency with: sec.371.32 of this title (relating to Required 
General Information); sec.371.33 of this title (relating to Required Fiscal 
Data); sec.371.34 of this title (relating to Required Legal Data); sec.371.35 of 
this title (relating to Required Environmental Review and Determinations); 
sec.371.36 of this title (relating to Required DWSRF Engineering Feasibility 
Report); and sec.371.38 of this title (relating to Pre-Design Funding Option). 
If at any time the executive administrator determines that requested 
modifications or information is not being provided expeditiously by the 
applicant or that the applicant is not proceeding expeditiously to seek a loan 
commitment he shall, after notice to the applicant, return the application. The 
application will have to be resubmitted to receive consideration for financial 
assistance. 
(b) Review criteria for refinancing. The executive administrator shall review an 
application for refinancing of construction costs and present it to the board 
only after confirming the following. 
(1) All of the items in subsection (a) of this section have been confirmed. 
(2) The contract documents have been approved in accordance with sec.371.62 of 
this title (relating to Approval of Contract Documents).
(3) The executed contract documents have been submitted and approved, if 
available. 
(4) An inspection and, if necessary, appraisal of any completed work has been 
performed and the findings demonstrate the project is consistent with the 
board's rules. 
(5) The DWSRF engineering feasibility report and environmental review was 
completed in accordance with sec.371.36 of this title (relating to Required 
DWSRF Engineering Feasibility Report) before initiation of construction.
(6) Any other information requested by the executive administrator has been 
provided. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 3, 1996.
TRD-9700132
Craig D. Pedersen
Executive Administrator
Texas Water Development Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7981

Board Action on Application
31 TAC sec.371.51, sec.371.52
The new sections are proposed under the authority of the Texas Water Code, 6.101 
and 15.605, which provides the Texas Water Development Board with the authority 
to adopt rules necessary to carry out the powers and duties in the Water Code 
and other laws of the State and specifically the SRF Program. 

sec.371.51. Formal Action by the Board.
(a) Presentation to board. The executive administrator shall present the 
application to the board after completing the review pursuant to sec.371.39 of 
this title (relating to Review of Applications by Executive Administrator), and 
shall include comments concerning the best method of making financial assistance 
available. Upon the executive administrator's finding that the application is 
complete and in order for board review, the application shall be placed on the 
following month's agenda for board consideration. The applicant and other 
interested parties known to the board shall be notified of the time and place of 
such meeting. Evidence and arguments both for and against the granting of the 
application may be heard at such meeting. 
(b) Action by board. At the conclusion of the meeting to consider the project, 
the board may resolve to approve, disapprove, amend, or continue consideration 
of the application. The board shall approve an application only if the board 
finds that in its opinion the revenue or taxes or both revenue and taxes pledged 
by the applicant will be sufficient to meet all obligations assumed by the 
applicant and that the application and assistance applied for meet the 
requirements of the federal act and state law. 
(c) Commitment date. Applicants for funds under this chapter must close their 
loans within 24 months of the date the board commits funds, unless they request 
of the board and receive an extension of the commitment date. 

sec.371.52. Lending Rates.
Interest Rates for Loans from the State Safe Drinking Water Revolving Fund will 
be computed as follows: 
(1) The fixed interest rates for DWSRF loans under this chapter are set at a 
rate of 120 basis points below the fixed rate index rates for borrowers. The 
fixed rate index rates shall be established for each borrower based on the 
borrower's market cost of funds as they relate to the Delphis Hanover 
Corporation Range of Yield Curve Scales or the 90 index of the Delphis Hanover 
Corporation Scale for borrowers with either no rating or a rating less than 
investment grade, using individual coupon rates for each maturity of proposed 
debt based on the appropriate rate scale of the index. 
(2) The Development Fund Manager may adjust a borrower's interest rate at any 
time prior to closing as a result of a change in the borrower's credit rating. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 3, 1996.
TRD-9700133
Craig D. Pedersen
Executive Administrator
Texas Water Development Board
Earliest possible date of adoption: February 14, 1997
For further information, please call: (512) 463-7981

Engineering Design
31 TAC sec.371.61, sec.371.62
The new sections are proposed under the authority of the Texas Water Code, 6.101 
and 15.605, which provides the Texas Water Development Board with the authority 
to adopt rules necessary to carry out the powers and duties in the Water Code 
and other laws of the State and specifically the SRF Program. 

sec.371.61. Contract Documents.
An applicant shall obtain executive administrator approval of contract 
documents, including engineering plans and specifications, prior to receiving 
bids and awarding the contract. The applicant shall submit three copies of 
contract documents; which shall be as detailed as would be required for 
submission to contractors bidding on the work, and which shall be consistent 
with the engineering feasibility information submitted with the application. The 
contract documents must contain the following: 
(1) provisions assuring compliance with the board's rules and all relevant 
statutes; 
(2) forms by which the performance and payment bonds will be provided; 
(3) provisions requiring the contractor to obtain and maintain the appropriate 
insurance coverage; 
(4) provisions providing for the applicant to retain a minimum of 5% of the 
progress payments otherwise due to the contractor until the building of the 
project is substantially complete and a reduction in the retainage is authorized 
by the executive administrator; 
(5) a contractor's act of assurance form to be executed by the contractor which 
shall warrant compliance by the contractor with all laws of the State of Texas 
and all rules and published policies of the board;
(6) provisions giving authorized representatives of the board access to all such 
construction activities, books, records, documents and other evidence of the 
contractor for the purpose of inspection, audit and copying during normal 
business hours; and 
(7) any additional conditions that may be requested by the executive 
administrator. 

sec.371.62. Approval of Contract Documents.
(a) Approval. The executive administrator will approve the contract documents if 
they: 
(1) conform to the requirements listed in this section (relating to Approval of 
Contract Documents); 
(2) are consistent with all relevant statutes, including the Water Code; 
(3) pass a biddability, operability, and constructability review by the 
executive administrator; and 
(4) are consistent with the DWSRF engineering feasibility report and 
environmental determinations required by sec.371.35 of this title (relating to 
Required Environmental Review and Determinations) and sec.371.36 of this title 
(relating to Required DWSRF Engineering Feasibility Report). 
(b) Advertisement for Bids. The applicant shall obtain authorization from the 
executive administrator before advertising for bids on the project.
(c) Other approvals. The applicant shall obtain the approval of the plans and 
specifications from each state and federal agency having jurisdiction over the 
project. The executive administrator's approval of the contract documents does 
not relieve the applicant of any liabilities or respo