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 <nl> code. [Brackets] indicate deletion of existing material 
within a section.

TITLE 10. COMMUNITY DEVELOPMENT
PART V. Texas Department of Economic Development
CHAPTER 186.Smart Jobs Fund Rules
SUBCHAPTER A.General Provisions
10 TAC sec.sec.186.102, 186.104
The Texas Department of Economic Development (department) proposes amendments to 
the Smart Jobs Fund Rules, Subchapter A. General Provisions, sec.sec.186.102 and 
186.104. The amendments are proposed pursuant to Government Code 
sec.sec.481.0044(a), authorizing the governing board of the department to adopt 
rules necessary for the administration of department programs, and 481.153, 
directing the governing board to adopt rules as necessary to implement the Smart 
Jobs Fund program, as well as Government Code, Chapter 2001, Subchapter B, 
Rulemaking, setting forth the state agency rulemaking process. Government Code, 
Chapter 481, Subchapter J, is affected by these amendments. 
The proposed amendments focus and clarify the purpose of the program as an 
economic development program, reword definitions for clarity and for consistency 
with statute, and add new definitions necessary to the administration of the 
program. Some non-substantive grammatical corrections have been made. 
Amendments to sec.186.102 clarify the purpose, intent, and goals of the program. 
Amendments to sec.186.104 amend the definitions of consortium and smart job to 
clarify the types of businesses that may form consortia under the program and to 
more accurately reflect the language of Government Code, Chapter 481, Subchapter 
J. The amendments add definitions of high impact economic development project, 
micro-business, and small business to provide for clarity of program 
administration. 
Jim Richardson, Director of the Smart Jobs Program, has determined that for each 
year of the first five years that the proposed amendments are in effect no 
additional cost to the state and to local governments, no reductions in costs to 
the state and to local governments, and no loss or increase in revenue to the 
state or to local governments is expected as a result of enforcing or 
administering the amendments, and that enforcing or administering the amendments 
does not have foreseeable implications relating to cost or revenues of the state 
or local governments. 
Mr. Richardson has further determined that there is no probable cost to persons 
required to comply with the amendments, other than any resources used to 
complete a Smart Jobs Fund application by businesses that voluntarily 
participate in the program. Mr. Richardson has determined that the public 
benefits expected as a result of adopting the proposed amendments include 
increased economic growth, more equitable distribution of program grant funds, 
and more efficient program administration. 
Written comments on the proposed amendments may be addressed to Mr. Richardson 
at the department, P.O. Box 12728, Austin, TX 78711-2728, or delivered to 1700 
N. Congress Avenue, Austin, TX 78701. Comments may be faxed to Mr. Richardson at 
(512) 936-0415. No comments received before publication of the proposed 
amendments in the Texas Register or later than 30 days after the date of 
publication will be considered.

sec.186.102.Purpose. 
The Smart Jobs Fund is established as <nl>an economic development <ol> [a 
business incentive] program<nl>. The goal of the program is to aid in the 
expansion, retention, and location of businesses by providing training 
opportunities that result in the creation and retention of smart jobs<ol> [and 
to enhance employment opportunities for Texans by fostering the development of 
jobs that include wages, benefits, opportunity for advancement, and job security 
in accordance with the program. It is also established to meet the needs of 
existing and new businesses in this state by assisting them in improving the 
overall education and skill levels of their work forces].

sec.186.104. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
Authorized employer representative--An individual authorized to bind the company 
under the terms of the contract. 
Benefits--Perquisites paid by an employer to an employee, either voluntarily or 
by collective bargaining agreement, in addition to the employee's wages. 
Classroom training--Training provided by an instructor to a group of trainees on 
a predetermined structured curriculum. 
Community-based organization--A public or private nonprofit entity authorized to 
do business within the State of Texas and exempt from taxation under the United 
States Internal Revenue Code, Section 501(c), and which has as a purpose of the 
organization providing education, employment, or training services.
Competencies--The level of skills that the employer determines to be necessary 
for the participant to successfully perform a specific job. This includes the 
employer's measures of the participant's expected learning gains or skill 
mastery for which they are being trained. Such competencies may be specified by 
the employer, by industry associations, or by inclusion in courses approved by 
the Texas Higher Education Coordinating Board, and be consistent with ISO 9000 
certification standards, or other credible sources acceptable to the employer as 
evidenced by their inclusion in the application. The employer's measures shall 
be consistent with specifications in its business plan as essential to the 
business' competitiveness. 
Completed application--A document submitted by an applicant on the forms 
provided by the Department that provides the information specified in 
sec.186.302 of this title (relating to Application Requirements) in sufficient 
detail as determined by the department to write a contract for a grant awarded 
under this chapter.
Consortium--A group that undertakes a training project <nl> for large 
businesses, small businesses, or a combination of small and large 
businesses,<ol> in which all or most of training will be the same for each 
employer. A lead entity will normally assume responsibility for preparing and 
submitting the grant application and for being the grant administrator. The lead 
entity may be one of the employers, a provider or other entity acceptable to the 
department.
Contract--The written legally binding obligation between the department, each 
employer, providers, guarantors, and administrative entities which may serve as 
a fiscal agent. 
Department--The Texas Department of Economic Development.
Employer organization--An organization funded by a group of employers that 
provides employment based training. 
Existing job--A position for which there has been an incumbent employee or a job 
opening for more than one year prior to the date the project is scheduled to 
begin. 
Full-time employment--Employment of at least 35 hours a week for a single 
employer, including normal days not worked by an employee such as a weekend or 
holiday. 
Governing Board--The existing board of the Texas Department of Economic 
Development. 
<nl>High impact economic development project<ol><nl>--A project or projects that 
the Department determines will result in a significant benefit to a community, 
region, or the State. Factors that may be considered in determining whether a 
project qualifies as a high impact economic development project include industry 
multipliers, cost-benefit models, jobs to be created, and capital investment. 
<ol>
In-kind contribution--A noncash contribution of goods and/or services provided 
by an employer as all or part of the employer's matching share of a grant or 
project. 
Job-related basic skills--The knowledge and abilities necessary to communicate 
and to function effectively in the workplace. These skills must be integrated as 
part of the job-related occupational skills training curricula and must be 
consistent with the requirements of the employer's business plan. Such skills 
may include reading, writing, mathematics, English as a Second Language, and 
Spanish as a Second Language if these skills are necessary for the job in which 
the participant will be employed at the end of the project consistent with the 
employer's certification.
Job-related occupational skills--The knowledge and abilities the employer 
specifies as necessary to perform the duties and tasks required for a specific 
job. These skills specifications shall be consistent with the requirements of 
the employer's business plan. 
Labor organization--Any organization of any kind, or any agency or employee 
representation committee or plan in which employees participate and which exists 
for the purpose, in whole or in part, of dealing with one or more employers 
concerning grievances, labor disputes, wages, rates of pay, hours of employment, 
or conditions of work.
Local labor market--One of many geographic areas of the State for which 
standardized occupational wage data is available from the Texas Workforce 
Commission.
Matching costs--The dollar value of the private contributions from the employer 
required under Smart Jobs Fund, whether they be dollar contributions or in-kind 
contributions. 
<nl>Micro-business<ol><nl>--A small business with 20 employees or less. <ol>
Minority employer status for application purposes--Minority group members 
include African-Americans, American Indians, Asian-Americans, Mexican-Americans 
and other Americans of Hispanic origin, and women. 
New job--A position which did not exist in this state in the employer's business 
and which had no incumbent employee for more than one year prior to the date the 
project is scheduled to begin. This may include an employee in an existing job 
who is being retrained for anew job with new skill requirements. 
On-the-job training--Structured training by instruction and supervision during a 
period of time a trainee works on the job. 
Prevailing wage--The average hourly wage paid for a specific occupation within a 
local labor market area and [is] based on the most current information provided 
by the Texas Workforce Commission. 
Program expenses--The costs incurred by the department for its operation of the 
program, which are not included in the cost of specific projects. 
Project--A specific employment training activity for which an employer developed 
and implemented a plan and entered into a contract under the Texas Government 
Code, Subchapter J, Section 481.151 et seq. 
Provider--A person or entity that provides employment-related training. The term 
includes employers, employer associations, labor organizations, community-based 
organizations, training consultants, public and private schools, community 
colleges, senior colleges, universities, technical colleges, and other higher 
education entities as defined in the Education Code, Section 61.003, and 
proprietary schools as defined in the Education Code, Section 32.11. 
Reimbursable costs--Those expenses in a training project that are reimbursed by 
a grant from the fund. Costs related to direct training and administrative costs 
for a project are reimbursable costs. 
<nl>Small Business<ol><nl>--A business that has fewer than 100 employees or less 
than $1 million in annual gross receipts.<ol>
<nl>Smart Job<ol>--A job that is a family wage job, a [ demand job, a job in] 
manufacturing <nl>job<ol>, [or] a job in an emerging occupation<nl>, or a job in 
a demand occupation that promotes high-skill, high-wage jobs in high-technology 
areas<ol>.
Subcontract--A written agreement between an applicant and a provider or 
administrative entity that is signed before a project has been approved and a 
grant awarded which details the rights and responsibilities of each party to the 
agreement. This can include the designation of a provider or administrative 
entity as a fiscal agent. 
Technological change--An advance in product design or production technique that 
enhances production efficiency or product performance. 
Total project cost--The sum of costs related to direct training plus 
administrative costs funded by a grant awarded under this chapter.
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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800406
W. Lane Lanford
Chief Administrative Officer
Texas Department of Economic Development
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 936-0181

SUBCHAPTER C.Application for Grants
10 TAC 186.301, 186.302, 186.305-186.308
The Texas Department of Economic Development (department) proposes amendments to 
the Smart Jobs Fund Rules, Subchapter C. Application for Grants, 
sec.sec.186.301, 186.302, and 186.305-186.308. The amendments are proposed 
pursuant to Government Code sec.sec.481.0044(a), authorizing the governing board 
of the department to adopt rules necessary for the administration of department 
programs, and 481.153, directing the governing board to adopt rules as necessary 
to implement the Smart Jobs Fund program, as well as Government Code, Chapter 
2001, Subchapter B, Rulemaking, setting forth the state agency rulemaking 
process. Government Code, Chapter 481, Subchapter J, is affected by these 
amendments. 
The proposed amendments clarify grant eligibility requirements, provide per 
employee training cost caps, clarify information required from training 
consortia, clarify permissible travel costs, provide for division of funds into 
categories and dedication of funds for high impact economic development 
projects, and provide for quarterly allocation of funds and scoring of 
applications. Some language has been changed to more accurately reflect 
statutory language and statutory intent. Some organizational changes and non-
substantive grammatical corrections have been made. 
Amendments to sec.186.301 provide cost per job caps for businesses that receive 
grant funds under the program. 
Amendments to sec.186.302 clarify the information required in the application 
regarding the size of the business or businesses applying for grant funds and 
whether the employer would provide the training regardless of whether grant 
funds were awarded. The amendments also clarify the amount of grant funds that 
may be expended for travel. 
Amendments to sec.186.305 clarify the application review process, provide that 
the executive director will attempt to award 50% of funds to small businesses 
and may dedicate up to 10% of funds for high impact economic development 
projects, and provide for funding of consortiums made up of both large and small 
businesses. Amendments to sec.186.306 provide for scoring of applications 
quarterly on a competitive basis. 
Amendments to sec.sec.186.307 and 186.308 are grammatical changes or changes 
that more accurately reflect current program practices. 
Jim Richardson, Director of the Smart Jobs Program, has determined that for each 
year of the first five years that the proposed amendments are in effect no 
additional cost to the state and to local governments, no reductions in costs to 
the state and to local governments, and no loss or increase in revenue to the 
state or to local governments is expected as a result of enforcing or 
administering the amendments, and that enforcing or administering the amendments 
does not have foreseeable implications relating to cost or revenues of the state 
or local governments. 
Mr. Richardson has further determined that there is no probable cost to persons 
required to comply with the amendments, other than any resources used to 
complete a Smart Jobs Fund application by businesses that voluntarily 
participate in the program. Mr. Richardson has determined that the public 
benefits expected as a result of adopting the proposed amendments include 
increased economic growth, more equitable distribution of program grant funds, 
and more efficient program administration. 
Written comments on the proposed amendments may be addressed to Mr. Richardson 
at the department, P.O. Box 12728, Austin, TX 78711-2728, or delivered to 1700 
N. Congress Avenue, Austin, TX 78701. Comments may be faxed to Mr. Richardson at 
(512) 936-0415. No comments received before publication of the proposed 
amendments in the Texas Register or later than 30 days after the date of 
publication will be considered.

sec.186.301. Eligibility. 
(a) The department shall evaluate applications submitted by one or more 
employers or by one or more employer organizations, labor organizations, 
community-based organizations or providers acting in partnership with one or 
more employers. Only businesses that have been in operation for at least one 
year are eligible to receive a grant. An employer that is rendering services to 
a Smart Jobs Fund contractor and receiving grant monies for these services is 
not eligible to receive a grant during the contract period. All businesses must 
demonstrate financial soundness and fulfillment of state tax obligations before 
they can receive a grant from the department. 
(b) The cost per job is calculated by dividing the total project cost by the 
number of jobs. <nl>The cost per job may not exceed $1,200 per trainee for a 
large business or $2,500 per trainee for a small business.<ol>
<nl>(c)<ol> <nl>Unless one of the conditions set forth in sec.481.155(a)(1-6) is 
met, grants awarded by the department shall meet the following two tests: the 
combination of grants in any fiscal year to a single employer may not exceed 
$1,500,000, and no grant or combination of grants in any fiscal year to a single 
employer may exceed 10% of the median annual wages of the new or existing jobs 
being created or retained with the grant.<ol>

sec.186.302 Application Requirements. 
(a) One or more employers; one or more employers acting in partnership with an 
employer organization, labor organization, or community-based organization; or 
one or more employers acting in partnership with a consortium composed of one or 
more providers may submit an application for a grant under the Smart Jobs Fund:
(b) Employee leasing firms, including firms contracting for temporary employees, 
are not eligible for a grant. Employees obtained from agreements with such firms 
are not eligible to participate as trainees unless the employer complies with 
the applicable certification requirements of this chapter. 
(c) Grant applications must be filed in a form approved by the department and 
must include a complete business and training plan and a project budget with a 
line item breakdown of costs. 
(d) Business and Training Plan. Grant funds awarded hereunder shall pay for job-
related occupational skills training and job-related basic skills training that 
enhance the employer's ability to carry out its business plan. Job-related basic 
skills must be integrated as part of the job-related occupational skills 
training curricula. An approved business and training plan will become part of 
any contract for grant funds awarded. The business and training plan will 
specify project start dates and project end dates. Up to four project periods 
may be specified by the employer. Each business and training plan must contain 
the information required by the Smart Jobs Fund, sec.481.156(b). Each business 
and training plan shall also: 
(1) describe how the proposed training is consistent with, and will enhance the 
employer's ability to carry out, its business plan to retain and increase its 
competitiveness; 
(2) describe the skills training curricula for each project, including the 
number of hours each participant will spend in classroom training, on-the-job 
training, and/or other employer-designed training components, to be funded by 
the grant and specify the training provider for each curricula;
(3) describe the skills and the competencies the employer expects the 
participant to achieve upon completion of training; 
(4) describe the method(s) used to assess each participant's competencies in the 
skills for which the project will train both immediately prior to the start date 
of the project and upon completion of training; 
(5) specify the projected cost per job which is calculated by dividing the total 
Smart Jobs Fund grant amount by the number of jobs;
(6) specify the geographic location, number and kind of jobs that will be 
available at the end of the project and the wages to be paid on completion of 
the project, and 
(7) specify the geographic location of all training to be provided with grant 
funds. All trainee travel will be specified in the proposed budget. All trainee 
travel outside the geographic location in which the employer is located and all 
trainee travel to locations outside of Texas will be at the discretion of the 
executive director as specified in the contract. No trainee travel will be 
reimbursed from grant funds for any purpose other than training as specified in 
the employer's business and training plan. 
(e) The application shall include the following information:
(1) whether the employer is a small business [with less than 100 employees or $1 
million or less in annual gross receipts] or a micro-business [with 20 employees 
or less]; [and]
(2) whether the employer is a minority group member, and if so, to which 
minority group the employer belongs<nl>;<ol>[
<nl>(3)<ol> <nl>if the application is from a consortium, the number of 
businesses that are small businesses, micro-businesses, and large businesses and 
the number of employees to be trained for each; and <ol>
<nl>(4)<ol> <nl> whether the employer would provide the training but for the 
Smart Jobs grant funds. <ol>
(f) Budget. Each application shall include a budget with line item breakdown of 
costs consistent with the requirements of the Smart Jobs Fund and these rules. 
The budget shall include three parts: 
(1) specification of costs related to direct training; 
(2) specification of administrative costs; 
(3) specification of matching contributions. An approved budget with line item 
breakdown of costs will become part of any contract for grant funds awarded 
hereunder. 
(A) Costs related to direct training may include: tuition; fees; books and 
classroom materials; instructor wages and salaries and reasonable benefits if 
the instructor is not an employee of a public education institution if grant 
funds are paying tuition and fees; instructor and trainee travel and per diem 
outside the employer's specified region of the state (limited to 10% of the 
[total] <nl>other direct-related training<ol> costs [related to direct 
training]) with per diem expenses not to exceed the State of Texas allowable 
rates; reasonable equipment lease or rental costs during the term of the 
project; reasonable costs of pre- and post-training participant assessment, 
costs of purchasing approved curricula specified in the applicant's business and 
training plan if there is not already a course offering at a convenient public 
education institution for which the grant is paying tuition and fees; wages, 
salaries, and reasonable benefits of instructional aides and trainees' 
counselors if such personnel are not employees of a public education institution 
if grant funds are paying tuition and fees; and other such reasonable costs 
related to direct training. 
(B) Reimbursement for costs related to direct training will not include the 
lease, rental, purchase, or construction of facilities, the purchase of capital 
equipment, salaries, wages, or benefits paid to personnel assigned to manage or 
report on the project or the contract agreement. 
(C) Administrative costs may include the lease or rental of facilities except 
those facilities belonging to public education institutions where the curriculum 
specified in the business and training plan will be provided and for which the 
grant is paying tuition and fees; salaries, wages, and reasonable benefits paid 
to personnel assigned to manage or report on the project or the contract 
agreement; and other such reasonable expenses not included in costs related to 
direct training as are necessary to the successful completion of the project. 
Administrative costs are limited to 10% of costs related to direct training 
incurred by the training project(s). 
(D) Employers with fewer than 50 employees receiving a grant must provide a 
matching amount of private funds in an amount at least equal to 10% of the total 
project cost. Projects that provide significant economic benefits to an entire 
region of the state may have all matching requirements waived at the discretion 
of the executive director. Such projects must provide information describing the 
region to which benefits will accrue and projected economic information which 
may include other relevant macroeconomic and microeconomic data that shows 
positive effects on the region's average weekly wage, tax base, employment 
rates, family income, purchasing power, expenditures on unemployment insurance, 
Aid to Families with Dependent Children, Medicaid, and other public assistance, 
and the availability of job openings in demand, emerging, or manufacturing 
occupations. Employers may meet matching requirements by providing in-kind 
contributions. Documentation for in-kind contributions which are submitted as 
part of the employer's match must specify the dollar value of facilities, 
equipment, personnel, and consumable supplies contributed to the project. New 
equipment will be valued at cost. Existing equipment and facilities will be 
valued on a pro rata basis for the time used for training consistent with the 
United States Internal Revenue Service depreciation schedules for such assets 
based on data provided by the employer. Personnel contributions will be valued 
on a pro rata basis for the time spent on the project. In-kind contributions may 
not include the value of facilities, equipment, or personnel existing in public 
education institutions where such resources already are available to the 
employer as part of the institution's course offerings and for which the grant 
is paying tuition and fees. In-kind contributions may match either costs related 
to direct training or administrative costs. The sum of costs related to direct 
training and administrative costs will be used to determine the total matching 
costs required for any grant awarded. 
(E) The Smart Jobs Fund may reimburse nominal and reasonable costs of preparing 
an application for small and micro-businesses and shall not reimburse an 
applicant or any employer for retroactive training costs incurred prior to the 
start date of the contract. 
(g) Application process and time line. 
(1) Any eligible entity desiring to request funds from the Smart Jobs Fund shall 
submit an application for funding. 
(2) Within three business days after receiving an oral or written request for an 
application from an applicant, the department shall send an application packet 
to the applicant. 
(3) Within ten business days after receiving an application, the department 
shall notify the applicant whether the application is complete. If the 
application is incomplete, the department shall specify in a letter the 
additional information required to complete the application. With this 
notification to the applicant, the department shall identify a contact person on 
its staff who is available to assist the applicant in completing the 
application. The application will be placed in an inactive status if the 
requested additional information is not received within 30 business days from 
date of notification letter. 
(4) Within 30 business days after an application is complete, the executive 
director will act on the application. In acting on the application, the 
executive director may approve the application and award a grant; approve the 
application pending the award of the grant; disapprove the application; or 
request the applicant to modify all or part of the application. 

sec.186.305. Funding; Grants. 
(a) The executive director shall <nl>evaluate all completed applications to 
determine their eligibility for funding<ol> [attempt to award a grant for all 
approved projects], subject to the availability of funds. To ensure availability 
of funds throughout the fiscal year, <nl> the department shall attempt to ensure 
that 50% of the money spent under the program shall be used for small 
businesses. The<ol> [the] executive director <nl>will<ol> [may] award grants 
based on a quarterly allocation of funds. In deciding which projects to fund, 
the executive director shall be guided by the funding priorities <nl>and the 
scores achieved by each application as<ol> set forth [below] in Section 186.306 
of this title (relating to Funding Priorities). 
(b) <nl>To meet the legislative priorities and goals established for the 
program, the executive director may divide the funds appropriated for the 
program into separate categories. This includes funding categories for large 
businesses, small businesses, and for high impact economic development projects. 
At the beginning of each fiscal year, beginning September 1, 1998, the executive 
director may dedicate up to 10% of the total grant funding available to the 
program to fund high impact economic development projects<ol> [In June of each 
year, the Policy Board shall review the funding priorities set forth below in 
Section 186.306 and advise the executive director about changes to those 
priorities]. 
<nl>(c)<ol> <nl> If an application is from a consortium comprised of large and 
small businesses, funding for the large business trainees will originate from 
the large business funding category, as defined under subsection (b) of this 
section, and funding for small business trainees will originate from the small 
business category, as defined under subsection (b) of this section. In the event 
that no funds are available in the large business funding category, the 
consortium may be funded from the small business funding category provided that 
at least 51% of the employees being trained are from small businesses.<ol>

sec.186.306. Funding Priorities. 
(a) <nl>Program<ol> [Only program] objectives and priorities outlined in the 
Smart Jobs Fund Act and General Provisions <nl> and these rules<ol> will be 
considered in evaluating applications for funding<nl>.<ol> [, including:] 
[(1) At least 60% of the money spent under the program shall be used for 
projects that assist existing employers.] 
[(2) Shall attempt to ensure that 50% of the money spent under the program shall 
be used for projects that assist employers with fewer than 100 employees or less 
than $1 million in annual gross receipts.]
[(3) Shall attempt to ensure that 20% of the money spent under the program be 
used for projects that assist minority employers.]
[(4) Shall to the greatest extent practical spend money from the smart jobs fund 
in all areas of the state.] 
(b) The department will develop a scoring mechanism to be used for <nl>scoring 
applications on a competitive basis by quarter. Applications not funded may be 
considered in the following quarter, except for applications received in the 
last quarter of each fiscal year. No application will be considered for funding 
after two quarterly allocations. The scoring mechanism will determine which 
applications will be funded during each allocation period.<ol> [businesses, with 
100 or more employees and greater than $1 million in annual gross receipts that 
gives priority to funding applications] <nl>The scoring mechanism will include, 
but will not be limited to<ol> [based on] the following criteria: 
(1) business status, including <nl>small businesses,<ol> minority businesses, 
<nl>and<ol> existing businesses[, and businesses located in an Enterprise Zone]; 
(2) [statewide] distribution of <nl>funds including providing funds to all areas 
of the state, to under-served areas <ol> [businesses receiving grants under the 
program] and <nl> to <ol> first-time <nl>applicants<ol>[grantees]; 
(3) <nl>business impact such as the economic impact of the project on the 
community, region, and the State. Factors to be considered include the amount of 
capital investment and number of jobs created or retained relative to the 
population of the area<ol>[the regional impact of the project, the international 
impact, and involvement in defense conversion activities
(4) <nl>business type including whether it is a base industry to the community 
and an industry targeted by the State of Texas; <ol> 
<nl>(5)<ol> the quality of the jobs <nl>to be created or retained as a result of 
the training. This includes those jobs that are family wage jobs, in 
manufacturing occupations, in emerging occupations, or jobs in a demand 
occupation that provides high-skill, high-wage jobs in high-technology 
areas;<ol> [including manufacturing occupations and occupations in technological 
areas, wage levels, benefits, and whether the trainees are Texas residents 
formerly sentenced to the institutional division of the state jail division of 
the Texas Department of Criminal Justice.] 
<nl>(6)<ol> <nl> the factors set forth in Government Code, Section 481.155(a)(1) 
through (5); <ol>
<nl>(7)<ol> <nl> the employer's certification that the training to be funded 
would not be provided but for Smart Jobs funding; and <ol>
<nl>(8)<ol> <nl> whether the recipients of the job training are Texas residents, 
including residents formerly sentenced to the institutional division of the 
state jail division of the Texas Department of Criminal Justice. <ol>
<nl>(b)<ol> <nl> In June of each year, the Governing Board shall review the 
funding priorities set forth in this section and advise the executive director 
about changes to those priorities. <ol>

sec.186.307. Provider Eligibility.
An employer that has a contract under the Smart Jobs Fund <nl>cannot <ol> [can 
not] receive Smart Jobs fund grant monies for services rendered to another Smart 
Jobs Fund contractor during the contract period.

sec.186.308. Contracts and Contract Amendments.
(a) The department shall enter into a contract with each employer or employer 
designee participating in the project. Contract amendments must be requested in 
writing at least 30 days prior to the <nl>implementation of the<ol> proposed 
changes [and must be executed before changes are implemented]. Acceptance of the 
requested amendment is within the discretion of the executive director of the 
department. Amendments will not be made during the final quarter of the training 
project. Contracts and contract amendments will be executed by the authorized 
employer's representative and the department executive director or executive 
director designee. 
(b) Within 30 calendar days after the expiration of the 90-day retention period 
for each project, the employer shall submit to the department for verification 
the employment records for each trainee and other such data as the department 
may require to verify training and employment. 
(c) If all trainees specified in each project have been retained in employment 
90 days subsequent to that project end date and have successfully achieved the 
skills and competencies, wage requirements, and other contractual obligations, 
the amount of allowable expenditures withheld shall be remitted to the 
employer(s). Notwithstanding any other provision of these rules, an attrition 
rate of 15% is allowed based on the total number of jobs as outlined in the 
contract. The executive director may approve different numerical caps for micro-
businesses only based on one of the following requirements: The employer must 
certify: 
(1) that it is required to reduce or eliminate the employer's work force because 
of reductions in overall employment within an industry; or 
(2) that a substantial change in the skills required to continue the employer's 
business exists because of technological changes; or 
(3) that other reasonable factors, as determined by the executive director, 
exist.
(4) Attrition is verified 90 days after the end of the contract or 90 days after 
the end of each project period as defined in the contract. For attrition beyond 
the level specified in the contract, allowable expenditures will be reduced for 
each trainee who is not retained in employment at the end of the 90-day 
retention period by the amount of the average per-trainee training costs for a 
trainee. If there is a negative balance, the employer is liable for the amount 
of the negative balance and shall remit that amount to the department not later 
than the 30th day after the date of correspondence on which the employer is 
notified of the negative balance by the department.
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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800405
W. Lane Lanford
Chief Administrative Officer
Texas Department of Economic Development
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 936-0181

TITLE 16. ECONOMIC REGULATION
PART I. Railroad Commission of Texas
CHAPTER 3.Oil and Gas Division
Conservation Rules and Regulations
16 TAC sec.3.50
The Railroad Commission of Texas proposes an amendment to sec.3.50, relating to 
Enhanced Oil Recovery Projects - Approval and Certification for Tax Incentive. 
The proposed amendments conform the rule to Texas Tax Code, sec.202.054, as 
required by Senate Bill 582, 75th Legislature, Regular Session, which extends 
the deadline for applying for certification for a tax incentive for new and 
expanded enhanced oil recovery (EOR) projects from January 1, 1998, until 
January 1, 2008. 
The proposed amendments to sec.3.50 amend subsection (c)(5) by adding a 
provision to the definition of EOR project to clearly indicate that pressure 
maintenance and water disposal projects are excluded from coverage by this 
section. 
The proposed amendments to subsection (c)(6) delete the unnecessary references 
to past active operation commencement deadlines. 
The proposed amendments to subsection (c)(13) add a descriptive provision to the 
definition of pressure maintenance which states, "wherein fluid injection 
volumes are approximately equal to fluid withdrawals and no attempt is made to 
refill pre- existing reservoir voidage or to displace in situ hydrocarbons."
Proposed new subsection (c)(20) defines water disposal project as that term is 
excluded from coverage in amended subsection (c)(5).
The exclusion from coverage for pressure maintenance operations was previously 
contained in sec.3.50 (commonly referred to as Statewide Rule 50), but was 
inadvertently deleted during revisions made in 1991; however, the exclusion of 
pressure maintenance operations has always been enforced by the commission. 
Likewise, the exclusion of water disposal projects has always been enforced by 
the commission and is being included in revised subsection (c)(5) for 
clarification. The proposed amendments to subsection (d)(1) delete the 
unnecessary references to past active operation commencement deadlines and add 
the qualification of "EOR project and area designation" to indicate the 
appropriate application. Additionally, the application deadline, extended from 
January 1, 1998, to January 1, 2008, by Senate Bill 582, is corrected in 
subsections (d)(1) and (i)(1). The proposed amendments add "injection history" 
to subsection (d)(2) as an example of relevant information to be included with 
the application. The proposed amendments to subsection (e) remove unnecessary 
language regarding separate filings and clarify the procedure for filing 
concurrent applications. The proposed amendments to subsection (g)(1)(A) delete 
unnecessary references to the past active operation commencement deadlines. 
Subsection (g)(2) is amended by adding "injection graphs" and "supporting 
tabular" data as information required to be submitted with the positive 
production response certificate application. 
The proposed amendments to subsection (i) require that an application for 
reduced or enlarged project area certification be filed prior to the filing of 
an application for positive production response certification to ensure that 
only one application for positive production response certification per project 
will be filed. 
Rita E. Percival, planner, Oil and Gas Division, has determined that there will 
be no fiscal implications for state or local government as a result of enforcing 
or administering the amended rule. The amended rule merely extends the tax 
exemption which is currently afforded to qualified EOR projects. There will be 
no cost of compliance with the amended rule for small businesses. In fact, there 
should be a reduction of the tax burden on all operators establishing new and 
expanded EOR projects and increased production from many of Texas' more mature 
oilfields resulting from this tax-saving incentive. 
Mickey R. Olmstead, hearings examiner, Office of General Counsel, has determined 
that, for each year that the amendments are in effect, the public benefit 
anticipated as a result of adopting the amendments will be a reduction of the 
tax burden as previously stated. 
Comments may be submitted to Mickey R. Olmstead, Hearings Examiner, Office of 
General Counsel, Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 
78711-2967. Comments will be accepted for 30 days after publication in the Texas 
Register. All comments should refer to Oil and Gas Docket Number 20-0217580. For 
further information, please call Mickey Olmstead at (512) 463-6923. 
The commission proposes the amendments pursuant to Texas Natural Resources Code, 
sec.sec.81.051, 81.052, 85.042, 85.201, 85.202, 86.041 and 86.042, which 
authorize the commission to prevent waste of oil and gas and to protect 
correlative rights. 
Texas Tax Code, sec.sec.202.051-202.054, and Texas Natural Resources Code, 
sec.sec.101.001 - 101.052, are affected by the proposed amendments.

sec.3.50.Enhanced Oil Recovery Projects-Approval and Certification for Tax 
Incentive. 
(a)-(b) (No change.) 
(c) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1)-(4) (No change.) 
(5) Enhanced oil recovery project (EOR)--The use of any process for the 
displacement of oil from the reservoir other than primary recovery and includes 
the use of an immiscible, miscible, chemical, thermal, or biological process. 
<nl>This term does not include pressure maintenance or water disposal 
projects.<ol> 
(6) Existing enhanced recovery project--An EOR project that <nl>has begun<ol> 
[began] active operation [before September 1, 1989, or began active operation 
between September 1, 1989, and September 1, 1991,] but was not approved <nl>by 
the commission<ol> as a new EOR project. 
(7)-(12) (No change.) 
(13) Pressure maintenance--The injection of fluid into the reservoir for the 
purpose of maintaining the reservoir pressure at or near the bubble point or 
other critical pressure <nl>wherein fluid injection volumes are not sufficient 
to refill existing reservoir voidage and displace oil that would not be 
displaced by primary recovery operations<ol>. 
(14)-(18) (No change.) 
(19) Tertiary recovery project--An EOR project using a tertiary recovery method 
(as defined in the federal June 1979 energy regulations referred to in the 
Internal Revenue Code of 1986, sec.4993, or approved by the United States 
secretary of the treasury for purposes of administering the Internal Revenue 
Code of 1986, sec.4993, without regard to whether that section remains in 
effect) including those listed as follows<nl>:<ol>[
(A)-(I) (No change.) 
<nl>(20)<ol> <nl> Water disposal project--The injection of produced water into 
the reservoir for the purpose of disposing of the produced water wherein the 
water injection volumes are not sufficient to refill existing reservoir voidage 
and displace oil that would not be displaced by primary recovery operations. 
<ol>
(d) Application requirements. To qualify for the recovered oil tax rate the 
operator must: 
(1) [for a new EOR project, ]submit an application for approval on the 
appropriate form [on or after September 1, 1989, and] before January 1, 
<nl>2008<ol> [1998]. [For an expansion of an existing EOR project, the operator 
must submit an application for approval on the appropriate form on or after 
September 1, 1991, and before January 1, 1998. An application may be filed on or 
after the applicable date (September 1, 1989, or September 1, 1991) in this 
paragraph, even if a separate application for approval of the project has 
already been filed prior to that date.] All applications must be filed <nl>at 
the commission's Austin office<ol> [in Austin]. The form shall be executed and 
certified by a person having knowledge of the facts entered on the form. If an 
application is already on file under the Natural Resources Code, Chapter 101, 
Subchapter B, or for approval as a tertiary recovery project for purposes of the 
Internal Revenue Code of 1986, sec.4993, the operator may file a new <nl>EOR 
project and area designation<ol> application if the active operation of the 
project does not begin before the application under this section is approved by 
the commission; 
(2) submit all necessary forms to the Oil and Gas Division and provide the 
commission with any relevant information required to administer this section 
such as: area plats showing the proposed project area and all injection and 
producing wells within the area, production <nl>and injection <ol> history, 
planned enhanced oil recovery procedures, and any other pertinent data; 
(3)-(4) (No change.) 
(e) Concurrent applications. The operator may <nl>file<ol> [apply] concurrently[ 
or separately for]: 
(1) <nl>an application for<ol> approval of a new or expanded EOR project under 
this section<nl>, together with<ol>; 
(2) <nl>an application for<ol> approval of a unitization agreement for purposes 
of carrying out the enhanced oil recovery project under the Natural Resources 
Code, sec.sec.101.001 et seq.; <nl>or<ol> [and] 
(3) <nl>an application for<ol> approval [of an application] for certification of 
the project as a tertiary recovery project. 
(f) (No change.) 
(g) Approval and certification. 
(1) Project approval. In order to be eligible for the recovered oil tax rate as 
provided in the Tax Code, sec.202.052(b), the operator must apply for and be 
granted commission approval of a new EOR project or an expansion of an existing 
EOR project, prior to commencing active operation of the new project or expanded 
project. For a project to be approved the operator must:
[(A) for a new project prove that the project will begin active operation on or 
after September 1, 1989, or for the expansion of an existing project prove that 
the project will begin active operation on or after September 1, 1991;] 
<nl>(A)<ol>[(B)] prove that it qualifies as an EOR project; 
<nl>(B)<ol>[(C)] designate the area to be affected by the project and obtain 
commission approval of the designation; and 
<nl>(C)<ol>[(D)] if production from the wells within the project area is 
reported with production from wells not in the project area, designate the 
method to account for and report production from the project area. 
(2) Positive production response certificate. 
(A) (No change.) 
(B) The application for positive response certification shall include: 
(i) production <nl>and injection<ol> graphs <nl>with supporting tabular<ol> 
[and] data illustrating a positive production response and volumes of water or 
other substances that have been injected on the designated area since the 
initiation of the new [EOR project] or the expanded EOR project; 
(ii)-(iii) (No change.) 
(C) (No change.) 
(h) Annual reporting. 
(1) The operator must file an annual report on the appropriate form with the Oil 
and Gas Division each year the project remains eligible for the reduced 
severance tax rate. This form must be filed within 30 days of the <nl>first<ol> 
anniversary of the certification date of positive production response and 
annually thereafter. 
(2) (No change.) 
(i) Reduced or enlarged areas. The operator may apply for reduced or enlarged 
project area certification if: 
(1) the [original] application for <nl>reduction or enlargement of the<ol> 
project [approval] is received before January 1, <nl>2008<ol> [1998]; and 
(2) the application for reduction or enlargement is received <nl> prior to the 
filing of an application for positive production response certification of the 
original enhanced oil recovery project<ol> [no later than three years after the 
original approval of a secondary recovery project or five years after the 
original approval of a tertiary recovery project]. 
(j) (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.
Filed with the Office of the Secretary of State, on
January 7, 1998.
TRD-9800210
Mary Ross McDonald
Deputy General Counsel, Office of General Counsel
Railroad Commission of Texas
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 463-7008

TITLE 22. EXAMINING BOARDS
PART XXIII. Texas Real Estate Commission
CHAPTER 537.Professional Agreements and Standard Contracts
Professional Agreements and Standard Contracts
22 TAC sec.537.11, sec.537.42
The Texas Real Estate Commission (TREC) proposes amendments to sec.537.11, 
concerning use of standard contract forms, and sec.537.42, which adopts by 
reference an agreement for mediation. The amendment to sec.537.11 would modify 
the list of standard contract forms promulgated by TREC to include a revised 
version of an agreement for mediation. The agreement for mediation has been 
revised by the Texas Real Estate Broker-Lawyer Committee to clarify that the 
agreement survives the closing of the real estate transaction, enabling the 
parties to rely upon the agreement before resorting to litigation. The agreement 
for mediation also has been rewritten to reflect nonsubstantive changes in voice 
and style used in more recently promulgated contract forms. The amendment to 
sec.537.42 adopts the revised agreement for mediation by reference. Adoption of 
the amendments is necessary to clarify that the agreement for mediation also 
applies to disputes which may arise after closing and to make the agreement for 
mediation consistent with other forms promulgated by TREC. 
Mark A. Moseley, general counsel, has determined that for the first five-year 
period the sections are in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the sections. 
There is no anticipated impact on local or state employment as a result of 
implementing the sections. 
Mr. Moseley also has determined that for each year of the first five years the 
sections as proposed are in effect the public benefit anticipated as a result of 
enforcing the sections will be a possible increase in the use of mediation in 
real estate transactions as an alternative to litigation. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the proposed sections. 
Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, 
Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. 
The amendments are proposed under Texas Civil Statutes, Article 6573a, sec.5(h), 
which authorize the Texas Real Estate Commission to make and enforce all rules 
and regulations necessary for the performance of its duties.
The statute that is affected by these sections is Texas Civil Statutes, Article 
6573a. 

sec.537.11.Use of Standard Contract Forms.
(a) Standard Contract Form TREC Number 9-3 is promulgated for use in the sale of 
unimproved property where intended use is for one to four family residences. 
Standard Contract Form TREC Number. 10-2 is promulgated for use as an addendum 
concerning sale of other property by a buyer to be attached to promulgated forms 
of contracts. Standard Contract Form TREC Number 11-3 is promulgated for use as 
an addendum to be attached to promulgated forms of contracts which are second or 
"back-up" contracts. Standard Contract Form TREC Numbere 12-1 is promulgated for 
use as an addendum to be attached to promulgated forms of contracts where there 
is a Veterans Administration release of liability or restoration entitlement. 
Standard Contract Form TREC Number 13-1 is promulgated for use as an addendum 
concerning new home insulation to be attached to promulgated forms of contracts. 
Standard Contract Form TREC Number 15-2 is promulgated for use as a residential 
lease when a seller temporarily occupies property after closing. Standard 
Contract Form TREC Number. 16-2 is promulgated for use as a residential lease 
when a buyer temporarily occupies property prior to closing. Standard Contract 
Form 20-3 is promulgated for use in the resale of residential real estate where 
there is all cash or owner financing, an assumption of an existing loan, or a 
conventional loan. Standard Contract Form TREC Number 21-3 is promulgated for 
use in the resale of residential real estate where there is a Veterans 
Administration guaranteed loan or a Federal Housing Administration insured loan. 
Standard Contract Form TREC Number 23-2 is promulgated for use in the sale of a 
new home where construction is incomplete. Standard Contract Form TREC Number 
24-2 is promulgated for use in the sale of a new home where construction is 
completed. Standard Contract Form TREC Number 25-2 is promulgated for use in the 
sale of a farm or ranch. Standard Contract Form TREC Number 26-2 is promulgated 
for use as an addendum concerning seller financing. Standard Contract Form TREC 
Number 28-0 is promulgated for use as an addendum to be attached to promulgated 
forms of contracts where reports are to be obtained relating to environmental 
assessments, threatened or endangered species, or wetlands. Standard Contract 
Form TREC Number 29-0 is promulgated for use as an addendum to be attached to 
promulgated forms of contracts where an abstract of title is to be furnished. 
Standard Contract Form TREC Number 30-1 is promulgated for use in the resale of 
a residential condominium unit where there is all cash or seller financing, an 
assumption of an existing loan, or a conventional loan. Standard Contract Form 
TREC Number 31-1 is promulgated for use in the resale of a residential 
condominium unit where there is a Veterans Administration guaranteed loan or a 
Federal Housing Administration insured loan. Standard Contract Form TREC Number 
32-0 is promulgated for use as a condominium resale certificate. Standard 
Contract Form TREC Number 33-0 is promulgated for use as an addendum to be added 
to promulgated forms of contracts in the sale of property adjoining and sharing 
a common boundary with the tidally influenced submerged lands of the state. 
Standard Contract Form TREC Form Number 34-0 is promulgated for use as an 
addendum to be added to promulgated forms of contracts in the sale of property 
located seaward of the Gulf Intracoastal Waterway. Standard Contract Form TREC 
Number<nl> 35-1<ol> [35-0] is promulgated for use as an addendum to be added to 
promulgated forms of contracts as an agreement for mediation. Standard Contract 
Form TREC Form Number 36-0 is promulgated for use as an addendum to be added to 
promulgated forms in the sale of property subject to mandatory membership in an 
owners' association. Standard Contract Form TREC Form Number 37-0 is promulgated 
for use as a resale certificate when the property is subject to mandatory 
membership in an owners' association. 
(b)-(j) (No change.)

sec.537.42. Standard Contract Form TREC Number <nl>35-1<ol> [35-0].
The Texas Real Estate Commission adopts by reference standard contract form TREC 
No. <nl>35-1<ol> [35-0] approved by the Texas Real Estate Commission in 
<nl>1998<ol> [1994]. This document is published by and available from the Texas 
Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188.
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.
Filed with the Office of the Secretary of State, on January 8, 1998.
TRD-9800273
Mark A. Moseley
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 465-3900

PART XXV. Structural Pest Control Board
CHAPTER 595.Compliance and Enforcement
22 TAC sec.595.16
The Texas Structural Pest Control Board proposes new sec.595.16, concerning 
Approval of Products. The rule establishes an approval procedure for products 
and devices used by licensees of the agency. It defines what must be included in 
a request for approval, exempts mechanical traps, glue devices and insect 
monitoring stations from the approval process and sets out a procedure for 
appeal of an agency decision. 
Benny M. Mathis, Executive Director has determined that there will be fiscal 
implications as a result of enforcing or administering the rule. The effect on 
state government for the first five-year period the rule will be in effect is an 
estimated additional cost of $30,000,000, no estimated reduction in cost and an 
estimated loss in revenue as there is currently no source of revenue for this 
proposal. There will be no effect on 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 will be that licensees will only be using 
products or devices that have been determined to be effective for control of 
pest problems. The anticipated economic cost to individuals who are required to 
comply with the rule as proposed will be the delay in use while awaiting 
approval and the cost of compiling a request for approval.
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 new section is proposed under Article 135b-6, which provides the Structural 
Pest Control Board with the authority to license and regulate persons who 
provide structural pest control services. 
The following is the (statutes, articles, or code) that are affected by this 
rule: Rule Number Statute, Article or Code, Texas Civil Statutes Annotated, 
Article 135b-6. 

sec.595.16 Approval of Products
It will be illegal to use materials, products and/or methods for structural pest 
control that are not approved by the Board. 
(1) Each pesticide product or device registered by the United States 
Environmental Protection Agency and/or the Texas Department of Agriculture for 
structural pest control may be approved by the Board as long as the product is 
applied according to the instructions on the label or labeling and efficacy has 
been demonstrated. 
(2) Products or devices not subject to the Environmental Protection Agency or 
Texas Department of Agriculture registration may be approved by the Board if the 
manufacturer or a licensee submits a request for approval by the Board. The 
request should contain the following information:
(A) the name and address of the applicant and the name and address of the person 
whose name shall appear on the product label or device, if not the applicant's; 
(B) the name of the product or device; 
(C) a complete copy of all labeling or use instructions to accompany the product 
or device and a statement of all claims to be made for it, including directions 
for use; 
(D) the complete formula of the product, including active and inert ingredients; 
if any; 
(E) a full description of all tests known to the applicant and the results of 
the tests on which product efficacy claims are based. These tests should be made 
by a recognized testing agency or institution and support, to the Board's 
satisfaction, the efficacy and safety of the product or device when used as 
directed; and 
(F) all available toxicological and safety information, including any antidotes 
or effective treatments for problems associated with use of the product. 
(3) The following types of devices are exempt from this regulation: mechanical 
traps and glue-based devices used for rodent or small animal control, insect 
monitoring stations which may provide incidental control. 
(4) Requests for approval must be filed with the Executive Director of the 
Structural Pest Control Board. Not later than 60 days after a complete request 
is filed, the Executive Director shall make a recommendation to the Board 
regarding approval. The Executive Director may consult with academic 
institutions, governmental authorities and industry experts regarding the 
recommendation. The recommendation may include modifications or limitations on 
the use of the product or device. Upon receipt of the Director's recommendation, 
the Board may approve, deny or modify the request for approval. If the requestor 
disagrees with the Board's action, the requestor may request a hearing before 
the State Office of Administrative Hearings (SOAH). The request for hearing must 
be submitted within 30 days of the date of the Board's action on the request. 
The hearing will be governed by the Administrative Procedures Act (APA) and the 
regulations adopted by SOAH and the Structural Pest Control Board for conduct of 
administrative hearings. 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 December 9, 1997
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.
Filed with the Office of the Secretary of State, on January 9, 1998.
TRD-9800374
Benny M. Mathis, Jr.
Executive Director
Structural Pest Control Board
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 451-7200

PART XXIX. Texas Board of Professional Land Surveying
CHAPTER 661.General Rules of Procedure and Practices
Applications, Examinations, and Licensing
22 TAC sec.661.95
The Texas Board of Professional Land Surveying proposes new sec.661.95, 
concerning failures of respondent to appear for hearing. This proposed new rule 
specifies that respondents failing to appear for hearings will result in 
allegations against the respondent being admitted as true.
Sandy Smith, Executive Director, has determined that for the first five-year 
period this rule is in effect there will be no fiscal implications for state or 
local governments as a result of enforcing or administering this rule. Ms. Smith 
also has determined that for the first five-year period this rule is in effect 
the public benefits anticipated as a result of enforcing the section as proposed 
will be reduced costs for hearings where the respondent fails to appear. There 
will be no effect or economic cost to small or large businesses or persons who 
are required to comply with this rule.
Comments may be submitted to Sandy Smith,Texas Board of Professional Land 
Surveying, 7701 North Lamar Boulevard, Suite 400, Austin, Texas 78752. 
This rule is proposed under Article 5282c, sec.9, Texas Civil Statutes, which 
provides the Texas Board of Professional Land Surveying withthe authority to 
make and enforce all reasonable and necessary rules, regulations and bylaws not 
inconsistent with the Texas Constitution, the laws of this state and this Act.
The Texas Civil Statutes, Article 5282c, is affected by this proposed amendment.

sec.661.95.Failure to Attend Hearing: Default Judgment.
(a) If a respondent fails to appear in person or by legal representative on the 
day and at the time set for hearing regardless of whether an appearance has been 
entered, the Administrative law Judge, upon motion by the petitioner, shall 
enter a default judgment in the matter adverse to the respondent who has failed 
to attend the hearing. 
(b) For purposes of this section, default judgment shall mean the issuance of a 
proposal for decision against the respondent in which the factual allegations 
against the respondent contained in the Complaint shall be admitted as prima-
facie evidence and deemed admitted as true, without any requirement for 
additional proof to be submitted by the petitioner. 
(c) Any default judgment granted under this section will be entered on the basis 
of the factual allegations contained in the Complaint and upon the proof of 
proper notice to the defaulting party opponent. For purposes of this section, 
proper notice means notice sufficient to meet the provisions of the Government 
Code, sec.sec.2001.051, 2001.052 and 2001.054 and sec.661.75 of this title 
(relating to Notice and Hearing); such notice also shall include the following 
language in capital letters in boldface type; FAILURE TO APPEAR AT THE HEARING 
WILL RESULT IN THE ALLEGATIONS AGAINST YOU SET OUT IN THE COMPLAINT BEING 
ADMITTED AS TRUE. 
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.
Filed with the Office of the Secretary of State on January 9, 1998.
TRD-9800358
Sandy Smith
Executive Director
Texas Board of Professional Land Surveying
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 452-9427

TITLE 25. HEALTH SERVICES
PART II. Texas Department of Mental Health and Mental Retardation
CHAPTER 401.System Administration
SUBCHAPTER I.Certification of Community Residential Programs
25 TAC sec.sec.401.551-401.565
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.401.551-401.565, concerning certification of 
community residential programs, as part of a comprehensive reorganization of 
chapters and subchapters within the department's portion of the Texas 
Administrative Code. 
Key provisions of the sections are incorporated into new Chapter 412, Subchapter 
H, concerning standards for mental retardation community services and supports, 
as part of a comprehensive reorganization of chapters and subchapters within the 
department's portion of the Texas Administrative Code. The new subchapter is 
published contemporaneously for public comment in this issue of the Texas 
Register, as are other related subchapters being proposed for repeal.
Donald C. Green, chief financial officer, has determined that for each year of 
the first five-year period the repeals are in effect there will be no fiscal 
impact on state or local governments of as a result of enforcing the repeals. 
Leon Evans, director, community services, has determined that for each year of 
the first five years the repeals are in effect the public benefit will be the 
existence of a concise and relevant body of policy documents as a result of 
repealing unnecessary rules. There is no anticipated economic impact on small 
businesses expected to be affected by the repeal. No local economic impact is 
anticipated as a result of adopting the repeal as proposed. A hearing to accept 
oral and written testimony from the public concerning this and other related 
rules has been scheduled for 1:30 p.m, Friday, February 13, 1998, in Room 240 of 
department's Central Office auditorium in Building 2, 909 West 45th Street in 
Austin. If accommodations are required for persons who are hearing impaired, 
please notify the Office of Policy Development at least 72 hours in advance by 
calling 512/206-4516. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repeals are proposed under the Texas Health and Safety Code, sec.532.015, 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority. 
Texas Health and Safety Code, sec.534.052 and sec.534.058 are affected by these 
proposed repeals. 
sec.401.551.Purpose.
sec.401.552.Application.
sec.401.553.Definitions.
sec.401.554.General Provisions Governing Certification of Community Residential 
Programs.
sec.401.555.Requirements for Certification.
sec.401.556.Initial Application Process and Provisional Certification.
sec.401.557.Certification Decision and Notification.
sec.401.558.Alternative Certification Status.
sec.401.559.Certification Renewal.
sec.401.560.Change in Certification.
sec.401.561.Denial, Suspension, and Revocation of Certification.
sec.401.562.Inspection Authority and Reporting Responsibilities.
sec.401.563.Exhibits.
sec.401.564.References.
sec.401.565.Distribution.
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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800421
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

CHAPTER 408.Standards and Quality Assurance
SUBCHAPTER A.Standards of the Texas Department of Mental Health and Mental 
Retardation
25 TAC sec.sec.408.1-408.10
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.408.1-408.10, concerning standards of the Texas 
Department of Mental Health and Mental Retardation -- quality assurance, as part 
of a comprehensive reorganization of chapters and subchapters within the 
department's portion of the Texas Administrative Code. 
The subchapter adopts by reference a number of national quality assurance 
standards as well as the department's mental health and mental retardation 
standards for services and supports delivered by local authorities in the 
community. The mental health standards have been incorporated into Chapter 408, 
Subchapter B, concerning mental health community services standards. Key 
provisions of the 1988 TDMHMR Community Standards for Individuals with Mental 
Retardation have been incorporated into new Chapter 412, Subchapter H concerning 
standards and quality assurance for mental retardation community services and 
supports, which is published contemporaneously for public comment in this issue 
of the Texas Register.
Donald C. Green, chief financial officer, has determined that for each year of 
the first five-year period the repeals are in effect there will be no fiscal 
impact on state or local governments of as a result of enforcing the repeals. 
Leon Evans, director, community services, has determined that for each year of 
the first five years the repeals are in effect, the public benefit will be the 
existence of a concise and relevant body of policy documents as a result of 
repealing unnecessary rules. There is no anticipated economic impact on small 
businesses expected to be affected by the repeals. No local economic impact is 
anticipated as a result of adopting the repeals as proposed.
A hearing to accept oral and written testimony from the public concerning this 
and other related rules has been scheduled for 1:30 p.m, Friday, February 13, 
1998, in Room 240 of department's Central Office auditorium in Building 2, 909 
West 45th Street in Austin. If accommodations are required for persons who are 
hearing impaired, please notify the Office of Policy Development at least 72 
hours in advance by calling 512/206-4516. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repeals are proposed under the Texas Health and Safety Code, sec.532.015, 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority. 
Texas Health and Safety Code, sec.534.052 and sec.534.058 are affected by these 
proposed repeals. 
sec.408.1.Purpose.
sec.408.2.Application.
sec.408.3.Definition.
sec.408.4.Scope.
sec.408.5.Standards of Care.
sec.408.6.Governing Body.
sec.408.7.Director of Standards and Quality Assurance.
sec.408.8.Program Reviews.
sec.408.9.References.
sec.408.10.Distribution.
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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800422
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER C.Quality Assurance and Improvement System (Oais) for Mental 
Retardation Services and Supports
25 TAC sec.sec.408.51-408.63
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.408.51-408.63, concerning quality assurance and 
improvement system (QAIS) for mental retardation services and supports, as part 
of a comprehensive reorganization of chapters and subchapters within the 
department's portion of the Texas Administrative Code. 
Key provisions of the sections are incorporated into new Chapter 412, Subchapter 
H, concerning standards for mental retardation community services and supports, 
as part of a comprehensive reorganization of chapters and subchapters within the 
department's portion of the Texas Administrative Code. The new subchapter is 
published contemporaneously for public comment in this issue of the Texas 
Register, as are other related subhapters being proposed for repeal. 
Donald C. Green, chief financial officer, has determined that for each year of 
the first five-year period the repeals are in effect there will be no fiscal 
impact on state or local governments of as a result of enforcing the repeals. 
Leon Evans, director, community services, has determined that for each year of 
the first five years the repeals are in effect the public benefit will be the 
existence of a concise and relevant body of policy documents as a result of 
repealing unnecessary rules. There is no anticipated economic impact on small 
businesses expected to be affected by the repeals. No local economic impact is 
anticipated as a result of adopting the repeals as proposed.
A hearing to accept oral and written testimony from the public concerning this 
and other related rules has been scheduled for 1:30 p.m, Friday, February 13, 
1998, in Room 240 of department's Central Office auditorium in Building 2, 909 
West 45th Street in Austin. If accommodations are required for persons who are 
hearing impaired, please notify the Office of Policy Development at least 72 
hours in advance by calling 512/206-4516. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repeals are proposed under the Texas Health and Safety Code, sec.532.015, 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority. 
Texas Health and Safety Code, sec.534.052 and sec.534.058 are affected by these 
proposed repeals. 
sec.408.51.Purpose.
sec.408.52.Application.
sec.408.53.Definitions.
sec.408.54.Responsibilities of Local Authorities and Designated Providers.
sec.408.55.Self-assessment by Local Authorities and Designated Providers.
sec.408.56.Outcome Measures for People.
sec.408.57.Outcome Measures for Organizations.
sec.408.58.Plan of Improvement.
sec.408.59.External Validation.
sec.408.60.Exhibits.
sec.408.61.Training.
sec.408.62.References.
sec.408.63.Distribution.
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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800423
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER E.Health, Safety, and Rights in Community-based Mental Retardation 
Programs
25 TAC sec.sec.408.151-408.164
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.408.151-408.164, concerning health, safety, and 
rights in community-based mental retardation programs. 
Key provisions of the sections are incorporated into new Chapter 412, Subchapter 
H, concerning standards and quality assurance for mental retardation community 
services and supports, as part of a comprehensive reorganization of chapters and 
subchapters within the department's portion of the Texas Administrative Code. 
The new subchapter is published contemporaneously for public comment in this 
issue of the Texas Register, as are other related subchapters proposed for 
repeal.
Donald C. Green, chief financial officer, has determined that for each year of 
the first five-year period the repeals are in effect there will be no fiscal 
impact on state or local governments of as a result of enforcing the repeals. 
Leon Evans, director, community services, has determined that for each year of 
the first five years the repeals are in effect the public benefit will be the 
existence of a concise and relevant body of policy documents as a result of 
repealing unnecessary rules. There is no anticipated economic impact on small 
businesses expected to be affected by the repeals. No local economic impact is 
anticipated as a result of adopting the repeals as proposed.
A hearing to accept oral and written testimony from the public concerning this 
and other related rules has been scheduled for 1:30 p.m, Friday, February 13, 
1998, in Room 240 of department's Central Office auditorium in Building 2, 909 
West 45th Street in Austin. If accommodations are required for persons who are 
hearing impaired, please notify the Office of Policy Development at least 72 
hours in advance by calling 512/206-4516. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repeals are proposed under the Texas Health and Safety Code, sec.532.015, 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority. 
Texas Health and Safety Code, sec.534.052 and sec.534.058 are affected by these 
proposed repeals. 
sec.408.151.Purpose.
sec.408.152.Application.
sec.408.153.Definitions.
sec.408.154.Encouraging Full Expression of Individual Rights.
sec.408.155.Human Resources.
sec.408.156.Medication Practice and Health Related Services.
sec.408.157.Infection Control.
sec.408.158.Behavior Management.
sec.408.159.Psychoactive Medications.
sec.408.160.Consumer Records.
sec.408.161.Environmental Requirements.
sec.408.162.Additional Requirements.
sec.408.163.References.
sec.408.164.Distribution.
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.
Filed with the Office of the Secretary of State, on
January 12, 1998.
TRD-9800424
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

CHAPTER 409.Medicaid Programs
SUBCHAPTER D.Home and Community-based Services
25 TAC sec.409.100
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
an amendment to sec.409.100, concerning Home and Community-Based Services (HCS). 
In accordance with the Federal Balanced Budget Act of 1997, the proposed 
amendments would remove the requirement for an HCS consumer to have a history of 
institutionalization in an Intermediate Care Facility for Persons with Mental 
Retardation or Related Conditions or nursing facility in order to receive 
Medicaid-reimbursed for supported employment services. The proposed amendments 
would allow Medicaid matched funding for supported employment services for all 
eligible HCS consumers. 
Don Green, chief financial officer, has determined that for each year of the 
first five-year period the rule, as proposed, would be in effect there would be 
for FY 1998 a net fiscal impact of $0, of which $68,861 is federal and ($68,861) 
is state, for FY 1999 the net fiscal impact would be $0, of which $70,376 is 
federal and ($70,376) is state, for FY 2000 the net fiscal impact would be $0, 
of which $71,924 is federal and ($71,924) is state, for FY 2001 the net fiscal 
impact would be $0, of which $73,506 is federal and ($73,506) is state, for FY 
2002 the net fiscal impact would be $0, of which $75,124 is federal and 
($75,124) is state. 
Ernest McKenney, director, Medicaid Administration, has determined that for each 
year of the first five years the amendment would be in effect the public benefit 
anticipated would be a savings in state expenditures for supported employment 
services provided to HCS consumers. There is no anticipated economic cost to 
persons who are required to comply with the proposed amendment. There would be 
no effect on small business. 
A public hearing will be held at 8:30 a.m., February 19, 1998, in Room 240 of 
the main TDMHMR Central Office building (Building 2) at TDMHMR Central Office, 
909 West 45th Street, Austin, Texas, to accept oral and written testimony 
concerning the proposal. Persons requiring an interpreter for the deaf or 
hearing impaired should notify Sheila Wilkins, Office of Policy Development, at 
least 72 hours prior to the hearing by calling (512) 206-4516. 
Questions about the content of the proposal may be directed to Mr. McKenney. 
Comments on the proposed sections should be submitted to Linda Logan, director, 
Policy Development, Texas Department Mental Health and Mental Retardation, P.O. 
Box 12668, Austin, TX 78711-2668, within 30 days of publication.
The amendment is proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency.
The amendment affects Human Resources Code, Chapter 32, and Government Code, 
Chapter 531, sec.531.021. 

sec.409.100.Service Components of Home and Community-based Services (HCS) 
Program.
(a) HCS service components are selected for inclusion in an applicant's or 
program participant's Individual Plan of Care (IPC) to supplement rather than 
replace that individual's natural community supports. HCS service components are 
selected based on assessments which identify specific services and supports 
necessary for the individual to continue living in the community and prevent the 
individual's admission to institutional based services. The following service 
components are available to all individuals enrolled in the HCS Program unless 
indicated otherwise: 
(1)-(6) (No change.)
(7) Supported employment is provided in conjunction with day habilitation and 
may be provided up to an annual maximum of $3,000 per individual. Supported 
employment reimbursement is available only if documentation verifies that 
supported employment services have been denied or are otherwise unavailable to 
the individual through either the Texas Rehabilitation Commission or the public 
school system. [Medicaid-reimbursed supported employment may be provided only if 
the participant has a documented previous history of institutionalization in a 
nursing facility or an intermediate care facility for persons with mental 
retardation or a related condition. Supported employment may be provided as a 
state-funded, non-Medicaid reimbursed HCS service component for individuals 
without a prior history of institutionalization subject to the availability of 
state funding.] Any person receiving supported employment must have an 
identified need and desire for employment. 
(8)-(10) (No change.)
(b) (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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800426
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER J.Reimbursement for Services in Institutions for
Mental Diseases (IMD)
25 TAC sec.sec.409.373-409.375
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
amendments to sec.409.373-409.375, concerning governing Reimbursement for 
Services in Institutions for Mental Diseases (IMD). 
In accordance with the Federal Balanced Budget Act of 1997, the proposed 
amendments would remove the requirement for an inspection of care (IOC) in IMDs. 
Additionally, two minor revisions are made regarding the definitions of terms 
and the deletion of an unnecessary reference to an initial time period which was 
pertinent when the rule was initially promulgated. 
Don Green, chief financial officer, has determined that for each year of the 
first five-year period the amendments would be in effect there would be no 
fiscal implications for state or local government or small businesses.
Ernest McKenney, director, Medicaid Administration, has determined that for each 
year of the first five years the amendments would be in effect the public 
benefit anticipated would be the elimination of duplicative consumer quality of 
care reviews. There is no anticipated economic cost to persons who are required 
to comply with the proposed amendments. There would be no effect on small 
business. 
A public hearing will be held at 8:30 a.m., February 19, 1998, in Room 240 of 
the main TDMHMR Central Office building (Building 2) at TDMHMR Central Office, 
909 West 45th Street, Austin, Texas, to accept oral and written testimony 
concerning the proposal. Persons requiring an interpreter for the deaf or 
hearing impaired should notify Sheila Wilkins, Office of Policy Development, at 
least 72 hours prior to the hearing by calling (512) 206-4516. 
Questions about the content of the proposal may be directed to Mr. McKenney. 
Comments on the proposed sections should be submitted to Linda Logan, director, 
Policy Development, Texas Department Mental Health and Mental Retardation, P.O. 
Box 12668, Austin, TX 78711-2668, within 30 days of publication. 
The amendments are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. The 
amendments affect Human Resources Code, Chapter 32, and Government Code, Chapter 
531, sec.531.021. 

sec.409.373.Definitions.
The following words and terms, when used in this subchapter, have the following 
meanings, unless the context clearly indicates otherwise.
[Medical review team - A team designated by TDMHMR Office of Medicaid 
Administration, that includes at least one physician, as prescribed by 42 Code 
of Federal Regulations sec.456.602, who is familiar with the care of mentally 
ill individuals. No team member may be employed by or have a significant 
financial interest in the facility under review.]
Qualified mental health professional - A person acting within the scope of his 
or her training and licensure or certification, who is a:
(A) [certified or] licensed social worker as defined by the Human Resources 
Code, sec.50.001; 
(B)-(E) (No change.)

sec.409.374.Eligible Population.
Reimbursement for IMD services is limited to individuals: 
(1)-(7) (No change.)
(8) for whom the department has authorized IMD services based on medical 
necessity. Effective June 1, 1996, request for initial authorization must be 
submitted to the department's Office of Medicaid Administration within seven 
calendar days of the first day for which Medicaid reimbursement for the 
provision of IMD services will be requested. Request for authorization of 
continued stay must be submitted no later than seven calendar days prior to the 
end date of the initial and all subsequent authorizations. Initial and continued 
stay authorizations are valid for up to 31 calendar days. [For persons receiving 
IMD services, prior to June 1, 1996, authorization will be granted until July 1, 
1996. Requests for authorization of continued stay for these persons must also 
be submitted no later than seven calendar days prior to the end date of the 
initial authorization. Authorizations will be determined by a registered nurse 
or a licensed physician.] 

sec.409.375.Provider Eligibility for Reimbursement.
(a)-(b) (No change.)
(c) Evidence of compliance with subsection (a) of this section will be validated 
through [onsite inspections] <nl>reviews<ol> by [a medical review team 
designated by] the TDMHMR Office of Medicaid Administration. <nl>Reviews<ol> 
[Inspections] will occur at an interval decided upon by the department [and the 
team but no less than annually]. No facility may be notified more than 48 hours 
before the scheduled [arrival of the team] <nl>review<ol>. For each Medicaid 
patient, [the team] <nl>TDMHMR<ol> will additionally review: 
(1)-(3) (No change.)
(d) If the provider fails to provide evidence of compliance with subsection 
(c)(1)-(3) of this section, then the provider must take corrective action, as 
needed, based on the findings [in the medical review team's] <nl>contained in 
TDMHMR's<ol> report.
(1)-(2) (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.
Filed with the Office of the Secretary of State, on January 12, 1998.
TRD-9800428
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: February 23, 1998
For further information, please call: (512) 206-4516

CHAPTER 412.Local Authority Responsibilities
SUBCHAPTER H.Standards and Quality Assurance for Mental Retardation Community 
Services and Supports
25 TAC sec.sec.412.351-412.373
The Texas Department of Mental Health and Mental Retardation (department) 
proposes new sec.sec.412.351-412.373, concerning standards and quality assurance 
for mental retardation community services. The new subchapter is part of a 
comprehensive reorganization of chapters and subchapters within the department's 
portion of the Texas Administrative Code. 
The new subchapter incorporates selected provisions of the following subchapters 
of this title which are proposed contemporaneously for repeal in this issue of 
the Texas Register: Chapter 401, Subchapter I, concerning certification of 
community residential programs; Chapter 408, Subchapter A, concerning standards 
of the Texas Department of Mental Health and Mental Retardation -- quality 
assurance (which adopts by reference the 1988 TDMHMR Community Standards for 
Individuals with Mental Retardation); Chapter 408, Subchapter C, concerning 
quality assurance and improvement system (QAIS) for mental retardation services 
and supports; and Chapter 408, Subchapter E, concerning health, safety, and 
rights in community-based mental retardation programs. 
The new subchapter describes the quality assurance and improvement system (QAIS) 
by which local mental retardation authorities and designated providers assess 
their performance in the provision of community-based supports and services to 
individuals with mental retardation; minimum standards for health, safety, and 
rights which are necessary to ensure the protection of individuals receiving 
mental retardation supports and services in community-based programs; and how 
QAIS will be extended to cover community residential programs for individuals 
with mental retardation which receive funding directly from or through contracts 
for service with the department in its role as the state mental retardation 
authority. The community residential programs have been certified in the past by 
the department based on the 1988 TDMHMR Community Standards for Individuals with 
Mental Retardation. 
The minimum standards described in this subchapter replace the more prescriptive 
1988 TDMHMR Community Standards for Individuals with Mental Retardation and are 
an integral part of the QAIS process. Local authorities and designated providers 
collect data as part of their self-assessment based on these standards. The 
subchapter also includes a section concerning respite services as required by 
the Texas Health and Safety Code, sec.534.057. 
Donald C. Green, chief financial officer, has determined that for each year of 
the first five-year period the new sections are in effect there will be a fiscal 
impact on state or local governments as a result of enforcing the new sections. 
Leon Evans, director, community services, has determined that for each year of 
the first five years the new sections are in effect the public benefit will be 
the efficient and effective execution of the department's state authority 
oversight of community-based mental retardation programs, and the existence of a 
concise and relevant body of policy documents as a result of incorporating 
select provisions of five existing subchapters into a single new subchapter.
There is no anticipated economic impact on small businesses expected to be 
affected by the new sections. No local economic impact is anticipated as a 
result of adopting the new sections as proposed. 
A hearing to accept oral and written testimony from the public concerning the 
proposed new subchapter has been scheduled for 1:30 p.m, Friday, February 13, 
1998, in Room 240 of department's Central Office auditorium in Building 2, 909 
West 45th Street in Austin. If accommodations are required for persons who are 
hearing impaired, please notify the Office of Policy Development at least 72 
hours in advance by calling 512/206-4516. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The new sections are proposed under the Texas Health and Safety Code, 
sec.532.015, which provides the Texas Mental Health and Mental Retardation board 
with broad rulemaking authority; sec.534.052, which requires the board to adopt 
rules to ensure the adequate provision of community-based mental retardation 
services through a local authorities; sec.534.058, which requires the department 
to develop standards of care for services provided by local authorities and 
their subcontractors to ensure that the quality of those services is consistent 
with the quality of care available in department facilities; and sec.534.057 
which requires the department to adopt rules concerning respite services. 
Texas Health and Safety Code, sec.sec.534.052, 534.057, and 534.058 are affected 
by these proposed new sections. 

sec.412.351.Purpose.
This subchapter describes the: 
(1) quality assurance and improvement system (QAIS) for community-based mental 
retardation services and supports funded by the Texas Department of Mental 
Health and Mental Retardation, including community-based residential programs 
for individuals with mental retardation which receive funding directly from or 
through contracts for service with the department in its role as the state 
mental retardation authority and which formerly were certified by the department 
under the repealed 1988 TDMHMR Community Standards for Individuals with Mental 
Retardation. 
(2) minimum standards, as required by the Texas Health and Safety Code (THSC), 
sec.534.052, for ensuring: 
(A) the health, safety, and rights of individuals receiving community-based 
mental retardation services and supports; and 
(B) that the quality of those services and supports are consistent with those 
provided by department facilities, as required by the Texas Health and Safety 
Code, sec.534.058; and 
(3) minimum standards, as required by Texas Health and Safety Code, sec.534.057. 

sec.412.352.Application.
(a) The provisions of this subchapter apply to community-based mental 
retardation services and supports funded by the department and delivered by: 
(1) local mental retardation authorities and the providers with which they 
contract; and 
(2) designated providers. 
(b) The provisions of this subchapter apply to community-based residential 
programs which formerly were certified by the department under the repealed 1988 
TDMHMR Community Standards for Individuals with Mental Retardation.

sec.412.353.Definitions.
The following words and terms, when used in this subchapter, have the following 
meanings, unless the context clearly indicates otherwise:
Actively involved -- Involvement with the individual which the individual's 
planning team deems to be of a quality nature based on the following: 
(A) observed interactions of the person with the individual; 
(B) advocacy for the best interests of the individual;
(C) knowledge of and sensitivity to the individual's preferences, values, and 
beliefs; 
(D) ability to communicate with the individual; and 
(E) availability to the individual for assistance or support when needed. 
AIDS -- Acquired immune deficiency syndrome as defined by the National Centers 
for Disease Control and Prevention of the U.S. Public Health Service. 
Behavior management -- All efforts to increase socially adaptive behavior and to 
modify maladaptive or problem behaviors and replace them with behaviors and 
skills that are adaptive and socially productive. This broad category includes 
behavior interventions, emergency procedures used to protect an individual or 
other persons due to the actions of that individual, and both formal and 
informal planned interactions intended to increase socially adaptive behavior 
and/or to modify maladaptive or problem behaviors. 
CARE - The department's Client Assignment and Registration System, an on-line 
data entry system developed to provide demographic and other data about 
individuals served by the department. 
Community center -- A community mental health and mental retardation center 
established under the Texas Health and Safety Code, Title 7, Chapter 534. 
Department -- The Texas Department of Mental Health and Mental Retardation. 
Designated provider -- As defined in the Texas Health and Safety Code, 
sec.534.054, a service provider with whom the department contracts for the 
delivery of a specific community-based mental retardation service in a specified 
local service area of the state if the MRA for that local service area is unable 
or unwilling to provide that service. The term does not include a local 
authority. 
Emergency care -- Procedures and intervention designed to respond to medical 
emergencies. 
Hepatitis B -- An infection of the liver caused by the hepatitis B virus (HBV). 
Hepatitis B immunization -- Vaccination of persons at risk of infection from 
HBV. 
Hepatitis B testing -- Blood test for detection of hepatitis B surface antigens 
and antibodies. 
HIV -- Human immunodeficiency virus.
HIV testing -- Blood test for detection of human immunodeficiency virus 
infection. 
HRC (human rights committee) -- A committee appointed by the MRA comprising an 
independent group of representatives with the delegated authority to ensure that 
the civil and legal rights of individuals receiving services are acknowledged, 
respected, and protected through the review of organizational practices and 
approaches. The HRC is a mechanism for ensuring due process. Members of the 
human rights committee include, but are not limited to, individuals served by 
the MRA or designated provider, their legally authorized representatives, local 
advocates, and persons from the community who are not affiliated with the MRA or 
designated provider. 
(A) Minimally, one committee member should be experienced in issues and 
decisions regarding human rights. 
(B) At least one committee member should be knowledgeable of current behavior 
management strategies At least one third of the members should not be affiliated 
with the MRA or designated provider. 
(C) Any member directly involved in the development, review, or approval of a 
proposal before the committee will not take part in deliberations relative to 
that proposal. 
(D) Members should receive appropriate training to maximize the benefit of their 
participation on the committee.
Informed consent (legally adequate consent)-- A term consistent with provisions 
of the Texas Health and Safety Code, sec.591.006, concerning consent obtained 
from an individual with mental retardation which is legally adequate when each 
of the following conditions has been met: 
(A) legal status: The individual giving the consent is of the minimum legal age 
and currently does not have a guardian appointed to manage personal affairs by 
an appropriate court of law; 
(B) comprehension of information: The individual giving the consent has been 
informed of and comprehends the nature, purpose, consequences, risks, and 
benefits of and alternatives to the procedure, and the fact that withholding or 
withdrawal of consent shall not prejudice the future provision of care and 
services to the individual with mental retardation; and 
(C) voluntariness: The consent has been given voluntarily and free from coercion 
and undue influence. 
Legally authorized representative -- The parent of an individual who is a minor, 
the guardian of an individual who has been determined by a court to lack 
capacity, or the managing conservator of an individual. 
Local authority -- As defined in the Texas Health and Safety Code, sec.531.002, 
an entity to which the Texas Mental Health and Mental Retardation Board 
delegates its authority and responsibility within a specified region for 
planning, policy development, coordination, and resource development and 
allocation and for supervising and ensuring the provision of mental retardation 
services to individuals with mental retardation in one or more local service 
areas. 
Medication administration-- The direct application of a drug by injection, 
inhalation, ingestion, topical application or any other means to the body of a 
person in accord with the Texas Medical Practice Act. 
Outcome Based Performance Measures -- The Council's copyrighted system of 
quality improvement and measurement that emphasizes responsiveness on the part 
of service organizations to the individual needs of that organization's 
consumers rather than traditional compliance with established standards. The 
system:
(A) focuses on outcomes for consumers rather than the organizational processes 
that contribute to those outcomes but also looks at outcome measures for 
organizations; 
(B) is concise, focusing on those priority outcomes that people with 
disabilities indicate are most important to them; and 
(C) can be used with all services and programs -- residential, vocational, 
social, or residential -- and for consumers with different disabilities.
Planning team -- The individual with the ability to provide legally adequate 
consent, the legally authorized representative (LAR), if any, and those persons 
chosen by the individual and LAR, if any, who assess the individual's treatment, 
training, and service/support plan needs and make recommendations to the MRA or 
designated provider for services which will enable the individual to meet 
desired personal outcomes. Team members typically could include: 
(A) family members or other persons who are actively involved in the life of the 
individual; 
(B) persons who are professionally qualified, certified, or both, in various 
professions with special training and experience in the diagnosis, management, 
needs, and treatment of individuals with mental retardation;
(C) persons who are directly involved in the delivery of mental retardation 
services to the individual; and 
(D) member(s) of the local authority's public responsibility committee (PRC), if 
requested by the individual with the ability to provide legally adequate consent 
or the LAR, if any, or the PRC in instances when the individual does not have 
either the ability to provide legally adequate consent or an LAR. 
Polypharmacy -- Simultaneous use of more than one psychoactive medication from 
the same medication class to treat an individual. The period of overlapping use 
of more than one psychoactive medication when a physician changes an individual 
from one drug to another shall not be considered polypharmacy.
Provider -- 
(A) Any organization or entity, associated by a contract in a working alliance 
with a local authority or the department to provide community-based services and 
supports, including its employees or agents; or 
(B) that part of a local authority directly providing services and supports to 
individuals with mental retardation, including employees or agents. 
Psychoactive medication -- Any medication which is prescribed for the primary 
intent of improving cognition, affective state, and/or behavior.
Quality Assurance and Improvement System (QAIS) -- The framework by which local 
authorities and designated providers measure the quality, efficiency, and 
effectiveness of their organizations and the services and supports they provide 
to consumers either directly or by contracting with providers. It is an outcome-
oriented system that concentrates on measuring desired results and the processes 
used to obtain those results, as defined by the consumer. The system is based on 
The Council's Outcome Based Performance Measures and involves three stages: 
(A) self-assessment; 
(B) quality improvement plan; and 
(C) external validation. 
Respite services -- Services which assist both individuals with mental 
retardation and their families during times of crisis or other specific events. 
Designed to be of short duration, the services may vary from one day to a 
maximum of 30 consecutive calendar days per episode. Respite services may be 
provided either in the family home or in a residence operated or contracted by 
the local authority. 
Restraint -- Refers to the use of personal restraint methods or mechanical 
devices that are intended to restrict the movement or normal functioning of a 
portion of an individual's body. 
State operated community-based MHMR services division -- Those entities which 
provide community-based mental health and/or mental retardation services and 
which are operated by the department. Formerly known as community-based service 
divisions of state facilities. 
Tardive dyskinesia -- A possible side effect of neuroleptic medication 
characterized by involuntary and abnormal movements which are purposeless and 
stereotypical. 
The Council -- The Council on Quality and Leadership in Supports for People with 
Disabilities, formerly The Accreditation Council, is a diversified quality 
enhancement organization with an international focus in the field of human 
services which: develops standards of quality; develops and disseminates 
materials; provides training, consultation, and technical assistance; and 
operates an accreditation program for organizations which serve people with 
disabilities. 
Tuberculosis-- A disease spread through airborne particles containing tubercle 
bacilli which become established in the lungs and may spread throughout the 
body. 

sec.412.354.Responsibilities of Local Authorities and Designated Providers.
(a) Through its contract with the department, the local authority or designated 
provider shall assure its compliance with the provisions of this subchapter. 
(b) Through its contract with other providers, the local authority shall require 
compliance with the provisions of this subchapter as it applies to services and 
supports provided by the provider which are funded through the department. 
(c) Programs under the purview of the Texas Interagency Council on Early 
Childhood Intervention are not required to be surveyed as a part of QAIS. 
(d) Nothing in this subchapter is intended to diminish or negate any contractual 
requirement on the organization, including a contractual requirement to comply 
with applicable department rules. 

sec.412.355.Self-assessment by Local Authorities and Designated Providers.
(a) Self-assessment and the subsequent development of a quality improvement plan 
as described in sec.412.358 of this title (relating to Quality Improvement Plan) 
occurs annually and is completed by the fourth calendar quarter following 
completion of the previous self assessment. The self-assessment is based on The 
Council 's Outcome Based Performance Measures which are adopted by reference as 
Exhibit A in sec.412.370 of this title (relating to Exhibits) and is designed to 
evaluate two aspects of quality, which are: 
(1) outcomes of services that contribute to the quality of life (outcome 
measures for people); and 
(2) the organizational structure and processes that support quality services and 
supports (outcome measures for organizations). 
(b) The self-assessment is conducted by a team comprising at least four people, 
including the team coordinator. 
(1) The chief executive officer (CEO) or designee of the local authority or 
designated provider names a staff member as team coordinator.
(2) The team coordinator selects other members of the team with consideration 
given to both the communication needs and the diverse cultural, ethnic, and 
religious backgrounds of the consumers who receive services and supports from 
that local authority or designated provider. Recommended team members include: 
(A) at least one consumer and/or family member; 
(B) one direct care staff person; 
(C) one person from the local community who has no affiliation with the 
organization; and 
(D) one administrative staff person. 
(c) The local authority or designated provider also may choose to include on the 
team persons from other local authorities or designated providers of similar 
size. Having a team member from outside the organization may prove beneficial 
when reviewing the outcome measures for organizations.
(d) Team members will receive training in the self-assessment process in 
addition to an orientation which includes an overview of the consumers being 
reviewed, the importance of confidentiality, scheduling, and team assignments.
(1) The training is based on model curriculum provided by the department, as 
described in sec.412.371 of this title (relating to Training.)
(2) Each team member will sign a statement agreeing to respect the confidential 
nature of the information concerning the consumers being reviewed. 
(e) The self assessment will be performed using guidelines provided by the 
department, applicable department rules, and the organization's contract with 
the department. 
(f) The self-assessment process should take no longer than 15 working days with 
a formal feedback session immediately following the completion of the self-
assessment. This timeframe permits the organization to gain a "snapshot" of 
itself and maintain the continuity and validity of the self-assessment. The 
self-assessment is divided into the following key components: 
(1) visits to settings where services and supports are provided for: 
(A) discussion and interaction with consumers, staff, service coordinators, and 
other significant people; 
(B) observation of the environment; and 
(C) review of documentation, when necessary; 
(2) the completion of all individual consumer interviews;
(3) the team synthesis and consensus process including;
(A) compilation of interview or rating sheets; and 
(B) a consensus to generate a summary report of findings; and 
(4) feedback session for the CEO and invited staff.

sec.412.356.Outcome Measures for People.
(a) The outcome measures for people survey is designed to measure the impact of 
services and supports on the lives of consumers 
(b) A stratified, random sample for the survey is developed as described in the 
QAIS Implementation Manual. Technical assistance in developing the sample is 
available from the department's Office of Research and Evaluation.
(c) The program coordinator/case manager for each consumer included in the 
survey will be contacted by the team coordinator or another team member to 
explain the assessment process and to obtain the written consent of the consumer 
or the consumer's legally authorized representative as described in Chapter 403, 
Subchapter K of this title (relating to Client-Identifying Information). 
(d) The presence of each outcome is determined by the consumer or the consumer's 
legally authorized representative. It is evidenced through the interview process 
with the consumer and, when appropriate, with the consumer's legally authorized 
representative and the other significant people in the consumer's life. An 
outcome also can be met if it is absent but the consumer or legal representative 
has determined that it is unimportant to the consumer. There should be evidence 
that the consumer or legally authorized representative has an experiential 
context for making such a choice. 
(e) The interview is supplemented by observations of the consumer's environment 
and, when necessary, by reviewing documentation to resolve perceived conflicts 
in information. 
(f) Each outcome measure will be addressed with every consumer chosen for the 
interview process. 
(g) The Outcome Measures for People Results Worksheet is adopted by reference as 
Exhibit B and the Outcomes for People Scoring Grid is adopted by reference as 
Exhibit C in sec.412.370 of this title (relating to Exhibits).

sec.412.357.Outcome Measures for Organizations.
(a) The outcome measures for the organization support the findings of the 
outcome measures for people. The issues of health, safety, and rights are 
reviewed through assessment of the supports and services provided by the 
organization. 
(b) The organization's written documentation, together with interviews of 
designated staff and other stakeholders and the observations of team members, 
form the basis for reviewing the outcomes for organizations. Documentation of a 
utilization management process, policies and procedures, and strategic planning 
will be in evidence. 
(c) An organization profile will be generated by the team which identifies the 
extent to which processes contribute to outcomes, strengths in meeting outcomes, 
and areas needing improvement. 
(d) The Outcomes for Organizations Results Worksheet is adopted by reference as 
Exhibit D in sec.412.370 of this title (relating to Exhibits).

sec.412.358.Quality Improvement Plan.
(a) The quality improvement is intended to be a dynamic document that guides the 
organization in assuring that improvements are made which support consumers in 
realizing their desired outcomes. Consistent with the quality improvement plan, 
the organization will implement changes which facilitate its achievement of the 
18 outcomes for organizations described in Exhibit A in sec.412.370 of this 
title (relating to Exhibits). 
(b) A team selected by the organization's CEO to coordinate the quality 
improvement plan activities should include at least one representative from the 
self-assessment team to ensure the continuity of the process. 
(c) The quality improvement plan is developed within 30 calendar days of the 
feedback session described in sec.412.355(f)(4) of this title (relating to Self-
assessment by Local Authorities and Designated Providers) and will be reviewed, 
amended, and acted upon as determined necessary by a quarterly sampling of the 
relevant outcomes. 
(d) In developing the quality improvement plan, the team analyzes the self-
assessment data and other relevant information such as the organization's 
strategic plan or reports of other regulatory entities, reviews the 
organization's monitoring of critical issues data analysis, develops a concise 
profile of the strengths and weaknesses evident in critical areas, determines 
areas for improvement, and arranges these in priorities based upon the 
organization's mission and its contract with the department. 
(1) As part of the analysis, strategies that address high priority issues and 
barriers to opportunities for improvement are identified and described. 
(2) Ultimately, the team consolidates the results of these efforts into a 
written quality improvement plan consistent with any additional strategy or 
planning done by the organization. 
(e) The following should be reflected in the quality improvement plan: 
(1) the organization's mission statement; 
(2) goals essential for the fulfillment of the mission;
(3) action steps which will lead to the accomplishment of goals and which are 
specific enough to articulate responsibilities across the organization; 
(4) a quarterly evaluation process which will document progress towards goals, 
illuminate areas for further quality enhancement endeavors, and include a 
sampling of relevant outcomes; and 
(5) an evaluation process which describes and assesses leadership and its 
involvement in setting direction, and developing and maintaining a leadership 
system that supports the mission. 

sec.412.359.External Validation.
(a) The local authority or designated provider will submit its annual self-
assessment results and quality improvement plan along with the quarterly updates 
to the department's Office of Quality Management for the external validation 
portion of the QAIS. The external validation is intended to: 
(1) reassure the public that public funds are being expended prudently for the 
purpose intended; and 
(2) affirm to the administrators of the local authority or designated provider 
and to the trustees of the local authority that QAIS is being implemented as 
intended and that data are representative of the organization's performance. 
(b) The external validation process consists of three phases:
(1) pre-visit activities including: 
(A) desk review of requested documentation; 
(B) determination of external validation team composition;
(C) selection of an independent, stratified/random sample of individuals from 
the CARE system, separate from the sample used by the organization in the self-
assessment as described in sec.412.356 of this title (relating to Outcome 
Measures for People); 
(D) scheduling of on-site external validation process activities: and 
(E) coordination of external validation process with organization;
(2) on-site activities intended to confirm the findings and products of the 
organization's self-assessment and quality improvement plan are: 
(A) examination of the products of the internal self-assessment through 
validation of the organization's implementation of the self-assessment 
instrument and quality improvement plan; 
(B) feedback regarding the consumers' responses concerning all outcomes and 
confirmation of the findings on the health, safety, and rights outcome measures 
through interviews with the consumers selected in the random sample described in 
paragraph (1)(C) of this subsection; and 
(C) establishment of the organization's overall inter-rater reliability; and 
(3) followup reporting activities including: 
(A) an optional closed exit conference with key staff, at the discretion of the 
organization chief executive officer; 
(B) an open exit conference for staff, consumers, advocates, parents, and other 
interested parties; and 
(C) provision of information to the department's Community Services Division. 
(c) The external validation team leader will: 
(1) provide information to the department's Community Services Division 
regarding the organization's performance as reflected in the self assessment and 
the status of the quality improvement plan; and 
(2) notify the organization's CEO and department's Community Services Division 
of problems in the outcome areas of health, safety, and rights which require 
immediate action. 
(d) The membership of the external validation team is composed as described in 
the QAIS Implementation Manual. 
(e) During every fiscal year, each local authority and designated provider will 
conduct a self-assessment and develop a quality improvement plan. A desk review 
will be conducted by the department's Office of Quality Management of the annual 
self-assessment and quality improvement plan submitted by each local authority 
and designated provider. The on-site visit portion of the external validation 
component will take place in one, two, or three year cycles, depending on the 
organization's accomplishment as reflected in the following elements which are 
described in detail in the QAIS Implementation Manual: 
(1) a valid self assessment; 
(2) addressing of high impact issues in the quality improvement plan; 
(3) completion and implementation of a quality improvement plan; and 
(4) presence of outcomes and processes in the self assessment.
(f) The 18 outcomes for organizations described in Exhibit A assess whether an 
organization has the necessary and appropriate processes in place to support the 
30 outcomes for people. 
(g) Information obtained during the external validation of every organization's 
self-assessment and quality improvement plan will be used by the department's 
Community Services Division for contract enforcement and negotiations and in 
compiling statewide data related to outcomes for people and organizations. 
(h) Deemed status will be granted by the department to those organizations 
accredited by The Council based on evidence presented to the department's Office 
of Quality Management of continuing accreditation. These organizations will be 
exempt from the on-site external validation process, but will be required to 
submit an annual self-assessment and quality improvement plan to the 
department's Office of Quality Management for data compilation and further 
contract negotiation. Deemed status for accreditation by other nationally 
recognized accreditation associations which meet the requirements of QAIS will 
be considered by the department's Office of Quality Management upon request by a 
local authority or designated provider. 

sec.412.360.Encouraging Full Expression of Individual Rights.
(a) The MRA or designated provider will encourage the full expression of legal 
and civil rights by each individual receiving services and will provide 
supports, as necessary, to assist individuals and their legally authorized 
representatives in the exercise of their rights. The MRA or designated provider 
will fully inform individuals and their legally authorized representatives of 
their rights as guaranteed under the Persons with Mental Retardation Act (Texas 
Health and Safety Code, Title 7, Subtitle D). In doing so, the MRA or designated 
provider will refer to Chapter 405, Subchapter Y of this title (relating to 
Client Rights -- Mental Retardation Services) and use the handbook prescribed in 
the subchapter. 
(b) The MRA or designated provider shall ensure that due process is provided 
when an individual's rights must be limited. As applicable, see Chapter 405, 
Subchapter J of this title (relating to Surrogate Decision-Making for Community-
Based ICF/MR and ICF/MR/RC Facilities). Due process includes:
(1) obtaining informed consent in writing for a period not to exceed one year 
from the individual or the legally authorized representative; and 
(2) review by the individual's planning team and, if appropriate, the human 
rights committee of the proposed limitation of the individual's rights. 
(c) When an individual's rights must be limited, the individual's planning team 
will consider what, if any, training or modifications to the individual's 
service plan might enable the limitations to be removed. 
(d) The MRA or designated provider shall develop and implement written policies 
and procedures for reporting and investigating allegations of rights violations 
and allegations of abuse, neglect, and exploitation, and taking appropriate 
action in confirmed cases. See Chapter 405, Subchapter Y of this title (relating 
to Client Rights Mental Retardation Services) and Chapter 404, Subchapter B of 
this title (relating to Abuse, Neglect, and Exploitation of People Served by 
Providers of Local Authorities), and Chapter 404, Subchapter A of this title 
(relating to Abuse, Neglect, and Exploitation in TDMHMR Facilities.)
(e) Procedures for appeal of decisions shall be delineated and publicized, and 
shall include a mechanism for external review or mediation if agreement can not 
be reached. For MRAs, these procedures will include those set forth in 
sec.401.464 of this title (relating to Notification and Appeals Process). See 
Chapter 401, Subchapter G of this title (relating to Community Mental Health and 
Mental Retardation Centers.)

sec.412.361.Human Resources.
The MRA or designated provider ensures that: 
(1) all staff possess the work experience and education/credentials required by 
the job description or contract; 
(2) professional personnel are licensed, certified, or registered, if required 
by law;
(3) verification of credentials and verification of the renewal of credentials 
is maintained in the human resource file for all certified or licensed 
professionals; 
(4) there is a mechanism in place for maintaining and ensuring standards of 
professiona