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 1. ADMINISTRATION
PART IV. Office of the Secretary of State
CHAPTER 81.Elections
SUBCHAPTER E.Miscellaneous
1 TAC sec.81.72
The Office of the Secretary of State, Elections Division, proposes new rule, 
sec.81.72, concerning when the early voting ballot board (the "board") must 
convene to count late ballots cast in all elections other than a "general 
election for state and county officers" and primary elections. The new rule is 
proposed to set a time frame within which the board must convene and count late 
early-voted ballots cast from outside the country so that the governing body of 
the territory conducting the election can timely canvass the election returns no 
earlier than the third day or later than the sixth day after election day in 
accordance with section 67.003(2) of the Texas Election Code ("Code"). 
Ann McGeehan, Deputy Assistant Secretary of State for Elections, has determined 
that for the first five-year period this rule is in effect there will be no 
fiscal implications for state government as a result of enforcing or 
administering the rule; however, there may be minimal fiscal impact for local 
governments. Such fiscal amount is indeterminable due to the fact that the 
number of late ballots that qualify for late counting is unpredictable. 
Ms. McGeehan has determined also that for every other year of the first five 
years the rule is in effect the public benefits anticipated as a result of 
enforcing the rule will be to allow a time frame within which the board must 
convene and count late early voted ballots cast from outside the country so that 
the governing body of the territory conducting the election can timely canvass 
the election returns no earlier than the third day or later than the sixth day 
after election day in accordance with Section 61.003(2) of the Code. There are 
no anticipated economic costs to persons who are required to comply with the 
rule as proposed. 
Comments on the proposal may be submitted to Ann McGeehan, Deputy Assistant 
Secretary of State for Elections, Office of the Secretary of State, P.O. Box 
12060, Austin, Texas 78711-2060. 
The rule is proposed under the Code, Chapter 31, Subchapter A, sec.31.003, which 
provides the Secretary of State with authority to promulgate rules to obtain 
uniformity in the interpretation and application of the Code, and under the 
Code.
Sections 67.003(2), 86.007(d)(3)(B) and 87.125 of the Code are affected by this 
proposed rule.

sec.81.72.Late Convening of Early Voting Ballot Board in Elections other than a 
General Election for State and County Officers and Primary Elections.
The presiding judge of the early voting ballot board shall convene the board 
between the third and fifth day after election day to count late early-voted 
ballots cast from outside the country and placed in delivery by 7:00 p.m. on 
election day so that the governing body of the territory conducting the election 
can timely canvass the election returns no earlier than the third day or later 
than the sixth day after election day.
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 June 12, 1998.
TRD-9809443
Clark Kent Ervin
Assistant Secretary of State
Office of the Secretary of State
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-5650

PART XV. Texas Health and Human Services Commission
CHAPTER 381.Guardianship Services 
The Health and Human Services Commission proposes new sec.sec.381.1, 381.2, 
381.101-381.103, and 381.201-381.210 of new chapter 381 concerning the purpose 
and definitions of terms for this chapter, the establishment of the Guardianship 
Advisory Board within HHSC, and the award of grants for the establishment of 
local volunteer guardianship programs. These provisions partially implement the 
provisions of Chapter 531, Subchapter D of the Texas Government Code, which 
authorizes the creation of the Guardianship Advisory Board and directs HHSC to, 
among other things, develop and award grants for the establishment of local 
volunteer guardianship programs. 
Mr. Gary Bego, Associate Commissioner for Fiscal Policy, has determined that for 
each year during the first five-year period that the rules will be in effect, 
there will be no net fiscal implications for state or local government as a 
result of enforcing or administering these rules. As the operation of the 
Guardianship Advisory Board and the award of grants for the establishment of 
local volunteer guardianship programs are subject to prior appropriation of 
funds by the Texas Legislature and are administered by existing staff of HHSC, 
there will be no impact on employment in the counties where the program is 
implemented. There will be no adverse effect on small or large businesses. There 
will be no costs to small businesses or persons complying with the rules as 
proposed. There will be no adverse economic effect on small businesses.
Mr. Bego has also determined that for each year during the first five-year 
period the rules will be in effect, the public benefit anticipated as a result 
of adopting the proposed rules will be an increase in the availability of 
guardianship or related services to incapacitated persons in Texas who require, 
but currently do not receive, guardianship services. This will occur through the 
establishment or expansion of local volunteer guardianship programs that receive 
grants from HHSC. 
Comments may be submitted to Steve Fields, Director, Guardianship Alliance of 
Texas, Health and Human Services Commission, 4900 North Lamar Boulevard, 4th 
Floor, Austin, Texas 78751, (512) 424-6599. Comments must be received no later 
than 30 days following publication of this proposal in the Texas Register. 

SUBCHAPTER A.Purpose and Definitions
1 TAC sec.381.1, sec.381.2
The new rules are proposed under the Texas Government Code, Chapter 531, 
sec.531.033, which authorizes the Commissioner of Health and Human Services to 
adopt rules necessary to carry out the Health and Human Services Commission's 
duties under Chapter 531. 
The new rules affect Chapter 531 of the Texas Government Code. 

sec.381.1.Purpose.
This chapter implements Government Code chapter 531, subchapter D, which 
establishes a guardianship advisory board within the Health and Human Services 
Commission (HHSC), requires HHSC to adopt minimum standards for the delivery of 
guardianship and related services, directs HHSC to develop and, subject to 
appropriations, implement a plan to ensure that incapacitated persons who need 
guardianship services receive necessary and appropriate assistance, and 
authorizes HHSC to award grants to local guardianship centers to establish local 
volunteer guardianship programs. 

sec.381.2.Definitions.
The following words and terms, when used in this chapter, have the following 
meanings unless the context clearly indicates otherwise: 
(1) Alliance Director -- Individual appointed by HHSC whose duties include 
serving as executive officer of the Guardianship Alliance of Texas, coordinator 
for the Guardianship Advisory Board, and liaison between the Guardianship 
Advisory Board and HHSC. 
(2) Guardian -- A person, corporation or guardianship program is appointed 
guardian of an incapacitated person under section 693, Probate Code, or a 
temporary or successor guardian. Except as expressly provided otherwise, 
"guardian" includes the guardian of the estate and the guardian of the person of 
an incapacitated person. 
(3) Guardianship -- Legal process by which a court appoints a guardian to make 
housing, medical and/or financial decisions for an incapacitated person. 
(4) Guardianship Advisory Board -- Eleven-member advisory group established 
pursuant to sec.531.122, Government Code, to advise HHSC regarding the 
implementation of chapter 531, subchapter D, Government Code. 
(5) Guardianship Alliance of Texas -- Title selected by HHSC with the advice of 
the Guardianship Advisory Board for the plan to ensure that each incapacitated 
individual in Texas who needs a guardianship or a less restrictive type of 
assistance to make decisions concerning the incapacitated person's own welfare 
and financial affairs receives that assistance. 
(6) Incapacitated person --: 
(A) a minor; 
(B) an adult individual who, because of a physical or mental condition, is 
substantially unable to provide food, clothing, or shelter for himself or 
herself, to care for the individual's own physical health, or to manage the 
individual's own financial affairs; 
(C) a missing person; or 
(D) a person who must have a guardian appointed to receive funds due the person 
from any governmental source. 
(7) Local guardianship center -- An entity in the state that provides 
guardianship and related services to an incapacitated person or other person who 
needs assistance in making decisions concerning the person's own welfare or 
financial affairs. 
(8) Local volunteer guardianship program -- Any local, county or regional 
program in this state that uses volunteers to provide guardianship and related 
services to an incapacitated person or other person who needs assistance in 
making decisions concerning the person's own welfare or financial affairs. 
(9) Statutory probate court -- A statutory court whose jurisdiction is limited 
by statute to the general jurisdiction of a probate court and a court whose 
statutorily designated name contains the word "probate." County courts at law 
exercising probate jurisdiction are not statutory probate courts under this 
chapter unless the statutorily designated name of the county courts at law 
includes the word "probate." 
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 June 15, 1998.
TRD-9809561
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 424-6576

SUBCHAPTER B.Guardianship Advisory Board 
1 TAC sec.sec.381.101-381.103
The new rules are proposed under the Texas Government Code, Chapter 531, 
sec.531.033, which authorizes the Commissioner of Health and Human Services to 
adopt rules necessary to carry out the Health and Human Services Commission's 
duties under Chapter 531.
The new rules affect Chapter 531 of the Texas Government Code. 

sec.381.101.Duties.
The Guardianship Advisory Board is not subject to the provisions of sections 
2110.002 and 2110.008, Government Code, Civil Statutes. The Guardianship 
Advisory Board is appointed in accordance with this subchapter to advise HHSC 
concerning its administration of the provisions of chapter 531, subchapter D, 
Government Code, and this chapter, including the following: 
(1) the adoption of minimum standards for the provisions of guardianship and 
related services; 
(2) development and, subject to appropriations, implementation of a plan to 
ensure that each incapacitated person in Texas who needs guardianship or a less 
restrictive form of assistance to make decisions concerning the person's welfare 
receives necessary and appropriate assistance; and 
(3) the development and award of grants for the establishment of local volunteer 
guardianship programs in accordance with the provisions of subchapter C of this 
chapter. 

sec.381.102.Membership and eligibility.
(a) The Guardianship Advisory Board is composed of one representative of each 
state health and human services region who is appointed by majority vote of the 
statutory probate judges of the region or, if the region has no statutory 
probate court, by majority vote of the statutory probate judges of the state. A 
member of the Guardianship Advisory Board serves at the pleasure of the majority 
of the statutory probate judges who appointed the member. 
(b) A person is eligible for appointment to the Guardianship Advisory board if 
the person has demonstrated experience working with a guardianship program, an 
organization that advocates on behalf of or in the interest of the elderly or 
persons with mental illness or mental retardation, or incapacitated persons. 

sec.381.103.Officers and meetings.
(a) The Guardianship Advisory Board shall elect a presiding officer and other 
officers considered necessary from the membership of the board. 
(b) The Guardianship Advisory Board may meet to conduct business and shall meet 
at the call of the presiding officer. 
(c) The Guardianship Advisory Board may hold public meetings or hearings on 
matters relating to the implementation of chapter 531, subchapter D, Government 
Code, or its duties under this chapter. Notice of public hearings or public 
meetings shall be posted in accordance with the provisions of chapter 551, 
Government Code. The board shall develop and implement policies to provide the 
public a reasonable opportunity to appear before the board and speak on any 
matter under the board's jurisdiction. 
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 June 15, 1998.
TRD-9809560
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 424-6576

SUBCHAPTER C.Grants for Local Volunteer Guardianship Programs 
1 TAC sec.sec.381.201-381.210
The new rules are proposed under the Texas Government Code, Chapter 531, 
sec.531.033, which authorizes the Commissioner of Health and Human Services to 
adopt rules necessary to carry out the Health and Human Services Commission's 
duties under Chapter 531. 
The new rules affect Chapter 531 of the Texas Government Code.

sec.381.201.Eligible Projects.
Grant applications must meet the requirements and specifications set forth in 
Requests for Proposals issued from time to time by HHSC. 

sec.381.202.Eligible Applicants.
The following entities are eligible to apply for grant funds: 
(1) an entity that wishes to create a new local volunteer guardianship program; 
(2) an entity that wishes to expand an existing local guardianship center to 
include a local volunteer guardianship program; 
(3) an entity that wishes to expand an existing local volunteer guardianship 
program to serve a county or a community that is not currently served by a local 
volunteer guardianship program; 
(4) an entity that wishes to expand an existing local volunteer guardianship 
program to serve new populations of incapacitated or disabled persons not 
currently served in the program's county by a local volunteer guardianship 
program; and 
(5) such other entities as are described in the requests for proposals or other 
notice of potential grant award that is issued by HHSC.

sec.381.203.Application and selection process.
A grant applicant must submit its application for a grant directly to HHSC by 
the deadline published in the request for proposal or other notice of potential 
grant award issued by HHSC. An application received after the deadline will not 
be considered. A review panel selected by HHSC, with the advice of the 
Guardianship Advisory Board, will review timely filed applications for 
eligibility and completeness. The review panel will evaluate eligible, complete, 
and timely proposals in accordance with the evaluation methodology published in 
the request for proposal or other notice of potential grant award issued by 
HHSC. 

sec.381.204.Grant period.
Grant awards are subject to the availability of appropriated funds and are 
generally funded for a 12-month period specified in the request for proposals or 
other notice of potential grant awards issued by HHSC. 

sec.381.205.Continuation funding policy.
All grants for local volunteer guardianship programs are subject to the 
availability of appropriated funds. A grant may be cancelled either prior to or 
following the award of a grant if funding for the grant is terminated, 
withdrawn, or if sufficient funds are not appropriated to HHSC. HHSC makes no 
commitment that a grant, once funded, will receive priority consideration for 
subsequent funding. 

sec.381.206.Grant amounts.
The minimum and maximum amount of grant awards will be published in the specific 
request for proposal or other notice of potential grant awards issued by HHSC. 

sec.381.207.Notification of award. 
HHSC will notify all applicants in writing of HHSC's final action on a grant 
application. HHSC will notify each successful grant applicant of a tentative 
grant award. Alternatively, HHSC may issue a non-binding letter of intent to 
award a grant to a successful applicant contingent upon the satisfaction of 
certain conditions specified in the letter of intent. Each successful grant 
applicant must notify HHSC in writing of its decision to either accept or reject 
a tentative grant award within 10 business days of the date of HHSC's notice of 
a tentative grant award or within a shorter time period as specified in a non-
binding letter of intent. A successful grant applicant's failure to notify HHSC 
within this time period shall be construed as a rejection of the tentative grant 
award. Any exception to this rule will require the review and written approval 
of the Alliance Director of the Guardianship Alliance of Texas. 

sec.381.208.Request for reconsideration.
An unsuccessful grant applicant may request a reconsideration of its grant 
application by requesting reconsideration in writing to the Alliance Director 
within 10 days of the date of notification of HHSC's final action on a grant 
application. The applicant should submit written documentation in support of the 
request. The Alliance Director will review the request for reconsideration and 
respond in writing to the request within business 15 days of receipt of the 
request for reconsideration by HHSC. 

sec.381.209.Contract.
A successful applicant for a grant award shall be required to execute a contract 
with HHSC on mutually agreeable terms and conditions in the manner and format 
prescribed by HHSC. Grant funds may not be distributed to a successful applicant 
prior to execution of a contract with HHSC.

sec.381.210.Progress Reports.
Each grantee must submit progress reports in accordance with the instructions 
provided by and in the form prescribed by HHSC. The grantee must submit reports 
only for those activities supported by HHSC grant funds. The program director of 
the entity receiving the grant must sign all progress reports. Progress reports 
are due quarterly. Progress reports are due on the first day of January, April, 
July, and October. Failure to meet these deadlines will result in the grantee 
becoming ineligible for future grant awards and may result in HHSC placing a 
financial hold on the grantee.
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 June 15, 1998.
TRD-9809559
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 424-6576

TITLE 4. AGRICULTURE
PART II. Texas Animal Health Commission
CHAPTER 32.Hearing and Appeal Procedures
4 TAC sec.sec.32.1, 32.2, 32.5
The Texas Animal Health Commission proposes amendments to sec.sec.32.1, 32.2 and 
32.5 and the repeal of sec.32.3 and sec.32.4, concerning hearing and appeal 
procedures. Sections 32.1 and 32.2 are being amended to update statutory 
references. The definitions in sec.32.1 are also amended to comply with new 
Texas Register requirements. Section 32.5(a) and (b) are replaced by the 
reference in sec.32.2 to the rules of the State Office of Administrative 
Hearings. Sections 32.3 and 32.4 are no longer necessary because sec.32.2 adopts 
rules of State Office of Administrative Hearings.
Kathryn A. Reed, General Counsel, has determined for the first five-year period 
the rules are in effect, there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rules. 
Ms. Reed also has determined that for each year of the first five years the 
rules are in effect, the public benefit anticipated as a result of enforcing the 
rules will be updated regulations. There will be no effect to small businesses. 
There is no anticipated economic cost to persons who are required to comply with 
the rules as proposed. 
Comments regarding the proposed amendments and repeals may be submitted to Kathy 
Reed, P.O. Box 12966, Austin, Texas 78711-2966. 
The amendments are proposed under the Texas Agriculture Code, Chapter 161, 
sec.sec.161.038, 161.041 and 161.046, which authorizes the Commission to enact 
rules to eradicate communicable disease. 
No other statutes, articles, or codes are affected by the amendments. 

sec.32.1. Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> Act--The Administrative Procedure [and
Texas Register] Act, Texas <nl>Government Code, Chapter 2001<ol> [Civil 
Statutes, Article 6252-13a]. 
<nl>(2)<ol> Commission--The Texas Animal Health Commission.
<nl>(3)<ol> Executive director--The chief executive officer of the commission 
appointed by the commissioners. 
<nl>(4)<ol> Hearing officer--An administrative law judge designated by the State 
Office of Administrative Hearings to conduct proceedings pursuant to the 
[Administrative Procedure and Texas Register] Act. 
<nl>(5)<ol> Party--A person or agency named or admitted by the executive 
director as a party to a proceeding before the commission.
<nl>(6)<ol> Person--An individual, partnership, corporation, association, 
governmental subdivision, or public or private organization of any character. 

sec. 32.2. Appeal of a Decision or Order by the Executive Director.
A person receiving written notice of <nl>an<ol> [a decision or] order by the 
executive director has 15 days from receipt of the notice to file notice of 
appeal. The notice of appeal must be in writing and filed with the executive 
director at the commission's office in Austin. The notice must specifically 
state the issues for consideration on appeal. The administrative hearing on the 
specific issues appealed will be held in Austin, pursuant to provisions of the 
Act <nl>,this Chapter, and the rules of the State Office of Administrative 
Hearings (Title 1, Texas Administrative Code, Chapters 155-157)<ol>.

sec.32.5. Decisions and Orders.
[(a) <p<ol> The hearing officer's proposal for decision shall be sent by 
certified mail to the parties to the proceeding within 60 days after the hearing 
is closed. Any briefs and exceptions to the proposal for decision by parties 
adversely affected must be filed within 30 days of receipt of the proposal. 
Reply briefs, if any, must be filed within 15 days thereafter. ] 
[(b) <p<ol> Within 10 days of the deadline for filing reply briefs, the hearing 
officer shall send the final proposal for decision together with the record and 
any briefs and exceptions to the commission for final decision. ] 
<nl>(a)<ol> [(c)] After the completion of the hearing, no further evidence shall 
be received or considered. The commission may, in its discretion, allow oral 
arguments.
<nl>(b)<ol> [(d)] Seven commission members shall constitute a quorum. By a 
majority of those present or by a majority of the quorum, whichever is greater, 
the commission will adopt findings of fact and conclusions of law which shall be 
part of the commission's final decision or order. Findings of fact shall be 
based exclusively on the evidence or on matters officially noticed. 
<nl>(c)<ol> [(e)] Upon rendition of the commission's final decision, parties 
adversely affected may file a motion for rehearing in accordance with the Act. 
<nl>Judicial review will be by<ol> [Appeal shall be to] district court in Travis 
County, in accordance with the Act. 
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 June 15, 1998.
TRD-9809554
Kathryn A. Reed
General Counsel
Texas Animal Health Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 719-0714

4 TAC sec.32.3, sec.32.4
(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 Animal 
Health Commission or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the Texas Agriculture Code, Chapter 161, 
sec.sec.161.038, 161.041 and 161.046, which authorizes the Commission to enact 
rules to eradicate communicable disease. 
No other statutes, articles, or codes are affected by the repeals. 
sec.32.3. Hearing Officer and Commission Authority. 
sec.32.4. Subpoenas, Depositions, and Witnesses. 
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 June 15, 1998.
TRD-9809555
Kathryn A. Reed
General Counsel
Texas Animal Health Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 719-0714

CHAPTER 47.Approved Personnel
4 TAC sec.sec.47.1-47.6
The Texas Animal Health Commission proposes amendments to sec.sec.47.1-47.6, 
concerning approved personnel. The amendment to sec.47.1 reflects an updated 
calfhood vaccination age. The definitions are also amended to comply with new 
Texas Register requirements. The amendment to sec.47.2 more clearly defines the 
level of supervision an approved veterinarian must provide to an approved 
technician or other employee. The amendment to sec.47.3 clarifies how card test 
for brucellosis is to be conducted. The amendment to sec.47.4 emphasizes that 
individual cattle tattoos or brands may be used for brucellosis vaccination only 
if the animals are registered by an official breed association. Section 47.5 is 
amended to make submission time for test documents consistent with sec.47.3(d). 
Section 47.6 is amended to require an approved veterinarian to request 
reinstatement after suspension. 
Kathryn A. Reed, General Counsel, has determined for the first five-year period 
the rules are in effect, there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rules. 
Ms. Reed also has determined that for each year of the first five years the 
rules are in effect, the public benefit anticipated as a result of enforcing the 
rules will be updated regulations. There will be no effect to small businesses.
There is no anticipated economic cost to persons who are required to comply with 
the rules as proposed. 
Comments regarding the proposed amendments may be submitted to Kathy Reed, P.O. 
Box 12966, Austin, Texas 78711-2966. 
The amendments are proposed under the Texas Agriculture Code, Chapter 161, 
sec.161.041 and Chapter 163, sec.163.064, which authorizes the Commission to 
enact rules to eradicate communicable disease. 
No other statutes, articles, or codes are affected by the amendments.

sec.47.1. Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> Accredited veterinarian--A veterinarian approved by USDA under the 
provisions of Title 9, Part 161, Code of Federal Regulations, to perform 
specified functions required by cooperative state-federal disease control 
eradication programs. 
<nl>(2)<ol> Approved personnel-- 
(A) veterinarians and inspectors employed by the commission;
(B) USDA-APHIS, VS veterinary medical officers and animal health technicians; 
(C) veterinarians who: 
(i) are licensed to practice veterinary medicine in Texas; and 
(ii) are accredited by USDA-APHIS, VS for the State of Texas; and 
(iii) have satisfactorily completed Texas Animal Health Commission (TAHC) 
brucellosis training or provide documentation that they have satisfactorily 
completed substantially similar brucellosis training in another state; and
(D) veterinarians' technicians who have satisfactorily completed TAHC 
brucellosis training. 
<nl>(3)<ol> Calfhood Vaccination--Vaccination of female cattle between four and 
<nl>12<ol>[ten] months of age with an approved Brucella vaccine at the 
appropriate dosage. 
<nl>(4)<ol> Card test permit--A permit issued by USDA-APHIS, VS to an approved 
person certifying that card test training has been satisfactorily completed at a 
state-federal laboratory and that the individual is authorized to conduct the 
card test according to the requirements and standards for approved personnel and 
the brucellosis laws and regulations. 
<nl>(5)<ol> Commission--The Texas Animal Health Commission.
<nl>(6)<ol> Discrepancy--Differing result between the card test performed by an 
approved person and the card test performed by the state-federal laboratory. 
<nl>(7)<ol> Fraudulent blood sample--An adulterated sample or a sample that was 
collected from an animal other than the animal indicated on the test document. 
<nl>(8)<ol> Official eartag--A Veterinary Services approved identification 
eartag that conforms to the nine-character alphanumeric national uniform 
eartagging system. It uniquely identifies each individual animal. The term 
includes the orange-colored eartag series used to identify calfhood vaccinates. 
<nl>(9)<ol> Ownership information--Seller's full name and address, including zip 
code. 
<nl>(10)<ol> Veterinarian's technician--An approved person who works under the 
direct supervision of an approved veterinarian.
<nl>(11)<ol> Veterinary services--An agency of the United States Department of 
Agriculture, Animal and Plant Health Inspection Service. 

sec.47.2. General Requirements. 
This regulation sets the standards for personnel who perform work in the Texas 
Bovine Brucellosis Program pursuant to the Texas Agriculture Code, sec.163.064. 
Personnel may perform bovine brucellosis work in Texas as follows.
(1)-(3) (No change.)
(4) <nl>The approved veterinarian must be on the premise when an approved 
technician or other employee is<ol> [An approved veterinarian's technician or 
other employee must work under the direct supervision of an approved 
veterinarian while] performing brucellosis work as permitted herein. The 
approved veterinarian is responsible for assuring that approved veterinarian's 
technicians and other employees working under his/her supervision comply with 
all TAHC regulations. 

sec.47.3. Requirements for Brucellosis Testing.
(a) (No change.)
(b) Performing the card test. 
(1)-(2) (No change.)
(3) Antigen will be kept refrigerated <nl>but must be protected from 
freezing<ol>. 
(4) (No change.)
(5) Mechanical rockers will be used to rotate the card. Timers will be 
<nl>properly operated to assure that persons performing the card test read the 
test after four-minutes of rocking<ol> [used to read results of the card test at 
four-minute intervals]. 
(6) The card test will be run in an area where the sample is protected from wind 
and blowing dust <nl>and is away from extreme heat and cold<ol>. 
(7) (No change.)
(c)-(d) (No change.)

sec.47.4. Brucellosis Calfhood Vaccination Requirements.
(a) (No change.)
(b) Each calfhood-vaccinated animal must be permanently identified as vaccinates 
by tattoo and by official vaccination eartag. If the animal is already 
identified with an official eartag before vaccination, an additional official 
eartag is not required. Vaccination tattoos must be applied to the right ear. 
For Brucella abortus strain 19 vaccinates the tattoo will include the United 
States Registered Shield and "V," which will be preceded by a number indicating 
the quarter of the year and followed by a number corresponding to the last digit 
of the year in which the vaccination was done. For Brucella abortus strain RB 51 
vaccinates the tattoo will include the United States Registered Shield and "V," 
which will be preceded by a letter "R" and followed by a number corresponding to 
the last digit of the year in which the vaccination was done. Official 
vaccination (orange) eartags must be applied to the right ear. Individual animal 
registration tattoos or individual animal registration brands may be used for 
identifying animals in place of official eartags <nl> only <ol>if the cattle 
and/or bison are registered by breed associations recognized by VS. Official 
calfhood vaccinates are allowed to be retattooed by an accredited veterinarian 
designated by the State Veterinarian, or by a Federal or State representative, 
provided that: 
(1)-(3) (No change.)
(c) (No change.)

sec.47.5. Suspension or Revocation of Approved Personnel Status.
(a) (No change.)
(b) Suspension or revocation of approved personnel status may be made upon a 
determination that violations including, but not limited to, the following have 
occurred: 
(1)-(8) (No change.)
(9) failing to submit test documents <nl>as specified in sec.47.3(d) of this 
chapter <ol> [within seven days following testing]; 
(10)-(16) (No change.)
(c)-(h) (No change.)

sec.47.6. Restoration of Approved Personnel Status. 
(a) Approved personnel status will be [automatically] restored after a period of 
suspension <nl>upon receipt of written request of the suspended person<ol>. 
(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 June 15, 1998.
TRD-9809556
Kathryn A. Reed
General Counsel
Texas Animal Health Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 719-0714

CHAPTER 59.General Practice and Procedures
4 TAC sec.sec.59.2, 59.3, 59.6
The Texas Animal Health Commission proposes amendments to sec.sec.59.2, 59.3 and 
59.6, concerning general practice and procedures. The amendment to sec.59.2 
clarifies that comments, as well as complaints, can be addressed to the 
Commission complaint address and telephone line. Section 59.3 is amended to 
specify how Commission committees will operate. The amendment to sec.59.6 
specifies what action the Commission may take in response to a Petition for 
Rulemaking. 
Kathryn A. Reed, General Counsel, has determined for the first five-year period 
the rules are in effect, there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rules. 
Ms. Reed also has determined that for each year of the first five years the 
rules are in effect, the public benefit anticipated as a result of enforcing the 
rules will be updated regulations. There will be no effect to small businesses. 
There is no anticipated economic cost to persons who are required to comply with 
the rules as proposed. 
Comments regarding the proposed amendments may be submitted to Kathy Reed, P.O. 
Box 12966, Austin, Texas 78711-2966. 
The amendments to sec.59.2 are proposed under the Texas Agriculture Code, 
Chapter 161, sec.sec.161.033, 161.034, 161.041 and 161.046, which authorizes the 
Commission to enact rules to eradicate communicable disease. The amendments to 
sec.59.3 and sec.59.6 are proposed under the Texas Agriculture Code, Chapter 
161, sec.sec.161.030, 161.041 and 161.046, which authorizes the Commission to 
enact rules to eradicate communicable disease. 
No other statutes, articles, or codes are affected by the amendments.

sec.59.2. General Responsibilities.
(a)-(c) (No change.)
(d) Public Comment and Complaints. 
(1) (No change.)
(2) The public and those regulated by the Commission will be notified of the 
name, mailing address, and telephone number of the Commission for the purpose of 
directing complaints <nl>and comments<ol>to the Commission. The information 
shall be included on: 
(A)-(B) (No change.)
(e) (No change.)

sec.59.3. <nl>Operation of Committees;<ol> Designation of Commission Vice Chair 
and Ad Hoc Chair.
<nl>(a)<ol> <nl> Committees. <ol>
<nl>(1)<ol> <nl> Appointment of Committee Chair. For each committee, the 
Commission Chair will specify the purpose of the committee and name a committee 
chair. An ad hoc committee chair may be named to act by majority vote of the 
committee in the absence or unavailability of the chair. <ol>
<nl>(2)<ol> <nl> Quorum. A simple majority of the commission members appointed 
to the committee shall constitute a quorum. A committee must have a quorum 
present to convene and take action. Action may be taken by a majority vote of 
those present or by a majority vote of the quorum, whichever is greater. <ol>
<nl>(b)<ol> [(a)] Vice chair. Following the designation of a chair by the 
governor of Texas, the commission will name a vice chair by majority vote. The 
vice chair will act for the chair in the absence or unavailability of the chair, 
and will have the same powers and authority as those of the chair. 
<nl>(c)<ol> [(b)] Ad hoc chair. An ad hoc chair may be named to act by majority 
vote of the commission in the event neither the chair nor the vice chair can be 
present for a commission meeting. The ad hoc chair will have the same powers and 
authority as those of the chair. 

sec.59.6. Petitions for Rules or Changes to Rules.
(a)-(b) (No change.)
<nl>(c)<ol> <nl> After presentation of the document to the commission, the 
commission may direct commission staff to compile information relevant to the 
petition to be presented at a subsequent commission meeting; propose rules in 
response to the petition; vote to take no action regarding the petition; or take 
other action it deems appropriate. <ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on June 15, 1998.
TRD-9809557
Kathryn A. Reed
General Counsel
Texas Animal Health Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 719-0714

TITLE 7. BANKING AND SECURITIES
PART II. Texas Department of Banking
CHAPTER 17.Trust Company Regulation
SUBCHAPTER A.General
7 TAC sec.17.4
The Finance Commission of Texas (the commission) proposes new sec.17.4, 
concerning bonding requirements for directors, managers, managing participants, 
officers, and employees, of trust companies. 
Pursuant to Texas Civil Statutes, Article 342a-4.110, a trust company is 
required to maintain a bond for protection and indemnity of clients, in 
reasonable amounts against dishonesty, fraud, defalcation, forgery, theft, and 
other insurable losses with a corporate insurance or surety company. A bond is 
required for each director, manager, managing participant, officer, and employee 
without regard to whether the person receives salary or other compensation. Upon 
application, the banking commissioner may eliminate the bonding requirement for 
a particular individual if the banking commissioner finds that the bonding 
requirement is unnecessary or burdensome. The commission invites comments from 
interested parties on whether exemptions from bonding requirements for family 
trusts should be permitted. 
Proposed sec.17.4 requires trust companies to comply with the bonding 
requirements of Texas Civil Statutes, Article 342a-4.110, and sec.17.4. Also, 
proposed sec.17.4 specifies the types of bonds required to comply with Texas 
Civil Statutes, Article 342a-4.110, and sec.17.4. Proposed sec.17.4 also 
requires that a trust company's board demonstrate that it has thoroughly 
reviewed the risks associated with its trust business to determine if additional 
specialized bond coverage is necessary. Additionally, proposed sec.17.4 allows a 
trust company, under certain circumstances, to utilize a holding company's 
comprehensive insurance coverage to comply with Texas Civil Statutes, Article 
342a-4.110, and sec.17.4. Finally, proposed sec.17.4 requires that a trust 
company retain and make available to the Texas Department of Banking (the 
"department") all original bonds. 
Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the section as proposed will be in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the section. 
Mr. Jobe also has determined that for each year of the first five-year period 
the section as proposed will be in effect, the public benefit anticipated as a 
result of enforcing this section is the clarification of highly complex 
statutory standards to aid the industry in compliance. No net economic cost will 
result to persons required to comply with the proposed section. No difference 
will exist between the cost of compliance for small businesses and the cost of 
compliance for the largest businesses affected by this section. 
Comments on the proposal may be submitted in writing to Everette D. Jobe, 
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard, 
Austin, Texas 78705-4294, or by e-mail to everette.jobe@banking.state.tx.us. 
The section is proposed pursuant to Texas Civil Statutes, Article 342a-
3.011(e)(2), which authorizes the commission to adopt rules specifying the 
provisions of Texas Civil Statutes, Article 342a-1.001 et seq, that are subject 
to an exemption request. The section is also proposed pursuant to Texas Civil 
Statutes, Article 342a-1.003(a), which authorizes the commission to adopt rules 
necessary or reasonable to implement and clarify Texas Civil Statutes, Article 
342a-1.001 et seq. 
Texas Civil Statutes, Article 342a-4.110, is affected by the proposal.

sec.17.4.Bonding Requirements.
(a) Compliance required. Pursuant to Texas Civil Statutes, Article 342a-4.110, a 
trust company is required to maintain a bond for protection and indemnity of 
clients, in reasonable amounts against dishonesty, fraud, defalcation, forgery, 
theft, and other insurable losses with a corporate insurance or surety company. 
Unless the banking commissioner waives the bonding requirement for a particular 
individual, a bond is required for each director, manager, managing participant, 
officer, and employee without regard to whether the person receives salary or 
other compensation. In addition to complying with Texas Civil Statutes, Article 
342a-4.110, a trust company shall comply with this section. 
(b) Types of Bonds. Bonds must be obtained from a corporate insurance or surety 
company authorized to do business in this state, or acceptable to the banking 
commissioner and otherwise lawfully permitted to issue the coverage against all 
losses arising from dishonesty, fraud, defalcation, forgery, theft, errors and 
omission, and other similar insurable losses determined by the banking 
commissioner to be reasonably appropriate. In lieu of individual bonds, schedule 
or blanket bonds may be utilized, if in a form acceptable to the banking 
commissioner, to provide coverage for all directors, managers, managing 
participants, officers, and employees of a trust company. In addition, a trust 
company through its board must demonstrate that it has conducted a thorough 
review of the risks associated with the trust business conducted to determine if 
additional specialized bond coverages should be obtained. The board's review 
must be fully documented in its minutes. 
(c) Holding company's comprehensive insurance coverage. In lieu of obtaining 
individual or blanket bond coverage, a trust company which is owned and 
controlled by a holding company, may utilize a holding company's comprehensive 
insurance coverage to satisfy the requirements of Texas Civil Statutes, Article 
342a-4.110, and this section. Utilization by a trust company of its holding 
company's comprehensive insurance coverage must be lawfully permitted under 
terms of the comprehensive insurance policy and the insurance laws of this 
state. Evidence of bond coverage for a trust company's directors, officers, and 
employees must be provided to the banking commissioner. 
(d) Records. A trust company shall retain all original bonds to demonstrate 
compliance with Texas Civil Statutes, Article 342a-4.110, and this section, 
which documents must be available at all times to the department for examination 
and review. 
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 June 12 1998.
TRD-9809500
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: August 14, 1998
For further information, please call: (512) 475-1300

CHAPTER 21.Trust Company Corporate Activities
The Finance Commission of Texas (the commission) proposes new sec.21.24, 
concerning statutory exemptions for trust companies administering family trusts, 
and new sec.21.51, concerning change of control applications for trust 
companies.
Pursuant to Texas Civil Statutes, Article 342a-3.011, a trust company may 
request in writing that it be exempted from specified provisions of Texas Civil 
Statutes, Article 342a-1.001 et seq. The banking commissioner may grant the 
exemption in whole or in part if the banking commissioner finds that the trust 
company does not transact business with the public. A trust company does not 
transact business with the public if it acts as a corporate fiduciary for 
accounts in which all beneficiaries are related within the fourth degree of 
affinity or consanguinity to the person who controls the trust company. Pursuant 
to Texas Civil Statutes, Article 342a-3.012(6), a trust company requesting an 
exemption from the banking commissioner, must provide a list of the specific 
statutory provisions for which the exemption request is made. 
As proposed, sec.21.24 specifies the information that must be contained in an 
exemption application, and further specifies the specific provisions of Texas 
Civil Statutes, Article 342a-1.001 et seq, from which a trust company may 
request an exemption, subject to conditions or limitations imposed by the 
banking commissioner. Exemption from these provisions is permissible because 
trust companies that do not transact business with the public will be limited to 
administration of family trusts. 
Proposed sec.21.24 also specifies the provisions from which a trust company may 
not request an exemption, detailed in subsection (c) and described in the 
following paragraphs. 
An exemption may not be requested from Texas Civil Statutes, Article 342a, 
Chapter 1 (relating to General Provisions). An exemption may not be requested 
from Texas Civil Statutes, Article 342a-2.002, requiring annual examinations, or 
Texas Civil Statutes, Article 342a-2.003, requiring the quarterly filing of 
Statements of Condition and Income, except as otherwise provided by this 
section. Thus, trust companies that do not transact business with the public 
will be subject to annual examinations and quarterly filings of Statements of 
Condition and Income. These provisions are necessary for the Texas Department of 
Banking (the department) to meet its operational and oversight responsibilities 
to ensure the safety and soundness of trust companies, thus exemptions from 
these provisions are not appropriate. As proposed, a trust company may request 
an exemption from public disclosure of the Report of Trust Assets. The 
commission invites comments from interested parties on whether an exemption from 
Texas Civil Statutes, Article 342a-2.003(d), providing that a statement of 
condition and income is generally a public record, should be permitted. 
Except for Texas Civil Statutes, Article 342a-3.002(11), an exemption may not be 
made from Chapter 3 (relating to Powers, Organization, Organizational Changes, 
and Capital and Surplus). These provisions are necessary for the department to 
ensure the safety and soundness of trust companies, to limit trust companies not 
transacting business with the public from exceeding their limited purpose of 
administering family trusts, and to ensure that Texas corporate governance 
requirements are met. An exemption from Texas Civil Statutes, Article 342a-
3.002(11), requiring that the number of directors, managers, or managing 
participants, be specified in the articles of association as at least five and 
no more than 25, one of which must be a resident of this state, is appropriate 
because under subsection (b)(3) of this section, a minimum of three directors, 
managers, or managing participants is permissible. Also, although trust 
companies not transacting business with the public may be authorized to maintain 
restricted capital at an amount less than the statutory minimum, an exemption 
from Texas Civil Statutes, Article 342a-3.007(a) (relating to Restricted 
Capital), is unnecessary because Texas Civil Statutes, Article 342a-3.007(e), 
allows the banking commissioner, on a case-by-case basis, to reduce the minimum 
restricted capital amount if certain conditions are met. Generally, however, the 
banking commissioner will not grant approval for a trust company that does not 
transact business with the public to maintain restricted capital of less than 
$250,000. Additionally, an exemption from Texas Civil Statutes, Article 342a-
4.110 (relating to Bonding), is unnecessary because Texas Civil Statutes, 
Article 342a-4.110(c), grants the commissioner the authority to eliminate the 
bonding requirement for a particular individual if the bonding requirement is 
unnecessary or burdensome. 
A trust company may not request an exemption from Texas Civil Statutes, Article 
342a, Chapter 4 (relating to Shares and Participation Shares, Shareholders and 
Participants, and Management), except that an exemption may be requested from 
Texas Civil Statutes, Article 342a-4.103(a) (relating to the minimum number of 
directors, managers, and managing participants) and Article 342a-4.107(a)-(c) 
(relating to insider transactions). These provisions are necessary for the 
department to ensure the safety and soundness of trust companies, to limit trust 
companies not transacting business with the public from exceeding their limited 
purpose of administering family trusts, and to ensure that Texas corporate 
governance requirements are met. 
A trust company may not request an exemption from Texas Civil Statutes, Article 
342a, Chapter 5, Subchapter B (relating to State Trust Company Investments); 
Subchapter D (relating to Other Investment Provisions); Subchapter E (relating 
to Trust Deposits); and Subchapter F (relating to Liabilities and Pledge of 
Assets), except that an exemption may be requested from Texas Civil Statutes, 
Article 342a-5.103 (relating to Subsidiaries). These provisions are necessary 
for the department to ensure the safety and soundness of trust companies and to 
limit trust companies not transacting business with the public from exceeding 
their limited purpose of administering family trusts. 
Finally, proposed sec.21.24(c) does not allow a trust company to request an 
exemption from Texas Civil Statutes, Article 342a, Chapter 6 (relating to 
Enforcement Actions), Chapter 7 (relating to Dissolution and Receivership), and 
Chapter 8 (relating to General Provisions). These provisions are necessary for 
the department to meet its operational and oversight responsibilities to ensure 
the safety and soundness of trust companies and to limit trust companies not 
transacting business with the public from exceeding their limited purpose of 
administering family trusts. 
As proposed, sec.21.24(d) requires the banking commissioner to issue a written 
notice pursuant to sec.21.4 informing the applicant of the status of the 
exemption application. Proposed sec.21.24(e) requires that all beneficiaries of 
family trusts obtain a copy of the exemptions granted by the banking 
commissioner to a trust company. 
Proposed sec.21.51 pertains to requirements and procedures for change of control 
applications for trust companies. The proposed rule is based on existing 
sec.15.81, a rule applicable to banks that will continue to apply to trust 
companies until the new proposal is adopted and become effective.
Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the sections as proposed will be in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the section. 
Mr. Jobe also has determined that for each year of the first five-year period 
the section as proposed will be in effect, the public benefit anticipated as a 
result of enforcing this section is the clarification of highly complex 
statutory standards to aid the industry in compliance. No net economic cost will 
result to persons required to comply with the proposed section. No difference 
will exist between the cost of compliance for small businesses and the cost of 
compliance for the largest businesses affected by this section. 
Comments on the proposal may be submitted in writing to Everette D. Jobe, 
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard, 
Austin, Texas 78705-4294, or by e-mail to everette.jobe@banking.state.tx.us. 

SUBCHAPTER B.Trust Company Chartering and Powers
7 TAC sec.21.24
The section is proposed pursuant to Texas Civil Statutes, Article 342a-
3.011(e)(2), which authorizes the commission to adopt rules specifying the 
provisions of Texas Civil Statutes, Article 342a-1.001 et seq, that are subject 
to an exemption request. The section is also proposed pursuant to Texas Civil 
Statutes, Article 342a-1.003(a), which authorizes the commission to adopt rules 
necessary or reasonable to implement and clarify Texas Civil Statutes, Article 
342a-1.001 et seq. 
Texas Civil Statutes, Articles 342a-3.002(11), 342a-4.103(a), 342a-4.107(a)-(c), 
342a-5.001, 342a-5.101, 342a-5.102, 342a-5.104, 342a-5.201, and 342a-5.202, are 
affected by the proposal.

sec.21.24. Exemptions For Trust Companies Administering Family Trusts. 
(a) Compliance required. Pursuant to Texas Civil Statutes, Article 342a-3.011 
and Article 342a-3.012, a trust company, which does not transact business with 
the public, may request in writing that it be exempted from specified provisions 
of Texas Civil Statutes, Article 342a-1.001 et seq. The banking commissioner may 
grant the request in whole or in part if the trust company does not transact 
business with the public. A trust company does not transact business with the 
public if it acts as a corporate fiduciary for accounts in which all 
beneficiaries are related within the fourth degree of affinity or consanguinity 
to the person who controls the trust company. A trust company administering 
family trusts which request exemption from specified provisions of Texas Civil 
Statutes, Article 342a-1.001 et seq, must comply with this section. 
(b) Application for Exemption. A trust company administering family trusts which 
seeks exemption from specified provisions of Texas Civil Statutes, Article 342a-
1.001 et seq, shall file an application, together with the appropriate filing 
fee required by sec.21.2 of this title (relating to Filing and Investigation 
Fees), with the banking commissioner. The application must specify the specific 
exemptions requested and the reasons or justification for requesting the 
exemptions. The application must also include a copy of the trust company's 
articles of association which must contain the following statement in its 
purposes clause: "The sole purpose for which the trust company is organized is 
to act as a corporate fiduciary for accounts in which all beneficiaries are 
related within the fourth degree of affinity or consanguinity to 
___________________ (name of person who controls the trust company)." 
(c) Exemption. Subject to conditions or limitations being imposed by the banking 
commissioner, a trust company administering family trusts may request exemption 
from the following provisions of Texas Civil Statutes, Article 342a-1.001, et 
seq:
(1) the requirement of Texas Civil Statutes, Article 342a-2.003(d) providing 
that the report of assets portion of a statement of condition and income is a 
public record. 
(2) the requirement of Texas Civil Statutes, Article 342a-3.002(11), that five 
is the minimum number of directors, managers, or managing participants that can 
be specified in the articles of association, provided that the articles of 
association must specify the number of directors, managers, or managing 
participants, consistent with paragraph (3) of this subsection; 
(3) the requirement of Texas Civil Statutes, Article 342a-4.103(a), that the 
number of directors, managers, or managing participants of a trust company 
cannot be less than five or more than 25, the majority of whom must be residents 
of this state, provided that the board of a trust company seeking exemption 
under this section must consist of not fewer than three or more than 25 
directors, managers, or managing participants, at least one of whom must be a 
resident of this state; 
(4) the restrictions of Texas Civil Statutes, Article 342a-4.107(a)-(c), 
regarding transactions with management and affiliates; 
(5) the limitations of Texas Civil Statutes, Article 342a-5.001, on investment 
in trust company facilities; 
(6) the limitations of Texas Civil Statutes, Article 342a-5.101, on securities 
investments, provided that the exemption request must address each limitation 
and the reasons for exemption separately; 
(7) the restrictions of Texas Civil Statutes, Article 342a-5.102, regarding 
transactions in state trust company shares or participation shares; 
(8) the limitations of Texas Civil Statutes, Article 342a-5.104, on other real 
estate investments; and 
(9) the limitations of Texas Civil Statutes, Articles 342a-5.201, and 342a-
5.202, regarding lending limit and lease financing transaction restrictions, 
provided that no loans may be made from a trust company's minimum restricted 
capital amount. 
(d) Notice to applicant. The banking commissioner shall issue a written notice 
as required by sec.21.4 of this title (relating to Required Information and 
Abandoned Filings) informing the applicant either that all filing fees have been 
paid and the application is complete and accepted for filing, or that the 
application is deficient and specific additional information is required. 
(e) Notice to beneficiary. A trust company administering family trusts which has 
been granted an exemption under subsection (c) of this section must provide each 
beneficiary of the family trust with a copy of the exemption granted by the 
banking commissioner. The trust company must maintain an acknowledged receipt of 
such notice in its files. 
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 June 12 1998.
TRD-9809501
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: August 14, 1998
For further information, please call: (512) 475-1300

SUBCHAPTER E.Change of Control
7 TAC sec.21.51
The section is proposed under Texas Civil Statutes, Article 342a-1.003(a)(1), 
which authorizes the commission to adopt rules to implement and clarify Texas 
Civil Statutes, Article 342a-1.001 et seq. 
Texas Civil Statutes, Articles 342a-1.002, 342a-3.015, 342a-4.001, 342a-4.002, 
342a-4.003, and 342a-6.002 are affected by the proposal. 

sec.21.51. Application for Acquisition or Change of Control of Trust Company.
(a) General. Without the prior written consent of the banking commissioner, or 
as otherwise provided by this section, a person or entity may not, directly or 
indirectly, acquire a legal or beneficial interest in voting securities of a 
trust company or a corporation or other entity owning voting securities of a 
trust company if, after the acquisition, the person or entity would control the 
trust company. Except as otherwise provided in this section, an application must 
be filed with the banking commissioner for review and consideration of the 
proposed transaction. 
(b) Form of application. The applicant shall submit a fully completed, verified 
application on a form prepared and prescribed by the banking commissioner and 
simultaneously tender the required filing fee pursuant to sec.21.2 of this title 
(relating to Filing and Investigation Fees). The application must, except to the 
extent expressly waived in writing by the banking commissioner, disclose the 
following information: 
(1) the identity, biographical data, business background, and experience 
relating to trust industry matters, and a current statement of financial 
condition, a statement of changes in net worth and a statement of cash flows of 
each person by whom, or on whose behalf, the acquisition is to be made and by 
each person acting in concert with others seeking to acquire voting securities 
subject to Texas Civil Statutes, Article 342a-4.001, and to this section. 
Financial statements will be considered current if audited and dated within 180 
days of the date of the application or will be considered current if unaudited 
and dated within 90 days of the date of the application. All financial 
statements must be accompanied by an affidavit of no material change dated as of 
the date of application; 
(2) a completed authorization to release employment, financial, credit, 
fingerprint information, and criminal history records to the department; 
(3) a completed confirmation inquiry form; 
(4) the identity of each entity other than a natural person seeking to acquire 
control or working in concert with others to acquire control of a trust company 
and a copy of the entity's most recent audited financial statement. Financial 
statements will be considered current if audited and dated within 180 days of 
the date of the application or will be considered current if unaudited and dated 
within 90 days of the date of the application. All financial statements must be 
accompanied by an affidavit of no material change dated as of the date of 
application; 
(5) a description of all material, pending or adjudicated legal or 
administrative proceedings in which each acquiring person or entity is or was a 
party. A material legal proceeding includes a proceeding in which the person or 
entity has been charged with, cited for, or convicted under a state or federal 
law relating to trust or other financial institutions, securities or financial 
instrument reporting, or a felony or crime that directly relates to the duties 
and responsibilities involved in the operation of a trust company or financial 
institution under the laws of a state, the United States, or another country. A 
material legal proceeding also includes a proceeding that resulted in a material 
unsatisfied judgment, or may result in a judgment, against the acquiring person 
or entity and such loss contingency must be disclosed in the financial 
statements of the acquiring person or entity under generally accepted accounting 
principles, or is otherwise material. A material administrative proceeding 
includes a proceeding in which the person or entity is or has been subject to a 
cease and desist, removal, enforcement, or other order, including an order of 
supervision or conservatorship issued by a state, federal, or foreign regulatory 
agency; 
(6) the terms and conditions of the proposed acquisition or change of control 
and the manner in which the acquisition or change of control is to be made; 
(7) the identity, source, and amount of the funds or other consideration used or 
to be used in making the acquisition or change of control; 
(8) if a portion of the funds or other consideration to be used in making the 
acquisition has been borrowed or is to be borrowed or otherwise obtained for the 
purpose of making the acquisition, a complete description of the transaction, 
the names of the parties to the transaction, and a summary of all arrangements, 
agreements, or understandings with such parties including terms of repayment; 
(9) the applicant's current or proposed business or strategic plan including 
amendments to a current plan; 
(10) plans or proposals to liquidate the trust company, to sell its assets or 
merge it with another trust company or other entity, or to make other major 
changes in its business, corporate structure, or management;
(11) plans or proposals to change officers and directors of the trust company 
and the related trust or financial institution management experience of proposed 
or current officers and directors; 
(12) the terms and conditions of an offer, invitation, agreement, or arrangement 
under which a voting security will be acquired and any contract affecting such 
security or its financing after it is acquired; 
(13) pro forma financial statements with projections indicating whether the 
acquired or controlled trust company will be adequately capitalized for a period 
of not less than two years from the date of acquisition; and 
(14) such other information that the banking commissioner requires to be 
included in the particular application as considered necessary to an informed 
decision to approve or reject the proposed acquisition. The applicant bears the 
burden to supply all material information necessary to enable the banking 
commissioner to make a fully informed decision regarding the application. 
(c) Public notice. Upon notification that an initial application is complete and 
accepted for filing pursuant to sec.21.4 of this title (relating to Required 
Information and Abandoned Filings), the applicant shall publish notice as 
required by Texas Civil Statutes, Article 342a-4.002(d), and sec.21.5 of this 
title (relating to Public Notice) in the county where the trust company's home 
office is located. One publication under this subsection is adequate unless the 
banking commissioner expressly requires additional notice. 
(d) Confidentiality. Information obtained by the banking commissioner under this 
section is confidential and may not be disclosed by the banking commissioner or 
an officer or employee of the department, subject only to such disclosure as may 
be permitted by Texas Civil Statutes, Article 342a-4.002, or by sec.3.111 of 
this title (relating to Confidential Information). 
(e) Grandfather clause. A principal shareholder or participant that is 
considered to control a trust company, under Texas Civil Statutes, Article 342a-
4.001(a), is exempt from filing an application under this section until the 
principal shareholder acquires one or more additional shares or participation 
shares of the trust company. 
(f) Capital requirements. A person or entity seeking to acquire control of a 
trust company subject to this section must bring the trust company into 
compliance with the minimum capital requirements of Texas Civil Statutes, 
Article 342a-3.007, or such amount as required by the banking commissioner at 
the time the transaction is consummated. 
(g) Exemptions. In addition to the acquisitions specifically exempted pursuant 
to Texas Civil Statutes, Article 342a-4.001(c), the following types of 
involuntary acquisitions of control do not require prior written approval of the 
banking commissioner: 
(1) the inadvertent acquisition of control of a trust company by a shareholder 
as a result of a stock redemption or repurchase by the issuer if the potential 
controlling shareholder or participant of a trust company did not vote or have 
any direct or indirect input into the issuer's decision to repurchase or redeem 
the voting securities; 
(2) the acquisition and control by a qualified employee stock ownership plan 
(ESOP) of less than 25% of voting securities of a trust company unless an 
officer, director, or principal shareholder or participant directly or 
indirectly controls the voting securities held by the ESOP, in which event an 
application for acquisition of control must be filed by the officer, director or 
principal shareholder or participant, if as a result that person would control 
over 25% of the voting securities; 
(3) the acquisition of control of a trust company as a result of a shareholder 
receiving proportionate voting securities in a trust company arising from the 
liquidation of a holding company; 
(4) the acquisition of additional shares of voting securities of a trust company 
by virtue of a pro-rata stock dividend or stock split not resulting in increased 
ownership percentage; 
(5) the acquisition of control of a trust company as a result of a gift made in 
good faith, provided: 
(A) the donee is related to the donor within the second degree of consanguinity 
or affinity; 
(B) neither the donor nor donee is under an enforcement order; and 
(C) notice of the gift is given to the banking commissioner pursuant to 
subsection (h) of this section; 
(6) the acquisition of control of a trust company as a result of the transfer of 
voting securities by gift to a limited partnership or other estate planning 
vehicle, if determined by the banking commissioner to have an equivalent effect, 
if: 
(A) the limited partnership owns no other voting securities other than the 
securities transferred; 
(B) the donor is the sole general partner of the limited partnership who retains 
sole voting authority over the voting securities; 
(C) neither the donor nor donee is under an enforcement order; and 
(D) notice of the gift is given to the banking commissioner pursuant to 
subsection (h) of this section; and 
(7) the acquisition of control of a trust company by another entity if: 
(A) the transaction is subject to an application to be reviewed by a federal or 
state regulatory authority that will be the primary regulator of the trust 
company after the transaction is consummated; and 
(B) that regulatory authority has entered into an information sharing agreement 
with the banking commissioner. 
(h) Notices in lieu of filing. In the event that an application is not required 
because of exemption under Texas Civil Statutes, Article 342a-4.001(c), or 
subsection (g) of this section, but an application is required to be filed with 
a federal regulatory authority or a regulatory authority of another state, a 
copy of the application as filed with another agency must be filed with the 
banking commissioner within seven days of the date of such other filing or 
filings. A notice in lieu of filing is also required of a person claiming an 
exemption under Texas Civil Statutes, Article 342a-4.001(c), or paragraph (5) or 
(6) of subsection (g) of this section. This notice must be filed before the 
securities acquired are voted and must be accompanied by a completed 
authorization pursuant to subsection (b)(2) of this section. No filing fees are 
required for notices filed under this section; however, should the banking 
commissioner determine that an application is required, the appropriate filing 
fee pursuant to sec.21.2 of this title is required. 
(i) Approval. Automatic approval; conditional approval. If an application filed 
under this section is not approved by the banking commissioner or is not set for 
hearing on or before the 60th day after notice is published pursuant to 
subsection (c) of this section, the transaction may be consummated. The banking 
commissioner may, before the expiration of the initial 60-day period, give the 
applicant written notice that the application has been approved, in which case 
the transaction may be immediately consummated on receipt of the notice. The 
banking commissioner may also, before the expiration of the initial 60-day 
period, give an applicant written notice that the application has been approved 
subject to certain conditions. The applicant shall enter into a written 
agreement with the banking commissioner concerning the conditions on or before 
the 30th day after the date of notification of conditional approval. An 
agreement entered into by the applicant and the banking commissioner concerning 
conditional approval is enforceable against the applicant and the trust company 
and is considered for all purposes an agreement under the provisions of Texas 
Civil Statutes, Article 342a-6.002(a). In the event that an applicant who has 
received conditional approval does not enter into an agreement with the banking 
commissioner as required by this subsection, the banking commissioner shall set 
the matter for hearing. 
(j) Consummation of an acquisition or change of control transaction. The 
acquisition or change of control of the voting securities must be consummated as 
proposed in the application, in the agreement concerning conditional approval as 
provided in subsection (i) of this section, or as provided in a final order 
pursuant to subsection (m) of this section. A transaction approved or 
conditionally approved under this section must be consummated within 12 months 
after the date of approval by the banking commissioner unless an extension is 
granted in writing. Until a transaction is consummated, the banking commissioner 
reserves the right to alter, suspend or withdraw approval should an interim 
development warrant such action. 
(k) Notification by banking commissioner. A notification by the banking 
commissioner under this section may be by registered or certified mail, return 
receipt requested, and is complete when the notification is deposited in the 
United States mail postage prepaid, return receipt requested, addressed to the 
address furnished in the application. 
(l) Abandoned filing. The banking commissioner may determine an application to 
be abandoned pursuant to sec.21.4 of this title. 
(m) Hearing on application. The banking commissioner shall set an application 
for hearing on or before the 60th day after notice is published as required by 
Texas Civil Statutes, Article 342a-4.003, and subsection (i) of this section. 
The notice of hearing must comply with Government Code, sec.2001.051, and shall 
state that the purpose of the hearing is to give the applicant an opportunity to 
show all required qualifications for the banking commissioner's approval of the 
acquisition or change of control application have been met. The applicant has 
the burden of showing all such required qualifications by a preponderance of 
evidence. After the hearing, the banking commissioner shall grant or deny the 
application based solely upon the evidence presented at the hearing. An 
applicant may not appeal denial of an application or conditional approval of an 
application until a final order is issued. If after a hearing has been held, the 
banking commissioner has entered an order denying the application, and the order 
has become final, the applicant may appeal the final order as provided by Texas 
Civil Statutes, Article 342a-4.004, and Government Code, Chapter 2001. 
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 June 12 1998.
TRD-9809502
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: August 14, 1998
For further information, please call: (512) 475-1300

CHAPTER 25.Prepaid Funeral Contracts
SUBCHAPTER A.Contract Forms
7 TAC sec.25.8
The Texas Department of Banking (the department) proposes new sec.25.8, 
concerning an exemption from regulation for the sale of certain funeral goods 
under specified conditions. 
The department administers Texas Finance Code, Chapter 154 (codified by Acts 
1997, 75th Legislature, Chapter 1008, sec.1, from former Texas Civil Statutes, 
Article 548b), which generally requires sellers of prepaid funeral services or 
funeral merchandise to be licensed, to deposit sales proceeds in trust pending 
the death of the benefited party, and to submit to regulatory examination and 
reporting requirements applicable to the trust. 
The department has received numerous inquiries in recent months regarding the 
growing interest in Texas regarding retail sale and delivery of caskets other 
than by funeral homes. As this industry generally operates in other states (and 
would like to operate in Texas), a third party retail outlet, unaffiliated with 
a funeral provider, offers caskets for sale at discount prices and delivers the 
merchandise to the purchaser after receipt of the sales price, without 
restriction regarding the use of the casket. In the usual case, the purchaser is 
buying the casket for use in a pending or future funeral; however, such use is 
not a condition of purchase. 
Restrictive statutory language has in the past forced the department to take the 
position that such sales constitute sales of prepaid funeral merchandise. The 
department has required the unlicensed casket seller to either obtain a license 
and trust the sales proceeds as required by law, or (2) sell caskets only at 
need, obtain the name of the deceased from the purchaser at the time of sale, 
and deliver the purchased casket only to a funeral provider, unless the 
purchaser submits an affidavit demonstrating extenuating circumstances, such as 
the purchase of a casket for delivery overseas on an at-need basis. Current 
statutes are not as restrictive as former Article 548b but at best can be said 
to be ambiguous.
However, public policy under federal law has actually encouraged the development 
of the retail casket industry for the stated purpose of directly benefiting 
consumers through increased price competition. According to the Federal Trade 
Commission (FTC), its "Funeral Rule," codified at 15 Code of Federal 
Regulations, Part 453, is directly responsible for the development of the third 
party casket sales industry, see 59 Federal Register 1592 (1994) (Rulemaking 
Regarding Funeral Industry Practices). Testimony before the FTC in its 1994 
proceeding indicated that virtually no third-party casket sellers existed before 
the original enactment of the Funeral Rule in 1984, which effectively allowed 
the consumer to use a casket from an outside source, and casket retailers 
therefore owe their existence primarily to the Funeral Rule. 
The purpose of state regulation is the protection of funds paid in prepayment of 
funeral services to be performed in the future, to assure that the funds will be 
available to pay for the prearranged funeral services at the time the services 
are needed, see Finance Code, sec.154.001. The purpose of state regulation is 
not served by regulating the retail sale and delivery of a casket unconnected 
with a prearranged or prepaid funeral service, a practice encouraged under 
federal law. The department wishes to reconcile the state policy of protecting 
consumers from risk of loss in prepaid funeral services and merchandise with the 
federal policy of increased price competition, as both policies provide worthy 
objectives. 
As a point of further inquiry, the Department attempted to ascertain the 
original policy reason for regulating prepaid funeral merchandise in addition to 
prepaid funeral services. Legislative history on this point is virtually 
nonexistent; however, one may speculate that, in the absence of language to 
prevent abuse, a funeral provider could engage in a subterfuge that would permit 
early receipt of the funds for merchandise that is really part of a funeral 
service purchased in advance of need, through actual or constructive delivery of 
the funeral merchandise. This subterfuge could appear in the form of alleged 
partial performance of one contract or ostensibly separate and independent 
contracts for merchandise and services. Finance Code, sec.154.157 (derived from 
Article 548b, sec. 1(e)), lends credence to this view by stating that "delivery 
of funeral merchandise before death is not performance, in whole or in part, of 
a prepaid funeral benefits contract ...." Case law demonstrates the attempted 
use of this ploy, Falkner v. Memorial Gardens Association, 298 S.W.2d 934 (Tex. 
Civ. App.--Austin, 1957, writ ref'd n.r.e.); Lakeview Gardens, Inc. v. Kansas, 
221 Kan. 211, 557 P.2d 1286 (1976); Illinois v. Memorial Consultants, Inc., 50 
Ill. App.3d 1005, 366 N.E.2d 127 (1977). 
If possible abuses can be prohibited or restricted while allowing unregulated 
sales of funeral merchandise, the state and federal public policies can each be 
accommodated. Competitive fairness would require permitting licensed funeral 
providers to sell unregulated funeral merchandise as well. The department 
believes two key concepts can permit such an exemption to work. 
First, to protect the consumer from exposure to possible loss of purchased 
merchandise in the event of seller insolvency or default, unregulated 
merchandise must be actually delivered to the consumer. Storage by the seller 
also imposes a risk of loss to the consumer, so storage schemes involving actual 
or constructive delivery coupled with return of the merchandise to the seller or 
an affiliate for storage are unacceptable. 
Second, to fulfill the statutory mandate of Finance Code, sec.154.157, licensed 
funeral providers must not be able to separate funeral services from funeral 
merchandise by means of ostensibly separate contracts in order to immediately 
realize the revenue attributable to merchandise actually intended for use in the 
funeral service sold. Subterfuge involving affilated sellers must also be 
prevented. 
Based on these considerations, the department has proposed new sec.25.8. Because 
sale of funeral merchandise by definition is regulated, a new term is defined 
for "funeral goods." To be unregulated, funeral goods must be actually delivered 
to the purchaser, and storage options under the control of the seller or an 
affilitate of the seller may not be offered. The department believes that 72 
hours represents a commercially reasonable time for completing delivery. The 
funeral goods must be completely unconnected to a prepaid funeral service sold 
by the seller or an affiliate of the seller. While a sale of funeral goods may 
be financed, possessory security interests are prohibited. Finally, records must 
be maintained by the seller adequate to support the availability of the 
exemption. The department has the power and authority to subpoena the records of 
an unlicensed seller to verify compliance with the exemption, see Finance Code, 
sec.35.203. 
Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the section as proposed will be in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the section. 
Mr. Jobe also has determined that for each year of the first five-year period 
the section as proposed will be in effect, the public benefit anticipated as a 
result of the section will be the availability of funeral goods at lower cost 
through increased competition and continued public confidence that prepaid 
funeral merchandise and services will be furnished at the time of death. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. 
Comments on the proposal may be submitted in writing to Everette D. Jobe, 
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard, 
Austin, Texas 78705-4294, or by e-mail to everette.jobe@banking.state.tx.us. 
The section is proposed pursuant to rulemaking authority under Finance Code, 
sec.154.051, which authorizes the department to prescribe reasonable rules and 
regulations concerning all matters relating to the enforcement and 
administration of Chapter 154. 
Finance Code, Chapter 154, is affected by the proposed amendments.

sec.25.8. Exemption for Sale of Funeral Goods. 
(a) For purposes of this section, the term "funeral goods" means tangible and 
nonperishable items of personalty, designed for use in connection with a funeral 
service, that are sold or offered for sale directly to the public, including an 
alternative container, casket, or outer burial container, but not including a 
marker, monument, or tombstone. 
(b) A person who sells or offers to sell funeral goods prior to the death of the 
person for whom the goods are to be used is considered to be selling or offering 
to sell funeral merchandise on a preneed basis, and must be licensed under 
Finance Code, Chapter 154, unless: 
(1) the offer to sell funeral goods contemplates only a contemporaneous exchange 
of consideration and either delivery of actual physical possession and control 
of the funeral goods to the purchaser, or shipment of the goods directly to the 
purchaser; 
(2) within 72 hours of the time of sale, the seller delivers actual physical 
possession and control of the funeral goods or orders a third party to ship the 
goods directly to the purchaser; 
(3) within 72 hours of the time of sale, the purchaser removes the funeral goods 
from the premises of the seller from whom and where the goods are purchased, or 
receives confirmation of shipping instructions consistent with paragraph (2) of 
this subsection; 
(4) neither the seller nor an affiliate of the seller, nor a funeral provider 
within the actual knowledge of the seller, offers to store or stores the goods 
for the purchaser; and 
(5) the goods are not sold in connection with, or in contemplation of trade or 
barter for, prepaid funeral benefits to be delivered by the seller or an 
affiliate of the seller. 
(c) A seller of funeral goods is not considered to be selling funeral 
merchandise on a preneed basis solely because the seller takes a promissory note 
as consideration for the sale and retains a nonpossessory security interest in 
the funeral goods sold, provided the conditions of subsection (b) of this 
section are otherwise met.
(d) A seller of funeral goods must maintain written records of each sale 
adequate to demonstrate compliance with this section. Such records are subject 
to subpoena by the department pursuant to Finance Code, sec.35.203. 
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 June 9 1998.
TRD-9809253
Everette D. Jobe
General Counsel
Texas Department of Banking
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 475-1300

TITLE 28. INSURANCE
PART I. Texas Department of Insurance
CHAPTER 5. Property and Casualty Insurance
SUBCHAPTER E. Texas Windstorm Insurance Association
28 TAC sec.5.4603
The Texas Department of Insurance proposes an amendment to sec.5.4603 which 
adopts by reference the forms to be used for windstorm inspections to determine 
compliance with applicable building code requirements in the plan of operation 
of the Texas Windstorm Insurance Association (the Association). The department 
proposes the addition of two new forms used by the Texas Department of Insurance 
Windstorm Inspection Unit in the performance of inspections and certifications 
of structures located in the designated catastrophe areas, the revision of four 
forms used in the performance of inspections and certifications of structures 
located in the designated catastrophe areas, the elimination of seven forms that 
are no longer used by the Windstorm Inspection Unit for the purposes of 
performing inspections and certifications of structures located in the 
designated catastrophe areas, the addition of one new form used by Texas 
licensed professional engineers in the design of structures located in the 
designated catastrophe areas, the revision of one form and the elimination of 
one form used by Texas licensed professional engineers in the performance of 
inspections and certifications of structures located in the designated 
catastrophe areas. The amendment also re-orders the listing of the forms. 
Article 21.49 sec.6A of the Insurance Code specifies inspection or approval 
procedures for property to be considered insurable for windstorm and hail 
insurance through the Association. All structures located in the designated 
catastrophe areas in tier 1 counties that are constructed or repaired or to 
which additions are made on or after January 1, 1988, and structures located in 
specified designated catastrophe areas in Harris County that are constructed or 
repaired or to which additions are made on and after March 1, 1996, for portions 
of the cities of Seabrook and La Porte, June 1, 1996, for the city of Morgan's 
Point, and April 1, 1997, for portions of the cities of Shoreacres and Pasadena, 
must be inspected or approved by the commissioner for compliance with the 
building specifications in the plan of operation of the Association to be 
considered insurable property for windstorm and hail insurance from the 
Association. The commissioner must issue a certificate of compliance that is 
evidence of insurability of the structure by the Association for each structure 
that qualifies. The proposed new forms and revised forms are necessary to 
incorporate changes in the inspection process and to add new requirements to the 
inspection process as a result of the adoption by the commissioner under 
Commissioner Order No. 97-0626, dated June 30, 1997, of new prescriptive 
building codes applicable to structures located in the designated catastrophe 
areas. 
The proposed new forms for use by the department's windstorm inspectors, 
licensed professional engineers, and department staff are as follows: Texas 
Department of Insurance Application Acknowledgement for Engineered Structure - 
No Fee Required, Form WPI-9E, is to acknowledge receipt of the application for a 
windstorm building inspection of an engineered structure, assign an application 
identification number, and acknowledge that a Texas licensed professional 
engineer will be responsible for the inspection and notification of compliance 
of the structure. Texas Department of Insurance Application Acknowledgement - 
Fee Required, Form WPI-9F, is to acknowledge receipt of the application for a 
windstorm building inspection of structures inspected by the department, 
includes specific information such as the field office location, telephone 
number, application identification number, and types of inspections requested, 
and also stipulates the required fee for inspections of new structures and 
additions to existing structures. 
The proposed revised forms for use by the department's windstorm inspectors, 
licensed professional engineers, and department staff are as follows: 
Application for Windstorm Building Inspection, Form WPI-1, which is the initial 
step in the inspection process, has been revised to provide comprehensive 
information on the structure to be inspected, including but not limited to the 
type of building, type of construction, type of building materials, and the 
manufacturer and type of specific products used on the building. The information 
on the application permits immediate determination if the structure should be 
inspected by a windstorm inspector or a Texas licensed professional engineer. If 
a Texas licensed professional engineer performs the inspection, the engineer 
must submit the application prior to commencement of construction. Commencement 
of construction is defined as physical construction activity. Field Form, Form 
WPI-7, is completed by the windstorm inspector for each inspection requested; it 
represents the results of an inspection at any given time, and a copy is left at 
the job site with the original placed in the inspection file. This form has been 
revised to incorporate information contained on the proposed deleted forms WPI-
3, 4, 5, 6 and 11, and addresses the type of inspection conducted, inspection 
status, and comment on a structure's foundation, framing, roof, and mechanical 
equipment. This revised form will reduce the amount of paperwork associated with 
separate forms for each type of inspection and will provide a mechanism to track 
the progress of a structure on one document. Texas Department of Insurance 
Application Acknowledgement - No Fee Required, Form WPI-9, is used to 
acknowledge receipt of the application for a windstorm building inspection of 
structures inspected by the department. The name of the form has been changed 
from Inspection Acknowledgement to Texas Department of Insurance Application 
Acknowledgement - No Fee Required and includes specific information such as the 
application identification number, field office location, telephone number, and 
type of inspections requested. The WPI-9 also states that a fee is not required 
for alterations, repairs and mechanical inspections. Certificate of Compliance, 
Form WPI-8, indicates insurability for windstorm and hail insurance through the 
Association. The WPI-8 is issued by the department certifying that a structure 
was erected, altered, and/or repaired to comply with the wind load provisions of 
ASCE 7-93, Minimum Design Loads for Buildings and Other Structures (a national 
consensus standard), or the Southern Standard Building Code, as amended May 8, 
1973, or the TCPIA Windstorm Resistant Construction Code. Form WPI-8 was revised 
to include the designated catastrophe area (Inland I, Inland II or Seaward) for 
the structure being certified. 
The proposed revision of Field Form, Form WPI-7, has resulted in the deletion of 
the following forms: Foundation Inspection, Form WPI-3; Rough Framing 
Inspection, Form WPI-4; Final Framing Inspection, Form WPI-5; Mechanical 
Equipment Inspection, Form WPI-6; and Re-Roofing Application, Form WPI-11. Two 
other forms proposed to be deleted are the Mobile Home Tie Down Survey, Form 
WPI-MH-1, which was completed as a service to the Association and was not 
considered a mandatory service and has been discontinued by the department due 
to the increased workload of the windstorm inspectors, and the Metal Building 
Certificate, Form WPI-2M, which has been incorporated into the new form Building 
Design Compliance, Form WPI-2D. 
Proposed new and revised forms for use by Texas licensed professional engineers 
are as follows: The proposed new Building Design Compliance, Form WPI-2D, is for 
use by Texas licensed professional engineers to notify the department that a 
structure, including a metal building, has been designed to comply with the wind 
load provisions of ASCE 7-93, Minimum Design Loads for Buildings and Other 
Structures, in the Seaward and Inland I areas, or the Southern Standard Building 
Code, as amended May 8, 1973, for structures located in the Inland II areas, 
particularly, for construction methods and materials that are not specified in 
the existing guide or the new code. The proposed revised Building Compliance, 
Form WPI-2, is for use by Texas licensed professional engineers to notify that 
they have inspected the structure and the structure was erected, altered and/or 
repaired to comply with the wind load provisions of ASCE 7-93, Minimum Design 
Loads for Buildings and Other Structures, for structures located in the Seaward 
and Inland I areas, or the Southern Standard Building Code, as amended May 8, 
1973, for structures located in the Inland II areas. For structures not 
previously inspected and certified which were erected, altered and/or repaired 
from January 1, 1988, through August 31, 1998, Form WPI-2 requires notification 
by Texas licensed professional engineers that the structures meet the wind load 
provisions of the Southern Standard Building Code, as amended May 8, 1973, 
applicable to structures located inland of the intracoastal canal or the TCPIA 
Windstorm Resistant Construction Code, applicable to structures located seaward 
of the intracoastal canal. The submission of the Building Compliance to the 
department with the seal of the Texas licensed professional engineer and the 
department's acceptance will generate a certificate of compliance for the 
insured. The Texas licensed professional engineer shall submit a windstorm 
building inspection application, Form WPI-1, prior to commencement of 
construction. The deletion of Foundation Certificate, Form WPI-10, used by Texas 
licensed professional engineers to certify foundations only is proposed as this 
information will now be incorporated into the revised Building Compliance, Form 
WPI-2. The department will consider the adoption of amendments to sec.5.4603 in 
a public hearing under Docket Number 2368 scheduled for 9:00 a.m. on August 18, 
1998, in Room 100 of the William P. Hobby, Jr. State Office Buiolding, 333 
Guadalupe Street, Austin, Texas. 
Alexis Dick, deputy commissioner for the inspections division, has determined 
that for each year of the first five years that the amendment will be in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the section. There will be no adverse effect on 
local employment or the local economy. 
Ms. Dick has also determined that for each year of the first five years the 
amended section is in effect, the public benefit anticipated as a result of 
adopting this section is an improved efficiency of the department in the 
performance of windstorm inspections. Additionally, the new forms are more 
comprehensive and user-friendly. The new forms will provide the public, 
insurance industry, and Texas licensed professional engineers more expedient 
service from the field offices and the department staff. Further, the 
information contained on the new forms will provide an improved data history on 
file at the department, and this information will be available for the public, 
insurance industry, and Texas licensed professional engineers. The provisions of 
the new section apply equally to small and large businesses, and the department 
expects no differential impact between small and large businesses as only two of 
the forms are used by the businesses affected by the proposed amendment, and 
these forms replace forms currently in use and are available through the 
Windstorm Inspections Section. There is no additional anticipated economic cost 
to individuals or business entities who are required to comply with the section 
as amended. 
Comments on the proposed amendment to be considered by the department must be 
submitted within 30 days after publication of the proposed section in the Texas 
Register to Lynda H. Nesenholtz, Acting General Counsel and Chief Clerk, MC 113-
2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An 
additional copy of the comment should be submitted to Alexis Dick, Deputy 
Commissioner for the Inspections Division, MC 103-1A, Texas Department of 
Insurance, P.O. Box 149104, Austin, Texas, 78714-9104. Request for a public 
hearing should be submitted separately to the Chief Clerk's office.
This amended section is proposed pursuant to the Insurance Code Articles 21.49 
and 1.03A. Article 21.49 sec.6A of the Insurance Code specifies inspection or 
approval procedures for property to be considered insurable for windstorm and 
hail insurance through the Texas Windstorm Insurance Association. All structures 
located in the designated catastrophe areas in tier 1 counties that are 
constructed or repaired or to which additions are made on or after January 1, 
1988, and structures located in specified designated catastrophe areas in Harris 
County that are constructed or repaired or to which additions are made on and 
after March 1, 1996, for portions of the cities of Seabrook and La Porte, June 
1, 1996, for the city of Morgan's Point, and April 1, 1997, for portions of the 
cities of Shoreacres and Pasadena, must be inspected or approved by the 
commissioner for compliance with the building specifications in the plan of 
operation of the Association to be considered insurable property for windstorm 
and hail insurance from the Association. Article 21.49 sec.6A requires the 
commissioner to issue a certificate of compliance that is evidence of 
insurability of the structure by the Association and to promulgate rules and 
forms to effect the provisions of this section. Article 1.03A authorizes the 
commissioner to adopt rules and regulations for the conduct and execution of the 
duties and functions of the department as authorized by statute.
The following statute is affected by this proposal: Statute Insurance Code, 
Article 21.49 

sec.5.4603. Forms for Windstorm Inspections.
(a) The Texas Department of Insurance adopts by reference the following forms 
for use in windstorm inspection: 
(1) Application for <nl>Windstorm<ol> Building Inspection [Compliance with Wind 
Resistant Code], Form WPI-1, as amended <nl> August 1, 1998<ol> [March 1, 1990]; 
(2) Building <nl>Compliance<ol> [Certificate], Form WPI-2, as amended <nl>August 
1, 1998<ol> [March 1, 1990
(3) <nl>Building Design Compliance, Form WPI-2D, effective August 1, 1998<ol> 
[Metal Building Certificate, Form WPI-2M]; 
(4) <nl>Field Form, Form WPI-7, as amended August 1, 1998<ol> [Foundation 
Inspection, Form WPI-3, as amended March 1, 1990
(5) <nl>Certificate of Compliance, Form WPI-8, as amended August 1, 1998<ol> 
[Rough Framing Inspection, Form WPI-4, as amended March 1, 1990]; 
(6) <nl>Texas Department of Insurance Application Acknowledgment - No Fee 
Required, Form WPI-9, as amended August 1, 1998<ol> [Final Framing Inspection, 
Form WPI-5, as amended March 1, 1990]; 
(7) <nl>Texas Department of Insurance Application Acknowledgment for Engineered 
Structure - No Fee Required, Form WPI-9E, effective August 1, 1998<ol> 
[Mechanical Equipment Inspection, Form WPI-6, as amended March 1, 1990]; 
(8) <nl>Texas Department of Insurance Application Acknowledgment - Fee Required, 
Form WPI-9F, effective August 1, 1998<ol> [Field Form, Form WPI-7;] 
[(9) Certificate of Compliance, Form WPI-8;] 
[(10) Inspection Acknowledgment, Form WPI-9;] 
[(11) Foundation Certificate, Form WPI-10 as amended March 1, 1990;] 
[(12) Re-Roofing Application, Form WPI-11; and] 
[(13) Mobile Home Tie-Down Survey, Form WPI-MH-1, as amended February 1, 1992]. 
(b) These forms are published by and available from the Texas Department of 
Insurance. Copies of these forms may be obtained from the Windstorm <nl> 
Inspections<ol> [Inspection] Section of the <nl>Inspections <ol> [Property] 
Division, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, 
Texas 78714-9104. 
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 June 15, 1998.
TRD-9809517
Lynda H. Nesenholtz
Acting General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-6327

28 TAC sec.5.4604
The Texas Department of Insurance proposes new sec.5.4604, concerning the 
appointment of Texas licensed professional engineers as qualified windstorm 
inspectors. Article 21.49 sec.6A, Insurance Code, specifies building code 
requirements and inspection or approval procedures for the certification of 
structures to be insured for windstorm and hail insurance through the Texas 
Windstorm Insurance Association (the Association). Structures located in the 
designated catastrophe areas that are constructed or repaired or to which 
additions are made on or after January 1, 1988, and structures located in 
specified designated catastrophe areas in Harris County that are constructed or 
repaired or to which additions are made on and after March 1, 1996, for portions 
of the cities of Seabrook and La Porte, June 1, 1996, for the city of Morgan's 
Point, and April 1, 1997, for portions of the cities of Shoreacres and Pasadena, 
must be certified by the commissioner of insurance to be in compliance with the 
Association's building code requirements contained in the Association's plan of 
operation as evidence of insurability of the structure for windstorm and hail 
insurance provided through the Association. The certification of a structure 
requires an inspection of the structure be made by a qualified inspector who is 
a person determined by the commissioner to be qualified to perform inspections 
because of training or experience. Qualified inspectors must be approved and 
appointed or employed by the commissioner to perform building inspections. The 
proposed new section provides the necessary and appropriate inspection 
procedures and a new application form for a Texas licensed professional engineer 
to apply to be appointed and approved as a qualified inspector. The new 
procedures and the application form are necessary to provide specific procedures 
that must be followed for the inspection and notification of compliance of a 
structure by a Texas licensed professional engineer as a qualified inspector 
approved and appointed by the commissioner in order for the commissioner to 
issue a certificate of compliance for a structure as the evidence of 
insurability for windstorm and hail insurance provided through the Association; 
to ensure that Texas licensed professional engineers conducting the windstorm 
inspections are practicing engineering within their field of expertise and/or 
are qualified to design, inspect and note compliance of structures for wind 
resistance in high wind areas; and to ensure that the consumers of Texas are 
adequately and fairly served by engineers who are designing, inspecting and 
notifying the department of compliance of structures in the designated 
catastrophe areas that are to be insured for windstorm and hail insurance by the 
Association. In Fiscal Year 1997, engineers certified seventy-one percent (71%) 
of all new structures located in the designated catastrophe areas as meeting the 
Association's building code requirements for insurability for windstorm and hail 
insurance through the Association. The volume of inspections conducted by and 
certifications issued by Texas licensed professional engineers require the 
commissioner to establish a reasonable process for approving and appointing such 
engineers as qualified inspectors and to establish reasonable procedures that 
can be consistently applied in the inspecting of and notifying that a structure 
is in compliance with the building code requirements of the Association. To 
continue to allow the notification of compliance of a structure by any and all 
Texas licensed professional engineers without the appointment of each engineer 
as a qualified inspector and without standardized inspection and compliance 
procedures is contrary to the uniform inspection program contemplated in Article 
21.49 sec.6A, Insurance Code. In addition, the standardized inspection and 
compliance procedures ensure that structures are constructed to meet the 
building code requirements of the Association. Proposed subsection (a) of the 
rule outlines the purpose and scope of the new section. Proposed subsection (b) 
of the rule defines certain terms used in the new section. Proposed subsection 
(c) of the rule allows for the appointment by the commissioner of licensed 
professional engineers as qualified inspectors to perform building inspections 
for the purposes of establishing if a building or structure is eligible for 
windstorm insurance through the Association. Proposed subsection (d) of the rule 
outlines the qualification requirements for appointment of a Texas licensed 
engineer as a qualified inspector. Proposed subsection (e) of the rule specifies 
the information on the application to be submitted to the department on a form 
developed by the department and prohibits engineers from conducting windstorm 
and hail inspections pursuant to Article 21.49 sec.6A until the appointment has 
been made. Proposed subsection (f) of the rule provides for the cancellation or 
revocation of the appointment and for sanctions in lieu thereof if the holder or 
possessor of the approval and appointment is found to be in violation of, or to 
have failed to comply with, any provisions of the section or any other rule or 
regulation of the department or any statute enacted to govern inspections of 
structures to be insured for windstorm and hail insurance through the 
Association. Proposed subsection (g) of the rule outlines the responsibilities 
of the Texas licensed professional engineer in conducting windstorm inspections, 
including that the engineer must design, inspect, and prepare plans and 
calculations for each building or structure in accordance with wind load 
requirements of construction standards adopted by the commissioner or, 
alternatively, that the engineer may inspect in accordance with the prescriptive 
building code or construction guide adopted by the commissioner without 
preparing the plans and structural calculations for the building or structure. 
The subsection further requires statements of compliance bearing the seal of the 
professional engineer and submitted to the department on forms developed by the 
department. Proposed subsection (h) of the rule outlines a program of oversight 
by the department, including random periodic audits of building or structures 
and further provides for sanctions for non-compliance. Proposed subsection (i) 
of the rule adopts by reference the application form to be submitted by the 
engineer requesting approval by the commissioner for appointment as a qualified 
inspector. 
The department will consider the adoption of new sec.5.4604 in a public hearing 
under Docket Number 2369 scheduled for 9:00 a.m. on August 18, 1998, in Room 100 
of the William P. Hobby, Jr. State Office Buiolding, 333 Guadalupe Street, 
Austin, Texas. 
Alexis Dick, deputy commissioner for the inspections division, has determined 
that for each year of the first five years that the proposed new section will be 
in effect, there will be no fiscal implications for state or local government as 
a result of enforcing or administering the section. There will be no adverse 
effect on local employment or the local economy. 
Ms. Dick has also determined that for each year of the first five years the 
proposed new section is in effect, the public benefit is an assurance that 
structures that are being inspected by Texas licensed professional engineers 
meet the wind load requirements of the building specifications contained in the 
Association's plan of operation. Structures built to the new code will likely 
sustain less damage which will reduce the amount paid in claims by the 
Association. The department believes that within a few years the number of 
structures built to the new code will increase and the total risk of the 
Association will be kept to a minimum. Over the long term, the cost of wind and 
hail coverage through the Association should also decrease because of the 
savings realized in the reduced amount paid in claims. There is no fee 
associated with the application for appointment as set forth in the proposed 
section; therefore, any possible economic costs to persons, i.e., engineers who 
choose to apply to become qualified inspectors, will be in the preparation and 
submission of the application form. Further, under the proposed section, the 
department, as part of its oversight function, may, at its discretion, request 
random submissions of sealed plans and calculations for buildings and structures 
which have been documented by the engineer as being in compliance with the wind 
loads of the construction standards adopted by the commissioner. This will 
result in copying and transmission costs to the engineer in submitting such 
plans and specifications. The department therefore estimates the cost of 
compliance of the new section to be $250.00 based on a maximum of two hours of 
engineer time. To date in Fiscal Year 1998, eighty percent (80%) of new 
structures are being certified by engineers. Although the department cannot 
predict whether the inspectors may increase their charge for inspections, it 
should be noted that there is no application fee to pass on to consumers; the 
copying and transmission of plans and calculations are subject to random 
frequency; and to the extent that engineers may have to incur time and 
preparation costs for the application process, the estimates for these costs 
should not significantly increase the inspection charge. Additionally, any 
increased charge would likely be governed by marketplace competition, and the 
consumers also have the option to have the inspections conducted by the 
department's inspectors or engineers under the current fee not to exceed $100. 
The provisions of the proposed section apply equally to small and large 
businesses, and both small and large engineering firms would incur approximately 
the same costs for the copying and transmission expenses associated with the 
random submission of sealed plans and calculations. Regarding the costs of 
preparing and submitting the application form, the department has no means to 
know how many engineers will apply or how many will or will not be approved. The 
decision by both small and large businesses as to whether and how many of their 
engineers will apply to become qualified inspectors will likely be determined by 
the volume of their business that consists of engineer-inspected structures. The 
uniformity and reasonableness of the application process implemented by the 
department and the overall benefit of enhanced oversight of the work being 
conducted have led the department to conclude that it is not legal and feasible 
to exempt small businesses or waive compliance. 
Comments on the proposed new section to be considered by the department must be 
submitted within 30 days after publication of the proposed section in the Texas 
Register to Lynda H. Nesenholtz, Acting General Counsel and Chief Clerk, MC 113-
2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An 
additional copy of the comment should be submitted to Alexis Dick, Deputy 
Commissioner for the Inspections Division, MC 103-1A, Texas Department of 
Insurance, P.O. Box 149104, Austin, Texas, 78714-9104. Request for a public 
hearing should be submitted separately to the Chief Clerk's office.
This section is proposed pursuant to the Insurance Code Articles 21.49 and 
1.03A. Article 21.49 sec.6A specifies building code requirements and inspection 
or approval procedures for windstorm and hail insurance through the Texas 
Windstorm Insurance Association. All structures located in the designated 
catastrophe areas that are constructed or repaired or to which additions are 
made on or after January 1, 1988, and structures located in specified designated 
catastrophe areas in Harris County that are constructed or repaired or to which 
additions are made on and after March 1, 1996, for portions of the cities of 
Seabrook and La Porte, June 1, 1996, for the city of Morgan's Point, and April 
1, 1997, for portions of the cities of Shoreacres and Pasadena, to be considered 
insurable property for windstorm and hail insurance from the Association must be 
inspected or approved by the commissioner for compliance with the building 
specifications in the plan of operation of the Association. Article 21.49 sec.6A 
requires the commissioner to issue a certificate of compliance that is evidence 
of insurability of the structure by the Association and to promulgate rules and 
forms to effect the provisions of this section. Article 1.03A authorizes the 
commissioner to adopt rules and regulations for the conduct and execution of the 
duties and functions of the department as authorized by statute. 
The following statute is affected by this proposal: Statute Insurance Code, 
Article 21.49 

sec.5.4604. Appointment of Engineers as Qualified Inspectors. 
(a) Purpose and Scope. The purpose and scope of this section is to:
(1) provide procedures for the approval and appointment of a Texas licensed 
professional engineer to conduct inspections of structures and provide 
engineered analyses and designs, pursuant to the Insurance Code Article, 21.49 
sec.6A, for compliance with building specifications in the plan of operation of 
the Texas Windstorm Insurance Association and any other building specifications 
promulgated by the Texas Department of Insurance to determine insurability for 
windstorm and hail insurance covered by the Texas Windstorm Insurance 
Association and issue certifications of compliance for risks to qualify for 
insurability through the Texas Windstorm Insurance Association; 
(2) establish qualifications for the appointment of Texas licensed professional 
engineers to conduct windstorm inspections; 
(3) specify the responsibilities of an engineer performing windstorm 
inspections; 
(4) outline the method of applying for appointment of a Texas licensed 
professional engineer to perform windstorm inspections; 
(5) specify the oversight functions of the Department; and 
(6) adopt by reference the application form to be submitted by the engineer 
requesting approval by the Commissioner for appointment as a qualified 
inspector. 
(b) Definitions. The following words and terms when used in this section shall 
have the following meanings unless the context clearly indicates otherwise. 
(1) Commissioner - Commissioner of Insurance of the State of Texas. 
(2) Department - Texas Department of Insurance. 
(3) Manual - The Windstorm Inspection Manual as set forth in sec.5.4602 of this 
title (relating to Windstorm Inspection Manual). 
(4) Qualified inspector - A person determined by the Commissioner to be 
qualified to perform building inspections pursuant to the Insurance Code Article 
21.49 sec.6A, who must be approved and appointed by the Commissioner to perform 
building inspections for the purpose of establishing that a building or 
structure is eligible for windstorm and hail insurance through the Texas 
Windstorm Insurance Association. 
(5) Association - Texas Windstorm Insurance Association. 
(c) Appointment of a Texas Licensed Professional Engineer as a Qualified 
Inspector. The Commissioner may appoint a Texas licensed professional engineer 
as a qualified inspector to perform windstorm inspections and shall be 
responsible for inspections pursuant to this section and the Insurance Code 
Article 21.49 sec.6A. 
(d) Requirements for Appointment of a Texas Licensed Professional Engineer as a 
Qualified Inspector. 
(1) The engineer shall be: 
(A) a licensed structural engineer; or 
(B) a licensed engineer with demonstrable experience, education or training in 
the design of building structures in high wind areas. 
(2) The engineer shall affirm to the Commissioner through a sworn statement the 
engineer's qualifications pursuant to paragraph (1) of this subsection and shall 
also confirm in the sworn statement the currency and non-restricted status of 
the engineer's license through the Texas Board of Professional Engineers. 
(e) Application for Appointment of a Texas Licensed Professional Engineer as a 
Qualified Inspector. 
(1) The engineer shall submit to the Department a completed application form 
requesting approval by the Commissioner for appointment as a qualified inspector 
to conduct windstorm and hail inspections as outlined in this section and in 
Article 21.49 sec.6A of the Insurance Code. The application form shall be 
developed by and available from the Department. No engineer shall be approved 
and appointed by the Commissioner until the engineer's fully completed 
application form has been filed and reviewed by the Department. The engineer 
shall not, for the purposes of Article 21.49 sec.6A, conduct windstorm and hail 
inspections until formal action has been taken by the Commissioner to appoint 
the engineer as a qualified inspector. 
(2) The application form shall contain at a minimum the name, address, and 
telephone number of the applicant; name, address and telephone number of 
employer; the Texas license number of the applicant; the applicant's field of 
expertise in engineering; schools or courses attended; experience in design of 
structures in high wind areas; and a sworn statement verifying qualifications 
and licensing. 
(3) The Department shall notify the engineer by letter of the approval and 
appointment or disapproval of the appointment by the Commissioner of the 
engineer as a qualified inspector. Any letter of disapproval shall state the 
reasons for disapproval. 
(f) Cancellation or Revocation of an Engineer's Appointment as a Qualified 
Inspector. 
(1) After notice and opportunity for hearing, the Commissioner may cancel or 
revoke an approval and appointment made under this section if the holder or 
possessor of the approval and appointment is found to be in violation of, or to 
have failed to comply with, any provisions of this section or any other rule or 
regulation of the Department or any statute enacted to govern inspections of 
structures to be insured for windstorm and hail insurance through the 
Association. In lieu of cancellation or revocation, the Commissioner, upon 
determination from the facts that it would be fair, reasonable, or equitable, 
may order one or more of the sanctions specified in subparagraphs (A) - (D) of 
this paragraph. 
(A) The Commissioner may order the suspension of the approval or appointment for 
a specific period, not to exceed one year; 
(B) The Commissioner may issue an order directing the holder or possessor of the 
appointment to cease and desist from the specified activity determined to be in 
violation of any provisions of this section or any rule or regulation of the 
Department or any statute enacted to govern inspections of structures to be 
insured for windstorm and hail insurance through the Association. 
(C) The Commissioner may issue an order directing the holder or possessor of the 
appointment to remit within a specified time, a sum not to exceed $5,000, if the 
person approved and appointed is found by the Commissioner to have knowingly, 
willfully, fraudulently, or with gross negligence, signed or caused to be 
prepared an inspection report or sworn statement that contains a false, 
fictitious, or fraudulent statement or entry; or 
(D) The Commissioner may order any other statutory sanction that may be enacted 
pursuant to the Insurance Code Articles 21.49 sec.6A, 1.10 and 1.10E. 
(2) If it is found after notice and opportunity for hearing that any engineer 
approved and appointed by the Commissioner to conduct inspections pursuant to 
this section and Article 21.49 of the Insurance Code has failed to comply with 
an order issued by the Commissioner pursuant to this section or Articles 21.49, 
1.10 or 1.10E of the Insurance Code, the Commissioner shall, unless the 
Commissioner's order is lawfully stayed, cancel the appointment. 
(3) The Commissioner may informally dispose of any matter under this section by 
consent order or default. 
(4) Revocation or suspension of an engineer's license issued by the Texas Board 
of Professional Engineers automatically cancels any approval and appointment 
made pursuant to this section. 
(g) Responsibilities of a Texas Licensed Professional Engineer Conducting 
Windstorm Inspections. 
(1) The engineer shall comply with Article 21.49 sec.6A of the Insurance Code; 
sec.sec.5.4001, 5.4601, 5.4602, and 5.4603 of this title (relating to Plan of 
Operation and Inspections for Windstorm and Hail Insurance). 
(2) The engineer shall design, inspect and prepare plans and structural 
calculations for a building or structure in accordance with the wind load 
requirements of the construction standards adopted by the Commissioner in the 
Association's plan of operation as adopted by reference in sec.sec.5.4007 and 
5.4008 of this title (relating to Applicable Building Code Standards in 
Designated Catastrophe Areas for Structures Constructed, Repaired or to Which 
Additions Are Made Prior to June 1, 1998; and Applicable Building Code Standards 
in Designated Catastrophe Areas for Structures Constructed, Repaired or to Which 
Additions Are Made On and After June 1, 1998); however, the plans and 
calculations are not routinely required to be submitted to the Department for 
the issuance of a certification of compliance by the Department. The plans and 
calculations shall be documented by the engineer as meeting the wind load 
requirements of the construction standards adopted by the Commissioner and shall 
bear the seal of the engineer. 
(3) Alternatively, the engineer shall inspect in accordance with the 
prescriptive building code or construction guide adopted by the Commissioner and 
notify the department that a building or structure complies with the 
prescriptive building code or construction guide without preparing the plans and 
structural calculations for the building or the structure. Inspection under the 
prescriptive building code or construction guide adopted by the Commissioner 
requires strict compliance with that code or guide with no modifications. Any 
modifications or deviations from the prescriptive building code or construction 
guide adopted by the Commissioner require the engineer to comply with paragraph 
(2) of this subsection. 
(4) The engineer shall submit to the Department a building compliance form, 
developed by the Department, notifying the Department that the building or 
structure was erected, altered and/or repaired to meet the wind loads specified 
in the appropriate construction standards adopted by the Commissioner. 
(5) The engineer shall be responsible for the inspection of each building or 
structure during each major phase of construction. Major phases of construction 
shall be the foundation stage, rough framing stage, final framing stage and 
installation of mechanical equipment. The engineer's employee(s) may assist in 
the conduct of the inspections for which the engineer is personally responsible. 
(6) The engineer shall submit an Application for Windstorm Building Inspection 
on a form developed by the Department, to the Department prior to the actual 
commencement of construction of a new building or structure or the addition to 
an existing building or structure. This form shall be submitted for all 
structures, whether they are designed and inspected by the engineer or inspected 
by the engineer in accordance with the prescriptive building code or 
construction guide. 
(h) Oversight of Texas Licensed Professional Engineer Appointed as a Qualified 
Inspector. 
(1) The Department shall maintain oversight of all aspects of the inspection and 
notification of compliance of buildings or structures by an engineer pursuant to 
Article 21.49 sec.6A of the Insurance Code and the requirements of this section. 
(A) The Department may perform random periodic audits of buildings or structures 
in the course of construction for which an Application for Windstorm Building 
Inspection has been submitted to the Department by the engineer; or random 
periodic audits of buildings or structures which have been documented by the 
engineer as being in compliance with the wind loads of the construction 
standards adopted by the Commissioner. 
(B) The Department, at its discretion, may request random submissions of sealed 
plans and calculations for buildings and structures which have been documented 
by the engineer as being in compliance with the wind loads of the construction 
standards adopted by the Commissioner. 
(2) If the Department finds a building or structure that does not meet the 
required wind loads of the construction requirements adopted by the Commissioner 
or does not meet the prescriptive building code or construction guide, a 
certificate of compliance will not be issued by the Department; or if a 
certificate of compliance has been issued on a building or structure found not 
to be in compliance with the wind loads of the construction standards adopted by 
the Commissioner, the certificate of compliance may be rescinded. 
(3) If the Department finds a building or structure that does not meet the wind 
loads of the construction standards adopted by the Commissioner, and has been 
submitted to the Department for the issuance of a certificate of compliance, the 
appointed qualified inspector that conducted the inspection of the building or 
structure and submitted the notice of compliance to the Department may be 
subject to sanctions by the Department, pursuant to Insurance Code Articles 
21.49 sec.6A, 1.10 and 1.10E. 
(4) If the Department finds a building or structure may not meet the wind loads 
of the construction standards adopted by the Commissioner, the engineer must 
provide: 
(A) all substantiating information such as plans and calculations bearing the 
engineer's seal; 
(B) inspection forms and field notes; and, 
(C) dates of the inspections conducted by the engineer for assurance of 
compliance with design and construction of the building or structure. 
(5) Failure to provide the information requested by the Department in paragraph 
(4) of this subsection will result in a certification of compliance not being 
issued by the Department for the building or structure in question and the 
engineer may be subject to sanctions by the Department. 
(i) The application form required in subsection (e) of this section, Application 
for Appointment as a Qualified Inspector, Form ENG-1, is adopted by reference, 
effective August 1, 1998. 
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 June 15, 1998.
TRD-9809518
Lynda H. Nesenholtz
Acting General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-6327

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART XVI. Coastal Coordination Council
CHAPTER 506.Coastal Procedures for Federal Consistency with
Coastal Management Program Goals and Priorities
31 TAC sec.506.12
The Coastal Coordination Council (Council) proposes an amendment to sec.506.12 
(a)(1)(F), relating to Federal Agency Actions, Federal Agency Activities and 
Development Projects, and Outer Continental Shelf Plans Subject to the Coastal 
Management Program. Under the federal Coastal Zone Management Act (CZMA), 16 
United States Code Annotated sec.sec.1451-1464, a federal agency cannot 
undertake an activity affecting Texas' coastal zone unless the activity is 
consistent to the maximum extent practicable with the goals and policies of the 
federally approved Texas Coastal Management Program (CMP). Under CZMA 
regulations at 15 Code of Federal Regulations sec.930.35, a state may list 
federal activities that, in the opinion of the state, affect its coastal zone. 
The Council's list is contained in sec.506.12. 
The proposed amendment constitutes the Council's finding that federal agency 
approval of restoration or mitigation activities arising from enforcement 
actions under sec.10 of the Rivers and Harbors Act or sec.404 of the Clean Water 
Act affect the Texas coast. While most of these activities are individually 
inconsequential, they are numerous and frequent. Since they may cumulatively 
affect Texas' coastal zone, the Council proposes to add these activities to 
sec.506.12. Because of their nature, number, and frequency, however, it would be 
inefficient for each approval to be individually reviewed by the Council. 
Therefore, simultaneously with proposing to amend sec.506.12 to list these 
activities, the Council is proposing a general consistency concurrence deeming 
all but the most significant consistent with the goals and policies of the CMP. 
This general concurrence is intended to focus the Council's consistency review 
on federal agencies' approval of activities that are individually significant in 
scope. 
The United States Army Corps of Engineers (Corps) under sec.10 of the Rivers and 
Harbors Act and sec.404 of the Clean Water Act, and the United States 
Environmental Protection Agency under sec.404 of the Clean Water Act, enforce 
regulatory requirements for placing fill and structures in waters of the United 
States, including wetlands. According to sec.404 of the Clean Water Act and 
Wetlands: Special Statistical Report, U.S. Army Corps of Engineers Regulatory 
Branch (July 1995), the Corps employs four basic methods or approaches to handle 
violations. Generally, the method used in a particular case correlates to 
seriousness of the case, including the scope and severity of the damage to 
wetlands or other aquatic resources involved. The Corps handles routine and less 
serious violations through administrative action or informal approval of work 
that the violator performs voluntarily. These are relatively simple and informal 
processes and are appropriate enforcement techniques for these kinds of 
violations. According to the Corps' July 1995 report, 48.2% of its sec.404 
enforcement cases are resolved by voluntary restoration and 19.7% are resolved 
by administrative order. The general concurrence would deem consistent with the 
CMP cases resolved through either of these methods. Therefore, the general 
concurrence would allow 67.9% of cases affected by the proposed amendment to 
sec.506.12 to proceed without the possibility of individual review by the 
Council. 
Administrative orders or voluntary actions by the violator are not usually 
employed to resolve enforcement cases that are more serious in nature or more 
severe or broader in scope. These cases are typically resolved either by the 
issuance of an after-the-fact permit or through legal action. According to the 
July 1995 Corps report, 29.2% of enforcement cases are resolved by the issuance 
of after-the-fact permits. The Council takes the position that after-the-fact 
permits are individually reviewable by the Council because permits are already 
listed in sec.506.12. According to the report, the remaining 2.8% of enforcement 
cases are the subject of legal action in federal court. With the issuance of the 
general concurrence, therefore, only a handful of federal agency approvals of 
restoration or mitigation activities would be affected by the proposed amendment 
to sec.506.12. 
The federal consistency requirement of sec.307 of the Coastal Zone Management 
Act would apply to a written plan or other document that a federal executive 
branch agency prepares for judicial consideration or approval and that sets out 
the restoration or mitigation measures necessary to resolve the violation. 
According to the Corps of Engineers enforcement regulations at 33 Code of 
Federal Regulations sec.326.5, resolution of an enforcement case through legal 
action usually involves such a plan or document. The consistency process for 
such a plan or document would have to be completed prior to the agency's 
submitting the plan to the court. Submission to the court, not approval by the 
judge, would be the final federal agency action for consistency purposes The 
Council has thoroughly explored and considered the issues surrounding 
consistency review of federal agency approval of restoration or mitigation 
arising from Clean Water Act sec.404 and Rivers and Harbors Act sec.10 
enforcement actions. The issue first arose during the open public comment period 
at the June 25, 1997, meeting of the Council's executive committee in Corpus 
Christi, Texas. At the August 13, 1997, Council meeting, Council staff were 
directed to examine the possibility of the Council's amending its rules to list 
these as activities affecting the coast. Staff coordinated with and solicited 
comments on the listing from interested parties, including the Corps of 
Engineers, U.S. Environmental Protection Agency, the Office of Ocean and Coastal 
Resource Management of the National Oceanic and Atmospheric Administration 
(NOAA), and the U.S. Department of Justice. Written comments were received from 
NOAA and the Corps on both September 23, 1997 and November 10, 1997. Also, on 
December 5, 1997, the Council published in the Texas Register an advanced notice 
that it was considering the listing, had created a workgroup of stakeholders to 
identify and discuss the issues surrounding the listing, and invited the above 
agencies and others to participate. At its February 11, 1998, meeting, the 
Council considered proposing the amendment. However, the Council deferred action 
in order to address concerns that had been expressed by the Corps, who had 
participated on one of the three workgroup meetings that occurred in December 
1997 and January 1998. On May 6, 1998, the Corps sent a letter to the Council 
asserting that the Corps' approval of restoration or mitigation activities from 
enforcement actions are not subject to consistency requirements. The Council 
considered this matter at its May 13, 1998, meeting and determined that the 
Corps' approval of the above activities are decisions of federal executive 
branch agencies that meet the definition of "federal activity" in both the CZMA 
and its implementing regulations. Furthermore, these federal agency decisions 
may affect the Texas coast. Therefore, the Council found these to be appropriate 
for listing and voted to propose the amendment. 
Ms. Sally Davenport, associate deputy commissioner for Resource Management, has 
determined that for the first five-year period the rule is in effect there will 
be no fiscal implications for state or local governments as a result of 
administering the rule. 
Ms. Davenport also has determined that for the first five-year period the rule 
is in effect, the public benefit of the rule will be enhanced coordination of, 
and greater input into restoration plans for citizens and local governments. 
There will be no effect on small businesses and no cost to persons required to 
comply with the rule. Only federal agencies are required to comply with the 
rule. 
Comments on the proposed amendment may be submitted to Ms. Carol Milner, Texas 
Register Liaison, General Land Office, 1700 North Congress, Suite 626, Austin, 
Texas 78701-1495; or by facsimile: (512) 463-6311. To be considered, comments 
must be received by 5:00 p.m. on July 27, 1998. 
The amendment is proposed under the Natural Resources Code, Chapter 33, 
Subchapter C, sec.33.053(a)(10) and sec.33.206(d) which provide the Council 
with, respectively, the authority to list each federal activity that may have a 
direct and significant detrimental impact on coastal natural resource areas and 
to adopt procedural rules for the review of federal activities.
Natural Resources Codes, Chapter 33, Subchapter C, sec.33.053(a)(10) and 
sec.33.206(d) are affected by this proposed amendment. 

sec.506.12.Federal Agency Actions, Federal Agency Activities and Development 
Projects, and Outer Continental Shelf Plans Subject to the Coastal Management 
Program.
(a) For purposes of this section, the following federal actions within the CMP 
boundary may adversely affect coastal natural resource areas (CNRAs): 
(1) Federal Agency Activities and Development Projects: 
(A) - (E) (No change.) 
(F) All federal agencies: 
(i) -(ii) (No change.) 
<nl>(iii)<ol> <p<nl> natural resource restoration or mitigation plans developed 
as a result of enforcement actions for violations of sec.10 of the Rivers and 
Harbors Act or sec.404 of the Clean Water Act. 
(2) - (3) (No change.) 
(b) - (g) (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 June 15, 1998.
TRD-9809562
Garry Mauro
Chairman
Coastal Coordination Council
Proposed date of adoption: August 12, 1998
For further information, please call: (512) 305-9129

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART V. Texas Board of Pardons and Paroles
CHAPTER 141. General Provisions
SUBCHAPTER B. Rulemaking
37 TAC sec.141.57
The Policy Board of the Texas Board of Pardons and Paroles proposes an amendment 
to 37 TAC sec.141.57, concerning a petition for adoption of a rule. The 
amendment is proposed in order to simplify procedures for submitting a petition 
requesting the adoption of a rule. The physical location of Board offices has 
changed since the adoption of the current rule, with the Chair and the General 
Counsel of the Board now headquartered in Austin. One technical change in 
subsection (c) was made to the version voted by the Board, in order to reflect 
statutory language specifying that 60 days is the maximum number of days between 
receipt and consideration of the petition by the Policy Board. 
Victor Rodriguez, Chair of the Policy Board, has determined that for the first 
five-year period the proposed amended rule is in effect, there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering this section. 
Chairman Rodriguez also has determined that for each year of the first five 
years the amended rule as proposed is in effect, the public benefit anticipated 
as a result of enforcing the section will be the clarification of the Policy 
Board's procedures regarding submission of petitions for a rule change. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons required to comply with the amended rule as proposed. 
Comments should be directed to Laura McElroy, General Counsel, Texas Board of 
Pardons and Paroles, P.O. Box 13401, Austin, Texas 78711. Written comments from 
the general public should be received within 30 days of the publication of this 
amendment. 
The amendment proposed under Government Code, sec.2001.021, which provides that 
a state agency prescribe the form of such a petition and the procedure for its 
submission, consideration, and disposition. 
There is no cross-reference to the proposed amended rule. 

sec.141.57. Petition for Adoption of Rule.
(a) Any interested person may petition the <nl>policy<ol> board requesting the 
adoption of a rule. 
(b) The petition <nl>must<ol> [shall] be submitted in writing, must be 
[initially] identified as <nl>Petition for Adoption of Rule<ol> [such], and 
<nl>must<ol> comply with the following requirements<nl>:<ol>[.] 
(1) <nl>each<ol> [Each] rule requested must be requested by separate 
petition<nl>;<ol>[.] 
(2) <nl>each<ol> [Each] petition must state the name and address of the 
petitioner<nl>;<ol>[.] 
(3) <nl>each<ol> [Each] petition must be <nl> delivered<ol> [addressed] to the 
<nl>general counsel of the <ol> board at its <nl>Austin<ol> [Huntsville] 
office<nl>; and<ol>[.] 
(4) <nl>each<ol> [Each] petition shall include: 
(A) a brief explanation of the proposed rule; <nl>and<ol>
(B) the text of the proposed rule prepared in a manner to indicate the words to 
be added or deleted in the current text, if any. 
(c) Within 60 days after receipt of a petition [by the board at its office in 
Huntsville, Texas], the <nl>policy<ol> board shall consider the petition at a 
regular meeting and thereafter shall either deny it in writing, stating its 
reasons for denial, or shall initiate rulemaking proceedings in accordance with 
the Government Code, sec.2001.021. A petition may be denied for failure to 
comply with the petition requirements of this rule. 
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 June 10, 1998.
TRD-9809381
Laura McElroy
General Counsel
Texas Board of Pardons and Paroles
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-1883

SUBCHAPTER C. Submissions and Presentation of Information and Inmate 
Representation
37 TAC sec.141.60, sec.141.61
The Policy Board of the Texas Board of Pardons and Paroles proposes two new 
rules, 37 TAC sec.141.60 and 37 TAC sec.141.61, concerning submission and 
presentation of information and representation of an inmate. The amendment is 
proposed to reflect the changes made by House Bill 1386, Chapter 161, sec.9, 
Acts of the 75th Legislature, Regular Session, 1997 (effective September 1, 
1997) which requires the Policy Board to adopt rules as to the submission and 
presentation of information and arguments to the Board members in behalf of an 
inmate and providing guidelines for representation of an inmate before the 
Board. 
Victor Rodriguez, Chair of the Policy Board, has determined that for the first 
five-year period the proposed amended rule is in effect, there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering this section. 
Chairman Rodriguez also has determined that for each year of the first five 
years the amended rule as proposed is in effect, the public benefit anticipated 
as a result of enforcing the section will be the clarification of the Policy 
Board's procedures on submission and presentation of information and arguments 
for and on behalf of an inmate, as well as representation of an inmate before 
the Board. There will be no effect on small businesses. There is no anticipated 
economic cost to persons required to comply with the amended rule as proposed.
Comments should be directed to Laura McElroy, General Counsel, Texas Board of 
Pardons and Paroles, P.O. Box 13401, Austin, Texas 78711. Written comments from 
the general public should be received within 30 days of the publication of this 
amendment. 
The new rules are proposed under the Code of Criminal Procedure, Article 42.18, 
sec.11(a), which provides that the Policy Board adopt rules for submission and 
presentation of information and representation of an inmate before the Board. 
There is no cross-reference to the proposed new rules. 

sec.141.60. Submission and Presentation of Information. 
(a) Information and arguments for and in behalf of an inmate shall be in 
writing. 
(b) Unless otherwise provided, all information and arguments for and on behalf 
of an inmate shall be submitted to the Review and Release Processing Section-
TDCJ, Austin, Texas. 
(c) In the event that an inmate's case is in the review period, copies of all 
information and arguments for and on behalf of an inmate may be submitted to 
members of the panel designated to consider the case. For this purpose, review 
period shall mean a period greater than two months but less than six months 
prior to the scheduled review date. 

sec.141.61. Representation of an Inmate.
(a) Persons representing an inmate may appear before a member of the board panel 
designated to consider the inmate's case. 
(b) Requests for appearances by persons representing inmates shall be only when 
the inmate's case is under review, during the review period, and at the 
discretion of the members of the board panel designated to review the case. 
(c) The time, place, and manner of contact between a person representing an 
inmate and a member of the board or an employee of the board shall be 
established by the members of the board panel designated to review the case. 
(d) For this purpose, the review period shall mean a period greater than two 
months but less than six months prior to the scheduled review date. 
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 June 10, 1998.
TRD-9809385
Laura McElroy
General Counsel
Texas Board of Pardons and Paroles
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-1883

CHAPTER 145. Parole 
SUBCHAPTER A. Parole and Process
37 TAC sec.145.1
The Policy Board of the Texas Board of Pardons and Paroles proposes an amendment 
to 37 TAC sec.145.1, concerning the Board members as parole decision-makers. The 
amendment to subsection (a) is proposed to reflect the changes made during the 
75th legislature to the laws requiring a two-thirds Board vote to release an 
offender on parole (1) who was convicted of a capital felony or an offense under 
sec.21.11(a)(1) or sec.22.021 of the Penal Code, or (2) who is not eligible for 
parole under sec.508.145(c), Government Code, until 35 years are served for a 
conviction under sec.12.42(c)(2) of the Penal Code (the repeat offender laws). 
See Senate Bill 46, Chapter 665, sec.sec.1, 2, and 3, Acts of the 75th 
Legislature, Regular Session, 1997 (effective September 1, 1997). One technical 
change was made in the version voted by the Board, in order to correct a 
citation error. Specifically, a reference in the proposed rule to 
"sec.508.145(c) of the Government Code" was changed to reflect the correct 
citation to "sec.12.42(c)(2) of the Penal Code" (the repeat offender laws). 
The amendment to subsection (b) is proposed in order to facilitate Board panel 
votes when a majority of the panel does not concur in a decision involving 
parole and mandatory supervision or revocation of parole and mandatory 
supervision by providing for the case to be forwarded to a panel designated by 
the Presiding Officer (Chair) to revote the case. The amendment is proposed to 
reflect the changes made by House Bill 1386, Chapter 161, sec.9, Acts of the 
75th Legislature, Regular Session, 1997 (effective September 1, 1997) which 
transferred rulemaking authority from the Parole Board to the Policy Board. 
Victor Rodriguez, Chair of the Policy Board, has determined that for the first 
five-year period the proposed amended rule is in effect, there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering this section. 
Chairman Rodriguez also has determined that for each year of the first five 
years the amended rule as proposed is in effect, the public benefit anticipated 
as a result of enforcing the section will be the clarification of the Parole 
Board's voting procedures. There will be no effect on small businesses. There is 
no anticipated economic cost to persons required to comply with the amended rule 
as proposed. 
Comments should be directed to Laura McElroy, General Counsel, Texas Board of 
Pardons and Paroles, P.O. Box 13401, Austin, Texas 78711. Written comments from 
the general public should be received within 30 days of the publication of this 
amendment. 
The amended rule is proposed under the Code of Criminal Procedure, Article 
42.18,sec.8(g) and the Government Code, sec.508.044, which provide that the 
Policy Board may adopt rules regarding the authority of a parole panel to 
release inmates eligible for parole and mandatory supervision, as well as rules 
regarding the conduct of hearings on the revocation of parole and mandatory 
supervision, and conditions to be imposed on persons released on parole and 
mandatory supervision. See also Government Code, sec.508.141, which provides 
that a parole panel has the authority to make decisions on the release of an 
inmate on parole and mandatory supervision. 
There is no cross-reference to the proposed amended rule. 

sec.145.1. Parole Decision-Maker.
(a) <nl>Unless otherwise provided, parole decisions shall be made by two-thirds 
vote of a parole panel.<ol> The <nl>entire<ol> board is the parole release 
decision-maker of persons convicted of a <nl> capital<ol> [Capital] felony 
<nl>offense,<ol> or an offense under sec.sec.21.11 (a)(1), 22.021, or 12.42 
<nl>(c)<ol> [(d)] (2) of the Penal Code. <nl>In these cases, the<ol> [The] board 
may grant parole only upon a two-thirds vote of the entire membership of the 
board. The board is not required to meet as a body to perform this duty. 
(b) In all other matters of <nl>parole and mandatory supervision and revocation 
of parole and mandatory supervision,<ol> [Parole and Mandatory Supervision and 
Revocation of Parole and Mandatory Supervision] a three-member parole panel is 
the parole <nl>decision-maker<ol> [decisionmaker]. A parole panel may consider 
for parole any eligible person and upon approval by panel majority may release 
such person on parole. <nl> If a majority of the panel does not concur, the case 
is forwarded to a panel designated by the presiding officer (chair) to 
revote.<ol> The members of a parole panel are not required to meet as a body to 
perform these <nl>decision-making <ol> [decisionmaking] duties. 
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 June 10, 1998.
TRD-9809383
Laura McElroy
General Counsel
Texas Board of Pardons and Paroles
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-1883

CHAPTER 150. Memorandum of Understanding and Board Policy Statements
SUBCHAPTER A. Published Policies of the Board
37 TAC sec.150.55
The Policy Board of the Texas Board of Pardons and Paroles proposes an amendment 
to 37 TAC sec.150.55, concerning conflict of interest policy. The amendment is 
proposed to reflect the changes made by House Bill 1386, Chapter 161, sec.7, 
Acts of the 75th Legislature, Regular Session, 1997 (effective September 1, 
1997), which requires the Policy Board to develop and implement a policy that 
clearly defines circumstances under which Parole Board members should disqualify 
themselves from voting on a parole decision or a decision to continue, modify, 
or revoke parole or mandatory supervision.
Victor Rodriguez, Chair of the Policy Board, has determined that for the first 
five-year period the proposed amended rule is in effect, there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering this section. 
Chairman Rodriguez also has determined that for each year of the first five 
years the amended rule as proposed is in effect, the public benefit anticipated 
as a result of enforcing the section will be the clarification of the Policy 
Board's procedures on when Parole Board members should disqualify themselves 
from voting on certain matters. There will be no effect on small businesses. 
There is no anticipated economic cost to persons required to comply with the 
amended rule as proposed. 
Comments should be directed to Laura McElroy, General Counsel, Texas Board of 
Pardons and Paroles, P.O. Box 13401, Austin, Texas 78711. Written comments from 
the general public should be received within 30 days of the publication of this 
amendment. 
The amendment is proposed under the Code of Criminal Procedure, Article 42.18, 
sec.7(c), which charges the Policy Board with the duty to develop and implement 
a policy that clearly defines circumstances under which Parole Board members 
should disqualify themselves from voting on a parole decision or a decision to 
revoke parole or mandatory supervision. 
There is no cross-reference to the proposed amendment. 

sec.150.55. Conflict of Interest Policy.
(a)-(c) (No change.) 
(d) Section 4--disqualification. 
(1) <nl>Disqualification.<ol> [A parole board member] <nl>Parole Board 
members<ol> shall disqualify <nl>themselves from voting on all clemency matters, 
release on parole or mandatory supervision decisions, and decisions to continue, 
modify, or revoke parole or mandatory supervision when<ol> [himself making any 
type of decision or vote otherwise authorized to be made by board members when: 
any matter or decision which his impartiality might be questioned, including, 
but not limited to, situations where]: 
<nl>(A)<ol> they know that individually or as a fiduciary, they have an interest 
in the subject matter before them; or 
<nl>(B)<ol> [(A)] <nl>the Board<ol> [the board] member or his<nl>/her<ol> spouse 
is related by affinity or consanguinity within the third degree to a person who 
is the subject of <nl> the decision before them<ol> [a board decision or 
vote.]<nl>;<ol> 
<nl>(2)<ol> <nl>Recusal. Parole Board members shall recuse themselves from 
voting on all clemency matters, release on parole or mandatory supervision 
decisions, and decisions to continue, modify, or revoke parole or mandatory 
supervision when:<ol> 
<nl>(A)<ol> their impartiality might reasonably be questioned; 
<nl>(B)<ol> they have a personal bias or prejudice concerning the subject matter 
or person in the decision before them; 
[(B) the board member knows that he individually or as a fiduciary, or his 
spouse or a minor child residing in his household has or shares a financial 
interest in a person or shares a financial interest with a person who is the 
subject of a board decision or vote; ] 
[(C) the board member knows that he has any type interest that could be 
substantially affected by the outcome of a board decision or vote; ] 
[(D) the board member has any interest financial or otherwise, direct or 
indirect, which is in substantial conflict with the proper discharge of his 
duties in the public interest;]
<nl>(C)<ol> [(E)] the <nl>Board<ol> [ board] member was a complainant [in a 
criminal matter], [or served as] a material witness<nl>, or has served as 
counsel for the state or the defense<ol> in the prosecution of the subject of 
the <nl> parole decision or revocation decision before them<ol> [board decision 
or vote]. 
[(2) A board member may disqualify himself in any case in which he feels it is 
inappropriate for him to participate in voting or making a decision.] 
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 June 10, 1998.
TRD-9809380
Laura McElroy
General Counsel
Texas Board of Pardons and Paroles
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 463-1883

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART I. Texas Department of Human Services
CHAPTER 15.Medicaid Eligibility
The Texas Department of Human Services (DHS) proposes to amend sec.sec.15.100 
and 15.502, concerning definitions and incurred medical expenses as allowable 
deductions from nursing facility applied income, in its Medicaid Eligibility 
chapter. The purpose of the amendments is to reduce program abuse and to 
streamline some procedures. The procedural changes include: 1) the service must 
already have been provided; 2) for dental services, 15% above the fee schedule 
from the Texas Medicaid Provider Procedures Manual will be the maximum allowable 
cost; and 3) the authorization form can be signed by additional medical 
practitioners. DHS proposes using the Texas Medicaid Provider Procedures Manual 
procedure codes and fee schedule plus a 15% add on for dental services because 
dental providers incur greater administrative costs for services to nursing 
facility clients. Medicaid does not directly reimburse the dental providers for 
services; the client pays the provider, usually over an extended period of time. 
If the client dies or discharges from the nursing facility, the dental provider 
is often left with a bad debt. All of the definitions are included to conform to 
the Texas Register policy of numbering definitions. Only the definition for the 
term medically necessary is being amended.
Eric M. Bost, commissioner, has determined that for the first five-year period 
the proposed amendments will be in effect there will be fiscal implications as a 
result of enforcing or administering the amendments. The effect on state 
government for the first five-year period the amendments will be in effect is an 
estimated additional cost of $657,047 for fiscal year 1998; $654,621 for fiscal 
year 1999; $651,902 for fiscal year 2000; $649,225 for fiscal year 2001; and 
$646,589 for fiscal year 2002. There will be no fiscal implications for local 
government. 
Mr. Bost also has determined that for each year of the first five years the 
amendments are in effect the public benefit anticipated as a result of enforcing 
the amendments will be that nursing facility clients will receive only medically 
necessary services and inappropriate services will be reduced. The rule has an 
economic effect on some small businesses because it imposes a fee schedule for 
dental services to nursing facility clients. Use of the fee schedule will result 
in an estimated annual average cost-savings per Medicaid client of $110.90. 
There is no difference in the effect of the rule on large or small businesses. 
Questions about the content of this proposal may be directed to Judy Coker at 
(512) 438-3227 in DHS's Long-Term Care section. Written comments on the proposal 
may be submitted to Supervisor, Rules and Handbooks Unit-287, Texas Department 
of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 
days of publication in the Texas Register DHS will hold a public hearing on the 
proposal on Monday, July 20, 1998 at 1:00 p.m. in the John H. Winters Building, 
Public Hearing Room, first floor, East Tower, 701 W. 51st St. Austin, Texas. 
Final rules with comments from the public hearing will be presented to the DHS 
Board.

SUBCHAPTER A.General Information
40 TAC sec.15.100
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which authorizes the department to administer public and medical 
assistance programs and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The amendment implements sec.sec.22.001-22.030 and 32.001-32.042 of the Human 
Resources Code. 

sec.15.100.Definitions.
The following words and terms, when used in this chapter, have the following 
meanings unless the context clearly indicates otherwise: 
<nl>(1)<ol> Aid and Attendance (A&A) - Veterans Administration (VA) benefits for 
people living in a nursing home who need regular aid and attendance from another 
person. 
<nl>(2)<ol> Aged and Disabled (A&D) - Usually refers to financial and social 
services for individuals who are aged and disabled. 
<nl>(3)<ol> Aid to Families with Dependent Children (AFDC) - Financial 
assistance to low income families under Title IV-A of the Social Security Act. 
AFDC clients are also eligible for Medicaid. 
<nl>(4)<ol> Alimony - Allowance made by a court to one spouse from funds of the 
other spouse, either pending decision on a suit for separation or divorce or 
after a decision in the suit. 
<nl>(5)<ol> Alternate care - A service provided in a client's home or community 
as an alternative to institutional care. 
<nl>(6)<ol> Annuity - An amount payable yearly or at other regular intervals. 
<nl>(7)<ol> Appeal - A client's request for a fair hearing concerning a 
department action. 
<nl>(8)<ol> Applicant - An individual with a pending application for medical 
assistance. 
<nl>(9)<ol> Application - A completed, signed, and dated application for 
assistance (aged and disabled). 
<nl>(10)<ol> Applied income - The amount of personal income a client in a long-
term care facility must pay, to the facility, toward his cost of care. 
<nl>(11)<ol> Assets - All items that have monetary value and are owned by an 
individual. 
<nl>(12)<ol> Audit reconciliation - The process by which a facility with audit 
exceptions takes corrective action to clear the exceptions. 
<nl>(13)<ol> Award - Something of value conferred or bestowed on an individual 
as a result of merit or need. 
<nl>(14)<ol> BENDEX (Beneficiary Data Exchange) - Computer tape from the Social 
Security Administration (SSA) giving Retirement, Survivors, and Disability 
Insurance (RSDI) and Medicare information about the department's clients. 
<nl>(15)<ol> Blind - An individual is considered blind under Supplemental 
Security Income (SSI) requirements if the visual acuity in his better eye is 
20/200 or less with corrective lenses, or if he has tunnel vision that limits 
his field of vision to 20 degrees or less. 
<nl>(16)<ol> Bond - A written obligation to pay a sum of money at a future date. 
<nl>(17)<ol> Budgeting - The process of determining a client's eligibility and 
applied income. 
<nl>(18)<ol> Burial space - A burial plot, grave site, crypt, mausoleum, urn, 
casket, niche, or other repository customarily and traditionally used for the 
deceased's bodily remains. The term also includes necessary and reasonable 
improvements or additions to these spaces, including, but not limited to, 
vaults, headstones, markers, or plaques; burial containers; arrangements for 
opening and closing of grave site; and contracts for care and maintenance of the 
grave site. Contracts for care and maintenance are sometimes referred to as 
endowment or perpetual care. 
<nl>(19)<ol> Buy-in - The payment of Medicare Part B premiums by the department 
and for eligible Medicaid clients. 
<nl>(20)<ol> Client - Either an applicant for or a recipient of medical 
assistance. 
<nl>(21)<ol> Common law marriage - A relationship in which the parties live 
together and represent themselves to the public as husband and wife. 
<nl>(22)<ol> Community Care for Aged and Disabled (CCAD) - A group of alternate 
care services, either home-based or community based, for eligible aged and 
disabled Texans.
<nl>(23)<ol> Community care service - A service provided in a client's home or 
community, as opposed to services provided in an institution. The terms 
community care and alternate care are synonymous. 
<nl>(24)<ol> Compensation - Any money, real or personal property, food, shelter, 
or services received by a client that are not usually provided by a family 
member. 
<nl>(25)<ol> Countable income - The amount of a client's income after all 
exemptions and exclusions. 
<nl>(26)<ol> Countable resource - Any resource that the department would have 
counted, in whole or in part, toward the resource limitation. 
<nl>(27)<ol> Current market value - Current value of a resource at the time of 
sale or transfer. See the definition of fair market value in this section. 
<nl>(28)<ol> Deeming - Counting all or part of the income or resources of 
another person (parent or spouse) as income or resources available to the 
client. 
<nl>(29)<ol> Deemor - A person (spouse or parent of a client) whose income or 
resources are available to the client. 
<nl>(30)<ol> Disabled - An individual who is unable to engage in any 
substantial, gainful activity because of any medically determinable physical or 
mental impairment that can be expected to result in death or has lasted or can 
be expected to last for a continuous period of at least 12 months. 
<nl>(31)<ol> Discounting - The advancement of money on a negotiable note or 
agreement and the deduction of interest or a premium in advance. 
<nl>(32)<ol> Early and periodic screening, diagnosis, and treatment (EPSDT) - 
Services offered under Medicaid for eligible children. 
<nl>(33)<ol> Earned income - Income a client receives for services performed as 
an employee or as a result of self-employment.
<nl>(34)<ol> Earned income credits (EIC) - Payments from the Internal Revenue 
Service (IRS) to persons who have tax dependents and gross monthly earnings at 
or below levels established by IRS. 
<nl>(35)<ol> Earned income tax credit (EITC) - A special tax credit that reduces 
the federal tax liability of certain low-income working taxpayers. 
<nl>(36)<ol> Equity - The fair market value of a resource minus all money owed 
on it. 
<nl>(37)<ol> Excluded income - Income that is not counted when determining 
eligibility but that is counted to determine applied income. 
<nl>(38)<ol> Excluded resource - Any resource that the department does not count 
toward the resource limitation. 
<nl>(39)<ol> Exempt income - Income that is not counted in eligibility nor 
applied income determination. 
<nl>(40)<ol> Extended care facility (ECF) - A nursing home that is participating 
in Medicare as a skilled nursing facility. 
<nl>(41)<ol> Fair hearing - A meeting conducted by a regional hearing officer 
with a client or his representative who disagrees with and wishes to appeal some 
action taken on the client's case. 
<nl>(42)<ol> Fair market value - Amount of money an item would bring if sold in 
the current local market. 
<nl>(43)<ol> Federal benefit rate (FBR) - Standard payment amount in the SSI 
program. 
<nl>(44)<ol> Fiduciary agent - An individual who has authority to manage another 
person's funds. 
<nl>(45)<ol> Financial duress - Having insufficient funds to meet living 
expenses because of debts incurred for medical expenses for the 
institutionalized spouse, community-based spouse, or dependent, or because of 
replacement of a resource lost through theft or acts of God. 
<nl>(46)<ol> Financial management - The way a client manages his income, pays 
expenses, and maintains any remaining funds. 
<nl>(47)<ol> Fraud - Deliberate misrepresentation or willful withholding of 
information for the purpose of obtaining public assistance; either for self or 
another individual. 
<nl>(48)<ol> Health insurance claim (HIC) - Medicare claim number, which is the 
same as Social Security claim number or Railroad Retirement claim number (number 
with an alpha suffix.) 
<nl>(49)<ol> Home - A structure in which a client lives (including mobile homes, 
houseboats, and motor homes), other buildings, and all adjacent land. 
<nl>(50)<ol> Housebound Veterans Administration benefits (HB) - Veteran's 
Administration benefits for persons living in the community who need regular 
aid-and-attendance from another person. 
<nl>(51)<ol> Hospital insurance benefits (HIB) - Part A of Medicare. 
<nl>(52)<ol> Income - Receipt of any property or service a client can apply, 
either directly or by sale or conversion, to meet basic needs for food, 
clothing, and shelter. Countable income is the amount of a client's income after 
all exemptions and exclusions. 
<nl>(53)<ol> Income Eligibility Verification System (IEVS) - Computer tape 
matches required by federal law. 
<nl>(54)<ol> Ineligible child - for deeming purposes, the natural or adopted 
child of the client, of the client's spouse, or of the parent or parent's 
spouse, who lives with the client, is not eligible for SSI or Medical Assistance 
Only, and who is under age 18, or under age 21 and a student regularly attending 
a school, college, university, or course of vocational training in preparation 
for gainful employment. 
<nl>(55)<ol> Infrequent payment - A payment that is received no more than once 
per calendar quarter. 
<nl>(56)<ol> Inheritance - Cash, other liquid resources, noncash items, or any 
right in real or personal property received at the death of another. An 
individual may not have access to his inheritance pending legal action. An 
inheritance is income in the month of receipt unless the inherited item would be 
an excluded resource. Effective August 11, 1993, waiving an inheritance may 
result in a transfer of assets penalty. 
<nl>(57)<ol> In-kind support and maintenance - Food, clothing, or shelter that 
is provided to the client or that is purchased by someone else. Any cash 
payments given directly to the client for food, clothing, or shelter are cash 
income and not in-kind support and maintenance. 
<nl>(58)<ol> Institution - An establishment that makes available some treatment 
or services, besides food and shelter, to four or more persons who are not 
related to the proprietor. Also see definition of public institution in this 
section. 
<nl>(59)<ol> Institutional care - Long-term nursing care in a nursing home, ICF-
MR facility, or state institution. 
<nl>(60)<ol> Institutional cases - Medical assistance only cases in state 
institutions. 
<nl>(61)<ol> Insurance - The following terms apply to the definition of 
insurance: 
(A) The insured is the individual upon whose life a whole life or straight life 
policy is effected. 
(B) The beneficiary is the individual (or entity) named in the contract to 
receive the proceeds of the policy upon the death of the insured. 
(C) The owner is the individual paying the premiums on the policy, with the 
right to change it as he may see fit. The owner is the only individual who can 
receive the cash surrender amount of the policy. 
(D) The insurer-assurer is the company that contracts with the owner. 
(E) The face value amount is the basic death benefit or maturity amount, which 
is specified on the policy's face. The face value does not include dividends, 
additional amounts payable because of accidental death, or other special 
provisions. 
(F) The cash surrender value is the amount that the insurer pays if the policy 
is cancelled before death or before it has matured. The cash surrender value 
usually increases with the age of the policy. 
(G) A participating life insurance policy is one in which dividends are 
distributed to the policy holder. 
(H) A nonparticipating life insurance policy means that dividends are not 
distributed to the policy holders. 
(I) Default is the failure to pay the insurance premiums. There may be 
conditions in the policy relating to default. 
(J) Ordinary life insurance (also known as whole life or straight life) is a 
contract for which the owner pays premiums and the insurer pays the face amount 
of the policy to the beneficiary upon the death of the insured. 
(K) An individual policy is a policy that is paid for entirely by the owner. 
(L) A group policy is usually issued through an employer or organization. The 
premiums may include some contribution from the employer. 
(M) Dividends are shares of surplus funds allocated to the policy holders of 
participating insurance policies. They generally represent a previous 
overpayment of premiums. Dividends may be received as cash payments; used to 
reduce future premium payments; applied to the existing insurance to increase 
coverage; or left as a separate accumulation of funds that draw interest. 
<nl>(62)<ol> Intermediate Care Facility (ICF) - Medium level of nursing home 
care. Formerly ICF III. Effective October 1, 1990, an ICF is officially 
designated as nursing facility (NF). 
<nl>(63)<ol> Intermediate Care Facility for Mentally Retarded (ICF-MR) - Public 
or private facilities that provide client care in 24-hour specialized 
residential settings for the mentally retarded. 
<nl>(64)<ol> Intermediate Care II (ICF II) - Level of care in a nursing home for 
persons who need minimal nursing care. Effective October 1, 1990, an ICF is 
officially designated as nursing facility (NF). 
<nl>(65)<ol> Irregular payment - A payment made without an agreement or 
understanding and without any reasonable expectation that payment will occur 
again. 
<nl>(66)<ol> Level of care (LOC) - Type of care a client is eligible to receive 
in an ICF/MR facility. 
<nl>(67)<ol> Level of care determination (LCD) - Determination made by a Texas 
Department of Health MR program regarding the type of care a client requires. 
<nl>(68)<ol> Life estate - A contract transferring certain rights in property to 
a person for his life time. The person usually has the right to possess, use, 
receive profits, and sell his estate interest. 
<nl>(69)<ol> Liquid resources - Cash or financial instrument that can be 
converted to cash within 20 workdays. Liquid resources include cash, savings 
accounts, checking accounts, stocks, bonds, and time deposits. Liquid resources 
may also include promissory notes, loans, and mortgages. 
<nl>(70)<ol> Loan - A transaction whereby one party advances money to another 
party who promises to repay the debt in full, with or without interest. 
<nl>(71)<ol> Long Term Care Unit (LTCU) of Texas Department of Health (TDH) - A 
team of TDH health-care professionals responsible for quality assurance, 
licensure, and certification functions in the Title XIX facilities. 
<nl>(72)<ol> Materially Participating - A business owner is determined to be 
materially participating if he meets any one of the following criteria: 
(A) The owner engages in periodic advice and consultation with the tenant, 
inspection of the production activities, and furnishing of machinery, equipment, 
livestock, and production expenses. 
(B) The owner makes management decisions that affect the success of the 
enterprise. 
(C) The owner performs a specified amount of physical labor to produce the 
commodities raised. 
(D) The owner does not meet the full requirements above but his involvement in 
crop production is nevertheless significant. 
<nl>(73)<ol> Medicaid - A program of medical care authorized by Title XIX of the 
Social Security Act and the Human Resources Code. It is a federal/state program 
that is state administered, utilizing a combination of state and federal dollars 
to purchase medical care for categorically needy and medically indigent people. 
<nl>(74)<ol> Medicaid-qualifying trusts (MQT) - A Medicaid-qualifying trust is 
one that the client, his spouse, guardian, or anyone holding his power of 
attorney establishes using the client's money. The client is the beneficiary of 
a Medicaid-qualifying trust. A Medicaid-qualifying trust is one that was 
established between June 1, 1986, and August 10, 1993. Trusts which meet the MQT 
definition and were established prior to June 1, 1986, are treated as standard 
inter vivos trusts. 
<nl>(75)<ol> Medical Assistance Only (MAO) - Programs providing Medicaid 
coverage only, with no cash assistance. 
<nl>(76)<ol> Medical care facility - A nursing facility (Title XIX, Title XX, or 
private), hospital, ICF-MR, or an institution for mental diseases (IMD). 
<nl>(77)<ol> Medical care identification card - A monthly computer-issued notice 
to Medicaid clients, verifying Medicaid coverage. Also referred to as Medicaid 
card. 
<nl>(78)<ol> Medical effective date (MED) - Date Medicaid coverage begins. 
<nl>(79)<ol> Medical necessity (MN) - The determination that a client requires 
the services of registered nurses or licensed nurses in an institutional 
setting. 
<nl>(80)<ol> Medical services - Those services which are directed toward 
diagnostic, preventive, therapeutic, or palliative treatment of a medical 
condition and which are performed, directed, or supervised by a state-licensed 
health professional. 
<nl>(81)<ol> Medically necessary - The need for medical services in an amount 
and frequency sufficient, according to accepted standards of medical practice, 
to preserve health and life and to prevent future impairment. For dental 
services, prosthetic devices, and walking aids/shoes, the client must provide a 
statement of medical necessity from his physician<nl>, or a nurse practitioner, 
clinical nurse specialist, or physician's assistant who is working in 
collaboration with his physician<ol>. 
<nl>(82)<ol> Medicare - Medical coverage available to persons 65 years old or 
older and to certain disabled persons under Title XVIII of the Social Security 
Act. 
<nl>(83)<ol> Mineral rights - Ownership interests in the oil, gas, or minerals 
beneath the surface of a piece of property. Also see surface rights. 
<nl>(84)<ol> National Heritage Insurance Company (NHIC) - Company contracted 
with the department to serve as the insuring agent in providing health benefits 
to Medicaid clients. 
<nl>(85)<ol> Nursing facility (NF) - Formerly ICF or SNF. 
<nl>(86)<ol> Old Age, Survivors, and Disability Insurance (OASDI) - Title II of 
the Social Security Act. Also referred to as RSDI. 
<nl>(87)<ol> Parent - A child's natural or adoptive parent or the spouse of the 
natural or adoptive parent. 
<nl>(88)<ol> Pension funds - Monies held in a retirement fund under a plan 
administered by an employer or union, or an individual retirement account (IRA) 
or Keogh account as described in the Internal Revenue Code. 
<nl>(89)<ol> Preadmission screening and annual resident review (PASARR) - 
Federally mandated screening for mental illnesses, mental retardation, and 
related conditions before admission to a nursing facility to determine if 
placement is appropriate. 
<nl>(90)<ol> Prepaid burial contract - An agreement in which a client prepays 
his burial expenses and the seller agrees to furnish the burial. 
<nl>(91)<ol> Prize - Something of value won in a contest, lottery, or game of 
chance. 
<nl>(92)<ol> Promissory notes - A written or oral, unconditional agreement by 
the purchaser to pay the seller a specific sum of money at a specified time or 
on demand. 
<nl>(93)<ol> Property agreement - A pledge or security of a particular property 
or properties for the payment of a debt or the performance of some other 
obligation within a specified time. Property agreements on real estate (land and 
buildings) are generally referred to as mortgages but may also be called land 
contracts, contracts for deed, or deeds of trust. 
<nl>(94)<ol> Provider - A person, group, or agency providing a service to a 
client for a fee that is paid by the department. Providers are sometimes called 
vendors. 
<nl>(95)<ol> Public institution - An establishment that is operated or 
controlled by a federal or state government unit, or a political subdivision, 
such as the city or county. 
<nl>(96)<ol> Purchased health services - The department's state office division 
that monitors the NHIC contract. 
<nl>(97)<ol> Quality control (QC) - Review of a random sample of cases to 
determine correctness of assistance provided. 
<nl>(98)<ol> Railroad retirement benefits (RR) - Retirement, disability annuity, 
and survivorship benefits available to railroad employees and their families. 
<nl>(99)<ol> Real property - Land and houses or immovable objects attached to 
the land. 
<nl>(100)<ol> Redetermination - The decision concerning a client's continued 
eligibility for Medicaid benefits. 
<nl>(101)<ol> Refund value - The amount that a client would receive upon 
revocation or liquidation of his burial contract. The refund value is considered 
an available resource. 
<nl>(102)<ol> Relative - Son, daughter, grandson, granddaughter, stepson, 
stepdaughter, half sister, half brother, grandmother, grandfather, in-laws, 
mother, father, stepmother, stepfather, aunt, uncle, sister, brother, 
stepsister, stepbrother, nephew, niece. A dependant relative is one who was 
living in the client's home before the client's absence and who is unable to 
support himself outside of the client's home due to medical, social, or other 
reasons. 
<nl>(103)<ol> Rent - payment, either as cash or in-kind, which an individual 
receives for the use of real or personal property, such as land, housing, or 
machinery. Rental income is considered unearned income unless it is derived from 
self-employment, that is, someone is in the business of renting properties. 
<nl>(104)<ol> Resources - Cash, other liquid assets, or any real or personal 
property or other nonliquid assets owned by a client, his spouse, or parent, 
that could be converted to cash. 
<nl>(105)<ol> Restitution - Securing payment from a client when fraud is not 
indicated or pursued and when the client has been undercharged applied income 
because of previously unreported or under-reported monthly income or resources 
that do not involve income averaging. 
<nl>(106)<ol> Retirement, survivors, and disability insurance benefits (RSDI) - 
Title II of the Social Security Act. Also referred to as OASDI. 
<nl>(107)<ol> Review - The process of redetermining a client's continued 
eligibility for Medicaid. 
<nl>(108)<ol> Rider 49 status - Medicaid clients in nursing facilities in March 
1980, who qualify for ICF II levels of care. Entitled to continue ICF II and to 
retain Medicaid after leaving facility, if eligible. 
<nl>(109)<ol> Royalty - A payment to an individual for permitting another to use 
or market his property (such as mineral rights, patents, or copyrights). 
<nl>(110)<ol> Skilled nursing facility - A type of nursing home under Medicaid 
and Medicare. Also referred to as extended care facility, under Medicare. 
Effective October 1, 1990, refers only to Medicare facilities. 
<nl>(111)<ol> Social Security (SS)- A federal system of old-age, unemployment, 
or disability insurance for various categories of employed and dependent 
persons, financed by a fund maintained jointly by employees, employers, and the 
government. 
<nl>(112)<ol> Social Security Administration (SSA) - An organization of the 
Department of Health and Human Services (HHS). SSA processes SSI/SDX 
transactions for the states and is involved extensively in the Medicare program. 
<nl>(113)<ol> Social Security claim number (SSCN) - Usually same as Medicare 
claim number. 
<nl>(114)<ol> Social Security number (SSN) - A reference number used by the SSA 
to identify individual contributors to the Social Security fund. 
<nl>(115)<ol> Social service - Any service, other than medical, which is 
intended to assist a person with a physical disability or social disadvantage to 
function in society on a level comparable to that of a person who does not have 
such a disability or disadvantage. No in-kind items are expressly identified as 
social services. 
<nl>(116)<ol> State data exchange (SDX) - Computer tape from the SSA giving SSI 
information about the department's clients. SDX information can be used as a 
source of verification and is available to workers through the department's 
computer terminals. 
<nl>(117)<ol> Stocks - Shares of ownership in a corporation. 
<nl>(118)<ol> Supplementary medical insurance benefits (SMIB) - Part B of 
Medicare.
<nl>(119)<ol> Supplemental security income (SSI) - A needs-tested program, 
administered by the SSA, that provides monthly income to aged, blind, and 
disabled individuals. 
<nl>(120)<ol> Support - Contributions in cash or in kind that provide some or 
all of a client's usual needs. 
<nl>(121)<ol> Support and maintenance - The value of both food and shelter that 
a client receives. 
<nl>(122)<ol> Support or maintenance - The value of either food or shelter that 
a client receives, but not both. 
<nl>(123)<ol> Surface rights - Ownership interests in the exterior or upper 
boundary of land. 
<nl>(124)<ol> Texas Department of Health (TDH) - The state survey agency 
responsible for Title XIX survey and certification of nursing facilities, 
utilization review in Title XIX nursing facilities, and determination of levels 
of care for Medicaid clients. 
<nl>(125)<ol> Term life insurance - Life insurance with no cash or loan value. 
<nl>(126)<ol> Texas Medical Assistance Program - Medicaid program in Texas. 
<nl>(127)<ol> Third-party resource (TPR) - A source of payment for medical 
expenses other than the client, the department, or Medicaid. 
<nl>(128)<ol> Three months prior - The three calendar months before the month of 
application for SSI or MAO. Applicants who meet eligibility requirements during 
this period may receive retroactive medical coverage.
<nl>(129)<ol> Time deposit - A contract between an individual and a financial 
institution whereby the individual deposits funds for a specified period. In 
return, the financial institution agrees to pay an interest rate higher than the 
passbook rate. 
<nl>(130)<ol> Titles to Social Security Act - Divisions of the Social Security 
Act. Most common titles: 
(A) Title II - RSDI Benefits 
(B) Title XVI - SSI 
(C) Title XVIII - Medicare 
(D) Title XIX - Medicaid 
(E) Title XX - Social Services Block Grant 
<nl>(131)<ol> Uncompensated value - The fair market value of a resource minus 
the amount of compensation the client received in exchange for the resource. 
<nl>(132)<ol> Unearned income - Income that is not earned. 
<nl>(133)<ol> Utilization review (UR) - Department procedures for monitoring 
Medicaid services. 
<nl>(134)<ol> Vendor - Provider of care to clients. 
<nl>(135)<ol> Vendor payments - Payment to vendors. 
<nl>(136)<ol> Vendor situation - Situation in which the department pays a 
provider for client care. Usually refers to care in nursing home or other 
Medicaid facility. 
<nl>(137)<ol> Veterans Administration (VA) - Usually refers to VA benefits. 
<nl>(138)<ol> Whole life insurance - Life insurance that has or eventually will 
accumulate cash value. 
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 June 12, 1998.
TRD-9809456
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER F.Budgets and Payment Plans
40 TAC sec.15.502
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which authorizes the department to administer public and medical 
assistance programs and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The amendment implements sec.sec.22.001-22.030 and 32.001-32.042 of the Human 
Resources Code. 

sec.15.502.Allowable Deductions.
(a) (No change.) 
(b) Allowable deductions include but are not limited to <nl> the items listed in 
paragraphs (1)-(4) of this subsection. The service must already have been 
provided to be an allowable deduction. The client must have provided 
documentation of all medical expenses to be considered. For dental services, 15% 
above the fee schedule from the Texas Medicaid Provider Procedures Manual is the 
maximum allowable cost for an incurred medical expense. Included are:<ol> 
(1) - (4) (No change.) 
(c) - (g) (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 June 12, 1998.
TRD-9809457
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 438-3765

CHAPTER 19.Nursing Facility Requirements for Licensure and Medicaid 
Certification
The Texas Department of Human Services (DHS) proposes amendments to sec.19.201, 
concerning criteria for licensing; sec.19.602, concerning incidents of abuse and 
neglect reportable to the Texas Department of Human Services (DHS) by 
facilities; sec.19.1203, concerning frequency of physician visits; sec.19.1510, 
concerning emergency drugs; sec.19.1912, concerning additional clinical record 
service requirements; sec.19.1920, concerning operating policies and procedures; 
sec.19.1921, concerning general requirements for a nursing facility; 
sec.19.2008, concerning investigations of incidents and complaints; sec.19.2104, 
concerning suspension of a license; sec.19.2106, concerning revocation of a 
license; sec.19.2108, concerning emergency suspension and closing order; and 
sec.19.2312, concerning surety bonds or letters of credit; in its Nursing 
Facility Requirements for Licensure and Medicaid Certification chapter. The 
purpose of the amendments is to incorporate minor technical changes regarding 
reporting abuse and neglect; and correct errors regarding required frequency of 
physician visits, timeframes for submitting resident assessments, appeals for 
suspension, revocation and denial of a license, and copying nurses' licenses; 
relax restrictions on the number and types of rules allowed in emergency drug 
kits; change the procedure regarding surety bonds and letters of credit when a 
facility changes ownership; and add a requirement about computer changes and the 
year 2000. 
Eric M. Bost, commissioner, 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.
Mr. Bost also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to protect the health and safety of residents of Texas 
nursing facilities by improving methods of reporting abuse and neglect, 
increasing the number and types of drugs that may be kept in the emergency drug 
kit, correcting time frames regarding required frequency of physician visits and 
the submission of resident assessments, and requiring that facilities make 
reasonable and prudent efforts to prepare for computer changes resulting from 
the year 2000. There will be no effect on small businesses, because no 
additional services are required of any business, large or small. There is no 
anticipated economic cost to persons who are required to comply with the 
proposed sections.
Questions about the content of this proposal may be directed to Susan Syler at 
(512) 438-3111 in DHS's Long Term Care Policy Section. Written comments on the 
proposal may be submitted to Supervisor, Rules and Handbooks Unit-280, Texas 
Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, 
within 30 days of publication in the Texas Register

SUBCHAPTER C.Nursing Facility Licensure Application Process
40 TAC sec.19.201
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendment implements the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.201.Criteria for Licensing.
(a)-(c) (No change.) 
<nl>(d)<ol> <p<nl> In respect to all licensees in effect after December 31, 
1999, all services provided under licensure by the Texas Department of Human 
Services are required, as a condition of licensure, to be operational on and 
after January 1, 2000. 
<nl>(e)<ol> [(d)]An applicant for a license must affirmatively show that: 
(1) the applicant and all persons required to submit background information have 
not been convicted of a felony or crime involving moral turpitude in this state 
or any other state; 
(2) the applicant or license holder has the ability to comply with: 
(A) minimum standards of medical care, nursing care and financial condition; and 
(B) any other applicable state or federal standard; 
(3) the facility meets the standards of the Life Safety Code; 
(4) the facility meets the construction standards in Subchapter D of this 
chapter (relating to Facility Construction); and 
(5) the facility meets the standards for operation based upon an on- site 
survey. 
<nl>(f)<ol> [(e)] DHS considers the background and qualifications of: 
(1) the applicant or license holder; 
(2) a partner, officer, director, or managing employee of the applicant or 
license holder; 
(3) a person who owns or who controls the owner of the physical plant of a 
facility in which the nursing facility operates or is to operate; and 
(4) a controlling person with respect to the nursing facility for which a 
license or license renewal is requested. 
<nl>(g)<ol> [(f)] In making the evaluation required by subsection <nl>(f)<ol> 
[(e)] of this section, DHS requires the applicant or license holder to file a 
sworn affidavit of a satisfactory compliance history and any other information 
required by DHS to substantiate a satisfactory compliance history relating to 
each state or other jurisdiction in which the applicant or license holder and 
other person described in subsection
<nl>(f) <ol>[(e)] of this section operated a long term care facility during the 
five-year period preceding the date on which the application is made. For 
purposes of the sworn affidavit of a satisfactory compliance history, the 
applicant will be considered to have complied with the filing requirement (but 
not necessarily be entitled to a license) if the applicant swears or affirms 
that all the information disclosed in the application concerning previous state 
and federal nursing facility sanctions and penalties and related information are 
true and correct. The affidavit of compliance history is contained in DHS's 
application form. 
<nl>(h)<ol> [(g)] A license is issued if, after inspection and investigation, 
DHS finds that the applicant or license holder, and any other person described 
in subsection <nl>(e) <ol>[(d)] of this section, meets all requirements of this 
chapter. The license is valid for two years. Each license specifies the maximum 
allowable number of residents. The number of residents authorized by the license 
must not be exceeded. 
<nl>(i)<ol> [(h)] In making a determination whether to grant a nursing facility 
license, DHS reviews: 
(1) the information contained in the application; and 
(2) other documents DHS deems relevant, including survey and complaint 
investigation findings in each facility the applicant or any other person named 
in subsection <nl>(f) <ol>[(e)] of this section has been affiliated with during 
the last five years. 
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 June 12, 1998.
TRD-9809458
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER G.Resident Behavior and Facility Practice
40 TAC sec.19.602
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendment implements the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.602.Incidents of Abuse and Neglect Reportable to the Texas Department of 
Human Services (DHS) by Facilities.
(a) Any facility staff member who has cause to believe that the physical or 
mental health or welfare of a resident has been or may be adversely affected by 
abuse<nl>, <ol>[or] neglect<nl>, or exploitation <ol>caused by another person 
must report the abuse<nl>, <ol>[or] neglect<nl>, or exploitation to the DHS 
state office, Austin, Texas, at 1-800-458-9858.<ol>
<nl>(1)<ol> <p<nl> The person reporting must make the telephone report 
immediately on learning of the alleged abuse, neglect, or exploitation.
<nl>(2)<ol> <p<nl> The facility must conduct an investigation of the reported 
act(s). A written report of the investigation must be sent no later than the 
fifth working day after the oral report. 
<nl>(b)<ol> Facility staff must also report <nl>using the DHS form, <ol>conduct 
or conditions<nl>, not caused by abuse or neglect, <ol> resulting in [:] 
[(1)] exploitation of residents; 
[(2)] serious accidental injury to residents; or 
[(3)] hospitalization of residents. 
<nl>(1)<ol> <p<nl> Reports must be submitted by the 10th of each month for the 
previous month. 
<nl>(2)<ol> <p<nl> Reports must be faxed to (512) 438-2724 or mailed to: 
Investigations Section, LTC-R; Texas Department of Human Services; P.O. Box 
149030 (E-343); Austin, TX 78714-9030. 
<nl>(c)<ol> [(b)] Each employee of a facility must sign a statement which 
states: 
(1) the employee may be criminally liable for failure to report abuses; and 
(2) under the Health and Safety Code, Title 4, sec.242.133, the employee has a 
cause of action against a facility, its owner(s) or employee(s) if he is 
suspended, terminated, disciplined, or discriminated or retaliated against as a 
result of: 
(A) reporting any action described in <nl>subsections<ol> [subsection] (a) 
<nl>and (b) <ol>of this section to DHS or a law enforcement agency; 
(B) reporting the abuse or neglect or other complaint to the person's 
supervisors; or 
(C) for initiating or cooperating in any investigation or proceeding of a 
governmental entity relating to care, services, or conditions at the nursing 
facility. 
<nl>(d)<ol> [(c)] The statements described in subsection <nl>(c)<ol> [(b)] of 
this section must be available for inspection by DHS. 
[(d) <p<ol> Reports described in subsection (a) of this section are to be made 
to the DHS state office, Austin, Texas, at 1-800-458-9858. The person reporting 
must make an oral report immediately on learning of the alleged abuse or 
neglect.] 
[(e) <p<ol> The facility must conduct an investigation of the reported acts in 
subsection (a) of this section. A written report of the investigation must be 
sent no later than the fifth calendar day after the oral report.] 
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 June 12, 1998.
TRD-9809459
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER M.Physician Services
40 TAC sec.19.1203
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs.
The amendment implements the Human Resources Code, sec.sec.22.001-22.030.

sec.19.1203.Frequency of Physician Visits.
Physician visits must conform to the following schedule:
(1) (No change.) 
(2) Medicaid-certified facilities <nl>and Medicare skilled nursing 
facilities<ol>. 
(A)-(C) (No change.) 
(3) (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 June 12, 1998.
TRD-9809460
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER P.Pharmacy Services
40 TAC sec.19.1510
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendment implements the Human Resources Code, sec.sec.22.001-22.030.

sec.19.1510.Emergency Drugs.
Stocks of inventoried emergency dangerous drugs may be kept in facilities. 
(1)-(2) (No change.) 
(3) The facility must develop policies and procedures for the emergency 
dangerous drug kit that include the following: 
(A)-(B) (No change.) 
(C) a limitation on the type and quantity of controlled substances, as follows: 
(i) the controlled drugs must be limited to <nl>units<ol> [injectable unit] of 
use in dosage strengths generally recommended for single dose therapy <nl>for 
each route of administration<ol>; 
(ii) [analgesic] controlled drugs must be limited to no more than three 
different drugs <nl>per therapeutic drug class <ol>with a maximum total of 
<nl>doses necessary to treat for a 72-hour period <ol>[six drugs]; <nl>and<ol> 
<nl>(iii)<ol> <p<nl> the facility's professional staff must: 
<nl>(I)<ol> <p<nl> determine, select, and record a prudent number of controlled 
drugs for potential emergency incidents based on clinical criteria applicable to 
each facility's demographics; and 
<nl>(II)<ol> <p<nl> document treatment protocols for controlled substance use in 
the emergencies that might be reflective of the facility's census and 
environment. 
[(iii) <p<ol> anticonvulsant controlled drugs must be limited to no more than 
two different drugs with a maximum total of six doses; and] 
[(iv) <p<ol> the controlled drugs selected by the facility must not exceed a 
total of ten doses for the overall quantity maintained by the facility.] 
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 June 12, 1998.
TRD-9809461
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER T.Administration
40 TAC sec.sec.19.1912, 19.1920, 19.1921
The amendments are proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendments implement the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.1912.Additional Clinical Record Service Requirements.
(a)-(c) (No change.) 
(d) Required record retention. Periodic thinning of active clinical records is 
permitted; however, the following items must remain in the active clinical 
record: 
(1)-(2) (No change.) 
(3) current resident assessment instrument (RAI) and Subsequent quarterly 
reviews; in Medicaid-certified facilities, all <nl> RAIs <ol>[Resident 
Assessment Instruments] and Quarterly Reviews for the prior <nl>15-month 
<ol>[24-month] period,
(4)-(9) (No change.) 
(e)-(h) (No change.) 

sec.19.1920.Operating Policies and Procedures.
(a)-(b) (No change.) 
(c) The facility must ensure that personnel records are correct and contain 
sufficient information to support placement in the assigned position (including 
a resume of training and experience). When appropriate, a current copy of the 
person's license or permit must be in the file. [Registered nurse and Licensed 
Vocational nurse licenses must not be copied. Documentation of visual 
verification must be maintained.] 
(d) (No change.) 

sec.19.1921.General Requirements for a Nursing Facility.
(a)-(d) (No change.) 
(e) Each licensed facility must conspicuously and prominently post the 
information listed in paragraphs (1)-(10) of this subsection in an area of the 
facility that is readily and customarily available to the public. The posting 
must be in a manner that each item of information is directly visible at a 
single time. In the case of a licensed section that is part of a larger building 
or complex, the posting must be in the licensed section or public way leading 
thereto. Any exceptions must be approved by the Texas Department of Human 
Services (DHS). The following items must be posted: 
(1)-(5) (No change.) 
(6) notice that DHS can provide information about the nursing facility 
administrator at <nl>512-231-5825 <ol>[512-834-6787
(7)-(10 (No change.) 
(f)-(l) (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 June 12, 1998.
TRD-9809462
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER U.Inspections, Surveys, and Visits
40 TAC sec.19.2008
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendment implements the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.2008.Investigations of Incidents and Complaints.
(a)-(i) (No change.) 
(j) The individual reporting the alleged abuse or neglect <nl> or other 
complaint, the resident, the resident's family, any person designated to receive 
information concerning the resident, <ol>and the facility will be notified of 
the results of DHS's investigation of a reported case of abuse or neglect <nl>or 
other complaint<ol>. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on June 12, 1998.
TRD-9809463
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER V.Enforcement
40 TAC sec.sec.19.2104, 19.2106, 19.2108
The amendments are proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendments implement the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.2104.Suspension of a License.
(a)-(c) (No change.) 
(d) The facility will be notified by certified mail of DHS's suspension of the 
facility's license. The facility has 15 days from receipt of the certified mail 
notice to request a hearing in accordance with <nl> Chapter 79, Subchapter Q of 
this title (relating to Formal Appeals) <ol>[sec.sec.79.1601-79.1614 of the 
title (relating to Formal Hearings)]. The suspension is effective when the 
deadline for appeal of the suspension passes, unless the facility appeals the 
suspension. If the facility appeals the suspension, the status of the license 
holder is preserved until final disposition of the contested matter. 
(e) (No change.)

sec.19.2106.Revocation of a License.
(a)-(c) (No change.) 
(d) The facility will be notified by certified mail of DHS's revocation of the 
facility's license. The facility has 15 days from receipt of the certified mail 
notice to request a hearing in accordance with <nl>Chapter 79, Subchapter Q of 
this title (relating to Formal Appeals)<ol> [sec.sec.79.1601-79.1614 of this 
title (relating to Formal Hearings)]. The revocation will take effect when the 
deadline for appeal of the revocation passes, unless the facility appeals the 
revocation. If the facility appeals the revocation, the status of the license 
holder is preserved until final disposition of the contested matter. Upon 
revocation, the license must be returned to DHS. 

sec.19.2108.Emergency Suspension and Closing Order.
(a)-(c) (No change.) 
(d) When an emergency suspension has been ordered and the conditions in the 
facility indicate that residents should be relocated, the following rules apply 
unless superseded by DHS's Medicaid discharge rules in sec.19.502 of this title 
(relating to Transfer and Discharge in Medicaid-Certified Facilities): 
(1) (No change.) 
(2) If a facility or part of a facility is closed: 
(A)-(H) (No change.) 
(I) a licensee whose facility is closed under this section is entitled to 
request an administrative hearing in accordance with <nl> Chapter 79, Subchapter 
Q of this title (relating to Formal Appeals) <ol>[sec.sec.79.1601-79.1614 of 
this title (relating to Formal Appeals)], but requesting a hearing does not 
suspend the effectiveness of the order. 
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 June 12, 1998.
TRD-9809464
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER X.Requirements for Medicaid-Certified Facilities
40 TAC sec.19.2312
The amendment is proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendment implements the Human Resources Code, sec.sec.22.001-22.030. 

sec.19.2312.Surety Bonds or Letters of Credit.
(a) (No change.) 
(b) At its sole option, the Texas Department of Human Services (DHS) may allow 
the prior owner to obtain a surety bond or an irrevocable letter of credit 
(collateral) <nl>and release the vendor payments on hold <ol>[for a period of 
one year to cover the adjustments or exceptions resulting from an audit]. Money 
owed DHS <nl>by the prior owner for any reason <ol>will be recovered through the 
surety bond or the letter of credit. [The one-year period begins with DHS's 
recognized effective date of the facility's ownership change.] Usually, the 
surety bond equals the average monthly vendor payments paid to the facility. 
Facilities terminating a contract for long-term care services may furnish a 
surety bond or letter of credit only if all required long-term care facility 
cost reports have been filed with DHS. If an acceptable surety bond or letter of 
credit is presented to DHS, the vendor payments may be released. Facilities must 
ensure that this bond or irrevocable letter of credit is in a format acceptable 
to DHS, and does not include requirements that DHS, as a condition of receiving 
payment, either: 
(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 June 12, 1998.
TRD-9809465
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: September 1, 1998
For further information, please call: (512) 438-3765

PART II. Texas Rehabilitation Commission
CHAPTER 117.Special Rules and Policies
40 TAC sec.117.2
The Texas Rehabilitation Commission (TRC) proposes an amendment to sec.117.2, 
concerning special rules and policies. The section is being amended to conform 
it to current TRC internal policies. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the section is in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be conformity to current TRC internal policies. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the section as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 
The amendment is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.117.2.Sick Leave Pool.
(a) The commission adopts by reference <nl>Texas Rehabilitation Commission (TRC) 
HRM Policy 7-35, January 21, 1997,<ol> [Commission TRC APPM 23.9, paragraph 9.5, 
General Policies;] Sick Leave Pool[, and an attached form]. 
(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 June 15, 1998.
TRD-9809552
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: July 26, 1998
For further information, please call: (512) 424-4050