ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION PART III. Office of the Attorney General CHAPTER 55.Child Support Enforcement SUBCHAPTER F.Collections and Distributions 1 TAC sec.55.140 The Office of the Attorney General adopts the repeal of 1 TAC sec.55.140 concerning disputing the distribution of child support collections, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (24 TexReg 7677). The text will not be republished. The repeal of the section is adopted because the section is being replaced by a new 1 TAC sec.55.140 and sec.55141, which will include additional provisions relating to disputing the distribution of child support collections. The repeal of the section deletes a rule to be replaced. It affects the Family Code, Chapter 231. No comments were received. The repeal of the section is adopted under the Family Code sec.231.002 and the Government Code sec.2107.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813789 Sarah Shirley Assistant Attorney General Office of the Attorney General Effective date: September 20, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 460-6000 1 TAC sec.55.140 The Office of the Attorney General adopts new sec.55.140 relating to the collection of money distributed by the Child Support Division from the custodial parent or other person entitled to receive the support when the collection is reversed after it has been distributed, and new sec.55.141 providing custodial parents and others affected by sec.55.140 the opportunity for a hearing to contest the action by the agency, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (24 TexReg 7677-78, 7858-60). The text will not be republished. These rules are adopted for the efficient collection of sums owed to the State. These rules provide an effective process for collecting money owed to the State as the result of a child support collection being reversed after it has been distributed to the payee as well as provide a process for contesting the agency's action. These rules affect the Family Code, Chapter 231. No comments were received in writing or at the public hearing. The new sections are adopted under the Family Code sec.231.002 and the Government Code sec.2107.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813791 Sarah Shirley Assistant Attorney General Office of the Attorney General Effective date: September 20, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 460-6000 SUBCHAPTER I.State Directory of New Hires 1 TAC sec.sec.55.301-55.308 The Office of the Attorney General adopts new Subchapter I, sec.sec.55.301- 55.308, concerning Employer New Hire Reporting to the State Directory of new Hires, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (24 TexReg 7678-81, 7861-63). The text will not be republished. This new subchapter is being adopted to establish the procedures for reporting employee information to the State Directory of New Hires meeting the requirements of federal law at sec.313(b) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and 42 U.S.C. sec.653A (codified from sec.453A of the Social Security Act). This new subchapter details when, where, what information, and how, employers must report information concerning newly hired employees to the State Directory of New Hires. This subchapter affects the Family Code, Chapters 231 and 234. Comments received are summarized as follows: The rule authorizing a $500.00 civil penalty for intentional conspiracy in failing to report should be omitted because the Office of the Attorney General lacks authority to promulgate the penalty rule. The Office of the Attorney General has not made the suggested change because its authority to promulgate the penalty rule derives from Texas Family Code sec. 234.104, which authorizes the promulgation of rules for reporting employee information and for operating a state directory of new hires meeting the requirements of federal law, and then from 42 U.S.C. sec. 653A(d) (sec. 453A(d) of the Social Security Act) which authorizes the State to set a State civil money penalty for failure to report as a result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report. The Office of the Attorney General has not proposed a penalty for just any failure to report as would also be authorized under 42 U.S.C. sec.653A(d) (sec. 453A(d) of the Social Security Act). The new sections are adopted under the Family Code sec.234.104 which provides the Office of the Attorney General with the authority to establish by rule procedures for reporting employee information and for operating a state directory of new hires meeting the requirements of federal law at sec.313(b) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and 42 U.S.C. sec.653A (sec.453A of the Social Security Act). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813790 Sarah Shirley Assistant Attorney General Office of the Attorney General Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 460-6000 PART X. Department of Information Resources CHAPTER 201.Planning and Management of Information Resources Technologies 1 TAC sec.201.13 The Department of Information Resources adopts an amendment to sec.201.13, concerning information security, without changes to the proposed text as published in the May 22,1998 issue of the Texas Register (23 TexReg 5283). The effect of the section is to clarify, refine and update the current information security standards and to remove obsolete provisions. The department received no comments regarding the proposed rule. The amendments are adopted pursuant to the provisions of Texas Government Code sec.2054.051(b), which requires the department to develop and publish standards relating to information resource management by state agencies, and Texas Government Code sec.2054.052(a), which permits the department to adopt rules as necessary to implement its responsibilities. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 24, 1998. TRD-9813485 C.J. Brandt, Jr. General Counsel Department of Information Resources Effective date: September 13, 1998 Proposal publication date: May 22, 1998 For further information, please call: (512) 475-2153 TITLE 16. ECONOMIC REGULATION PART I. Railroad Commission of Texas CHAPTER 3.Oil and Gas Division 16 TAC sec.3.14 The Railroad Commission of Texas adopts amendments to sec.3.14, concerning plugging, with changes to the proposed text as published in the April 17, 1998, issue of the Texas Register (23 TexReg 3785). The amendments conform sec.3.14 to Texas Natural Resources Code, sec.sec.89.002 and 89.011, as amended, to codify existing Commission procedures regarding plugging of inactive wells, to clarify certain provisions, and to delete obsolete provisions from the section. In conformity with statutory changes, the adopted amendments provide that an entity that designates itself to the Commission as operator of a well by having a designation form approved on or after September 1, 1997, retains responsibility for properly plugging that well until a subsequent operator files, and the Commission approves, an operator designation form for the well in question. For wells on which the most recent operator designation form was filed prior to September 1, 1997, Commission rules regarding plugging responsibility remain unchanged - the designated operator is presumed to be responsible for plugging but that presumption may be rebutted upon a showing at a hearing that some other entity has assumed responsibility for the physical operation and control of the well. The amendments clarify the procedures for obtaining extensions of plugging deadlines and delineate when extensions may be cancelled. A new provision concerning applications to transfer inactive wellbores into the Texas Experimental Research and Recovery Activity (TERRA) program is added in subsection (b)(3). The amendments also add provisions setting out the circumstances in which the Commission may plug wells and seek reimbursement from the operator and the procedures for obtaining designation as an approved cementer. Comments were received from four individuals and three associations - North Texas Oil & Gas Association ("NTOGA"), Texas Independent Producers & Royalty Owners Association ("TIPRO"), and Texas Oil & Gas Association ("TxOGA"). The comments primarily focused on concerns regarding specific proposed provisions. None of the commenters expressed general opposition to the proposed amendments. NTOGA commented on three specific areas. NTOGA asserted that the presumption that the P-4 operator is responsible for plugging should be irrebuttable regardless of the date the P-4 filing. Under the proposed rule, any P-4 operator designated on or after September 1, 1997 is responsible for plugging the well; as to designations filed prior to that date, there is a rebuttable presumption of responsibility. The Commission declines to make any change to this aspect of the rule. The statutory change was effective September 1, 1997 and the effect of operator designations filed prior to that date cannot be altered retroactively. NTOGA comments that the provision of subsection (d)(1) stating that both the cementer and operator are responsible for complying with Commission plugging rules and that both may be fined for failing to do so should be removed or amended to limit the liability of cementing companies. The Commission declines to change this paragraph. For the Commission's regulation of plugging operations to be effective and fair it is vital that cementing companies, as the entities that are on site and that conduct the actual plugging operation, comply with these rules and that they be subject to penalties for failure to do so. Finally, NTOGA asserts that the rule is vague concerning obtaining certification as an approved plugger and that plugging ability should not have to be demonstrated in multiple districts. The Commission agrees with NTOGA that approval of a cementer in one district is valid for all districts and believes that the rule clearly states this. Subsection (d)(5)(A) states that an entity requesting designation as an approved cementer should file its request in "the district in which it proposes to conduct its initial plugging operations." Subsection (d)(5) provides that, "An approved cementer is authorized to conduct plugging operations in accordance with Commission rules in each commission district." Accordingly, the Commission declines to make any change based on this comment. TIPRO and TxOGA both filed comments indicating that the language of subsection (c)(1) should be amended to more closely track the statutory change and that the Commission's Form P-4 should be revised so that it conforms to the new language of the rule. The Commission agrees and the phrase "specifically identified" has been added to the paragraph to satisfy this concern. TxOGA also commented that the definition of "active operation" for a delinquent inactive production well in subsection (a)(1)(A) should be broadened to include all "commission-approved operations." The Commission agrees that certain other operations directly related to a bona fide attempt to re-establish production constitute active operation. However, operations on a well that has been inactive for twelve months, such as closing a pit or conducting a well test, do not constitute active operation and do not preclude the necessity of obtaining an exception to the plugging requirements of subsection (b)(2). Accordingly, based on this comment, the phrase, "or other commission-approved operations, such as recompletion attempts, conducted downhole in a bona fide attempt to re- establish production" has been added to this definition. This definition does not require an exception for wells that were approved as monitoring wells prior to becoming delinquent inactive wells because these wells are involved in regular and continuing activities related to the production of oil or gas. TxOGA also recommended various amendments to the definition of a "delinquent inactive well." As this definition is taken verbatim from the statute (Texas Natural Resources Code sec.89.002(a)(7)), the Commission declines to make any changes to this provision. TxOGA comments that the definitions in subsection (a)(1)(E) should be eliminated and all forms referred to by their designation (e.g., P-4 and W-1) throughout the rule. The forms are described rather than identified by form name because form names are changed from time to time and if the current form name is used in the rule and the name is subsequently changed, a rule amendment would be required even though the change was purely ministerial. The definition was used to abbreviate references to the forms within the rule and make the substantive portions of the rule easier to read. The Commission declines to make any change based on this comment. TxOGA and Felderhoff Production Company commented regarding the requirement in subsection (a)(5) that notice of plugging be given to the surface owner. This rule is intended to assure that surface owners whose activities may be directly affected by a plugging operation have reasonable advance notice of what can, depending on the surface use and type of plugging, be a highly disruptive operation. Three days advance notice (or mailing seven days in advance) is a reasonable compromise time-frame for this purpose. TxOGA asserts that it is impractical to identify the specific date the well will be plugged. Ordinarily, plugging is scheduled in advance and identifying the date plugging will actually occur should not present a problem. To address the situation in which weather or other circumstances force a change in the plugging date, the requirement has been amended based on this comment to require giving notice of the "projected date the well will be plugged" rather than "the day the well will be plugged." Felderhoff comments that the advance notice requirement cannot be met where a drilling or workover rig is involved. The Commission agrees with this comment and has added a provision stating that, "The district director may grant exceptions to the requirements of this paragraph concerning the timing of notices when a workover or drilling rig is already at work on location, ready to commence plugging operations." TxOGA objects to the provision in both subsection (a)(2) and (a)(3) that the "operator shall deliver the [notice] to the district office" on the grounds that "it is the U.S. postal service, another mail carrier, or a facsimile machine that type-name="italic">delivers' the notice." The provision merely indicates that it is the operator's duty to assure that the notices are delivered to the district office and is not intended to require personal delivery or dictate the method of delivery chosen by the operator. To clarify this intent, these sections have been re- worded based on this comment. TxOGA comments that the provision allowing the district director to grant exceptions to the requirements regarding the timing of notice of plugging to the district office should be expanded to allow verbal approval of exceptions to plugging procedures. The Commission disagrees. Use of an appropriate plugging procedure is vital to protection of freshwater and oil and gas reserves. Oral authorization of plugging procedures would introduce a substantial risk of miscommunication, misunderstanding and improper plugging. Written approval greatly limits the potential for miscommunication and, given the wide use of fax machines, written approval can be obtained as quickly or nearly as quickly as oral approval. The Commission declines to make any change to this provision. With regard to subsection (b)(2)(A), TxOGA comments that the Commission should not require that both the well and associated facilities are not a pollution hazard as a condition to granting a plugging extension. It is important that all related facilities, including tank batteries and pits, and not just the wellbore itself, be maintained in a manner that does not threaten fresh water. If the wellbore or related facilities pose a pollution hazard, extensions of the one- year time frame for plugging inactive wells is not appropriate. Accordingly, the Commission declines to make any change based on this comment. TxOGA comments with regard to both subsection (b)(2)(A) and subsection (b)(2)(D) that operators should be required to provide evidence of a good faith claim only upon request and not as a matter of course. The Commission agrees and has clarified this by amending these two provisions to emphasize that, although each operator is required to possess a good faith claim to operate any well for which it seeks an extension, providing evidence of this good faith claim is required only upon request. TxOGA asserts that, under subsection (b)(2)(C), operators should be given 90 days rather than 30 days after a request for an extension is denied or revoked to plug the well or return it to active operation. The Commission disagrees with this comment. Any well that is subject to this provision has already been inactive for a minimum of one year. Currently, Commission orders requiring compliance with sec.3.14(b)(2) typically give an operator 30 days to achieve compliance after the order becomes final. This 30-day benchmark is a reasonable time-frame under the circumstances in most cases. If extraordinary circumstances exist, the operator has the option of requesting a hearing. The Commission declines to make any change based on this comment. TxOGA comments that it is not clear whether 48 hours notice must be given prior to hydraulic pressure tests. The Commission agrees and, in response to this comment, has clarified this by expressly re-stating the notice requirement in subsection (b)(2)(E)(iii). TxOGA comments that subsection (b)(2)(E)(iv) is confusing and should be amended. The Commission agrees with this comment and has deleted the phrase "within a year after the well becomes inactive," as suggested by TxOGA. TxOGA comments that subsection (b)(3) should be deleted as it believes that the TERRA program will be discontinued in the future. The TERRA program is currently in effect and the rule therefor should address the program. Accordingly, the Commission disagrees with this comment and declines to make any change to this provision. Felderhoff Production Company commented regarding subsection (d)(9) that the requirement that the mud-laden fluid used for plugging be 9 1/2 pounds per gallon, "is one of those 'one size fits all' regulations that needs to be changed, not added to," since mud is used as spacer and not as a permanent barrier to fluid migration and the proper weight and viscosity varies with conditions. The proposed paragraph states the mud weight and viscosity as minimums and does not preclude the use of heavier or more viscous fluids if conditions warrant. There are few, if any, circumstances in which lighter or less viscous mud would be necessary to properly plug a well. However, in response to this comment a clause has been added authorizing the district director to grant exceptions to the weight and viscosity minimums if necessary to properly plug the well. TxOGA, Ronald D. Stephens, Stephens Energy Corp., and Tidemark Petroleum, Inc. all commented regarding subsection (d)(12). TxOGA and Tidemark specifically objected to the requirement that underground piping be removed as being unduly onerous. Based on these comments, the Commission has amended this provision to allow an operator to leave underground piping in place if it is emptied and is at least three feet below the surface. TxOGA, Ronald D. Stephens, and Stephens Energy Corp. all objected to the requirement that tanks, vessels and related piping be removed within 120 days. Removal of these items is necessary because as they deteriorate they may pollute fresh water. Further, unused tanks, vessels and piping create an unnecessary regulatory burden because it is impossible to tell without continuing and repeated inspections whether these receptacles remain empty or have become a pollution threat due to unauthorized use. In addition, unused tanks in remote locations may be used by unauthorized persons for the temporary, illegal storage of "hot" oil. Based on the comments, the Commission has amended this provision to provide the district director with authority to extend the time period for removing these facilities up to an additional 120 days in appropriate circumstances. Finally, TxOGA commented that the requirement in subsection (d)(12) that the location be contoured to discourage pooling of surface water should be specific to the well or facility site. Based on this comment, this provision has been amended to specify that contouring is required to discourage pooling of water on or around the facility site. The Commission adopts the amendments pursuant to Texas Natural Resources Code, sec.sec.81.052, 85.042, 85.046, 85.201, 86.042, 89.001, 89.121, and 91.101, which authorize the Commission to prevent waste of oil and gas, to protect correlative rights and to prevent the pollution of surface and subsurface water within the state. Texas Natural Resources Code sec.sec.81.052, 85.042, 85.046, 85.201, 86.042, 89.001, 89.121, and 91.101 are affected by the adopted amendments to this section. sec.3.14.Plugging. (a) Definitions and application to plug. (1) As used in this section: (A) "Active operation" means regular and continuing activities related to the production of oil and gas for which the operator has all necessary permits. In the case of a delinquent inactive well that is not permitted as a disposal or injection well, active operation requires reported production or other commission-approved operations, such as recompletion attempts, conducted downhole in a bona fide attempt to re-establish production. (B) "Delinquent inactive well" means an unplugged well that has had no reported production, disposal, injection, or other permitted activity for a period of greater than 12 months and for which, after notice and opportunity for hearing, the commission has not extended the plugging deadline. (C) "Funnel viscosity" means viscosity as measured by the Marsh funnel, based on the number of seconds required for 1,000 cubic centimeters of fluid to flow through the funnel. (D) "Good faith claim" means a factually supported claim based on a recognized legal theory to a continuing possessory right in a mineral estate, such as evidence of a currently valid oil and gas lease or a recorded deed conveying a fee interest in the mineral estate. (E) "Operator designation form" means a certificate of transportation authority and compliance or an application to drill, deepen, recomplete, plug back, or reenter which has been completed, signed and filed with the commission. (F) "Productive horizon" means any stratum known to contain oil, gas, or geothermal resources in producible quantities in the vicinity of an unplugged well. (G) "Reported production" means production of oil or gas, excluding production attributable to well tests, accurately reported to the commission on a monthly producer's report. (H) To "serve surface notice" means to hand deliver a written notice identifying the well to be plugged and the projected date the well will be plugged to the intended recipient at least three days prior to the day of plugging or to mail the notice by first class mail, postage pre-paid, to the last known address of the intended recipient at least seven days prior to the day of plugging. (I) "Usable quality water strata" means all strata determined by the Texas Natural Resources Conservation Commission to contain usable quality water. (2) The operator shall give the commission notice of its intention to plug any well or wells drilled for oil, gas, or geothermal resources or for any other purpose over which the commission has jurisdiction, except those specifically addressed in sec.3.100(f)(1) of this title (relating to Seismic Holes and Core Holes) (Statewide Rule 100), prior to plugging. The operator shall deliver or transmit the written notice to the district office on the appropriate form. (3) The operator shall cause the notice of its intention to plug to be delivered to the district office at least five days prior to the beginning of plugging operations. The notice shall set out the proposed plugging procedure as well as the complete casing record. The operator shall not commence the work of plugging the well or wells until the proposed procedure has been approved by the district office. The operator shall not initiate approved plugging operations before the date set out in the notification for the beginning of plugging operations unless authorized by the district director. The operator shall notify the district office at least four hours before commencing plugging operations and proceed with the work as approved. The district director may grant exceptions to the requirements of this paragraph concerning the timing of notices when a workover or drilling rig is already at work on location, ready to commence plugging operations. Operations shall not be suspended prior to plugging the well unless the hole is cased and casing is cemented in place in compliance with commission rules. (4) The landowner and the operator may file an application to condition an abandoned well located on the landowner's tract for usable quality water production operations, provided the landowner assumes responsibility for plugging the well and obligates himself, his heirs, successors, and assignees as a condition to the commission's approval of such application to complete the plugging operations. The application shall be made on the form prescribed by the commission. In all cases, the operator responsible for plugging the well shall place all cement plugs required by this rule up to the base of the usable quality water strata. (5) The operator of a well shall serve surface notice on the surface owner of the well site tract, or the resident if the owner is absent, before the scheduled date for beginning the plugging operations. A representative of the surface owner may be present to witness the plugging of the well. Plugging shall not be delayed because of the lack of actual notice to the surface owner or resident if the operator has served surface notice as required by this paragraph. The district director may grant exceptions to the requirements of this paragraph concerning the timing of notices when a workover or drilling rig is already at work on location ready to commence plugging operations. (b) Commencement of plugging operations and extensions. (1) The operator shall complete and file in the district office a duly verified plugging record, in duplicate, on the appropriate form within 30 days after plugging operations are completed. A cementing report made by the party cementing the well shall be attached to, or made a part of, the plugging report. If the well the operator is plugging is a dry hole, an electric log status report shall be filed with the plugging record. (2) Plugging operations on each dry or inactive well shall be commenced within a period of one year after drilling or operations cease and shall proceed with due diligence until completed. Plugging operations in delinquent inactive wells shall be commenced immediately unless the well is restored to active operation. For good cause, a reasonable extension of time in which to start the plugging operations may be granted pursuant to the following procedures. (A) The commission or its delegate may administratively grant an extension of time of one year if the well is in compliance with all other laws and commission rules; the well and associated facilities are not a pollution hazard; the operator's organization report is current and active, the operator has, and upon request provides evidence of, a good faith claim to operate the well; and (i) the operator pays the proper fee as provided in sec.3.76 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed) (Statewide Rule 78), obtains a permit for this extension, and no more than three extensions have been granted after June 1, 1992, for the well under the provisions of this clause; or (ii) the operator files an individual or blanket performancebond as provided in sec.3.76 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed) (Statewide Rule 78), or a letter of credit. (B) The commission or its delegate may revoke an administratively granted extension of time if an operator fails to maintain the well in compliance with commission rules, fails to maintain a current and accurate organization report on file with the commission, or fails to provide the commission, upon request, with evidence of a continuing good faith claim to operate the well. (C) If the commission or its delegate declines administratively to grant or continue an extension of time, or revokes an extension, the operator shall, within 30 days, return the well to active operation, plug the well or request a hearing on the matter. (D) The commission or its delegate may allow a well to be the subject of more than four extensions granted after June 1, 1992, under the provisions of subparagraph (A)(i) of this paragraph, upon written application, if the operator's organization report is current and active, the operator has, and upon request provides evidence of, a good faith claim to operate the well, and the operator demonstrates that no pollution of surface or subsurface water could occur as a result of granting the extension. If such application is administratively denied, the commission may subsequently grant the extension. (E) The operator of any well more than 25 years old that becomes inactive and subject to the provisions of this paragraph shall plug or annually test such well to determine whether the well poses a potential threat of harm to natural resources, including surface and subsurface water, oil and gas. (i) In general, a fluid level test is a sufficient test for purposes of this subparagraph. However, the commission or its delegate may require alternate methods of testing, and more frequent tests, if the commission deems it necessary to ensure the well does not pose a potential threat of harm to natural resources. Alternate methods of testing may be approved by the commission or its delegate by written application and upon a showing that such a test will provide information sufficient to determine that the well does not pose a threat to natural resources. (ii) No test other than a fluid level test shall be acceptable without prior approval from the district office. The district office shall be notified at least 48 hours before any test other than a fluid level test is conducted. Mechanical integrity test results shall be filed with the district office and fluid level test results shall be filed with the commission in Austin. Test results shall be filed on a commission-approved form, within 30 days of the completion of the test. (iii) Notwithstanding the provisions of clause (ii) of this subparagraph, a hydraulic pressure test may be conducted without prior approval from the district office, provided that the operator gives the district office at least 48 hours advance notice of the test, the production casing is tested to a depth of at least 250 feet below the base of usable quality water strata, or 100 feet below the top of cement behind the production casing, whichever is deeper, and the minimum test pressure is greater than or equal to 250 psig for a period of at least 30 minutes. A hydraulic pressure test, so conducted, will exempt the well from further testing for five years from the date of the test unless the commission or its delegate determines that more frequent testing is necessary to ensure that the well does not pose a potential threat of harm to natural resources. (iv) Wells that are returned to continuous production, as evidenced by three consecutive months of reported production, need not be tested. (3) An operator may apply to have an inactive, mechanically sound and non- polluting wellbore accepted into the Texas Experimental Research and Recovery Activity (TERRA) program. If the well is accepted into the TERRA program, the operator is no longer responsible for plugging the well. An operator is not entitled to a hearing to contest the administrative denial of an application to accept a well into the TERRA program. (4) The commission may plug or replug any dry or inactive well as follows: (A) After notice and hearing, if the well is causing or is likely to cause the pollution of surface or subsurface water or if oil or gas is leaking from the well, and: (i) Neither the operator nor any other entity responsible for plugging the well can be found; or, (ii) Neither the operator nor any other entity responsible for plugging the well has assets with which to plug the well. (B) Without a hearing if the well is a delinquent inactive well and: (i) the commission has sent notice of its intention to plug the well as required by sec.89.043(c) of the Texas Natural Resources Code; and, (ii) the operator did not request a hearing within the period (not less than 10 days after receipt) specified in the notice. (C) Without notice or hearing, if: (i) The commission has issued a final order requiring that the operator plug the well and the order has not been complied with; or, (ii) The well poses an immediate threat of pollution of surface or subsurface waters or of injury to the public health and the operator has failed to timely remediate the problem. (5) The commission may seek reimbursement from the operator and any other entity responsible for plugging the well for state funds expended pursuant to paragraph (4) of this subsection. (c) Designated operator responsible for proper plugging. (1) The entity designated as the operator of a well specifically identified on the most recent commission-approved operator designation form filed on or after September 1, 1997 is responsible for properly plugging the well in accordance with this section and all other applicable commission rules and regulations concerning plugging of wells. (2) As to any well for which the most recent commission-approved operator designation form was filed prior to September 1, 1997, the entity designated as operator on that form is presumed to be the entity responsible for the physical operation and control of the well and to be the entity responsible for properly plugging the well in accordance with this section and all other applicable commission rules and regulations concerning plugging of wells. The presumption of responsibility may only be rebutted at a hearing called for the purpose of determining plugging responsibility. (d) General plugging requirements. (1) Wells shall be plugged to insure that all formations bearing usable quality water, oil, gas, or geothermal resources are protected. All cementing operations during plugging shall be performed under the direct supervision of the operator or his authorized representative, who shall not be an employee of the service or cementing company hired to plug the well. Direct supervision means supervision at the well site during the plugging operations. The operator and the cementer are both responsible for complying with the general plugging requirements of this subsection and for plugging the well in conformity with the procedure set forth in the approved notice of intention to plug and abandon for the well being plugged. The operator and cementer may each be assessed administrative penalties for failure to comply with the general plugging requirements of this subsection or for failure to plug the well in conformity with the approved notice of intention to plug and abandon the well. (2) Cement plugs shall be set to isolate each productive horizon and usable quality water strata. (3) Cement plugs shall be placed by the circulation or squeeze method through tubing or drill pipe. Cement plugs shall be placed by other methods only upon written request with the written approval of the district director or the director's delegate. (4) All cement for plugging shall be an approved API oil well cement without volume extenders and shall be mixed in accordance with API standards. Slurry weights shall be reported on the cementing report. The district director or the director's delegate may require that specific cement compositions be used in special situations; for example, when high temperature, salt section, or highly corrosive sections are present. (5) Operators shall use only cementers approved by the assistant director of well plugging or the assistant director's delegate, except when plugging is conducted in accordance with subparagraph (B)(ii) of this paragraph or paragraph (6) of this subsection. Cementing companies, service companies, or operators may apply for designation as approved cementers. Approval will be granted on a showing by the applicant of the ability to mix and pump cement in compliance with this rule. An approved cementer is authorized to conduct plugging operations in accordance with commission rules in each commission district. (A) A cementing company, service company, or operator seeking designation as an approved cementer shall file a request in writing with the district director of the district in which it proposes to conduct its initial plugging operations. The request shall contain the following information: (i) the name of the organization as shown on its most recent approved organizational report; (ii) a list of qualifications including personnel who will supervise mixing and pumping operations; (iii) length of time the organization has been in the business of cementing oil and gas wells; (iv) an inventory of the type of equipment to be used to mix and pump cement; and (v) a statement certifying that the organization will comply with all commission rules. (B) No request for designation as an approved cementer will be approved until after the district director or the director's delegate has: (i) inspected all equipment to be used for mixing and pumping cement; and (ii) witnessed at least one plugging operation to determine if the cementing company, service company, or operator can properly mix and pump cement to the specifications required by this rule. (C) The district director or the director's delegate shall file a letter with the assistant director of well plugging recommending that the application to be designated as an approved cementer be approved or denied. If the district director or the director's delegate does not recommend approval, or the assistant director of well plugging or the assistant director's delegate denies the application, the applicant may request a hearing on its application. (D) Designation as an approved cementer may be suspended or revoked for violations of commission rules. The designation may be revoked or suspended administratively by the assistant director of well plugging for violations of commission rules if: (i) the cementer has been given written notice by personal service or by registered or certified mail informing the cementer of the proposed action, the facts or conduct alleged to warrant the proposed action, and of its right to request a hearing within 10 days to demonstrate compliance with commission rules and all requirements for retention of designation as an approved cementer; and (ii) the cementer did not file a written request for a hearing within 10 days of receipt of the notice. (6) An operator may request administrative authority to plug its own wells without being an approved cementer. An operator seeking such authority shall file a written request with the district director and demonstrate its ability to mix and pump cement in compliance with this subsection. The district director or the director's delegate will determine whether such a request warrants approval. If the district director or the director's delegate refuses to administratively approve this request, the operator may request a hearing on its request. (7) The district director may require additional cement plugs to cover and contain any productive horizon or to separate any water stratum from any other water stratum if the water qualities or hydrostatic pressures differ sufficiently to justify separation. The tagging and/or pressure testing of any such plugs, or any other plugs, and respotting may be required if necessary to insure that the well does not pose a potential threat of harm to natural resources. (8) For onshore or inland wells, a 10-foot cement plug shall be placed in the top of the well, and casing shall be cut off three feet below the ground surface. (9) Mud-laden fluid of at least 9 1/2 pounds per gallon with a minimum funnel viscosity of 40 seconds shall be placed in all portions of the well not filled with cement. The hole shall be in static condition at the time the cement plugs are placed. The district director may grant exceptions to the requirements of this paragraph if a deviation from the prescribed minimums for fluid weight or viscosity is necessary to insure that the well does not pose a potential threat of harm to natural resources. (10) Non-drillable material that would hamper or prevent reentry of a well shall not be placed in any wellbore during plugging operations, except in the case of a well plugged and abandoned under the provisions of sec.3.35 or sec.3.94(e) of this title (relating to Procedures for Identification and Control of Wellbores in Which Certain Logging Tools Have Been Abandoned (Statewide Rule 35); and Disposal of Oil and Gas NORM Waste (Statewide Rule 94), respectively). Pipe and unretrievable junk shall not be cemented in the hole during plugging operations without prior approval by the district director. (11) All cement plugs, except the top plug, shall have sufficient slurry volume to fill 100 feet of hole, plus 10% for each 1,000 feet of depth from the ground surface to the bottom of the plug. (12) The operator shall fill the rathole, mouse hole, and cellar, and shall empty all tanks, vessels, related piping and flowlines that will not be actively used in the continuing operation of the lease within 120 days after plugging work is completed. Within the same 120 day period, the operator shall remove all such tanks, vessels, related surface piping, and all subsurface piping that is less than three feet beneath the ground surface, remove all loose junk and trash from the location, and contour the location to discourage pooling of surface water at or around the facility site. The operator shall close all pits in accordance with the provisions of sec.3.8 of this title (relating to Water Protection (Statewide Rule 8)). The district director may grant a reasonable extension of time of not more than an additional 120 days for the removal of tanks, vessels and related piping. (e) Plugging requirements for wells with surface casing. (1) When insufficient surface casing is set to protect all usable quality water strata and such usable quality water strata are exposed to the wellbore when production or intermediate casing is pulled from the well or as a result of such casing not being run, a cement plug shall be placed from 50 feet below the base of the deepest usable quality water stratum to 50 feet above the top of the stratum. This plug shall be evidenced by tagging with tubing or drill pipe. The plug must be respotted if it has not been properly placed. In addition, a cement plug must be set across the shoe of the surface casing. This plug must be a minimum of 100 feet in length and shall extend at least 50 feet above and below the shoe. (2) When sufficient surface casing has been set to protect all usable quality water strata, a cement plug shall be placed across the shoe of the surface casing. This plug shall be a minimum of 100 feet in length and shall extend at least 50 feet above the shoe and at least 50 feet below the shoe. (3) If surface casing has been set deeper than 200 feet below the base of the deepest usable quality water stratum, an additional cement plug shall be placed inside the surface casing across the base of the deepest usable quality water stratum. This plug shall be a minimum of 100 feet in length and shall extend from 50 feet below the base of the deepest usable quality water stratum to 50 feet above the top of the stratum. (f) Plugging requirements for wells with intermediate casing. (1) For wells in which the intermediate casing has been cemented through all usable quality water strata and all productive horizons, a cement plug meeting the requirements of subsection (d)(11) of this section shall be placed inside the casing and centered opposite the base of the deepest usable quality water stratum, but extend no less than 50 feet above and below the stratum. (2) For wells in which intermediate casing is not cemented through all usable quality water strata and all productive horizons, and if the casing will not be pulled, the intermediate casing shall be perforated at the required depths to place cement outside of the casing by squeeze cementing through casing perforations. (g) Plugging requirements for wells with production casing. (1) For wells in which the production casing has been cemented through all usable quality water strata and all productive horizons, a cement plug meeting the requirements of subsection (d)(11) of this section shall be placed inside the casing and centered opposite the base of the deepest usable quality water stratum and across any multi-stage cementing tool. (2) For wells in which the production casing has not been cemented through all usable quality water strata and all productive horizons and if the casing will not be pulled, the production casing shall be perforated at the required depths to place cement outside of the casing by squeeze cementing through casing perforations. (3) The district director may approve a cast iron bridge plug to be placed immediately above each perforated interval, provided at least 20 feet of cement is placed on top of each bridge plug. A bridge plug shall not be set in any well at a depth where the pressure or temperature exceeds the ratings recommended by the bridge plug manufacturer. (h) Plugging requirements for well with screen or liner. (1) If practical, the screen or liner shall be removed from the well. (2) If the screen or liner is not removed, a cement plug in accordance with subsection (d)(11) of this section shall be placed at the top of the liner. (i) Plugging requirements for wells without production casing and open-hole completions. (1) Any productive horizon or any formation in which a pressure or formation water problem is known to exist shall be isolated by cement plugs centered at the top and bottom of the formation. Each cement plug shall have sufficient slurry volume to fill a calculated height as specified in subsection (d)(11) of this section. (2) If the gross thickness of any such formation is less than 100 feet, the tubing or drill pipe shall be suspended 50 feet below the base of the formation. Sufficient slurry volume shall be pumped to fill the calculated height from the bottom of the tubing or drill pipe up to a point at least 50 feet above the top of the formation, plus 10% for each 1,000 feet of depth from the ground surface to the bottom of the plug. (j) The district director shall review and approve the notification of intention to plug in a manner so as to accomplish the purposes of this section. The district director may approve, modify, or reject the operator's notification of intention to plug. If the proposal is modified or rejected, the operator may request a review by the director of field operations. If the proposal is not administratively approved, the operator may request a hearing on the matter. After hearing, the examiner shall recommend final action by the commission. (k) Plugging horizontal drainhole wells. All plugs in horizontal drainhole wells shall be set in accordance with subsection (d)(11) of this section. The productive horizon isolation plug shall be set from a depth 50 feet below the top of the productive horizon to a depth either 50 feet above the top of the productive horizon, or 50 feet above the production casing shoe if the production casing is set above the top of the productive horizon. If the production casing shoe is set below the top of the productive horizon, then the productive horizon isolation plug shall be set from a depth 50 feet below the production casing shoe to a depth that is 50 feet above the top of the productive horizon. In accordance with subsection (d)(7) of this section, the commission or its delegate may require additional plugs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on August 25, 1998. Filed with the Office of the Secretary of State on August 25, 1998. TRD-9813522 Mary Ross McDonald Deputy General Counsel Railroad Commission of Texas Effective date: September 14, 1998 Proposal publication date: April 17, 1998 For further information, please call: (512) 463-7008 PART II. Public Utility Commission of Texas CHAPTER 23.Substantive Rules SUBCHAPTER A.General Rules 16 TAC sec.23.3 The Public Utility Commission of Texas adopts the repeal of sec.23.3 relating to Definitions with no changes to the proposed text as published in the May 15, 1998 Texas Register (23 TexReg 4721). The repeal is necessary to avoid duplicative rule sections. The commission has adopted sec.25.5 of this title (relating to Definitions) for electric service providers, and sec.26.5 of this title (relating to Definitions) for telecommunications service providers to replace sec.23.3. This repeal is adopted under Project Number 19120. The commission received no comments on the proposed repeal. This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813642 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: May 15, 1998 For further information, please call: (512) 936-7308 SUBCHAPTER D.Certification 16 TAC sec.23.32 The Public Utility Commission of Texas adopts the repeal of sec.23.32 relating to Automatic Dial Announcing Devices with no changes to the proposed text as published in the July 24, 1998 Texas Register (23 TexReg 7480). The repeal is necessary to avoid duplicative rule sections. The commission has adopted sec.26.125 of this title (relating to Automatic Dial Announcing Devices) to replace sec.23.32. This repeal is adopted under Project Number 19466. The commission received no comments on the proposed repeal. This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813650 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 936-7308 16 TAC sec.23.33 The Public Utility Commission of Texas adopts the repeal of sec.23.33 relating to Telephone Solicitation with no changes to the proposed text as published in the July 24, 1998 Texas Register (23 TexReg 7481). The repeal is necessary to avoid duplicative rule sections. The commission has adopted sec.26.126 of this title (relating to Telephone Solicitation) to replace sec.23.33. This repeal is adopted under Project Number 19467. The commission received no comments on the proposed repeal. This repeal is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813648 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 936-7308 SUBCHAPTER I.Universal Service Fund 16 TAC sec.23.134 The Public Utility Commission of Texas (commission) adopts an amendment to sec.23.134, relating to the Small and Rural Incumbent Local Exchange Carrier (ILEC) Universal Service Plan with changes as published in the June 5, 1998 Texas Register (23 TexReg 5882). This amendment is adopted under Project Number 19293. The commission initiated this rulemaking to investigate severing the link between Substantive Rule sec.23.133 of this title (relating to Texas High Cost Universal Service Plan (THCUSP)), and Substantive Rule sec.23.134. Docket Number 18515 is the compliance proceeding to implement sec.23.133. Docket Number 18516 is the compliance proceeding to implement sec.23.134. As currently written, sec.23.134(e)(1)(B) cannot be implemented until after the proceeding in Docket Number 18515 is completed. During the Open Meeting held on May 6, 1998, the commission voted to delay implementation of the Texas Universal Service Fund (TUSF) until January 1, 1999. The commission also instructed commission staff to initiate a rulemaking proceeding to investigate severing the link between sec.23.133 and sec.23.134. Interested parties filed written comments on June 25, 1998, and reply comments on July 5, 1998. The commission received timely written comments on the proposed rule from AT&T Communications of the Southwest, Inc. (AT&T), the Texas Telephone Association (TTA), and Texas Statewide Telephone Cooperative Incorporated (TSTCI). The commission received reply comments from AT&T and TSTCI. A public hearing was held on July 10, 1998. Representatives from AT&T, TTA, and TSTCI attended the hearing and provided comments. To the extent that these comments differ from the submitted written comments, they are summarized herein. At the public hearing, commission staff requested additional information regarding interstate and intrastate access rates and rate elements. TTA filed the requested information on July 16, 1998. Parties commenting generally supported the amendment of sec.23.134(e); however, as summarized herein, they offered modifications to the proposal. AT&T noted a difference in the caption for subparagraph (B) and the text in subparagraph (B). AT&T commented that the proposed amendment should reflect that the small and rural incumbent local exchange carriers (SLECs) are being granted flexibility to "reduce" their access and toll rates rather than "set new" access and toll rates as published. AT&T indicated that based on the rules of statutory construction, which apply to the commissions substantive rules, the proposed subparagraph (B) is captioned "Access/toll reduction"; the caption has no legal force. AT&T recommended that the text of the rule should be amended to clarify that the SLECs may only reduce their access and toll rates. TSTCI countered that it is not necessary to include language to the effect that SLECs may only reduce their access and toll rates, since it was TSTCI's opinion that subsection (e) of the rule clearly indicates that SLECs may only reduce access and toll. The commission concurs with AT&T and modifies subparagraph (B) to clarify that the SLECs may only reduce their existing carrier common line (CCL), residual interconnection charge (RIC), and/or intraLATA toll rates. TTA proposed modifications to the rule that would allow a company to mirror its interstate access rate structure, not just the CCL and RIC rate elements. TTA opined that while a reduction in CCL could be used to achieve a closer per minute composite rate between the intrastate and interstate tariffs, the difference in transport and local switching structure between state and federal tariffs could continue to create incentives to tariff shop (the situation where an interexchange carrier might have the incentive, because of differences in rates and structure, to improperly report usage as interstate rather than intrastate), and SLECs and their customers would have to administer two separate tariffs, thereby lessening efficiencies. TTA's proposed modification would allow a company two options regarding access rate reductions: (1) a company could choose to mirror its interstate rates and be assured of commission approval; or (2) a company could propose an alternate structure subject to commission approval. TTA stated that allowing companies this flexibility is a benefit and permits a SLEC to propose a different tariff that may be better suited to its situation than its interstate tariff. TSTCI stated that since 1991 it has advocated for SLECs to be permitted to mirror the National Exchange Carrier Association (NECA) access rates and rate structure for their intrastate access rates and rate structure. TSTCI argued that many of the reasons and benefits to be gained by mirroring NECA tariff in 1991 are still significant and valid today. Like TTA, TSTCI advocated a single set of access rates for the SLECs for three reasons: (1) removal of incentives for access customers to tariff shop and eliminate the basis for percentage interstate usage (PIU) reporting disputes; (2) increase in the efficiency of tariff administration and reduce the administrative costs associated with administering two access tariffs; and (3) furthering the Chairman's goal of "a nonlocal minute is a nonlocal minute." TSTCI proposed replacing "CCL and RIC" in the proposed rule revision with "intrastate access rates." AT&T stated that adoption of the proposed amendment as published would grant the SLECs the flexibility in rate reduction that both TTA and TSTCI sought in their proposed rule comments. In its reply comments, AT&T stated that TTA's and TSTCI's suggested changes were a significant modification that it had not had sufficient time to analyze and quantify. AT&T stated that the original rule only considered CCL and RIC and there was previously no suggestion in formal comments by any party that all access rate elements be considered. AT&T stated that it is clear that CCL and RIC are subsidy elements, it is less clear whether other access rate elements should be replaced by universal service funding. AT&T stated that its brief review of some SLEC intrastate tariffs, revealed that in some cases the intrastate transport rate appears higher than the interstate rate. AT&T continued that it was unclear to AT&T that if a SLEC mirrors its interstate access tariff the result would be a net access reduction for that SLEC. For that reason alone, AT&T opposed TTA's proposed revision, since it would not require any commission approval. AT&T stated that it believes that all access rates should be driven down, and it would not oppose a restructuring of intrastate switched access tariffs to mirror interstate switched access tariffs if the effect was a net switched access reduction, but it was not apparent to AT&T that this rulemaking is the place to do it. AT&T concluded that the benefits of a consistent jurisdictional rate structure cited by TTA and TSTCI are not necessarily tied to TUSF relief and urged caution. In its reply comments, AT&T suggested that the commission republish the rule with the commission's preferred language and allow additional written comments, if the commission supports the changes proposed by TTA and TSTCI. AT&T was also concerned that TTA's proposal contains no provision for intraLATA toll reductions to be subject to commission approval. At the public hearing TTA noted that its current proposal would not continue a perpetual parity of intrastate access rates with interstate access rates. The commission notes that this rulemaking contemplates making explicit the known implicit subsidies contained in the SLECs' intrastate access rate elements. The commission recognizes that CCL and RIC are subsidy elements of the SLECs' intrastate access tariffs. The commission acknowledges that the differences that exist between the SLECs' interstate and intrastate tariffs may continue even though RIC and CCL revenues are replaced by TUSF support. However, the commission does not, at this time, revise the rule to adopt TTA's and TSTCI's proposal to allow the SLECs to match their interstate access rate elements. If the SLECs desire to mirror their interstate access rates and rate elements, the commission encourages them to provide their proposals in Docket Number 18516 and support those proposals with appropriate testimony. TSTCI asked if the commission allowed the SLECs to mirror their interstate rates, that they be allowed to adjust their intrastate tariffs each time the interstate rates were revised. TSTCI requested that the commission establish a new project to investigate a mechanism for maintaining one set of access rates for SLECs that chose to mirror their interstate access rates because interstate access rates change at least annually. The commission declines to establish a new project in conjunction with this rulemaking, as requested by TSTCI. If the SLECs are allowed in the future to mirror their interstate access rates and rate elements, then the commission will address the need for such a project at that time. AT&T stated that it understood the commission's goal of separating the access and toll reduction amounts for SLECs from the reductions of large incumbent local exchange carriers (ILECs), but AT&T took issue with the "voluntary" nature of the reduction amounts, which would have the effect of diminishing the importance of any consistency in SLEC and large ILEC access and toll rates. TSTCI countered that the "voluntary" aspect of rate reductions for small ILECs has not changed from the initially approved rule, and is therefore not a new issue in this proceeding. The commission agrees with TSTCI that the voluntary aspect of intraLATA access rate reductions is not a new issue in this proceeding and takes no action as a result of AT&T's comments. TSTCI expressed concern about the issue of revenue neutrality, particularly as it pertained to the phrase "recover reasonable amount" in the proposed amendment. TSTCI indicated that this wording creates a great deal of uncertainty and anxiety on the part of the SLECs as to their assurance of revenue recovery for access and/or toll rate reductions. TSTCI requested concrete assurance about the issue of how the phrase will be interpreted and proposed adding language to the amendment to define the phrase. TSTCI's proposed language defines a reasonable amount as the amount equal to the difference between the SLECs' previous rates and its current approved interstate access rates, or the amount equal to the difference between the SLECs' previous rates and the rate reductions of one of the ILECs receiving support under sec.23.133, or the amount equal to the difference between the SLEC's previous rates and the revised rate level of one of the ILECs receiving support under sec.23.133. TSTCI posed several questions to illustrate its concern: what parameters would be used to apply "reasonable" on a consistent basis? Would the commission go as far as to require additional proceedings to establish what is a reasonable amount of revenue recovery? Would potential proceedings entail a revenue requirement showing? Would the small and rural companies have the burden of proof? Would support amounts be based on earnings and rate of return? AT&T did not offer amended language but indicated that de-linking will only export the rate reduction issue from Docket Number 18515 to Docket Number 18516, where parties may be forced to argue the "reasonable amount of the difference between the previous rates and the new rates." In its reply comments, AT&T stated that it understood the SLEC's desire to have certainty in this process, but TSTCI's proposed language was not sufficiently certain for AT&T. AT&T argued that TSTCI's proposed language when defining "reasonable amount," fails to take into account toll reductions in the first instance, and in the second instance matches "previous rates" to "rate reductions," which AT&T does not believe will work from a rule construction standpoint. AT&T indicated that it can accept the commission's original rule, which TSTCI appears to want to retain as an option, but then the original language ought to be retained and the "reasonable amount" language could be eliminated. It is the commission's intent to sever the connection between sec.23.133 and sec.23.134. The commission declines to adopt TSTCI's proposed definition of reasonable amount. The commission will consider evidence presented in Docket Number 18516 when deciding the SLECs' rate reductions. The commission reiterates that SLECs shall remain revenue neutral as a result of the implementation of sec.23.134. TSTCI urged the commission to consider including special access in this section of the TUSF rule to enable SLECs to overcome deficiencies in their existing special access tariffs. TSTCI summarized the history of the existing TSTCI Intrastate Access Service Tariff, parts of which have been in place since the time of divestiture. According to TSTCI, the commission has adopted changes to switched access tariffs, but it has not granted past requests on the part of TSTCI to change special access tariffs. TSTCI implored the commission to take this opportunity to address special access by permitting the SLECs to mirror their interstate special access rates and rate structure. TSTCI's proposed revision to replace "CCL and RIC" with "intrastate access rates" would facilitate achieving complete interstate and intrastate access rate parity. TSTCI argued that the benefits of parity between the interstate and intrastate tariffs would not be achieved unless the SLECs were able to mirror all of the access rate elements in their currently approved interstate access tariffs. TTA also supported allowing the SLECs to update their special access tariffs, which TTA called outdated. TTA stated that the estimated impact on TUSF for mirroring the interstate special access tariff would not exceed $3.8 million. TTA segregated the $3.8 million into two components: current special access billed revenue ($2,854,377) and current intraLATA private line billed revenue ($939,702). TTA analyzed a sample of SLECs that repriced their current inventory of special access and intraLATA private line services using the current interstate special access tariffs. Based on that sample, TTA indicated that the impact of mirroring special access tariffs would depend on whether the company has its own interstate tariff or concurs in the NECA interstate special access tariff. TTA reported that for companies concurring in the NECA interstate tariff, the impact would be an average reduction of 20 to 38% for intraLATA private line circuits and 19 to 24% for intrastate special access circuits. TTA concluded that the overall impact for the sample concurring in the NECA interstate tariff would be a reduction of 25 to 26%. TTA reported that overall impact for companies moving from their current intrastate tariff to their own interstate special access tariff would be a reduction of 52%. TTA's final conclusion, if the sample holds true for all SLECs, then the potential TUSF impact of mirroring the interstate special access tariffs would be an increase in the range of $814,846 to $2,131,964. In its reply comments, AT&T strongly opposed SLEC recovery from the TUSF of lost revenues as a result of restructuring of special access rates. AT&T argued that special access services, typically non-switched, dedicated transmission paths, are competitive services whose revenues should not be replaced by an explicit subsidy. AT&T pointed to sec.58.151 of the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.sec.11.001-63.063 (Vernon 1998) (PURA), which defines special access services as competitive services for the purpose of basket treatment for ILECs who elect incentive regulation under PURA Chapter 58. AT&T stated that while a SLEC may not have the statutory pricing flexibility of PURA Chapter 58 for its special access services, there is no doubt that the commission would treat a SLEC special access tariff application in the same way, i.e., as though the service were competitive. During its quick review of the SLEC's switched access tariffs, AT&T found that some of the SLEC's interstate special access rates appear higher than their intrastate access rates. AT&T argued that changes to special access rates could be achieved by SLECs without the need of TUSF support. AT&T concluded that restructuring of special access in this proceeding introduces an unnecessary element of complexity, and is particularly inappropriate given the competitive nature of special access. TTA clarified its position in response to issues raised by AT&T. TTA stated that it proposed to "grandfather" at current rates all private line and special access circuits that would otherwise experience a rate increase if the interstate special access rates were applied. TTA did not propose to increase rates for any in-place circuits. In an additional filing, AT&T indicated that TTA's clarification that existing rates would be "grandfathered" is an appropriate step. AT&T also indicated that neither the amount of the impact on the TUSF of SLECs mirroring interstate special access tariffs or the potential increase in special access rates have been the focus of AT&T's concern. AT&T restated that its primary objection to the SLEC's proposal is that any resulting revenue loss to the SLECs would be made up from the TUSF. AT&T reiterated that special access services are competitive services that ought not receive a subsidy in order to achieve rate reductions. AT&T argued that while the commission has the authority to determine which rates ought to be reduced, the commission's deliberations thus far have been on reducing switched access, which is not competitive, and toll, which is generally not competitive in the absence of dialing parity. AT&T concluded that regardless of the amount of money involved, the policy issue remains the same: should ILECs be allowed a competitive advantage through TUSF subsidies? At the public hearing, TTA agreed that special access services are competitive services. TTA argued that the competitive classification does not preclude the commission from using the TUSF to remove any implicit subsidies from special access rates. AT&T responded that the statute has made clear that for some specific discretionary services or competitive services, like intraLATA toll, SLECs should receive TUSF, but that the commission ought not give special consideration to something like special access. The commission finds it inappropriate to make TSTCI and TTA's proposed changes because those proposals are beyond the scope of this rulemaking. The commission notes that the SLECs have the flexibility under Substantive Rule. sec.23.94 of this title (relating to Small Local Exchange Carrier Regulatory Flexibility), to reduce their special access tariffs on their own motion. SLECs also have the option of filing for additional universal service support under sec.23.138 of this title (relating to Additional Financial Assistance), in a PURA sec.sec.53.105, 53.151, or 53.306 proceeding. This amendment is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA), which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, and specifically sec.51.001 which sets forth the state's policy regarding telecommunications; and Chapter 56, Subchapter B which sets forth the requirements for the TUSF. Cross Index to Statutes: PURA sec.14.002 and sec.51.001, and Chapter 56, Subchapter B. sec.23.134.Small and Rural Incumbent Local Exchange Carrier (ILEC) Universal Service Plan. (a)-(d) (No change.) (e) Small and Rural ILEC Universal Service Plan monthly per-line support. A monthly per-line amount of support for each small or rural ILEC study area shall be determined in a one-time calculation using data from such small or rural ILEC's test year that has been audited by an independent auditor in conformance with generally accepted accounting principles (GAAP). (1) Calculation of the monthly per-line amount of support for each small or rural ILEC. The toll pool amounts and access/toll revenue reductions determined in accordance with subparagraphs (A) and (B) of this paragraph shall be added together. To calculate the per-line amount of support, the resulting sum will then be divided by the average number of eligible lines served by such small or rural ILEC during the test year. To calculate the monthly per-line amount of support, the result shall be divided by 12. (A) Toll pool amounts. The toll pool amount for a small or rural ILEC shall be determined by subtracting the actual toll billed by the small or rural ILEC during the test year from its toll pool revenue requirement for the test year, as certified by the Texas Exchange Carrier Association (TECA). (B) Access/toll revenue reduction. At the time this section is implemented, a small or rural ILEC may reduce carrier common line (CCL), residual interconnection charge (RIC), and/or intraLATA toll rates. Upon commission approval a small or rural ILEC may recover a reasonable amount of the difference between the previous rates and the new rates, computed on the basis of minutes of use in the test year. This amount is calculated by multiplying the difference between the previous rates and the new rates by the test year minutes of use. (2)-(3) (No change.) (f)-(h) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813669 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 936-7308 CHAPTER 25.Substantive Rules Applicable to Electric Service Providers SUBCHAPTER A.General Provisions 16 TAC sec.25.5 The Public Utility Commission of Texas (PUC or commission) adopts new sec.25.5 relating to Definitions with changes to the proposed text as published in the May 15, 1998 Texas Register (23 TexReg 4723). Project Number 19120 is assigned to this proceeding. The proposed new section will replace sec.23.3 of this title (relating to Definitions) as it concerns electric service. Proposed new sec.25.5 gathers all the general definitions related to electric service located throughout Chapter 23 of this title into one section. The only definitions that remain in other sections are definitions that are section specific and would adversely affect other sections of Chapter 25 if moved to the general definition section. Definitions have been updated to reflect changes in the industries regulated by the commission and to reflect commission policy and existing practices. The Appropriations Act of 1997, House Bill 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The PUC held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the PUC is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 25 has been established for all commission substantive rules applicable to electric service providers. In the published review of sec.23.3 of this title in the May 15, 1998 Texas Register (23 TexReg 4935) the commission requested specific comments on the Section 167 requirement as to whether the reason for adopting sec.23.3 continues to exist in adopting corresponding sec.25.5. The commission received no comments on the Section 167 requirement. The commission finds that the reason for adopting sec.23.3 continues to exist in adopting corresponding sec.25.5 of this title. The commission received comments on the proposed section from Central Power and Light Company (CPL), Southwestern Electric Power Company (SWEPCO), and West Texas Utilities Company (WTU), the electric utilities of the Central and South West Corporation that provide electric service in Texas (collectively, CSW); and Texas Utilities Electric Company (TUEC). General comments: TUEC supports the proposed consolidation of definitions contained in the Substantive Rules, and believes that, for the most part, the proposed definitions are accurate and should be adopted. CSW commented that the commission should make its intent clear as to specific definitions. CSW also commented that this effort to consolidate definitions should avoid substantive changes which should instead be addressed in a separate rulemaking. The commission will clarify its intent, as appropriate, through its response to comments. The commission disagrees with the comments of CSW as they relate to substantive changes; the scope of change which may be accomplished by this rulemaking is established by the commission's published proposal. As stated in the preamble to the proposed rule, one of the purposes of this rulemaking includes updating existing rules to reflect changes in the industries regulated by the commission. CSW recommended that terms defined by statute be defined in sec.25.5 by simply referring to the relevant statutory provisions. CSW also recommended that the definitions in sec.25.5 be consistent with the definitions in the commission's Procedural Rules. Wherever possible, the commission has avoided incorporating definitions by reference in the Substantive Rules, so that persons using the commission's Substantive Rules will not need other documents to determine the meaning of the terms used. Customers of electric utilities who contact the commission regarding a specific question or problem with an electric utility often request a copy of the specific substantive rule section that relates to their question or problem. These customers seldom have a copy of the statutes available to assist them in understanding these rules. Where a term is defined by statute, the commission has generally defined the term identically in sec.25.5. The commission believes that sec.25.5 and the commission's Procedural Rules are consistent, if not identical. Section 25.5(5) - Ancillary service provider: CSW commented that the definition may be too restrictive, because ancillary services can be provided by persons other than electric utilities and their affiliates. The commission agrees that persons other than electric utilities and their affiliates can provide ancillary services, as indicated in sec.23.70(d)(2)(B) of this title (relating to Terms and Conditions of Open-Access Comparable Transmission Service). However, the obligations contained in the rules with respect to ancillary services are limited to electric and municipally owned utilities. The commission has changed the definition to reflect this fact. The reference to affiliates of electric utilities has been deleted since they are not obligated to provide ancillary services. Section 25.5(6) - Applicant: TUEC recommended that the definition of this term be deleted because the term is straightforward and does not need a definition. Also, the term is used both to refer to a person seeking service from an electric utility in some substantive rules and to a person seeking relief from the commission in other substantive rules. The commission agrees. The definition has been deleted. Section 25.5(7) - Base rate: CSW commented that it was unclear whether the commission intended a substantive change. In addition, CSW sought clarification of whether surcharges (e.g., rate case expenses, "House Bill 11 taxes") and an item such as a "power cost and conservation factor" would be classified as base rates. Finally, CSW requested that the commission reaffirm that it is not attempting to claim the authority to change base rates in a manner other than the traditional rate determination process. The definition change is not intended to effect a substantive change. Rather, it is intended to reflect existing practice. The definition does not address the extent of the commission's authority to modify base rates. The definition has been changed to state that surcharges are not base rates, and the word "generally" has been added as recognition that the definition is intended as a general description of base rates, and is not intended to be determinative of whether a particular rate is a base rate. Section 25.5(16) - Distributed resource: CSW commented that the definition may be too restrictive in that it is limited to a resource that is connected to an electric utility's distribution system. CSW stated that WTU has a tariff to offer photovoltaic facilities that do not require a connection to the transmission or distribution system. The commission has changed the definition in the manner requested by CSW. The commission notes that the issue of off-grid and customer premises energy services is being considered by the commission in Project Number 19205, Rulemaking on Unbundling of Energy Service. Section 25.5(18) - Electric utility: CSW commented that the definition should include municipal utilities where appropriate and cited Public Utility Regulatory Act (PURA) sec.35.001. PURA sec.35.001 defines "electric utility" to include a municipally owned utility for purposes of PURA Chapter 35, which addresses transmission and ancillary services. Rather than include municipally owned utilities in the definition of electric utility for purposes of transmission and ancillary services only, the commission has changed the definitions of ancillary service provider, eligible ancillary service customer, eligible transmission service customer, transmission service, and transmission service provider to expressly include municipally owned utilities. Section 25.5(19) - Eligible ancillary service customer; and sec.25.5(20) - Eligible transmission customer: CSW and TUEC recommended that "other wholesale customer" be deleted in the definition of "eligible transmission customer", so that the definition is limited to persons specifically listed in PURA as eligible for wholesale transmission service. CSW also challenged the commission's legal authority to adopt the proposed changes. The commission has changed "other wholesale customer" to "other person whom the commission has determined to be an eligible transmission service customer" in order to avoid inappropriate requests for transmission service. This change narrows the definition but preserves the commission's ability to interpret and implement PURA. The commission does not agree with CSW's assertion that the lists of entities in PURA sec.35.004 and sec.35.005 are exclusive and limit the commission's authority as suggested. The commission has also changed the term "eligible transmission customer" to "eligible transmission service customer", and the term "transmission customer" to "transmission service customer". In addition, the commission has changed the definition of "eligible ancillary service customer", to "any person that is an eligible transmission service customer" so that it is consistent with the definition of eligible transmission service customer. Section 25.5(24) - Good utility practice: TUEC recommended that the references to the North American Electric Reliability Council (NERC) and the Electric Reliability Council of Texas (ERCOT) in the current rule be maintained. The commission disagrees. The new definition is broad enough to include NERC and ERCOT guidelines where appropriate. Furthermore, not all electric utilities in Texas are in ERCOT. Section 25.5(36) - Power marketer: TUEC recommended that a reference to the registration requirements in sec.23.19 be included in the definition as was done in the definition of "exempt wholesale generator". The commission agrees. TUEC's proposed change has been adopted. Section 25.5(44) - Rate year: CSW commented that the definition omits references to fuel matters and changes words of reference to bonded rates from "include" to "may include". CSW requested that the commission state that it intends no substantive change by the revisions to the existing definition. The definition is not intended to effect a substantive change. Rather, it is intended to reflect existing practice and is not intended to be determinative of the rate year in a particular case. Section 25.5(46) - Renewable energy technology; sec.25.5(47) - Renewable resources; and sec.25.5(53) - Supply-side resource: CSW commented that, under these definitions, a solid waste fueled resource may be considered a "renewable resource" but not one which utilizes a "renewable energy technology". CSW requested that the commission resolve this potential inconsistency. The commission has changed the definition of renewable resource to: "A resource that relies on renewable energy technology." Consistent with this change, the commission has changed the definition of supply-side resource to: "A resource, including a storage device, that provides electricity from fuels or renewable resources." The commission declines to decide in this context whether a resource that relies both on renewable and non-renewable energy technologies can be considered a renewable resource. Section 25.5(50) - Service: CSW requested that the commission clarify why it is necessary to refer to telephone directory advertising. The commission has deleted the last sentence of the proposed definition, which referred to telephone directory advertising. This reference is unnecessary for Texas Administrative Code, Chapter 25, which is limited to rules pertaining to electric service providers. Section 25.5(52) - Submetering: CSW requested that the commission clarify this term's intended use and explain why the term is limited to apartments. The commission has deleted the limitation of the definition to submetering in apartment houses and changed the definition so that it is of general applicability. For example, the term is used in sec.23.51 of this title (relating to Utility Submetering) with respect to submetering of both apartment houses and mobile home parks. In addition, the term is used in sec.23.45(m)(3) of this title (relating to Billing) with respect to submetering of appliances in order to make bill adjustments due to meter tampering. Section 25.5(61) - Transmission losses: CSW commented that this definition is different from the current definition in that it deletes the second sentence of the definition in sec.23.67(b)(7) of this title (relating to Open-access Comparable Transmission Service). CSW opined that the deletion of the second sentence is inappropriate because that sentence recognizes that capacity is required to generate the energy for transmission losses and recognizes that compensation for full costs of covering such losses is appropriate. The commission disagrees. Deletion of the second sentence of the existing definition is appropriate because it addresses the calculation of transmission losses, rather than being limited to defining transmission losses. It is preferable to address the calculation of transmission losses in a section other than the definitions section. Section 25.5(64) - Transmission service provider: CSW recommended that the term "electric utility" include municipally owned utilities for transmission service. Rather than include municipally owned utilities in the definition of electric utility for transmission service only, the commission has included municipally owned utilities in the definitions of ancillary service provider, eligible transmission service customer, transmission service, and transmission service provider. In addition, the commission has deleted the term "transmission provider" and changed the definition of transmission service provider to capture the proposed definition of transmission provider. Changing the term to "transmission service provider" makes it consistent with the term "ancillary service provider". The commission has also deleted the reference to affiliates in the definition of transmission service provider. The obligation to provide transmission service is on utilities, not their affiliates. In addition, the commission has changed "owns or controls" to "owns or operates", making it consistent with the wording of the definition of electric utility. Section 25.5(67) - Transmission upgrade: TUEC and CSW asked whether the commission intended a substantive change by deleting "constructed by a transmission provider" from the existing definition. The commission did not intend a substantive change. Therefore, the phrase "owned or operated by a transmission service provider" has been added. Use of "owned or operated" is more consistent with the definitions of transmission service provider and electric utility than use of "constructed by". All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purpose of clarifying its intent and conforming to the preferred formatting of the Texas Register. This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002. sec.25.5.Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise: (1) Administrative review - A process under which an application may be approved without a formal hearing. (2) Affected person - means: (A) a public utility affected by an action of a regulatory authority; (B) a person whose utility service or rates are affected by a proceeding before a regulatory authority; or (C) a person who: (i) is a competitor of a public utility with respect to a service performed by the utility; or (ii) wants to enter into competition with a public utility. (3) Affiliate - means: (A) a person who directly or indirectly owns or holds at least 5.0% of the voting securities of a public utility; (B) a person in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; (C) a corporation that has at least 5.0% of its voting securities owned or controlled, directly or indirectly, by a public utility; (D) a corporation that has at least 5.0% of its voting securities owned or controlled, directly or indirectly, by: (i) a person who directly or indirectly owns or controls at least 5.0% of the voting securities of a public utility; or (ii) a person in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; (E) a person who is an officer or director of a public utility or of a corporation in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; or (F) a person determined to be an affiliate under Public Utility Regulatory Act sec.11.006. (4) Ancillary service - A service necessary to support the transmission of energy from resources to loads while maintaining reliable operation of transmission service providers' transmission systems in accordance with good utility practice. (5) Ancillary service provider - An electric or municipally owned utility that provides an ancillary service. (6) Base rate - Generally, a rate designed to recover the costs of electricity other than costs recovered through a fuel factor, power cost recovery factor, or surcharge. (7) Commission - The Public Utility Commission of Texas. (8) Control area - An electric power system or combination of electric power systems to which a common automatic generation control scheme is applied in order to: (A) match, at all times, the power output of the generators within the electric power system(s) and capacity and energy purchased from entities outside the electric power system(s), with the load within the electric power system(s); (B) maintain, within the limits of good utility practice, scheduled interchange with other control areas; (C) maintain the frequency of the electric power system(s) within reasonable limits in accordance with good utility practice; and (D) obtain sufficient generating capacity to maintain operating reserves in accordance with good utility practice. (9) Cooperative corporation - (A) An electric cooperative corporation organized and operating under the Electric Cooperative Corporation Act, Texas Utilities Code Annotated, Chapter 161, or a predecessor statute to Chapter 161 and operating under that chapter; or (B) A telephone cooperative corporation organized under the Telephone Cooperative Act, Texas Utilities Code, Chapter 162, or a predecessor statute to Chapter 162 and operating under that chapter. (10) Corporation - A domestic or foreign corporation, joint-stock company, or association, and each lessee, assignee, trustee, receiver, or other successor in interest of the corporation, company, or association, that has any of the powers or privileges of a corporation not possessed by an individual or partnership. The term does not include a municipal corporation, except as expressly provided by the Public Utility Regulatory Act. (11) Customer class - A group of customers with similar electric usage service characteristics (e.g., residential, commercial, industrial, sales for resale) taking service under one or more rate schedules. Qualified businesses as defined by the Texas Enterprise Zone Act, Texas Government Code, Title 10, Chapter 2303 may be considered to be a separate customer class of electric utilities. (12) Demand-side management - Activities that affect the magnitude and/or timing of customer electricity usage to produce desirable changes in the utility's load shape. (13) Demand-side resource or demand-side management resource - Activities that result in reductions in electric generation, transmission, or distribution capacity needs or reductions in energy usage or both. (14) Distribution line - A power line operated below 60,000 volts, when measured phase-to-phase. (15) Distributed resource - A generation, energy storage, or targeted demand- side resource, generally between one kilowatt and ten megawatts, located at a customer's site or near a load center, which may be connected at the distribution voltage level (60,000 volts and below), that provides advantages to the system, such as deferring the need for upgrading local distribution facilities. (16) Electric Reliability Council of Texas (ERCOT) - Refers to the organization and, in a geographic sense, refers to the area served by electric utilities that are not synchronously interconnected with electric utilities outside of the State of Texas. (17) Electric utility - (A) A person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Texas Utilities Code, Subchapter C, Chapter 184, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include: (i) a municipal corporation; (ii) a qualifying facility; (iii) an exempt wholesale generator; (iv) a power marketer; (v) a corporation described by Public Utility Regulatory Act sec.32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer; or (vi) a person not otherwise an electric utility who: (I) furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others; (II) owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person; or (III) owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Texas Utilities Code, Subchapter C, Chapter 184. (B) With respect to transmission service and ancillary service, the term includes municipally owned utilities and river authorities that are not otherwise subject to the commission's ratesetting authority. (18) Eligible ancillary service customer - Any person that is an eligible transmission service customer. (19) Eligible transmission service customer - A transmission service provider (for all uses of its transmission system) or any electric utility, municipally owned utility, federal power marketing agency, exempt wholesale generator, qualifying facility, power marketer, or other person whom the commission has determined to be an eligible transmission service customer. (20) Energy efficiency - Management of energy resources through efficacy in the utilization of electrical energy through: end-user conservation (a single device, measure, or practice, or a grouping thereof, to reduce energy or demand and that can be measured at the customer meter); utility-controlled options such as optimization of existing and planned generation, transmission, and distribution facilities through direct load management (reduction in peak demand on an electric utility system by direct control of electric devices), cogeneration (reduction in additions to electric utility planned generation expansion as a result of using firm and reliable capacity from an industrial company), peak shaving (reduction in peak demand on an electric utility system by the storage of energy produced during an off-peak period and then utilizing it to serve loads during the peak period), small power production (reduction in additions to electric utility planned generation additions by the installation of dependable, long-life generating plants utilizing direct conversion of renewable resources of electric energy), power plant productivity improvement (reduction in additions to electric utility planned generation expansion as a result of improvements in the productivity of existing or new generating units), and power plant efficiency improvement (reduction in the utilization of natural resources in their conversion to electrical energy as a result of improvements in the efficiency of existing and new generating units); and optimal conversion of renewable resources to electrical energy. (21) Exempt wholesale generator - A person who is engaged directly or indirectly through one or more affiliates exclusively in the business of owning or operating all or part of a facility for generating electric energy and selling electric energy at wholesale who does not own a facility for the transmission of electricity, other than an essential interconnecting transmission facility necessary to effect a sale of electric energy at wholesale, and who is in compliance with the registration requirements of sec.23.19 of this title (relating to Registration of Power Marketers and Exempt Wholesale Generators). (22) Facilities - All the plant and equipment of an electric utility, including all tangible and intangible real and personal property without limitation, and any and all means and instrumentalities in any manner owned, operated, leased, licensed, used, controlled, furnished, or supplied for, by, or in connection with the business of any electric utility, including any construction work in progress allowed by the commission. (23) Good utility practice - Any of the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts that, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, and expedition. Good utility practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather is intended to include acceptable practices, methods, and acts generally accepted in the region. (24) Hearing - Any proceeding at which evidence is taken on the merits of the matters at issue, not including prehearing conferences. (25) License - The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law. (26) Licensing - The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license. (27) Municipality - A city, incorporated village, or town, existing, created, or organized under the general, home rule, or special laws of the state. (28) Municipally owned utility - Any utility owned, operated, and controlled by a municipality or by a nonprofit corporation whose directors are appointed by one or more municipalities. (29) Native load customer - A wholesale or retail customer on whose behalf an electric utility, by statute, franchise, regulatory requirement, or contract, has an obligation to construct and operate its system to meet in a reliable manner the electric needs of the customer. (30) Person - Any natural person, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or public or private organization of any character other than an agency. (31) Planned resources - Generation resources owned, controlled, or purchased by a transmission customer, and designated as planned resources for the purpose of serving load. (32) Planned transmission service - Use by a transmission service customer of a transmission service provider's transmission system for the delivery of power from planned resources to the customer's loads. (33) Pleading - A written document submitted by a party, or a person seeking to participate in a proceeding, setting forth allegations of fact, claims, requests for relief, legal argument, and/or other matters relating to a proceeding. (34) Power cost recovery factor - A charge or credit that reflects an increase or decrease in purchased power costs not in base rates. (35) Power marketer - A person who becomes an owner of electric energy in this state for the purpose of selling the electric energy at wholesale; does not own generation, transmission, or distribution facilities in this state; does not have a certificated service area; and who is in compliance with the registration requirements of sec.23.19 of this title (relating to Registration of Power Marketers and Exempt Wholesale Generators). (36) Pre-existing transmission contract - A contract for transmission or wheeling services that took effect prior to March 4, 1996. (37) Premises - A tract of land or real estate including buildings and other appurtenances thereon. (38) Proceeding - A hearing, investigation, inquiry, or other procedure for finding facts or making a decision. The term includes a denial of relief or dismissal of a complaint. It may be rulemaking or nonrulemaking; rate setting or non-rate setting. (39) Public utility or utility - A person or river authority that owns or operates for compensation in this state equipment or facilities to convey, transmit, or receive communications over a telephone system as a dominant carrier. The term includes a lessee, trustee, or receiver of any of those entities, or a combination of those entities. The term does not include a municipal corporation. A person is not a public utility solely because the person: (A) furnishes or furnishes and maintains a private system; (B) manufactures, distributes, installs, or maintains customer premise communications equipment and accessories; or (C) furnishes a telecommunications service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others. (40) Public Utility Regulatory Act (PURA) - The enabling statute for the Public Utility Commission of Texas, located in the Texas Utilities Code Annotated, sec.sec.11.001 - 63.063, (Vernon 1998). (41) Rate - Includes: (A) any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility for a service, product, or commodity described in the definition of utility in the Public Utility Regulatory Act, sec.31.002; and (B) a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification. (42) Rate class - A group of customers taking electric service under the same rate schedule. (43) Rate year - The 12-month period beginning with the first date that rates become effective. The first date that rates become effective may include, but is not limited to, the effective date for bonded rates or the effective date for interim or temporary rates. (44) Regulatory authority - In accordance with the context where it is found, either the commission or the governing body of a municipality. (45) Renewable energy technology - Any technology that exclusively relies on an energy source that is naturally regenerated over a short time scale and derived directly from the sun (solar-thermal, photochemical, and photoelectric), indirectly from the sun (wind, hydropower, and biomass), or from other natural movements and mechanisms of the environment (geothermal and tidal energy). A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources. (46) Renewable resources - A resource that relies on renewable energy technology. (47) Rule - A statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission. The term includes the amendment or repeal of a prior rule, but does not include statements concerning only the internal management or organization of the commission and not affecting private rights or procedures. (48) Rulemaking proceeding - A proceeding conducted pursuant to the Administrative Procedure Act, Texas Government Code, sec.sec.2001.021 - 2001.037 to adopt, amend, or repeal a commission rule. (49) Service - Has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a public utility or an electric utility in the performance of its duties under the Public Utility Regulatory Act to its patrons, employees, other public utilities or electric utilities and the public. The term also includes the interchange of facilities between two or more public utilities or electric utilities. (50) Spanish speaking person - a person who speaks any dialect of the Spanish language exclusively or as their primary language. (51) Submetering - Metering of electricity consumption on the customer side of the point at which the electric utility meters electricity consumption for billing purposes. (52) Supply-side resource - A resource, including a storage device, that provides electricity from fuels or renewable resources. (53) Tariff - The schedule of a utility containing all rates and charges stated separately by type of service and the rules and regulations of the utility. (54) Tenant - A person who is entitled to occupy a dwelling unit to the exclusion of others and who is obligated to pay for the occupancy under a written or oral rental agreement. (55) Test year - The most recent 12 months for which operating data for an electric utility are available and shall commence with a calendar quarter or a fiscal year quarter. (56) Transmission facilities study - An engineering study conducted by a transmission service provider subsequent to a system security study to determine the required modifications to its transmission system, including the detailed costs and scheduled completion date for such modifications, that will be required to provide a requested transmission service. (57) Transmission interconnection agreement - An agreement that sets forth requirements for physical connection or other terms relating to electrical connection between an eligible transmission service customer and a transmission service provider, including contracts or tariffs for transmission service that include provisions for interconnection. Transmission service providers must have such an agreement with all transmission service providers to whom they are physically connected. (58) Transmission line - A power line that is operated at 60,000 volts or above, when measured phase-to-phase. (59) Transmission losses - Energy losses resulting from the transmission of power. (60) Transmission service - Service that allows a transmission service customer to use the transmission and distribution facilities of electric and municipally owned utilities to efficiently and economically utilize generation resources to reliably serve its loads and to deliver power to another transmission customer. (61) Transmission service customer - An eligible transmission customer receiving transmission service. Where consistent with the context, "transmission service customer" includes an eligible transmission service customer seeking transmission service. (62) Transmission service provider - An electric or municipally owned utility that owns or operates facilities used for the transmission of electricity and provides transmission service. (63) Transmission system - The transmission facilities at or above 60 kilovolts owned, controlled, operated, or supported by a transmission provider or transmission customer that are used to provide transmission service. (64) Transmission system security study - An assessment by a transmission service provider of the adequacy of the transmission system to accommodate a request for transmission service and whether any costs are anticipated in order to provide transmission service. (65) Transmission upgrade - A modification or addition to transmission facilities owned or operated by a transmission service provider. (66) Unplanned resources - Generation resources owned, controlled or purchased by the transmission customer that have not been designated as planned resources. (67) Unplanned transmission service - Use by a transmission service customer of a transmission service provider's transmission system for the delivery of power from resources that the customer has not designated as planned resources to the customer's loads. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813640 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: May 15, 1998 For further information, please call: (512) 936-7308 SUBCHAPTER D.Records, Reports and Other Required Information 16 TAC sec.25.87 The Public Utility Commission of Texas (commission) adopts new sec.25.87 relating to Distribution Unbundling Reports, and new sec.25.221 relating to Electric Cost Separation with changes to the proposed text as published in the March 13, 1998 Texas Register (23 TexReg 2652). The new regulations are adopted under Project Number 16536. Also proposed under this project was new sec.25.41 relating to Calculation, Rendering, and Form of Certain Electric Bills, which the commission declines to adopt at this time. Section 25.87 is necessary to provide the commission with information concerning the number of meters each utility serves under each customer class and rate schedule, as well as information on each utility's customer service programs. Section 25.221 will require electric utilities to adjust the way they record and account for costs incurred in providing distribution service and customer service. While still consistent with the Federal Energy Regulatory Commission system of accounts, electric utilities will record their distribution service and customer service costs in a way that permits the commission to track costs associated with specific services, functions, or activities. The commission initiated this rulemaking proceeding by publishing questions on the general topic of distribution functional unbundling. The questions appeared in the December 20, 1996 Texas Register (21 TexReg 12340), and comments were received in January, 1997. The staff of the commission conducted a workshop on the classification of distribution functions and activities on February 6, 1997. On October 24, 1997, the commission invited comment on a table which set forth a classification scheme for distribution functions and activities. Comments were received on November 4, 1997. On January 22, 1998 the commission conducted a workshop on the future structure of the electric industry in an effort to address issues raised in the comments. The commission received written comments and replies to comments on the proposed regulations from Bailey County Electric Cooperative (Bailey); Cap Rock Electric Cooperative (Cap Rock); Center for Energy and Economic Development (CEED); Central and South West Corporation Utilities (CSW), representing Central Power & Light Company, West Texas Utilities Company, and Southwestern Electric Power Company; the Cities of Austin (COA), Bryan, Garland, and Greenville; Coalition of Commercial Customers (CCC); Consumers Union (CU); East Texas Cooperatives (East Texas); El Paso Electric Company (EPE); Environmental Defense Fund (EDF); Enron Energy Services (Enron); Entergy Gulf States (EGS); Guadalupe Valley Electric Cooperative (GVEC); Houston Lighting & Power Company (HL&P); Mid-South Electric Cooperative (MSEC); Office of the Attorney General of Texas (OAG); Office of Public Utility Counsel (OPC); Pedernales Electric Cooperative (PEC); PG&E Corporation (PG&E); Public Citizen; South Texas Electric Cooperative (STEC); Southwestern Public Service (SPS); Texas Electric Cooperatives (TEC); Texas Industrial Energy Customers (TIEC); Texas New-Mexico Power Company (TNMP); Texas Propane Gas Association (TPGA); Texas Ratepayers Alliance to Save Energy (Texas ROSE); and Texas Utilities Electric Company (TUEC). Parties who filed only reply comments were City of Houston (Houston), and National Association of Energy Service Companies (NAESCO). Such comments are summarized below. A public hearing on the proposal was held at commission offices on May 8, 1998, at 9:00 a.m. Representatives from CSW, CCC, CU, EPE, EDF, Enron, HL&P, OAG, OPC, STEC, SPS, TIEC, TNMP, Texas ROSE, TUEC, and Wharton Country Electric Cooperative, Inc. (Wharton) attended the hearing and provided comments. To the extent that these comments differ from the submitted written comments, such comments are summarized herein. When these proposed rules were published in the Texas Register on March 13, 1998, the commission listed three goals: (1) separate the costs of electric service by function so that the commission can monitor the cost of service components; (2) begin the process of removing regulation from those services and markets which are sufficiently competitive that regulatory-based pricing and oversight are no longer needed; and (3) enhance public awareness of electricity production and delivery costs. The commission has decided to concentrate on the first goal--cost separation--in this project. The second goal--removing competitive services from regulation-- will be addressed in a separate rulemaking proceeding relating to the unbundling of energy service. The third goal, enhancing public awareness of cost, was a proposal to educate the public through changes to the format of monthly electric bills. The commission has decided to defer this matter until it can examine the results of the cost separation rules and any statutory changes made during the 1999 legislative session. The new regulations are necessary to allow the commission to monitor more closely the activities conducted and the costs incurred in local delivery of electricity and in the provision of electric services to retail customers. The commission adopts a standard form for reporting and cost accounting in order to analyze and assign utilities' fully embedded costs to specific services, and to compare electric utility costs and services. The cost separation regulations require electric utilities to record and account separately for costs incurred in providing generation service, transmission service, distribution service, and customer service, based on the Federal Energy Regulatory Commission system of accounts and regulations specific to the Texas commission. The cost accounting and cost separation principles reflected in these rules are necessary to ensure that the costs associated with competitive services are not being subsidized by customers of regulated services and products. Cost tracking of certain activities by subaccount may become necessary to allow the commission to identify the cost of specific activities. The new annual reports require electric utilities to provide information pertaining to customer services on forms provided by the commission. The reports relate to meters, tariffs, and related customer services. After publication of the proposals in Project Number 16536, the commission proposed new regulations relating to the unbundling of energy service to address more fully the goal of removing competitive services from regulation. The energy service unbundling rulemaking was assigned Project Number 19205. Two groups supported parts of the proposed regulations. Potential competitors to utilities and large customers (CCC, Enron, NAESCO, PG&E, TIEC, and TPGA) favored the cost separation and reporting portions of the proposed regulations. Consumer and environmental groups (CU, EDF, Public Citizen, and Texas ROSE) supported the emissions reporting requirements. The investor-owned utilities (CSW, EPE, EGS, HL&P, SPS, TNMP, and TUEC) generally opposed the proposed rules, often suggesting the deletion or substantial revision of sections. The electric cooperatives (Bailey, Cap Rock, East Texas, GVEC, MSEC, PEC, STEC, and TEC) were also generally opposed to the proposed regulations and generally argued for exclusions from the rules. In addition to requesting comments on the proposed rules, the commission requested responses to eight related questions. The first question addressed the application of the rules to utilities of different sizes; the next three questions addressed customer billing; the fifth question addressed reporting of emissions by utilities; the sixth related to the classification scheme for services; the seventh question addressed the quality of the cost separation data; and the final question related to the costs and benefits of the proposed regulations. In the first question, the commission posed a general question relating to the application of the proposed regulations, particularly to utilities of different size. COA, Bryan, Garland, and Greenville argued that municipal utilities are or should be exempt from the proposed rules. Cap Rock, East Texas, GVEC, PEC, STEC, and TEC claimed that small utilities should be exempt from the requirements of the proposed regulations. CSW, EGS, Enron, EPE, HL&P, PG&E, and TNMP stated that no utility should be exempt, but that some accommodations might be provided to electric cooperatives, such as additional time to comply with the proposed regulations. NAESCO also believed that the proposed rules should apply to all utilities unless the commission determines that the cost of accounting and reporting is too burdensome on small utilities. NAESCO also pointed out that utilities with over 20,000 meters, to comply with the commission's energy efficiency reports, should already have the separate accounting in place to comply with the energy service portion of the rule. The commission has determined that an improved understanding of the retail activities of all electric utilities is warranted. Although PURA sec.14.151 grants the commission the authority to regulate the manner in which municipal utilities maintain their books, the commission declines to apply these regulations to municipal utilities at this time. The commission elects to exclude municipal utilities from these regulations, because the commission's motivation for separating costs is to facilitate the correct assignment of costs for competitive services and the degree to which municipal utilities will participate in competitive markets and against competitive services is currently unclear. The size of a utility may affect the manner in which the information may be efficiently provided; therefore, the commission will consider utility size when deciding whether a utility must file such annual reports. In adopting reporting requirements relating to meters and the services provided to retail customers, the commission concludes that all investor-owned electric utilities and other electric utilities with more than 20,000 meters in service must file an annual report. The commission provides this exclusion because small utilities tend to offer fewer special services, therefore the cost of complying with these reporting requirements is disproportionally higher than for larger utilities. The exemption will apply to approximately 55 cooperative utilities. The commission will allow an additional twelve months for cooperatives and river authorities to implement new cost accounting requirements compared to the investor-owned utilities. The commission has chosen to defer the compliance deadline for cooperatives to permit the staff and the investor-owned utilities to complete the first iteration of implementation and compliance activities associated with the new regulations. The second, third, and fourth questions addressed issues related to proposed new sec.25.41 relating to the Calculation, Rendering, and Form of Certain Electric Bills. The regulations would have required a separate display of the components of electric cost on each retail bill to raise public awareness of cost of electricity production and delivery. A widely-held view among interested parties was that modification of the electric bills is premature, and that the commission should wait for legislative direction prior to changing electric bill formats (Cap Rock, CU, East Texas, EGS, Garland, Greenville, PEC, TEC, and TUEC). In response to a question relating to the terminology proposed by the commission, several parties indicated that the terms "generation," "transmission," and "distribution" should be relied upon because these terms are already familiar to electric customers. (Cap Rock, EPE, PEC, HL&P) CSW argued that costs should be segregated into the general categories of cost of power and cost of power delivery. STEC argued that "cost of transmission and distribution" was preferable to "cost of power delivery;" "cost of local and state fees, assessments, and taxes" was preferable to "cost of retail taxes;" and "cost of energy conservation" should be deleted. PG&E indicated that the commission should first identify the competitive and monopoly services and then establish terminology for the electric bill that is consistent with the classification of services. TIEC argued that the commission's cost categories should be divided even more than proposed in the rule. TUEC argued against the proposed billing labels in the rule, however, it did not offer any alternative language. The inclusion of metering and billing service with power delivery instead of customer service was recommend by several parties. Cap Rock, East Texas, and PEC indicated that the metering functions should continue to be the responsibility of the distribution electric utility currently providing billing service. Enron stated that two categories should be established for the purpose of billing: one for the cost of power and the other for the cost of metering, billing, and other customer services. CSW and EPE also suggested that the costs of educating customers be recoverable in rates. CU, PEC stated that customer education should wait for legislative direction. CSW, CU, EPE, Garland, Greenville, GVEC, HL&P and PG&E stated that education should begin before distribution unbundling, and HL&P, PG&E, and SPS stated that it should be provided by others besides the incumbent utility. TIEC argued that the commission should play a central role in the customer education effort, but that the cost separation activities should not be delayed by the education effort. The commission declines to adopt the proposal at this time. The comments of the parties are instructive and will be considered in the future, possibly in a rulemaking or a report. The estimated cost of implementing the proposed billing changes and the possibility that statutory changes adopted during the 1999 legislative session could require additional changes to customers' bills has persuaded the commission that adoption of this section is premature. The commission's fifth question addressed the proposed reporting requirement in sec.25.87 relating to the generation mix and emissions of each electric utility. This question drew significant comment. Non-generating utilities (Cap Rock, East Texas, PEC) stated that the wholesale power purchasers would have no control over the accuracy of the information provided by the generators of power. GVEC stated that because it purchases all of its power from one source, the reporting of generation mix serves no purpose. MSEC argued that monthly reporting of the generation mix and emissions seemed excessive and might increase costs. CSW suggested that the degree of accuracy required in the rule, 0.5%, was too high and that a lower degree of accuracy, 7.5 to 10%, would be more realistic, especially when considering the uncertainty of emissions associated with purchased power. EDF and Enron stated that purchased power could be reported once a simplifying assumption was made regarding the average emissions of purchased power. EPE also stated that the emissions data associated with purchased power might be especially hard to acquire. HL&P argued that no reporting of generation mix and emission should be required. PG&E stated that generation mix and emission reporting should only be required of suppliers claiming to offer "green" or environmentally-benign power resources. STEC recommended that the commission modify its reporting requirement to an annual report of the previous year and the rule should require all power suppliers to provide the necessary information. TNMP recommended an annual reporting of emissions be limited to only the generation owned by the utility. CU, Public Citizen, and EDF stated that a generation mix and emission report should be simple, standardized, and personalized and must be provided frequently without the necessity of a request by the customer. Conversely, CEED argued that the deletion of the generation mix and emissions reporting requirements would have no impact on the commission's three stated goals. The commission believes that reporting of generation mix and emissions is important information that should be provided to consumers. Rather than adopt reporting requirements for all utilities at this time, the commission will take up this issue in Project Number 19087 relating to renewable resource tariffs. Upon adoption of a reporting requirement for that project, the commission will reassess whether a broader industry- wide reporting requirement or customer education program is necessary to support the development of competitive markets. The sixth question addressed a general topic on which the commission sought comment, the classification scheme and definitions for electric services. Proposed sec.25.221 defined six categories of service: generation service, transmission service, distribution service, metering and billing service, customer service, and energy service. The commission later proposed a similar classification scheme in Project Number 19205, published in the May 8, 1998 issue of the Texas Register (23 TexReg 4500). The commission stated in Project Number 19205 that all comments provided on the definitions common to Project Number 16536 would be incorporated by reference in the later project. The commission received a variety of comments relating to the classification of distribution services, metering and billing services, customer services, and energy services. For example, many utilities stated that metering service should remain a monopoly function provided by the distribution service company (Cap Rock, PEC, STEC). PG&E offered a different perspective, stating that metering could become a competitive service. Cap Rock, PEC, and TUEC argued that the classification of services was premature and should wait direction from the Legislature. CSW stated that the numerous sub-activities in the proposal needed to be defined clearly and consistently. EPE argued that the unbundling would represent a major variance from the FERC Uniform System of Accounts. HL&P suggested that it would be preferable to separate metering and billing in preparation for possible legislative action in the 1999 session. HL&P also argued that several items the rule defines as energy services would be more appropriately classified as distribution services. NAESCO supported the creation of the "energy service" category for cost tracking. OPC argued that the fundamental goal of unbundling is to prevent monopoly services from subsidizing competitive services, but noted that the rule does not provide for a review process to prevent cross-subsidies. TIEC argued that costs should be unbundled to a greater extent than in the proposal. Correspondingly, TIEC argued for the creation of new cost categories, such as public policy programs, power merchant services, and ancillary services. TNMP argued that ancillary services should be classified as generation services rather than transmission services. Additionally, TNMP urged the Commission to track and report costs according to only the six categories in the proposal, not the various subcategories. Texas ROSE suggested that the commission create a separate cost category to track low- income programs. It is not necessary that the commission provide an exhaustive response at this time, because these issues are more closely related to Project Number 19205. However, from the comments received to this and related questions on the labeling of monthly electric bills, the commission is persuaded that the terms "generation," "transmission," and "distribution" are familiar to customers. Furthermore, the commission finds that Enron's recommendation that the commission should create a category that includes metering, billing, and all other customer services has merit. Therefore, the commission adopts general definitions for four terms: generation service, transmission service, distribution service, and customer service. The term "distribution service" is limited to the low-voltage delivery of power from the transmission system to customers. Other services and functions historically associated with the term "distribution" are grouped in the term "customer service". The principal distinction relates to the division of wires-related services (distribution services) and customer-related services. Therefore, customer service includes subcategories such as metering service, billing service, tariff administration, and the provision of related energy services. It is not necessary that the commission adopt detailed definitions for each component of customer service at this time to achieve the cost separation goal that is the primary intent of this project. However, the commission believes that the costs for these subcategories should be separately recorded and would encourage utilities to begin tracking these costs separately even before the commission adopts specific rules to define the subcategories. The commission requested comment on the appropriate cost data that should be relied upon during the compliance phase of these proceeding. Of the eight questions asked, the commission received the greatest diversity of responses to this question. Cap Rock, CSW, Enron, HL&P, PEC, SPS, and TIEC argued in favor of using the utilities' most recent cost of service study in the compliance filing. TNMP argued for the use of the same cost of service study used by the commission to set transmission pricing in ERCOT. OPC argued that the sufficiency of previously filed cost of service studies would depend on the commission's use of the results of the unbundling compliance filings. If the commission wants to use the results as a customer information and education tool, then old studies are probably appropriate. The cost of service studies upon which those unbundled rates are based should be updated if the commission intends to use the unbundled costs derived from old cost of service studies to identify and prevent cross- subsidies between service offerings, or if the commission or the legislature might allocate any future recovery of stranded costs or non-bypassable access charge on the basis of the unbundled costs. OAG recommended that the commission require updated cost of service studies because so many are old or were developed through stipulation. CCC argued that cost of service studies over three years old or studies that show a relative rate of return in excess of two percentage points above or below 100% should be updated to eliminate historical allocation disparities. EGS observed that a utility's past cost of service studies will not have the historic embedded costs separated into the functional definitions proposed. GVEC argued that the 75th legislature exempted them from preparing a new cost of service study if one had been prepared within the last five years. STEC argued that the commission should provide distribution utilities an exemption from updating their cost of service studies if they plan to modify their cost accounting software to track costs as required by the proposed rules. TPGA argues that out-of-date cost of service studies will cause difficulty in separating out competitive from monopoly activities. PG&E suggested that the commission first determine which services are viably competitive before deciding whether an updated cost of service study is needed. The commission concludes that for comparative and educational purposes, the utilities' cost of service studies need not be updated. However, use of unbundled costs based on an outdated cost of service study would not be suitable for all purposes. Accordingly, the commission will not require utilities to update their cost of service studies to comply with this proposal. The commission disagrees with PG&E's assertion that an activity or service must be found competitive before the cost separation occurs. The commission believes that utilities can begin recording separated costs in anticipation that the commission or the legislature will someday classify the activity as competitive. Most importantly, the commission's goal is to begin recording separated costs so when services become competitive, the costs embedded in utility rates can be more easily identified. The commission revises its cost separation compliance requirements from a rate case style filing requirement to a one-time filing of a report describing the utilities' cost separation implementation plans. To support this change, the commission staff will develop cost separation guidelines for investor-owned utilities and cooperatives and they will calculate unbundled unit costs for investor-owned utilities. The guidelines will provide detailed guidance to the utilities regarding the methodology that the staff will use to calculate the utilities' unbundled unit costs. The cost separation guidelines for the investor-owned utilities will be considered for adoption in September or October of 1998. The calculation of the unbundled unit costs will be completed by December 31, 1998. The cost separation guidelines for cooperatives will be developed after the staff completes the calculation of the investor-owned utilities' unbundled unit costs. The commission's eighth question addressed the costs and benefits of the proposed rules. When the proposal was published, the commission estimated that, depending on the size of the utility, it would cost approximately $20,000 to $2.5 million per utility to comply with the proposed rules. The commission recognized the difficulty of estimating the cost of compliance, and invited the utilities to estimate these costs. Those parties who commented on the cost of compliance (Bailey, Cap Rock, CSW, Garland, Greenville, East Texas, EPE, EGS, GVEC, HL&P, MSEC, PEC, STEC, SPS, TEC, TNMP, TUEC) each stated that the commission's estimate was too low, and provided estimates as high as $14 million for one-time compliance costs. The majority of these costs were associated with the implementation of new sec.25.41 relating to the form of customers' monthly bills. The commission shares parties' concerns that the cost of changing the format of customers' bills could exceed the benefits, especially in the early years. The parties' comments and the uncertainty of statutory changes during the upcoming legislative session persuaded the commission to defer the adoption of new regulations relating to the format of customers' bills. The commission does not desire to burden the utilities or their customers with excessive costs that may not produce commensurate long-term benefits. The parties were invited to comment on the proposed regulations in addition to the eight questions. In light of the comments received regarding competition in the provision of metering and billing service and related retail services, the commission makes the following changes to sec.25.87 relating to Distribution Unbundling Reports. The commission adopts with changes a reporting requirement relating to meters and metering technologies. This is a new reporting requirement that will provide baseline data and annual updates. The paragraph will expire on April 1, 2001 because the commission anticipates that the way in which metering service is provided will change, and will make these reporting requirements unnecessary. The data that the commission requires at this time include the number of different types of meters in use, any special metering activities or investments in which the utility is engaged, and the manner in which metered data are transferred to the utility billing system. Because some meters facilitate the provision of special or innovative rate designs and demand-side management services, the reporting of metering technologies will help the commission to identify opportunities for increased efficiency in the use, control, and measurement of electricity. These data will also aid in the development of policies relating to metering service. To fulfill its second goal of removing regulation from those services and markets which are sufficiently competitive, the commission has determined that it needs better information about the retail services offered by the utilities that it regulates. While many of these services are provided pursuant to a tariff, certain services and activities are provided to retail customers in an informal manner. The commission adopts with changes a reporting requirement relating to customer services provided to retail customers, including the revenues and number of customers obtaining the service under each tariff, and the participation level for each non-tariff service offered by the utility. This is a new reporting requirement; however, many of these data have been reported by utilities with more than 20,000 customers as part of the biennial energy efficiency plan report filed since 1985 pursuant to sec.23.22 relating to Energy Efficiency Plan. These data will allow the commission to understand the programs and activities associated with the cost information reported and tracked pursuant to sec.25.221 relating to Electric Cost Separation. All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purpose of clarifying its intent. These sections are adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 and sec.14.052 (Vernon 1998), which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure; and specifically, sec.14.151, which requires a public utility to keep its books, accounts, records, and memoranda in the form and manner prescribed by the Commission, and sec.38.002 and sec.38.003, which provides the commission with authority to adopt reasonable standards and classifications with respect to electric services. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002, sec.14.052, sec.14.151, sec.38.002, and sec.32.003. sec.25.87.Distribution Unbundling Reports. (a) Purpose. The purpose of this section is to require the filing of certain reports by affected utilities. (b) Application. This section shall apply to all investor-owned electric utilities and to other electric utilities that provide retail electric utility service in Texas to more than 20,000 meters in service as measured on the last day of the reporting year. This section shall not apply to municipal utilities. (c) Compliance and timing. Affected utilities shall file annual reports with the commission's filing clerk on the last working day of March each year, which shall cover the 12 months of the preceding calendar year. The first such report may cover months prior to the effective date of this section. (d) Definitions. As used in this section, the terms affected utility, generation service, transmission service, distribution service, and customer service have the meanings set forth in sec.25.221 of this title (relating to Electric Cost Separation). (e) Reports. Affected utilities shall file the following reports on forms provided by the commission. (1) Meters. The report shall indicate the number of meters in service at year end by customer class, rate schedule, metering technology, and any other information requested by the commission. The report shall describe any non- routine meter replacement activities, end-use and metering research, and special metering activities, and shall state the affected utility's goals with respect to improvements in metering technology. The report shall indicate the manner in which meters are read and the data communicated to the billing system. This requirement will expire on April 1, 2001. (2) Customer service. (A) Tariffs. The report shall indicate the number of customers taking service under each rate design or service regulation during the reporting year, the base rate, fixed fuel factor, and purchased power recovery factor revenues, and any other information requested by the commission. (B) Non-tariffed activities. The report shall be organized by individual activity, program, or service and shall include a description of each. The report shall indicate the number of participants or other measure of activity during the reporting year, the charge, compensation, or rebate, if any, related to the activity, program, or service, and any other information requested by the commission. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813677 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: March 13, 1998 For further information, please call: (512) 936-7308 SUBCHAPTER I.Transmission and Distribution 16 TAC sec.25.221 These sections are adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 and sec.14.052 (Vernon 1998), which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, including rules of practice and procedure; and specifically, sec.14.151, which requires a public utility to keep its books, accounts, records, and memoranda in the form and manner prescribed by the Commission, and sec.38.002 and sec.38.003, which provides the commission with authority to adopt reasonable standards and classifications with respect to electric services. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002, sec.14.052, sec.14.151, sec.38.002, and sec.32.003. sec.25.221.Electric Cost Separation. (a) Purpose. The purpose of this section is to identify the costs incurred by electric utilities that provide retail electric utility service, and to separate such costs into four categories: generation service, transmission service, distribution service, and customer service. This section establishes procedures for cost separation. (b) Application. This section shall apply to electric utilities that provide retail electric service in Texas. This section shall not apply to municipal utilities. (c) Definitions. As used in this section, the following terms have the following meanings unless the context clearly indicates otherwise: (1) Affected utilities - shall refer to all utilities to which this section applies. (2) Customer service - A service that consists of metering, billing, tariff administration, energy service, and related services. Customer service does not include generation service, transmission service, or distribution service; however, it does include all retail customer interaction necessary for the administration of tariffs that include charges for generation service, transmission service, and distribution service. (3) Distribution service - A service that ensures safe and reliable delivery of electric power from the transmission system to retail customers, generally, but not exclusively, below 60 kilovolts. Distribution service does not include generation service, transmission service, or customer service. (4) Generation service - The production and purchase of electricity for retail customers and the production, purchase, and sale of electricity in the wholesale power market. (5) Transmission service - As defined in sec.25.5 of this title (relating to Definitions). For the purpose of this section, ancillary service, as defined in sec.25.5 of this title, is a component of transmission service. (6) Working day - A day on which the commission is open for the conduct of business. (d) Cost separation. Affected utilities shall maintain a cost-accounting and records system based on the Federal Energy Regulatory Commission chart of accounts system, as it may be updated, to ensure that the costs associated with generation service, transmission service, distribution service, and customer service are accurately and separately identified. Affected utilities shall create and maintain any additional accounts necessary to identify and separate costs incurred to provide retail electric utility service. Within the customer service category, the utility shall separate its costs on its books in sufficient detail to track costs specific to unique services, activities, or functions. The commission may adopt cost separation guidelines to assist affected utilities in separating their costs. (e) Compliance filing. (1) Affected utilities shall report to the commission on strategies to comply with the cost separation requirements of this section in accordance with the commission cost separation guidelines. The filing shall provide a narrative that discusses the types of distribution and customer service costs and activities that the utility will begin to track separately to comply with this section. The narrative shall explain the changes needed in accounting procedures, activity tracking, timekeeping, and other management functions necessary to track the newly segregated costs, including a list that identifies costs that the utility will begin to track separately. (2) Compliance filing date. Affected utilities shall make a compliance filing according to the following schedule: (A) Investor-owned electric utilities shall file by December 31, 1998. (B) All other affected utilities shall file by December 31, 1999. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813678 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: March 13, 1998 For further information, please call: (512) 936-7308 CHAPTER 26.Substantive Rules Applicable to Telecommunications Service Providers SUBCHAPTER A.General Provisions 16 TAC sec.26.5 The Public Utility Commission of Texas (PUC or commission) adopts new sec.26.5 relating to Definitions with changes to the proposed text as published in the May 15, 1998 Texas Register (23 TexReg 4734). Project Number 19120 is assigned to this proceeding. The proposed new section will replace sec.23.3 of this title (relating to Definitions) as it concerns telecommunications service. Proposed new sec.26.5 gathers all the general definitions related to telecommunications service located throughout Chapter 23 of this title into one section. The only definitions that remain in other sections are definitions that are section specific and would adversely affect other sections of Chapter 26 if moved to the general definition section. Definitions have been updated to reflect changes in the industries regulated by the commission and to reflect commission policy and existing practices. The Appropriations Act of 1997, House Bill 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The PUC held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the PUC is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers. In the published review of sec.23.3 of this title in the May 15, 1998 Texas Register (23 TexReg 4935) the commission requested specific comments on the Section 167 requirement as to whether the reason for adopting sec.23.3 continues to exist in adopting corresponding sec.26.5. The commission received no comments on the Section 167 requirement. The commission finds that the reason for adopting sec.23.3 continues to exist in adopting corresponding sec.26.5 of this title. The commission received comments on the proposed section from AT&T Communications of the Southwest, Inc. (AT&T); and Central Power and Light Company, Southwestern Electric Power Company, and West Texas Utilities Company, the electric utilities of the Central and South West Corporation that provide retail electric service in Texas (collectively, CSW). CSW referenced both sec.25.5 of this title (relating to Definitions) as it relates to electric service, and sec.26.5 of this title (relating to Definitions) as it relates to telecommunications service, in their comments. Therefore, CSW's comments regarding "General Comments Regarding Consolidation" and "Consistency of Definitions" are summarized in both the preambles for sec.25.5 and sec.26.5. CSW's comments relating to transmission service and specific definitions only concerned sec.25.5 as it relates to electric service and are not summarized in this preamble for sec.26.5. Texas Utilities Electric Company (TUEC) in its comments on sec.25.5 recommended that the definition of the term "applicant" be deleted because the term is straightforward and does not need a definition. Also, the term is used both to refer to a person seeking service from a utility in some substantive rules and to a person seeking relief from the commission in other substantive rules. The commission agrees with TUEC and deleted the term from sec.25.5. The commission also deletes the term from sec.26.5 for consistency. General comments: AT&T expresses a general concern that the proposed reorganization of commission definitions may have "unintended consequences". As an example, AT&T points out that the definition of the term "access services" is limited to dominant certificated telecommunications utilities (DCTUs). AT&T states that the limitation to DCTUs is appropriate within the context of Substantive Rule sec.23.23(d) of this title (relating to Rate Design), but not for general use of the term. The commission realizes that it must take care not to have unintended consequences on other rule sections in consolidating its definitions and approached this consolidation process with this concern in mind. The commission believes that sec.26.5 as adopted will not have unintended consequences on other rule sections. AT&T is concerned that the use of general definitions could result in the commission's rules being applied to entities over which it has only limited jurisdiction. AT&T again refers to the definition of "access service" to show that, if the definition is not tied to Substantive Rule sec.23.23(d), it could be misinterpreted to apply to CTUs other than DCTUs. The commission will state any limitations to definitions for a particular rule in the rule section or subsection to which the limitation applies. CSW commented that the commission should make its intent clear as to specific definitions. CSW also commented that this effort to consolidate definitions should avoid substantive changes, which should instead be addressed in a separate rulemaking. The commission will clarify its intent, as appropriate, through its response to comments. The commission disagrees with the comments of CSW as they relate to substantive changes; the scope of change which may be accomplished by this rulemaking is established by the commission's published proposal. As stated in the preamble to the proposed rule, one of the purposes of this rulemaking includes updating existing rules to reflect changes in the industries regulated by the commission. CSW recommended that terms defined by statute be defined in sec.26.5 by simply referring to the relevant statutory provisions. CSW also recommends that the definitions in sec.26.5 be consistent with the definitions in the commission's Procedural Rules. Wherever possible, the commission has avoided incorporating definitions by reference in the Substantive Rules, so that persons using the commission's Substantive Rules will not need other documents to determine the meaning of the terms used in the Substantive Rules. Customers of utilities who contact the commission regarding a specific question or problem with a utility often request a copy of the specific substantive rule section that relates to their question or problem. These customers seldom have a copy of the statutes available to assist them in understanding these rules. Where a term is defined by statute, the commission has generally defined the term identically in sec.26.5. The commission believes that sec.26.5 and the commission's Procedural Rules are consistent, if not identical. Section 26.5(63) - Dominant carrier: AT&T recommends the PURA definition for "dominant carrier" be used instead of the proposed definition. The commission agrees and has made this change. Section 26.5(105) - Interexchange carrier (IXC): AT&T recommends the definition of "interexchange carrier (IXC)" be changed to make clear that incumbent local exchange companies (ILECs), and their affiliates, who provide interLATA long distance service are subject to the same rules as other IXCs. AT&T proposes that the definition of "interexchange carrier" be modified to remove the phrase "other than a DCTU" and to add the sentence "The term also includes an ILEC or ILEC affiliate to the extent that it is providing such service." The commission agrees DCTUs should not be automatically excluded from being considered as an IXC. Furthermore, the concern expressed by AT&T is not necessarily limited to ILECs. The commission should retain discretion to act on a case by case basis in deciding if a CTU should be considered an IXC. Therefore, the definition has been modified to provide the commission with this discretion. Section 26.5(174) - Regulatory authority: AT&T recommends the definition of "regulatory authority" be deleted as unnecessary. Alternatively, AT&T proposes the term be modified to exclude the reference to municipalities, as municipalities have no jurisdiction to regulate the entry, rates, or services of telecommunications utilities. The commission declines to delete or modify the term "regulatory authority". The term as defined in the Substantive Rules is consistent with the term as defined in PURA, Subtitle A, sec.11.003(17), which relates to provisions applicable to all utilities. Because the municipality reference is preceded by "in accordance with the context where it is found" the commission does not share AT&T's concern regarding the definition. The commission recognizes that municipalities do not currently have the sort of regulatory jurisdiction described by AT&T over telecommunications services. Definitions consolidated into sec.26.5 from sec.23.91 of this title (relating to Long Run Incremental Cost Methodology for Dominant Certificated Telecommunications Utility (DCTU) Services): AT&T suggests that the terms "group of services", "measure of unit cost", "network access", "subcategories of basic network functions", and "switching and switch functions" that were consolidated into the general definitions section from sec.23.91 be deleted and remain in sec.23.91 as section specific definitions. The commission agrees with AT&T on these five terms and deletes the terms from sec.26.5. Definitions of these terms will remain in sec.23.91. AT&T recommended that some definitions be modified to delete language which limits their application to DCTUs, when the definitions should encompass all carriers. AT&T suggested modifications to the terms "access customer", "access services", "direct-trunked transport", "equal access", "meet point billing", "percent interstate usage", "switched access", "switched access minutes", "switched transport", and "tandem-switched transport". The commission finds that in the new Chapter 26 general definitions section the more encompassing term "certificated telecommunications utility" is appropriate for these terms. However, in Chapter 23 the terms identified by AT&T and others sometimes only apply to DCTUs. Therefore, the commission has amended the definition of these terms and other terms as necessary, containing the language "certificated telecommunications utility" to include the sentence, "In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates." The commission also modifies the terms "access customer" and "equal access" to recognize that they may apply to holders of certificates of operating authority and service provider certificates of operating authority, who, although required to have their rates on file with the commission, are not required to have an access service tariff. AT&T suggested minor modifications to clarify other terms as follows: "certificated service area", clarify that the term also applies to service provider certificate of operating authority holders; "experimental service", delete unnecessary language as a result of moving the definition to the new section; "extended local calling service (ELCS)", add reference to subsection (c) of sec.23.49 of this title (relating to Telephone Extended Area Service (EAS) and Expanded Toll- free Local Calling Areas); "per call blocking", change the word "provider" to the word "utility"; "Public Utility Regulatory Act (PURA)", change citation to Texas Utilities Code to reference sec.sec.11.001 "et seq."; and "telecommunications utility", delete the reference to sec.51.002(8) from the citation to PURA and reference only sec.51.002(11). The commission agrees with AT&T's suggestions regarding "certificated service area", "experimental service", and "extended local calling service" and has made the changes as suggested. The commission disagrees with AT&T's suggestion regarding "per-call blocking". Changing the word "provider" to the word "utility" is not a minor change and interested persons have not had an opportunity to comment on such a change. The commission also declines to modify the citation to the Texas Utilities Code in the definition of PURA. The Bluebook, A Uniform System of Citation recommends that when citing consecutive sections or subsections, provide the inclusive numbers when possible instead of "et seq.". The commission agrees with AT&T that the reference to sec.51.002(8) should be deleted from the term "telecommunications utility". As a result of deleting the reference to sec.51.002(8), the commission will repeat the PURA definition for "telecommunications utility" in its Substantive Rules, instead of defining the term with a reference to PURA. In adopting this section, the commission makes other minor modifications for the purpose of clarifying its intent and to conform to the Texas Register's preferred format for definitions. All comments, including any not specifically referenced herein, were fully considered by the commission. This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Public Utility Regulatory Act sec.14.002. sec.26.5.Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise: (1) Access customer - Any user of access services which are obtained from a certificated telecommunications utility. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (2) Access services -Certificated telecommunications utility services which provide connections for or are related to the origination or termination of intrastate telecommunications services that are generally, but not limited to, interexchange services. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (3) Administrative review - A process under which an application may be approved without a formal hearing. (4) Affected person - means: (A) a public utility affected by an action of a regulatory authority; (B) a person whose utility service or rates are affected by a proceeding before a regulatory authority; or (C) a person who: (i) is a competitor of a public utility with respect to a service performed by the utility; or (ii) wants to enter into competition with a public utility. (5) Affiliate - means: (A) a person who directly or indirectly owns or holds at least 5.0% of the voting securities of a public utility; (B) a person in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; (C) a corporation that has at least 5.0% of its voting securities owned or controlled, directly or indirectly, by a public utility; (D) a corporation that has at least 5.0% of its voting securities owned or controlled, directly or indirectly, by: (i) a person who directly or indirectly owns or controls at least 5.0% of the voting securities of a public utility; or (ii) a person in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; (E) a person who is an officer or director of a public utility or of a corporation in a chain of successive ownership of at least 5.0% of the voting securities of a public utility; or (F) a person determined to be an affiliate under Public Utility Regulatory Act sec.11.006. (6) Aggregate customer proprietary network information (CPNI) - a configuration of customer proprietary network information that has been collected by a telecommunications utility and organized such that none of the information will identify an individual customer. (7) Assumed name - Has the meaning assigned by Texas Business and Commerce Code, sec.36.10. (8) Automatic dial announcing device (ADAD) - Any automated equipment used for telephone solicitation or collection that: (A) is capable of storing numbers to be called, or has a random or sequential number generator capable of producing numbers to be called; and (B) alone or in conjunction with other equipment, can convey a prerecorded or synthesized voice message to the number called without the use of a live operator. (9) Automatic number identification (ANI) - The automatic transmission by the local switching system of the originating telephone number to an interexchange or other communications carrier or to the operator of a 911 system. (10) Base rate area - A specific area within an exchange area, as set forth in the dominant certificated telecommunications utilities' tariffs, maps or descriptions, wherein local exchange service is furnished at uniform rates without extra mileage charges. (11) Basic local telecommunications service - flat rate residential and business local exchange telephone service, including primary directory listings; tone dialing service; access to operator services; access to directory assistance services; access to 911 service where provided by a local authority or dual party relay service; the ability to report service problems seven days a week; lifeline and tel-assistance services; and any other service the commission, after a hearing, determines should be included in basic local telecommunications service. (12) Baud - Unit of signaling speed reflecting the number of discrete conditions or signal elements transmitted per second. (13) Bellcore - Bell Communications Research, Inc. (14) Bit Error Ratio (BER) - The ratio of the number of bits received in error to the total number of bits transmitted in a given time interval. (15) Bit Rate - The rate at which data bits are transmitted over a communications path, normally expressed in bits per second. (16) Bona fide request - A written request to an incumbent local exchange company (ILEC) from a certificated telecommunications utility or an enhanced service provider, requesting that the ILEC unbundle its network/services to the extent ordered by the Federal Communications Commission. A bona fide request indicates an intent to purchase the service subject to the purchaser being able to obtain acceptable rates, terms, and conditions. (17) Business service - A telecommunications service provided a customer where the use is primarily of a business, professional, institutional or otherwise occupational nature. (18) Busy hour - The clock hour each day during which the greatest usage occurs. (19) Busy season - That period of the year during which the greatest volume of traffic is handled in a switching office. (20) Call aggregator - Any person or entity that owns or otherwise controls telephones intended to be utilized by the public, which control is evidenced by the authority to post notices on and/or unblock access at the telephone. (21) Call splashing - Call transferring (whether caller-requested or operator service provider-initiated) that results in a call being rated and/or billed from a point different from that where the call originated. (22) Call transferring - Handing off a call from one operator service provider (OSP) to another OSP. (23) Caller identification materials (caller ID materials) - Any advertisements, educational materials, training materials, audio and video marketing devices, and any information disseminated about caller ID services. (24) Caller identification service (caller ID service) - A service offered by a telecommunications provider that provides calling party information to a device capable of displaying the information. (25) Calling area - The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A "local" calling area may include more than one exchange area. (26) Calling party information - (A) the telephone listing number and/or name of the customer from whose telephone instrument a telephone number is dialed; or (B) other information that may be used to identify the specific originating number or originating location of a wire or electronic communication transmitted by a telephone instrument. (27) Capitalization - Long-term debt plus total equity. (28) Carrier of choice - An option that allows an individual to choose an interexchange carrier for long distance calls made through Telecommunications Relay Service. (29) Carrier-initiated change - A change in the telecommunications utility serving a customer that was initiated by the telecommunications utility to which the customer is changed, whether the switch is made because a customer did or did not respond to direct mail solicitation, telemarketing, or other actions initiated by the carrier. (30) Central office - A switching unit in a telecommunications system which provides service to the general public, having the necessary equipment and operating arrangements for terminating and interconnecting customer lines and trunks or trunks only. (31) Census block group (CBG) - A United States Census Bureau geographic designation that generally contains between 250 and 550 housing units. (32) Certificated service area - The geographic area within which a company has been authorized to provide basic local telecommunications services pursuant to a certificate of convenience and necessity (CCN), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA) issued by the commission. (33) Certificated telecommunications utility - A telecommunications utility that has been granted either a certificate of convenience and necessity (CCN), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA). (34) Class of service or customer class - A description of utility service provided to a customer which denotes such characteristics as nature of use (business or residential) or type of rate (flat rate or message rate). Classes may be further subdivided into grades, denoting individual or multiparty line or denoting quality of service. (35) Commission - The Public Utility Commission of Texas. (36) Competitive exchange service - Any of the following services, when provided on an inter- or intrastate basis within an exchange area: central office based PBX- type services for systems of 75 stations or more; billing and collection services; (high speed private line services of 1.544 megabits or greater; customized services; private line and virtual private line services; resold or shared local exchange telephone services if permitted by tariff; dark fiber services; non-voice data transmission service when offered as a separate service and not as a component of basic local telecommunications service; dedicated or virtually dedicated access services; services for which a local exchange company has been granted authority to engage in pricing flexibility pursuant to sec.23.27 of this title (relating to Rate-Setting Flexibility); any service initially provided within an exchange after October 26, 1992, if first provided by an entity other than the incumbent local exchange company (companies) certificated to provide service within that exchange; and any other service the commission declares is not local exchange telephone service. (37) Completed call - a call that is answered by the called party. (38) Complex service - The provision of a circuit requiring special treatment, special equipment, or special engineering design, including but not limited to private lines, WATS, PBX trunks, rotary lines, and special assemblies. (39) Consumer good or service - (A) real property or tangible or intangible personal property that is normally used for personal, family, or household purposes, including personal property intended to be attached to or installed in any real property; (B) a cemetery lot; (C) a time-share estate; or (D) a service related to real or personal property. (40) Consumer telephone call - An unsolicited call made to a residential telephone number to: (A) solicit a sale of a consumer good or service; (B) solicit an extension of credit for a consumer good or service; or (C) obtain information that will or may be used to directly solicit a sale of a consumer good or service or to extend credit for the sale. (41) Cooperative - An incumbent local exchange company that is a cooperative corporation. (42) Cooperative corporation - (A) An electric cooperative corporation organized and operating under the Electric Cooperative Corporation Act, Texas Utilities Code Annotated, Chapter 161, or a predecessor statute to Chapter 161 and operating under that chapter; or (B) A telephone cooperative corporation organized under the Telephone Cooperative Act, Texas Utilities Code, Chapter 162, or a predecessor statute to Chapter 162 and operating under that chapter. (43) Corporate name - Has the meaning assigned by Texas Business Corporation Act, Article sec.2.05. (44) Corporation - A domestic or foreign corporation, joint-stock company, or association, and each lessee, assignee, trustee, receiver or other successor in interest of the corporation, company, or association, that has any of the powers or privileges of a corporation not possessed by an individual or partnership. The term does not include a municipal corporation, except as expressly provided by the Public Utility Regulatory Act. (45) Custom calling-type services - Call management services available from a central office switching system including, but not limited to, call forwarding, call waiting, caller ID, or automatic recall. (46) Customer access line - A unit of measurement representing a telecommunications circuit or, in the case of ISDN, a telecommunications channel designated for a particular customer. One customer access line shall be counted for each circuit which is capable of generating usage on the line side of the switched network or a private line circuit, regardless of the quantity or ownership of customer premises equipment connected to each circuit. In the case of multiparty lines, each party shall be counted as a separate customer access line. (47) Customer-initiated change - A change in the telecommunications utility serving a customer that is initiated by the customer and is not the result of direct mail solicitation, telemarketing, or other actions initiated by the carrier. (48) Customer premises equipment (CPE) - Telephone terminal equipment located at a customer's premises. This does not include overvoltage protection equipment, inside wiring, coin-operated (or pay) telephones, "company-official" equipment, mobile telephone equipment, "911" equipment, equipment necessary for provision of communications for national defense, or multiplexing equipment used to deliver multiple channels to the customer. (49) Customer proprietary network information (CPNI), customer-specific - Any information compiled about a customer by a telecommunications utility in the normal course of providing telephone service that identifies the customer by matching such information with the customer's name, address, or billing telephone number. This information includes, but is not limited to: line type(s), technical characteristics (e.g., rotary service), class of service, current telephone charges, long distance billing record, local service billing record, directory assistance charges, usage data, and calling patterns. (50) Customer trouble report - Any oral or written report from a customer or user of telecommunications service received by any telecommunications utility relating to a physical defect, difficulty, or dissatisfaction with the service provided by the telecommunications utility's facilities. Each telephone or PBX switchboard position reported in trouble shall be counted as a separate report when several items are reported by one customer at the same time, unless the group of troubles so reported is clearly related to a common cause. (51) dBrn - A unit used to express noise power relative to one Pico watt (-90 dBm). (52) dBrnC - Noise power in dBrn, measured with C-message weighting. (53) dBrnCO - Noise power in dBrnC referred to or measured at a zero transmission level point. (54) D-Channel - The integrated-services-digital-network out-of-band signaling channel. (55) Dedicated signaling transport - Transmission of out-of-band signaling information between an access customer's common channel signaling network and a certificated telecommunications utility's signaling transport point on facilities dedicated to the use of a single customer. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (56) Depreciation expenses - The charges based on the depreciation accrual rates designed to spread the cost recovery of the property over its economic life. (57) Direct-trunked transport - Transmission of traffic between the serving wire center and another certificated telecommunications utility's office, without intermediate switching. It is charged on a flat-rate basis. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (58) Disconnection of telephone service - The event after which a customer's telephone number is deleted from the central office switch and databases. (59) Discretionary services - Services that may be added, at the user's option, to basic local telecommunications service, such as call waiting, call forwarding, and caller ID. (60) Distance learning- Instruction, learning, and training that is transmitted from one site to one or more sites by telecommunications services that are used by an educational institution predominantly for such instruction, learning, or training-- including: video, data, voice, and electronic information. (61) Distribution lines - Those lines from which the end user may be provided direct service. (62) Dominant carrier- A provider of a communication service provided wholly or partly over a telephone system who the commission determines has sufficient market power in a telecommunications market to control prices for that service in that market in a manner adverse to the public interest. The term includes a provider who provided local exchange telephone service within certificated exchange areas on September 1, 1995, as to that service and as to any other service for which a competitive alternative is not available in a particular geographic market. In addition with respect to: (A) intraLATA long distance message telecommunications service originated by dialing the access code "1-plus," the term includes a provider of local exchange telephone service in a certificated exchange area for whom the use of that access code for the origination of "1-plus" intraLATA calls in the exchange area is exclusive; and (B) interexchange services, the term does not include an interexchange carrier that is not a certificated local exchange company. (63) Dominant certificated telecommunications utility (DCTU) - A certificated telecommunications utility that is also a dominant carrier. Unless clearly indicated otherwise, the rules applicable to a DCTU apply specifically to only those services for which the DCTU is dominant. (64) Dual-party relay service - A service using oral and printed translations, by either a person or an automated device, between hearing- or speech-impaired individuals who use telecommunications devices for the deaf, computers, or similar automated devices, and others who do not have such equipment. (65) Educational institution - Accredited primary or secondary schools owned or operated by state and local government entities or by private entities; institutions of higher education as defined by the Education Code, sec.61.003(13); the Texas Education Agency, its successors and assigns; regional education service centers established and operated pursuant to the Education Code, Chapter 8; and the Texas Higher Education Coordinating Board, its successors and assigns. (66) Electing local exchange company (LEC) - A certificated telecommunications utility electing to be regulated under the terms of the Public Utility Regulatory Act, Chapter 58. (67) Electric utility - (A) A person or river authority that owns or operates for compensation in this state equipment or facilities to produce, generate, transmit, distribute, sell, or furnish electricity in this state. The term includes a lessee, trustee, or receiver of an electric utility and a recreational vehicle park owner who does not comply with Texas Utilities Code, Chapter 184, Subchapter C, with regard to the metered sale of electricity at the recreational vehicle park. The term does not include: (i) a municipal corporation; (ii) a qualifying facility; (iii) an exempt wholesale generator; (iv) a power marketer; (v) a corporation described by Public Utility Regulatory Act sec.32.053 to the extent the corporation sells electricity exclusively at wholesale and not to the ultimate consumer; or (vi) a person not otherwise an electric utility who: (I) furnishes an electric service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others; (II) owns or operates in this state equipment or facilities to produce, generate, transmit, distribute, sell or furnish electric energy to an electric utility, if the equipment or facilities are used primarily to produce and generate electric energy for consumption by that person; or (III) owns or operates in this state a recreational vehicle park that provides metered electric service in accordance with Texas Utilities Code, Chapter 184, Subchapter C. (B) With respect to transmission service and ancillary service, the term includes municipally owned utilities and river authorities that are not otherwise subject to the commission's ratesetting authority. (68) Element - Unbundled network elements, including: interconnection, physical- collocation, and virtual-collocation elements. (69) Eligible telecommunications provider (ETP) service area - The geographic area, determined by the commission, containing high cost rural areas which are eligible for Texas Universal Service Funds support under sec.23.133 or sec.23.134 of this title (relating to Texas High Cost Universal Service Plan (THCUSP) and Small and Rural Incumbent Local Exchange Company (ILEC) Universal Service Plan). (70) Embedded customer premises equipment - All customer premises equipment owned by a telecommunications utility, including inventory, which was tariffed or subject to the separations process of January 1, 1983. (71) End user choice - A system that allows the automatic routing of interexchange, operator-assisted calls to the billed party's chosen carrier without the use of access codes. (72) Enhanced service provider - A company that offers computer-based services over transmission facilities to provide the customer with value-added telephone services. (73) Entrance facilities - The transmission path between the access customer's (such as an interexchange carrier's) point of demarcation and the serving wire center. (74) Equal access -Access which is equal in type, quality and price to Feature Group C, and which has unbundled rates. From an end user's perspective, equal access is characterized by the availability of "1-plus" dialing with the end user's carrier of choice. (75) Equipment distribution program (EDP) - Program to assist individuals who are deaf or hard of hearing or who have an impairment of speech to purchase specialized telecommunications devices for telephone service access, authorized by 1997 Texas General Laws Chapter 149, to be jointly administered by the commission and the Texas Commission for the Deaf and Hard of Hearing. (76) Equipment distribution program (EDP) voucher - a voucher issued by Texas Commission for the Deaf and Hard of Hearing under the equipment distribution program, in accordance with its rules, that an eligible individual may use to acquire eligible specialized telecommunications devices from a vendor of such equipment. (77) Exchange area - The geographic territory delineated as an exchange area by official commission boundary maps. An exchange area usually embraces a city or town and its environs. There is usually a uniform set of charges for telecommunications service within the exchange area. An exchange area may be served by more than one central office and/or one certificated telephone utility. An exchange area may also be referred to as an exchange. (78) Expenses - Costs incurred in the provision of services that are expensed, rather than capitalized, in accordance with the Uniform System of Accounts applicable to the carrier. (79) Experimental service - A new service that is proposed to be offered on a temporary basis for a specified period not to exceed one year from the date the service is first provided to any customer. (80) Extended area service (EAS) - A telephone switching and trunking arrangement which provides for optional calling service by dominant certificated telecommunications utilities within a local access and transport area and between two contiguous exchanges or between an exchange and a contiguous metropolitan exchange local calling area. For purposes of this definition, a metropolitan exchange local calling area shall include all exchanges having local or mandatory EAS calling throughout all portions of any of the following exchanges: Austin metropolitan exchange, Corpus Christi metropolitan exchange, Dallas metropolitan exchange, Fort Worth metropolitan exchange, Houston metropolitan exchange, San Antonio metropolitan exchange, or Waco metropolitan exchange. EAS is provided at rate increments in addition to local exchange rates, rather than at toll message charges. (81) Extended local calling service (ELCS) - Service provided pursuant to sec.23.49(c) of this title (relating to Telephone Extended Area Service and Expanded Toll-free Local Calling Areas). (82) Facilities - All the plant and equipment of a public utility, including all tangible and intangible real and personal property without limitation, and any and all means and instrumentalities in any manner owned, operated, leased, licensed, used, controlled, furnished, or supplied for, by, or in connection with the business of any public utility, including any construction work in progress allowed by the commission. (83) Foreign exchange (FX) - exchange service furnished by means of a circuit connecting a customer's station to a primary serving office of another exchange. (84) Foreign serving office (FSO) - Exchange service furnished by means of a circuit connecting a customer's station to a serving office of the same exchange but outside of the serving office area in which the station is located. (85) Forward-looking common costs - Economic costs efficiently incurred in providing a group of elements or services that cannot be attributed directly to individual elements or services. (86) Forward-looking economic cost - The sum of the total element long-run incremental cost of an element and a reasonable allocation of its forward- looking common costs. (87) Forward-looking economic cost per unit - The forward-looking economic cost of the element as defined in this section, divided by a reasonable projection of the sum of the total number of units of the element that the dominant certificated telephone utility (DCTU) is likely to provide to requesting telecommunications carriers and the total number of units of the element that the DCTU is likely to use in offering its own services, during a reasonable time period. (88) Geographic scope - The geographic area in which the holder of a Certificate of Operating Authority or of a Service Provider Certificate of Operating Authority is authorized to provide service. (89) Grade of service - The number of customers a line is designated to serve. (90) Hearing - Any proceeding at which evidence is taken on the merits of the matters at issue, not including prehearing conferences. (91) Hearing carryover - A technology that allows an individual who is speech- impaired to hear the other party in a telephone conversation and to use specialized telecommunications devices to send communications through the telecommunications relay service operator. (92) High cost area - A geographic area for which the costs established using a forward- looking economic cost methodology exceed the benchmark levels established by the commission. (93) High cost assistance (HCA) - A program administered by the commission in accordance with the provisions of sec.23.133 of this title (relating to Texas High Cost Universal Service Plan (THCUSP). (94) Identity - The name, address, telephone number, and/or facsimile number of a person, whether natural, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or state agency and the relationship of the person to the entity being represented. (95) Impulse noise - Any momentary occurrence of the noise on a channel significantly exceeding the normal noise peaks. It is evaluated by counting the number of occurrences that exceed a threshold. This noise degrades voice and data transmission. (96) Incumbent local exchange company (ILEC) - A local exchange company that had a certificate of convenience and necessity on September 1, 1995. (97) Information sharing program - Instruction, learning, and training that is transmitted from one site to one or more sites by telecommunications services that are used by a library predominantly for such instruction, learning, or training, including video, data, voice, and electronic information. (98) Integrated services digital network (ISDN) - a digital network architecture that provides a wide variety of communications services, a standard set of user- network messages, and integrated access to the network. Access methods to the ISDN are the Basic Rate Interface (BRI) and the Primary Rate Interface (PRI). (99) Interactive multimedia communications - Real-time, two-way, interactive voice, video, and data communications conducted over networks that link geographically dispersed locations. This definition includes interactive communications within or between buildings on the same campus or library site. (100) Intercept service - A service arrangement provided by the local exchange carrier whereby calls placed to a disconnected or discontinued telephone number are intercepted and the calling party is informed by an operator or by a recording that the called telephone number has been disconnected, discontinued, changed to another number, or otherwise is not in service. (101) Interconnection - Generally means: The point in a network where a customer's transmission facilities interface with the dominant carrier's network under the provisions of this section. More particularily it means: The termination of local traffic (including basic telecommunications service as delineated in sec.24.32 of this title (Relating to Universal Service) or integrated services digital network (ISDN) as defined in this section and/or extended area service/extended local calling service traffic of a certificated telephone utility (CTU) using the local access lines of another CTU, as described in section sec.23.97(d)(4)(A)(i) of this title (relating to Interconnection). Interconnection shall include non- discriminatory access to signaling systems, databases, facilities and information as required to ensure interoperability of networks and efficient, timely provision of services to customers without permitting access to network proprietary information or customer proprietary network information, as defined in sec.23.57 of this title (relating to Telecommunications Privacy), unless otherwise permitted in sec.23.97 of this title. (102) Interconnector - A customer that interfaces with the dominant carrier's network under the provisions of sec.23.92 of this title (relating to Expanded Interconnection). (103) Interexchange carrier (IXC) - A carrier providing any means of transporting intrastate telecommunications messages between local exchanges, but not solely within local exchanges, in the State of Texas. The term may include a certificated telecommunications utility (CTU) or CTU affiliate to the extent that it is providing such service. An entity is not an IXC solely because of: (A) the furnishing, or furnishing and maintenance of a private system; (B) the manufacture, distribution, installation, or maintenance of customer premises equipment; (C) the provision of services authorized under the FCC's Public Mobile Radio Service and Rural Radio Service rules; or (D) the provision of shared tenant service. (104) Interoffice trunks - Those communications circuits which connect central offices. (105) IntraLATA equal access - The ability of a caller to complete a toll call in a local access and transport area (LATA) using his or her provider of choice by dialing "1" or "0" plus an area code and telephone number. (106) Intrastate - Refers to communications which both originate and terminate within Texas state boundaries. (107) Least cost technology - The technology, or mix of technologies, that would be chosen in the long run as the most economically efficient choice. The choice of least cost technologies, however, shall: (A) be restricted to technologies that are currently available on the market and for which vendor prices can be obtained; (B) be consistent with the level of output necessary to satisfy current demand levels for all services using the basic network function in question; and (C) be consistent with overall network design and topology requirements. (108) License - The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law. (109) Licensing - The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license. (110) Lifeline Service - A program certified by the Federal Communications Commission to provide for the reduction or waiver of the federal subscriber line charge for residential consumers. (111) Line - A circuit or channel extending from a central office to the customer's location to provide telecommunications service. One line may serve one customer, or all customers served by a multiparty line. (112) Local access and transport area (LATA) - A geographic area established for the provision and administration of communications service. It encompasses one or more designated exchanges, which are grouped to serve common social, economic and other purposes. For purposes of these rules, market areas, as used and defined in the Modified Final Judgment and the GTE Final Judgment, are encompassed in the term local access and transport area. (113) Local call - A call within the certificated telephone utility's toll-free calling area including calls which are made toll-free through a mandatory extended area service (EAS) or expanded local calling (ELC) proceeding. (114) Local calling area - The area within which telecommunications service is furnished to customers under a specific schedule of exchange rates. A local calling area may include more than one exchange area. (115) Local exchange company (LEC) - A telecommunications utility that has been granted either a certificate of convenience and necessity or a certificate of operating authority to provide local exchange telephone service, basic local telecommunications service, or switched access service within the state. A local exchange company is also referred to as a local exchange carrier. (116) Local exchange telephone service or local exchange service - A telecommunications service provided within an exchange to establish connections between customer premises within the exchange, including connections between a customer premises and a long distance provider serving the exchange. The term includes tone dialing service, service connection charges, and directory assistance services offered in connection with basic local telecommunications service and interconnection with other service providers. The term does not include the following services, whether offered on an intraexchange or interexchange basis: (A) central office based PBX-type services for systems of 75 stations or more; (B) billing and collection services; (C) high-speed private line services of 1.544 megabits or greater; (D) customized services; (E) private line or virtual private line services; (F) resold or shared local exchange telephone services if permitted by tariff; (G) dark fiber services; (H) non-voice data transmission service offered as a separate service and not as a component of basic local telecommunications service; (I) dedicated or virtually dedicated access services; (J) a competitive exchange service; or (K) any other service the commission determines is not a "local exchange telephone service." (117) Local message - A completed call between customer access lines located within the same local calling area. (118) Local message charge - The charge that applies for a completed telephone call that is made when the calling customer access line and the customer access line to which the connection is established are both within the same local calling area, and a local message charge is applicable. (119) Local service charge - The charge for furnishing facilities to enable a customer to send or receive telecommunications within the local calling area. This local calling area may include more than one exchange area. (120) Local telecommunications traffic: (A) Telecommunications traffic between a dominant certificated telecommunications utility (DCTU) and a telecommunications carrier other than a commercial mobile radio service (CMRS) provider that originates and terminates within the mandatory single or multi-exchange local calling area of a DCTU including the mandatory extended area service (EAS) areas served by the DCTU; or (B) Telecommunications traffic between a DCTU and a CMRS provider that, at the beginning of the call, originates and terminates within the same major trading area. (121) Long distance telecommunications service - That part of the total communication service rendered by a telecommunications utility which is furnished between customers in different local calling areas in accordance with the rates and regulations specified in the utility's tariff. (122) Long run - A time period long enough to be consistent with the assumption that the company is in the planning stage and all of its inputs are variable and avoidable. (123) Long run incremental cost (LRIC) - The change in total costs of the company of producing an increment of output in the long run when the company uses least cost technology. The LRIC should exclude any costs that, in the long run, are not brought into existence as a direct result of the increment of output. (124) Mandatory minimum standards - The standards established by the Federal Communications Commission, outlining basic mandatory telecommunication relay services. (125) Meet point billing - An access billing arrangement for services to access customers when local transport is jointly provided by more than one certificated telecommunications utility. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (126) Message - A completed customer telephone call. (127) Message rate service - A form of local exchange service under which all originated local messages are measured and charged for in accordance with the utility's tariff. (128) Minor change - A change, including the restructuring of rates of existing services, that decreases the rates or revenues of the small local exchange company (SLEC) or that, together with any other rate or proposed or approved tariff changes in the 12 months preceding the date on which the proposed change will take effect, results in an increase of the SLEC's total regulated intrastate gross annual revenues by not more than 5.0%. Further, with regard to a change to a basic local access line rate, a minor change may not, together with any other change to that rate that went into effect during the 12 months preceding the proposed effective date of the proposed change, result in an increase of more than 10%. (129) Municipality - A city, incorporated village, or town, existing, created, or organized under the general, home rule, or special laws of the state. (130) National integrated services digital network (ISDN) - the standards and services promulgated for integrated services digital network by Bellcore. (131) Negotiating party - A certificated telecommunications utility (CTU) or other entity with which a requesting CTU seeks to interconnect in order to complete all telephone calls made by or placed to a customer of the requesting CTU. (132) New service - Any service not offered on a tariffed basis prior to the date of the application relating to such service and specifically excludes basic local telecommunications service including local measured service. If a proposed service could serve as an alternative or replacement for a service offered prior to the date of the new-service application and does not provide significant improvements (other than price) over, or significant additional services not available under, a service offered prior to the date of such application, it shall not be considered a new service. (133) Non-discriminatory - Type of treatment that is not less favorable than that an interconnecting certificated telecommunications utility (CTU) provides to itself or its affiliates or other CTUs. (134) Non-dominant certificated telecommunications utility (NCTU) - A certificated telecommunications utility (CTU) that is not a dominant certificated telecommunications utility (DCTU) and has been granted a certificate of convenience and necessity (CCN) (after September 1, 1995, in an area already certificated to a DCTU), a certificate of operating authority (COA), or a service provider certificate of operating authority (SPCOA) to provide local exchange service. (135) Nondominant carrier - (A) An interexchange telecommunications carrier (including a reseller of interexchange telecommunications services). (B) Any of the following that is not a dominant carrier: (i) a specialized communications common carrier; (ii) any other reseller of communications; (iii) any other communications carrier that conveys, transmits, or receives communications in whole or in part over a telephone system; or (iv) a provider of operator services that is not also a subscriber. (136) Open network architecture - The overall design of an incumbent local exchange company's (ILEC's) network facilities and services to permit all users of the network, including the enhanced services operations of an ILEC and its competitors, to interconnect to specific basic network functions on an unbundled and non-discriminatory basis. (137) Operator service - Any service using live operator or automated operator functions for the handling of telephone service, such as local collect, toll calling via collect, third number billing, credit card, and calling card services. The transmission of "1-800" and "1-888" numbers, where the called party has arranged to be billed, is not operator service. (138) Operator service provider (OSP) - Any person or entity that provides operator services by using either live or automated operator functions. When more than one entity is involved in processing an operator service call, the party setting the rates shall be considered to be the OSP. However, subscribers to customer-owned pay telephone service shall not be deemed to be OSPs. (139) Originating line screening (OLS) - A two digit code passed by the local switching system with the automatic number identification (ANI) at the beginning of a call that provides information about the originating line. (140) Out-of-service trouble report - An initial customer trouble report in which there is complete interruption of incoming or outgoing local exchange service. On multiple line services a failure of one central office line or a failure in common equipment affecting all lines is considered out of service. If an extension line failure does not result in the complete inability to receive or initiate calls, the report is not considered to be out of service. (141) Partial deregulation - The ability of a cooperative to offer new services on an optional basis and/or change its rates and tariffs under the provisions of the Public Utility Regulatory Act, sec.sec.53.351 - 53.359. (142) Pay-per-call-information services - Services that allow a caller to dial a specified 1-900-XXX-XXXX or 976-XXXX number. Such services routinely deliver, for a predetermined (sometimes time-sensitive) fee, a pre-recorded or live message or interactive program. Usually a telecommunications utility will transport the call and bill the end-user on behalf of the information provider. (143) Pay telephone access service (PTAS) - A service offered by a certificated telecommunications utility which provides a two-way, or optionally, a one-way originating-only business access line composed of the serving central office line equipment, all outside plant facilities needed to connect the serving central office with the customer premises, and the network interface; this service is sold to pay telephone service providers. (144) Pay telephone service (PTS) - A telecommunications service utilizing any coin, coinless, credit card reader, or cordless instrument that can be used by members of the general public, or business patrons, employees, and/or visitors of the premise's owner, provided that the end user pays for local or toll calls from such instrument on a per call basis. Pay per call telephone service provided to inmates of confinement facilities is PTS. For purposes of this section, coinless telephones provided in guest rooms by a hotel/motel are not pay telephones. A telephone that is primarily used by business patrons, employees, and/or visitors of the premise's owner is not a pay telephone if all local calls and "1-800" and "1-888" type calls from such telephone are free to the end user. (145) Per-call blocking - A telecommunications service provided by a telecommunications provider that prevents the transmission of calling party information to a called party on a call-by-call basis. (146) Per-line blocking - A telecommunications service provided by a telecommunications utility that prevents the transmission of calling party information to a called party on every call, unless the calling party acts affirmatively to release calling party information. (147) Percent interstate usage (PIU) - An access customer-specific ratio or ratios determined by dividing interstate access minutes by total access minutes. The specific ratio shall be determined by the certificated telecommunications utility (CTU) unless the CTU's network is incapable of determining the jurisdiction of the access minutes. A PIU establishes the jurisdiction of switched access usage for determining rates charged to switched access customers and affects the allocation of switched access revenue and costs by CTUs between the interstate and intrastate jurisdictions. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (148) Person - Any natural person, partnership, municipal corporation, cooperative corporation, corporation, association, governmental subdivision, or public or private organization of any character other than an agency. (149) Pleading - A written document submitted by a party, or a person seeking to participate in a proceeding, setting forth allegations of fact, claims, requests for relief, legal argument, and/or other matters relating to a proceeding. (150) Prepaid local telephone service (PLTS) - Prepaid local telephone service means: (A) voice grade dial tone residential service consisting of flat rate service or local measured service, if chosen by the customer and offered by the dominant certificated telecommunications utility (DCTU); (B) if applicable, mandatory services, including extended area service, extended metropolitan service, or expanded local calling service; (C) tone dialing service; (D) access to 911 service; (E) access to dual party relay service; (F) the ability to report service problems seven days a week; (G) access to business office; (H) primary directory listing; (I) toll blocking service; and (J) non-published service and non-listed service at the customer's option. (151) Premises - A tract of land or real estate including buildings and other appurtenances thereon. (152) Pricing flexibility - Discounts and other forms of pricing flexibility may not be preferential, prejudicial, or discriminatory. Pricing flexibility includes: (A) customer specific contracts; (B) volume, term, and discount pricing; (C) zone density pricing; (D) packaging of services; and (E) other promotional pricing flexibility. (153) Primary interexchange carrier (PIC) - The provider chosen by a customer to carry that customer's toll calls. (154) Primary interexchange carrier (PIC) freeze indicator - An indicator that the end user has directed the certificated telecommunications utility to make no changes in the end user's PIC. (155) Primary rate interface (PRI) integrated services digital network (ISDN) - One of the access methods to ISDN, the 1.544-Mbps PRI comprises either twenty- three 64 Kbps B-channels and one 64 Kbps D-channel (23B+D) or twenty-four 64 Kbps B-channels (24B) when the associated call signaling is provided by another PRI in the group. (156) Primary service - The initial provision of voice grade access between the customer's premises and the switched telecommunications network. This includes the initial connection to a new customer or the move of an existing customer to a new premises but does not include complex services. (157) Print translations - The temporary storage of a message in an operator's screen during the actual process of relaying a conversation. (158) Privacy issue - An issue that arises when a telecommunications provider proposes to offer a new telecommunications service or feature that would result in a change in the outflow of information about a customer. The term privacy issue is to be construed broadly. It includes, but is not limited to, changes in the following: (A) the type of information about a customer that is released; (B) the customers about whom information is released; (C) the entity or entities to whom the information about a customer is released; (D) the technology used to convey the information; (E) the time at which the information is conveyed; and (F) any other change in the collection, use, storage, or release of information. (159) Private line - A transmission path that is dedicated to a customer and that is not connected to a switching facility of a telecommunications utility, except that a dedicated transmission path between switching facilities of interexchange carriers shall be considered a private line. (160) Proceeding - A hearing, investigation, inquiry, or other procedure for finding facts or making a decision. The term includes a denial of relief or dismissal of a complaint. It may be rulemaking or nonrulemaking; rate setting or non-rate setting. (161) Promotional rate - A temporary tariff, fare, toll, rental or other compensation charged by a certificated telecommunications utility (DCTU) to new or new and existing customers and designed to induce customers to test a service. A promotional rate shall incorporate a reduction or a waiver of some rate element in the tariffed rates of the service, or a reduction or waiver of the service's installation charge and/or service connection charges, and shall not incorporate any charge for discontinuance of the service by the customer. Such rates may not be offered for basic local telecommunications service, including local measured service. (162) Provider of pay telephone service - The entity that purchases pay telephone access service (PTAS) from a certificated telecommunications utility (CTU) and registers with the Public Utility Commission as a provider of pay telephone service (PTS) to end users. (163) Public utility or utility - A person or river authority that owns or operates for compensation in this state equipment or facilities to convey, transmit, or receive communications over a telephone system as a dominant carrier. The term includes a lessee, trustee, or receiver of any of those entities, or a combination of those entities. The term does not include a municipal corporation. A person is not a public utility solely because the person: (A) furnishes or furnishes and maintains a private system; (B) manufactures, distributes, installs, or maintains customer premise communications equipment and accessories; or (C) furnishes a telecommunications service or commodity only to itself, its employees, or its tenants as an incident of employment or tenancy, if that service or commodity is not resold to or used by others. (164) Public Utility Regulatory Act (PURA) - The enabling statute for the Public Utility Commission of Texas, located in the Texas Utilities Code Annotated, sec.sec.11.001 - 63.063, (Vernon 1998). (165) Qualifying low-income consumer - A consumer that participates in one of the following programs: Medicaid, food stamps, Supplemental Security Income, federal public housing assistance, or Low-Income Home Energy Assistance Program. (166) Qualifying services - (A) residential flat rate basic local exchange service; (B) residential local exchange access service; and (C) residential local area calling usage. (167) Rate - Includes: (A) any compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, observed, charged, or collected by a public utility for a service, product, or commodity, described in the definition of utility in the Public Utility Regulatory Act sec.sec.31.002 or 51.002; and (B) a rule, practice, or contract affecting the compensation, tariff, charge, fare, toll, rental, or classification. (168) Reciprocal compensation - An arrangement between two carriers in which each of the two carriers receives compensation from the other carrier for the transport and termination on each carrier's network facilities of local telecommunications traffic that originates on the network facilities of the other carrier. (169) Redirect the call - A procedure used by operator service providers (OSPs) that transmits a signal back to the originating telephone instrument that causes the instrument to disconnect the OSP's connection and to redial the digits originally dialed by the caller directly to the local exchange carrier's network. (170) Regulatory authority - In accordance with the context where it is found, either the commission or the governing body of a municipality. (171) Relay Texas Advisory Committee (RTAC) - The committee authorized by the Public Utility Regulatory Act, sec.56.110 and 1997 Texas General Laws Chapter 149. (172) Relay Texas - The name by which telecommunications relay service in Texas is known. (173) Relay Texas administrator - The individual employed by the commission to oversee the administration of statewide telecommunications relay service. (174) Repeated trouble report - A customer trouble report regarding a specific line or circuit occurring within 30 days or one calendar month of a previously cleared trouble report on the same line or circuit. (175) Residual charge - The per-minute charge designed to account for historical contribution to joint and common costs made by switched transport services. (176) Retail service - A telecommunications service is considered a retail service when it is provided to residential or business end users and the use of the service is other than resale. Each tariffed or contract offering which a customer may purchase to the exclusion of other offerings shall be considered a service. For example: the various mileage bands for standard toll services are rate elements, not services; however, individual optional calling plans that can be purchased individually and which are offered as alternatives to each other are services, not rate elements. (177) Return-on-assets - After-tax net operating income divided by total assets. (178) Reversal of partial deregulation - The ability of a minimum of 10% of the members of a partially deregulated cooperative to request, in writing, that a vote be conducted to determine whether members prefer to reverse partial deregulation. Ten percent shall be calculated based upon the total number of members of record as of the calendar month preceding receipt of the request from members for reversal of partial deregulation. (179) Rule - A statement of general applicability that implements, interprets, or prescribes law or policy, or describes the procedure or practice requirements of the commission. The term includes the amendment or repeal of a prior rule but does not include statements concerning only the internal management or organization of the commission and not affecting private rights or procedures. (180) Rulemaking proceeding - A proceeding conducted pursuant to the Administrative Procedure Act, Texas Government Code, sec.sec.2001.021 - 2001.037 to adopt, amend, or repeal a commission rule. (181) Rural incumbent local exchange company (ILEC) - An ILEC that qualifies as a "rural telephone company" as defined in 47 United States Code sec.3(37) and/or 47 United States Code sec.251(f)(2). (182) Separation - The division of plant, revenues, expenses, taxes, and reserves applicable to exchange or local service if these items are used in common to provide public utility service to both local exchange telephone service and other service, such as interstate or intrastate toll service. (183) Service - Has its broadest and most inclusive meaning. The term includes any act performed, anything supplied, and any facilities used or supplied by a public utility in the performance of the utility's duties under the Public Utility Regulatory Act to its patrons, employees, other public utilities, and the public. The term also includes the interchange or facilities between two or more public utilities. The term does not include the printing, distribution, or sale of advertising in a telephone directory. (184) Service connection charge - A charge designed to recover the costs of non- recurring activities associated with connection of local exchange telephone service. (185) Service provider certificate of operating authority (SPCOA) reseller - A holder of a service provider certificate of operating authority that uses only resold telecommunications services provided by an incumbent local exchange company (ILEC) or by a certificate of operating authority (COA) holder or by a service provider certificate of operating authority (SPCOA) holder. (186) Service restoral charge - A charge applied by the DCTU to restore service to a customer's telephone line after it has been suspended by the DCTU. (187) Serving wire center (SWC) - The certificated telecommunications utility designated central office which serves the access customer's point of demarcation. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (188) Signaling for tandem switching - The carrier identification code (CIC) and the OZZ code or equivalent information needed to perform tandem switching functions. The CIC identifies the interexchange carrier and the OZZ digits identify the call type and thus the interexchange carrier trunk to which traffic should be routed. (189) Small certificated telecommunications utility (CTU) - A CTU with fewer than 2.0% of the nation's subscriber lines installed in the aggregate nationwide. (190) Small local exchange company (SLEC) - Any incumbent certificated telecommunications utility as of September 1, 1995, that has fewer than 31,000 access lines in service in this state, including the access lines of all affiliated incumbent local exchange companies within the state, or a telephone cooperative organized pursuant to the Telephone Cooperative Act, Texas Utilities Code Annotated, Chapter 162. (191) Small incumbent local exchange company (Small ILEC) - An incumbent local exchange company that is a cooperative corporation or has, together with all affiliated incumbent local exchange companies, fewer than 31,000 access lines in service in Texas. (192) Spanish speaking person - a person who speaks any dialect of the Spanish language exclusively or as their primary language. (193) Special access - A transmission path connecting customer designated premises to each other either directly or through a hub or hubs where bridging, multiplexing or network reconfiguration service functions are performed and includes all exchange access not requiring switching performed by the dominant carrier's end office switches. (194) Stand-alone costs - The stand-alone costs of an element or service are defined as the forward-looking costs that an efficient entrant would incur in providing only that element or service. (195) Station - A telephone instrument or other terminal device. (196) Study area - An incumbent local exchange company's (ILEC's) existing service area in a given state. (197) Supplemental services - Telecommunications features or services offered by a certificated telecommunications utility for which analogous services or products may be available to the customer from a source other than a dominant certificated telecommunications utility. Supplemental services shall not be construed to include optional extended area calling plans that a dominant certificated telecommunications utility may offer pursuant to sec.23.49 of this title (relating to Telephone Extended Area Service (EAS) and Expanded Toll-free Local Calling Area), or pursuant to a final order of the commission in a proceeding pursuant to the Public Utility Regulatory Act, Chapter 53. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (198) Suspension of service - That period during which the customer's telephone line does not have dial tone but the customer's telephone number is not deleted from the central office switch and databases. (199) Switched access - Access service that is provided by certificated telecommunications utilities (CTUs) to access customers and that requires the use of CTU network switching or common line facilities generally, but not necessarily, for the origination or termination of interexchange calls. Switched access includes all forms of transport provided by the CTU over which switched access traffic is delivered. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (200) Switched access demand - Switched access minutes of use, or other appropriate measure where not billed on a minute of use basis, for each switched access rate element, normalized for out of period billings. For the purposes of this section, switched access demand shall include minutes of use billed for the local switching rate element. (201) Switched access minutes - The measured or assumed duration of time that a certificated telecommunications utility's network facilities are used by access customers. Access minutes are measured for the purpose of calculating access charges applicable to access customers. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (202) Switched transport - Transmission between a certificated telecommunications utility's central office (including tandem-switching offices) and an interexchange carrier's point of presence. (203) Tandem-switched transport - Transmission of traffic between the serving wire center and another certificated telecommunications utility office that is switched at a tandem switch and charged on a usage basis. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (204) Tariff - The schedule of a utility containing all rates, tolls, and charges stated separately by type or kind of service and the customer class, and the rules and regulations of the utility stated separately by type or kind of service and the customer class. (205) Tel-assistance service - A program providing eligible consumers with a 65% reduction in the applicable tariff rate for qualifying services. (206) Texas Universal Service Fund (TUSF) - The fund authorized by the Public Utility Regulatory Act, sec.56.021 and 1997 Texas General Laws Chapter 149. (207) Telecommunications relay service (TRS) - A service using oral and print translations by either live or automated means between individuals who are hearing-impaired or speech-impaired who use specialized telecommunications devices and others who do not have such devices. Unless specified in the text, this term shall refer to intrastate telecommunications relay service only. (208) Telecommunications relay service (TRS) carrier - The telecommunications carrier selected by the commission to provide statewide telecommunications relay service. (209) Telecommunications utility - (A) a public utility; (B) an interexchange telecommunications carrier, including a reseller of interexchange telecommunications services; (C) a specialized communications common carrier; (D) a reseller of communications; (E) a communications carrier who conveys, transmits, or receives communications wholly or partly over a telephone system; (F) a provider of operator services as defined by sec.55.081, unless the provider is a subscriber to customer-owned pay telephone service; and (G) a separated affiliate or an electronic publishing joint venture as defined in the Public Utility Regulatory Act, Chapter 63. (210) Telephones intended to be utilized by the public - Telephones that are accessible to the public, including, but not limited to, pay telephones, telephones in guest rooms and common areas of hotels, motels, or other lodging locations, and telephones in hospital patient rooms. (211) Telephone solicitation - An unsolicited telephone call. (212) Telephone solicitor - A person who makes or causes to be made a consumer telephone call, including a call made by an automatic dialing/announcing device. (213) Test year - The most recent 12 months, beginning on the first day of a calendar or fiscal year quarter, for which operating data for a public utility are available. (214) Tier 1 local exchange company - A local exchange company with annual regulated operating revenues exceeding $100 million. (215) Title IV-D Agency - The office of the attorney general for the state of Texas. (216) Toll blocking - A service provided by telecommunications carriers that lets consumers elect not to allow the completion of outgoing toll calls from their telecommunications channel. (217) Toll control - A service provided by telecommunications carriers that allows consumers to specify a certain amount of toll usage that may be incurred on their telecommunications channel per month or per billing cycle. (218) Toll limitation - Denotes both toll blocking and toll control. (219) Total element long-run incremental cost (TELRIC) - The forward-looking cost over the long run of the total quantity of the facilities and functions that are directly attributable to, or reasonably identifiable as incremental to, such element, calculated taking as a given the certificated telecommunications utility's (CTU's) provision of other elements. In Chapter 23 of this title, this term is applicable only to dominant certificated telecommunications utilities when the context clearly indicates. (220) Transport - The transmission and/or any necessary tandem and/or switching of local telecommunications traffic from the interconnection point between the two carriers to the terminating carrier's end office switch that directly serves the called party, or equivalent facility provided by a carrier other than a dominant certificated telecommunications utility. (221) Trunk - A circuit facility connecting two switching systems. (222) Two-primary interexchange carrier (Two-PIC) equal access - A method that allows a telephone subscriber to select one carrier for all 1+ and 0+ interLATA calls and the same or a different carrier for all 1+ and 0+ intraLATA calls. (223) Unbundling - The disaggregation of the ILEC's network/service to make available the individual network functions or features or rate elements used in providing an existing service. (224) Unit cost - A cost per unit of output calculated by dividing the total long run incremental cost of production by the total number of units. (225) Usage sensitive blocking - Blocking of a customer's access to services which are charged on a usage sensitive basis for completed calls. Such calls shall include, but not be limited to, call return, call trace, and auto redial. (226) Virtual private line - Circuits or bandwidths, between fixed locations, that are available on demand and that can be dynamically allocated. (227) Voice carryover - A technology that allows an individual who is hearing- impaired to speak directly to the other party in a telephone conversation and to use specialized telecommunications devices to receive communications through the telecommunications relay service operator. (228) Volume insensitive costs - The costs of providing a basic network function (BNF) that do not vary with the volume of output of the services that use the BNF. (229) Volume sensitive costs - The costs of providing a basic network function (BNF) that vary with the volume of output of the services that use the BNF. (230) Wholesale service - A telecommunications service is considered a wholesale service when it is provided to a telecommunications utility and the use of the service is to provide a retail service to residence or business end-user customers. (231) Working capital requirements - The additional capital required to fund the increased level of accounts receivable necessary to provide telecommunications service. (232) "0-" call - A call made by the caller dialing the digit "0" and no other digits within five seconds. A "0-" call may be made after a digit (or digits) to access the local network is (are) dialed. (233) "0+" call - A call made by the caller dialing the digit "0" followed by the terminating telephone number. On some automated call equipment, a digit or digits may be dialed between the "0" and the terminating telephone number. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813641 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: May 15, 1998 For further information, please call: (512) 936-7308 SUBCHAPTER F.Regulation of Telecommunications Service 16 TAC sec.26.125 The Public Utility Commission of Texas (PUC) adopts new sec.26.125, relating to Automatic Dial Announcing Devices (ADAD) with changes to the proposed text as published in the July 24, 1998 Texas Register (23 TexReg 7481). The rule is necessary to conform sec.26.125 to House Bill 2128 (75th Legislature) requirements which restrict ADAD solicitation and impose additional obligations upon ADAD solicitors. Further, the rule is needed by the commission in the execution of its jurisdiction under PURA, subchapter F, which concerns the regulation and permitting process for ADADs and requires the commission to create a permitting scheme for ADAD operators and to investigate complaints relating to the use of ADADs; PURA sec.55.134(a)(2), which grants to the commission the power to enforce subchapter F; and, PURA sec.52.001(b), which requires the commission to adopt rules that protect the public interest. This new section was adopted under Project Number 14966. The Appropriations Act of 1997, House Bill 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The PUC held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the PUC is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers. The commission requested specific comments on the Section 167 requirement as to whether the reason for adopting or readopting the rule continues to exist (Section 167 comments). Texas State Telephone Cooperative, Inc. (TSTCI) filed Section 167 comments. TSTCI believed that the rule is necessary in order to protect the public interest, reduce the number of consumer complaints concerning ADADs, and to bring ADAD operators into compliance with provisions of PURA. No other Section 167 comments were filed. The commission finds that the reason for adopting the rule continues to exist. A public hearing on the rule was not held as no request for a hearing was received by the commission. The commission received written comments on the proposed new section from TSTCI, Advisory Commission on State Emergency Communication (ACSEC), and GTE Southwest Incorporated (GTE). TSTCI supports the rule but recommends that sec.26.125(g)(1) & (2) concerning the display of ADAD's telephone number, per-line blocking and per-call blocking be consistent with provisions found in House Bill 2128 as well as staff's proposed revision to sec.26.126(c)(3) and (4). TSTCI proposes using language that is identical to that proposed for adoption in sec.26.126(c)(3) and (4). The commission adopts the language proposed by TSTCI, finding it to be an improvement over the language in the staff proposal. TSTCI also asked for a sixty (60) day compliance deadline for the filing of tariffs by telephone companies. The commission rejects this request because it is beyond the jurisdiction of the commission as HB2128 provides an effective date of September 1, 1998 for the amendments to PURA. GTE generally supported the rule but recommended one change to proposed sec.26.125(b)(6). GTE pointed out that the proposed section requires that messages be shorter than 30 seconds or that devices be capable of terminating a call with 30 seconds if an answering machine is reached. GTE submits that PURA sec.55.128 sets the time limits at one minute. GTE, however, failed to note the HB2128 amendment to PURA sec.3.653(a)(5) which has not yet been incorporated into the Texas Utilities Code. That amendment expressly changes the time limits to 30 seconds. For this reason the commission rejects GTE's suggested change to the proposed rule. ACSEC supported the rule and especially voiced its support for sec.26.125(b)(8) which prohibits the use of ADADs for calling emergency numbers such as 9-1-1. ACSEC did express concern about Text Telephone (TTY) devices that are programmed to operate very much like ADADs for calls to emergency numbers. These devices automatically play and continue to repeat requests for emergency assistance when the callers use the TTYs to call 9-1-1. Because the messages are continually repeated, the call takers at the Public Safety Answering Point (PSAP) can encounter problems in answering and responding to TTY calls. ACSEC asked the commission to consider adding language to the rule to prohibit the use of these devices for TTY calls to 9-1-1 if the devices are not modified to stop repeating the automated messages for emergency assistance. The commission declines to adopt such language for several reasons. Most significantly, PURA sec.55.121 defines ADADs as "automated equipment used for telephone solicitation or collection" and does not include TTY devices in the definition. Further, the notice provided with the publication of the proposed rule can not be reasonably construed to include issues concerning TTY devices. Finally, the commission believes that further action by the Texas Legislature is needed prior to the commission being able to adopt a rule with the language requested by ACSEC. This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction and specifically, PURA sec.55.137 which grants the commission authority to impose an administrative penalty against a person who operates an ADAD in violation of subchapter F of PURA and PURA sec.55.134 which requires the commission to enforce subchapter F of PURA and to investigate complaints relating to the use of ADADs. Cross Index to Statutes: Public Utility Regulatory Act sec.sec.14.002, 14.052, and 55.121- 55.138. sec.26.125.Automatic Dial Announcing Devices (ADAD). (a) Purpose. The purpose of this section is to regulate the use of automatic dial announcing devices. (b) Requirements for use of an automatic dial announcing device. A person who operates an ADAD to make a telephone call in which the device plays a recorded message when a connection is completed to a telephone number must comply with the following requirements. (1) An ADAD operator must obtain a permit from the commission and give written notice specifying the type of device to be connected to each telecommunications utility over whose system the device is to be used. (2) The device must not be used for random number dialing or to dial numbers by successively increasing or decreasing integers. In addition, the device must not be used in a way such that two or more telephone lines of a multi-line business are engaged simultaneously. (3) Within the first 30 seconds of the call, the ADAD message must clearly state the nature of the call, the identity of the business, individual, or other entity initiating the call, and the telephone number (other than that of the ADAD which placed the call) or address of such business, individual, or other entity. However, if an ADAD is used for debt collection purposes and the use complies with applicable federal law and regulations, and the ADAD is used by a live operator for automatic or hold announcement purposes, the use complies with this paragraph. (4) The entire ADAD message must be delivered in a single language. (5) The device must disconnect from the called person's line no later than 30 seconds after the call is terminated by either party or, if the device cannot disconnect within that period, a live operator must introduce the call and receive the oral consent of the called person before beginning the message. In addition, the device must comply with the line seizure requirements in 47 Code of Federal Regulations sec.68.318(c)(2). (6) The device, when used for solicitation purposes, must have a message shorter than 30 seconds or have the technical capacity to recognize a telephone answering device on the called person's line and terminate the call within 30 seconds. (7) For calls terminating in Texas, the device must not be used to make a call: (A) for solicitation before noon or after 9:00 p.m. on a Sunday or before 9:00 a.m. or after 9:00 p.m. on a weekday or a Saturday; or (B) for collection purposes at an hour at which collection calls would be prohibited under the federal Fair Debt Collection Practices Act (15 United States Code sec.1692, et seq.). (8) Calls may not be made to emergency telephone numbers of hospitals, fire departments, law enforcement offices, medical physician or service offices, health care facilities, poison control centers, "911" lines, or other entities providing emergency service. In addition, calls may not be made to telephone numbers of any guest room or patient room of a hospital, health care facility, elderly home, or similar establishment, any telephone numbers assigned to paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier, or any service for which the called party is charged for the call. (9) If during a call a cross-promotion or reference to a pay-per-call information service is made, the call must include: (A) a statement that a charge will be incurred by a caller who makes a call to a pay-per-call information services telephone number; (B) the amount of the flat-rate or cost-per-minute charge that will be incurred or the amount of both if both charges will be incurred; and (C) the estimated amount of time required to receive the entire information offered by the service during a call. (c) Permit to operate an ADAD. (1) An application for a permit to use one or more ADADs must be made using a form prescribed by the commission and must be accompanied by a fee of $500. A permit is valid for one year after its date of issuance. Renewals must be applied for no later than 90 days prior to the expiration date of the current permit. Subject to paragraph (3) of this subsection, a permit may be renewed annually by making the filing required by this section and paying a renewal fee of $100. (2) Each application for the issuance or renewal of a permit under this section must contain the telephone number of each ADAD that will be used and the physical address from which the ADAD will operate. If the telephone number of an ADAD or the physical address from which the ADAD operates changes, the owner or operator of the ADAD shall notify the commission by certified mail of each new number or address not later than the 48th hour before the hour at which the ADAD will begin operating with the new telephone number or at the new address. If the owner or operator of an ADAD fails to notify the commission as required by this subsection within the period prescribed by this subsection, the permit is automatically invalid. (3) In determining if a permit should be issued or renewed, the commission will consider the compliance record of the owner or operator of the ADAD. The commission may deny an application for the issuance or renewal of a permit because of the applicant's compliance record. (4) A local exchange company (LEC) may obtain, on request to the commission, a copy of a permit issued under this section and of any changes relating to the permit. (5) The commission may revoke a permit to operate an ADAD for failure to comply with this section. (d) Exceptions. This section does not apply to the use of an ADAD to make a telephone call: (1) relating to an emergency or a public service under a program developed or approved by the emergency management coordinator of the county in which the call was received; or (2) made by a public or private primary or secondary school system to locate or account for a truant student. (e) Complaints, investigation, and enforcement. (1) If the commission determines that a person has violated the requirements of this section, the telecommunications utility providing service to the user of the ADAD shall comply with a commission order to disconnect service to the person. The telecommunications utility may reconnect service to the person only on a determination by the commission that the person will comply with this section. The utility shall give notice to the person using the device of the utility's intent to disconnect service not later than the third day before the date of the disconnection, except that if the device is causing network congestion or blockage, the notice may be given on the day before the date of disconnection. (2) A telecommunications utility may, without an order by the commission or a court, disconnect or refuse to connect service to a person using or intending to use an ADAD if the utility determines that the device would cause or is causing network harm. (3) A LEC that receives a complaint relating to the use of an ADAD shall send the complaint to the commission according to the following guidelines: (A) the complaint shall be recorded on a form prescribed by the commission; (B) the LEC shall inform the complainant that the complaint, including the identity of the complainant and other information relevant to the complaint, will be forwarded to the commission; (C) the complaint form and any written complaint shall be forwarded to the commission within three business days of its receipt by the LEC. (f) Permit Suspension/Child Support Enforcement. In consideration of the Texas Family Code Annotated, Chapter 232, as it may be subsequently amended, which provides for the suspension of state-issued licenses for failure to pay child support, the commission shall follow the procedures set out in this subsection. (1) Provision of information to a Title IV-D agency. Upon request, the commission shall provide a Title IV-D agency with the name, address, social security number, license renewal date, and other identifying information for each person who holds, applies for, or renews an ADAD permit issued by the commission. This information shall be provided in a format agreed to between the Title IV-D agency and the commission. (2) Suspension of permit. Upon receipt of a final order issued by a court or a Title IV- D agency suspending an ADAD permit under the provisions of the Texas Family Code, Chapter 232, the commission shall immediately: (A) record the suspension of the permit in the commission's files; and (B) notify the telecommunications utility providing service to the user of an ADAD that the permit has been suspended. (3) Service disconnection. Upon receipt of notification by the commission that a permit has been suspended under the provisions of this subsection, the telecommunications utility providing service to that user of an ADAD shall immediately disconnect service to that person. (4) Refund of fees. A person who holds, applies for, or renews an ADAD permit issued by the commission that is suspended under the provisions of this subsection is not entitled to a refund of any fees paid under subsection (c) of this section. (5) Reinstatement. The commission may not modify, remand, reverse, vacate, or reconsider the terms of a final order issued by the court or a Title IV-D agency suspending a permit under the provisions of the Texas Family Code, Chapter 232. However, upon receipt of an order by the court or Title IV-D agency vacating or staying an order suspending a person's permit to operate an ADAD, the commission shall promptly issue or re-issue the affected permit to that person if that person is otherwise qualified for the permit and has paid the applicable fees as set out in subsection (c) of this section. (g) Obligations of the ADAD Solicitor. (1) An ADAD solicitor may not use any method, including per call blocking or per-line blocking, that prevents caller identification information from the ADAD solicitor's lines from being shown by an end user's caller identification device. (2) The ADAD solicitor's displayed caller identification number must be one at which telephone calls may be received from end users if the ADAD solicitor uses a device which plays a recorded message when a connection is completed to a telephone number. All ADAD solicitors must comply with this provision by September 1, 1998. (h) Penalties. A person who operates an ADAD without a valid permit, with an expired permit, or with a permit that has been suspended under the provisions of subsection (f) of this section or who otherwise operates the ADAD in violation of this section or a commission order is subject to an administrative penalty of not more than $1,000 for each day or portion of a day during which the ADAD was operating in violation of this section. However, nothing in this subsection is intended to limit the commission's authority under the Public Utility Regulatory Act sec.15.021, et seq. (Vernon 1998). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813649 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 936-7308 16 TAC sec.26.126 The Public Utility Commission of Texas (PUC or commission) adopts new sec.26.126, relating to Telephone Solicitation with no changes to the proposed text as published in the July 24, 1998 Texas Register (23 TexReg 7484). The rule is necessary to conform sec.26.126 to House Bill 2128 (75th Legislature) requirements which impose additional obligations upon telephone solicitors. Further, the rule is needed by the commission in the execution of its jurisdiction under the Public Utility Regulatory Act (PURA) sec.55.151, which grants to the commission certain enforcement powers over telephone solicitors; PURA sec.55.152, which requires the commission to require by rule that a local exchange company (LEC) inform its customers of certain provisions of the law relating to telephone solicitation; and PURA sec.52.001(b), which requires the commission to adopt rules that protect the public interest. This new section was adopted under Project Number 14967. The Appropriations Act of 1997, House Bill 1, Article IX, Section 167 (Section 167) requires that each state agency review and consider for readoption each rule adopted by that agency pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). Such reviews shall include, at a minimum, an assessment by the agency as to whether the reason for adopting or readopting the rule continues to exist. The PUC held three workshops to conduct a preliminary review of its rules. As a result of these workshops, the PUC is reorganizing its current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer needed; (3) update existing rules to reflect changes in the industries regulated by the commission; (4) do clean-up amendments made necessary by changes in law and commission organizational structure and practices; (5) reorganize rules into new chapters to facilitate future amendments and provide room for expansion; and (6) reorganize the rules according to the industry to which they apply. Chapter 26 has been established for all commission substantive rules applicable to telecommunications service providers. The commission requested specific comments on the sec.167 requirement as to whether the reason for adopting or readopting the rule continues to exist (Section 167 comments). Texas State Telephone Cooperative, Inc. (TSTCI) filed sec.167 comments. TSTCI believed that the rule is necessary and is consistent with both the language and spirit of House Bill 2128. AT&T Communications of the Southwest, Inc. (AT&T) filed extensive comments, some of which suggested portions of the rule are beyond the commission's jurisdiction and authority. AT&T did recommend that a rule with revisions suggested by AT&T be adopted. No other sec.167 comments were filed. The commission finds that the reason for adopting the rule continues to exist. A public hearing on the rule was not held as no request for a hearing was received by the commission. The commission received written comments on the proposed new section from TSTCI and AT&T. TSTCI supports the rule as consistent with the language and spirit of House Bill 2128 and recommends that it be adopted without changes. AT&T generally supported the rule but recommended several changes. AT&T first addressed sec.26.125(b) and argued that it conflicts with PURA sec.55.152 in that it requires a LEC to provide notice to its customers both through an annual billing statement mailed to the customer and by publication of the notice in the local telephone directories. AT&T contended that PURA sec.55.152 directs the commission to adopt rules requiring the notice to be provided by an annual billing statement or by publication of the notice in local telephone directories. AT&T also argued that the existing sec.23.33, which is to be replaced by sec.26.125 and contains similar notice language has been in conflict with PURA since its adoption in 1995. AT&T recommended that sec.26.125(b) be changed to provide the LEC with an option as to how to provide notice to its customers. The commission declines to adopt AT&T's proposed change. The commission's authority to regulate telephone solicitation arises from PURA sec.sec.55.151, 55.152, the aforementioned legislation (codified at Acts 1997, 75th Legislation, Chapter 1402, sec.4, adding sec.3.661, Educational Programs), as well as under PURA sec.sec.14.001, 14.002 and the commission's authority to protect the public interest as granted in PURA sec.52.001(b)(1). AT&T also argued that sec.26.126(c)(2) and the particular form of notice contain an inaccurate statement concerning the requirements applicable to telephone solicitors. AT&T maintained that there is no statutory requirement for the solicitor to "identify the telephone number at which the person, company, or organization making the call may be reached." AT&T wanted that provision removed from the rule. The commission has the authority and responsibility under PURA sec.55.151 to adopt rules that clarify and facilitate a telephone solicitor's compliance with PURA sec.55.151(a) requirements to adopt systems and procedures which assure that a solicitor makes every effort not to call consumers who ask not to be called. This authority is strengthened by PURA sec.55.151(b), which grants the commission enforcement powers on this matter. The rule requires that the solicitor provide a telephone number at which he or she can be reached, and requires that LECs inform their customers of this requirement (relying upon the authority of House Bill 2128, adding sec.3.661 to create an educational program to inform the public of its rights with respect to telephone solicitation). This provision makes it less likely that a solicitor will call a consumer who has asked not to be called and is a reasonable implementation of PURA sec.55.152, Notice to Customers. Finally, AT&T contended that the requirements in sec.26.126(c)(3) and (4) are beyond the commission's jurisdiction and, in some respects, not technologically feasible. New sec.3.302 is the source of the requirements implemented in Substantive Rule sec.26.126(c)(3) and (4). Because these requirements have been mandated by statute, the commission rejects AT&T's argument that they should be removed from the rule. AT&T also raised an issue of technological feasibility, noting that the provisions of sec.26.126(c)(3) and (4) establish conditions "which some solicitors may be unable to satisfy" because of the nature of their trunking and PBX service. The statute allows no waiver to its requirement that a telephone solicitor's caller identification information must be displayed not later than September 1, 1998; in fact, the statute states that a solicitor who "violates this subsection is subject to an administrative penalty not to exceed $1,000 per day ... in which the person uses a method prohibited by this subsection." However, if the failure to provide caller identification information is due to physical limitations of the solicitor's operation and not to devices designed to specifically block caller identification, and if the solicitor makes this showing and demonstrates that corrective action is being taken, then the imposition of penalties under sec.26.126(d) should be deferred until January 1, 1999. This new section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated sec.14.002 (Vernon 1998) (PURA) which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, PURA sec.55.151 which grants the commission authority to enforce PURA sec.55.151 and PURA sec.55.152 which requires the commission to require local exchange companies and telephone cooperatives to provide to consumers the notice specified in sec.55.152. Cross Index to Statutes: Public Utility Regulatory Act sec.sec.14.002, 55.151 and 55.152. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 27, 1998. TRD-9813647 Rhonda Dempsey Rules Coordinator Public Utility Commission of Texas Effective date: September 16, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 936-7308 PART III. Texas Alcoholic Beverage Commission CHAPTER 45.Marketing Practices SUBCHAPTER D.Advertising and Promotion-All Beverages 16 TAC sec.45.109 The Texas Alcoholic Beverage Commission adopts an amendment to sec.45.109 without changes to the text as originally published in the July 10, 1998, edition of the Texas Register, (23 TexReg 7163). The amendment operates to allow industry members of the wholesale tier, and certain members of the manufacturing tier, to manipulate competitor's products, under circumstances stated in the rule, while in the course of stocking or restocking product on retail premises. Industry members subject to sec.45.109 are permitted to stock, rotate and rearrange product in retail premises so long as competitor's products are not altered or disturbed, sec.45.109(b). These industry members are also allowed to organize and construct displays of their product on retail premises, sec.45.109(c). Space allotted to end caps and floor displays in retail premises is commonly used by retail members to display competing products on a regularly rotating basis. Under the prior rule, an upper tier member was unable to remove a competitor's floor or end cap display in order to replace it with his/her own product. This rule proved to be unnecessarily disruptive of the delivery schedules and space management decisions of industry members. The commission concluded that the more efficient approach is reflected in the adopted amendment wherein the replacing industry member may remove his/her competitor's product from an end cap or floor display in order to make room for the replacing product. There were no comments received with regard to this proposed amendment. This amendment is adopted under the authority of sec.5.31 and sec.102.20 of the Alcoholic Beverage Code. Cross Reference: Alcoholic Beverage Code, sec.102.20, is affected by this amendment. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 28,1998. TRD-9813681 Doyne Bailey Administrator Texas Alcoholic Beverage Commission Effective date: September 17, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 206-3204 16 TAC sec.45.111 The Texas Alcoholic Beverage Commission adopts new sec.45.111, governing display of signs or advertising materials at charitable or civic events with changes to the text as published in the July 10, 1998, edition of the Texas Register, (23 TexReg 7163). Subsection (d) was amended to delete the words "provided that there is" from the first sentence of the paragraph and to add the words "for the placement of any sign" to the end of the second sentence of the paragraph. This amendment was adopted to clarify the meaning of this subsection. The language as originally published could be interpreted to mean that while upper tier members could not give consideration to retailers for placement of temporary advertising, they could give consideration to retailers for placement of other types of signs. The proposed language was amended to make clear that upper tier members may not give consideration to retailers for placement of any sign. Section 108.53 of the Alcoholic Beverage Code mandates that billboards and electric signs may not be erected within two hundred feet of retail establishments without specific permission of the commission. Effective September 1, 1997, this provision was amended to allow advertising to be placed within two hundred feet of retail premises during temporary civic or charitable events. This rule is adopted pursuant to the direction of that amending statute to allow placement of such advertising. No comments were received regarding adoption of the new rule. This rule is adopted pursuant to Alcoholic Beverage Code, sec.5.31 and sec.108.53(d) which provides the Alcoholic Beverage Commission with the authority to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code. Cross Reference: Alcoholic Beverage Code, sec.108.53, is affected by this rule. sec.45.111.Advertising Signs at Charitable or Civic Events. (a) This rule is enacted pursuant to sec.108.53(d) of the Alcoholic Beverage Code. (b) At a charitable or civic event of a temporary nature, members of the alcoholic beverage industry may place signs or other advertising materials indicating their participation in, or sponsorship of, the charitable or civic event. (c) It is the intent of this rule that any proceeds from signs advertising alcoholic beverages be received directly by the charity or civic endeavor. (d) Notwithstanding any other provision of the Alcoholic Beverage Code, signs at a charitable or civic event of a temporary nature may be within 200 feet of the licensed premises of a retailer of alcoholic beverages. No consideration of any kind may be given directly or indirectly, in any form or degree, to any retailer for the placement of any sign. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 28,1998. TRD-9813682 Doyne Bailey Administrator Texas Alcoholic Beverage Commission Effective date: September 17, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 206-3204 SUBCHAPTER F.Advertising and Promotion-Liquor (Distilled Spirits and Wine) 16 TAC sec.45.117 The Texas Alcoholic Beverage Commission adopts an amendment to sec.45.117, without changes to the text as published in the July 10, 1998, edition of the Texas Register, (23 TexReg 7164). The amendment allows members of the manufacturing and wholesale tiers of the liquor and wine industry to furnish meeting rooms to retailers for the purpose of providing product samples and food. A common marketing technique used for the introduction of new products is for a supplier to assemble potential customers for the purpose of offering samples of the offered product. Within the beer industry this technique is allowed between members of the manufacturing and wholesale tiers and members of the retail tier by virtue of sec.45.113(e)(2). Similar allowance has not previously been granted by the commission to members of the liquor and wine industry. The adopted amendment conforms the practice of the beer and liquor and wine industries. Further, the amendment allows upper tier members of the liquor and wine industry to efficiently and economically introduce potential customers to new products. No comments were received regarding adoption of the amendment. This amendment is imposed under the authority of the Alcoholic Beverage Code, sec.5.31 which provides the Alcoholic Beverage Commission with the authority to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code. Cross Reference: Alcoholic Beverage Code, sec.102.07, is affected by this rule. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 28,1998. TRD-9813683 Doyne Bailey Administrator Texas Alcoholic Beverage Commission Effective date: September 17, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 206-3204 TITLE 19. EDUCATION PART II. Texas Education Agency CHAPTER 89.Adaptations for Special Populations SUBCHAPTER CC.Commissioner's Rules Concerning Adult and Community Education 19 TAC sec.89.1311 The Texas Education Agency (TEA) adopts new sec.89.1311, concerning a memorandum of understanding (MOU) to provide educational services to released offenders, with changes to the proposed text published in the July 10, 1998, issue of the Texas Register (23 TexReg 7164). The MOU is between the Texas Department of Criminal Justice (TDCJ) and the Texas Education Agency (TEA) to provide educational services to released offenders. The MOU is to realize a human service system that offers releasees choices and opportunities, within the realm of educational services, to remain outside prison and achieve maximum integration in the community. The following guiding principles should be considered to accomplish the objectives of this memorandum: (1) the releasee will achieve more success outside of prison if a support system is in place to promote educational growth; (2) the releasee may be less likely to become a repeat offender if he/she pursues education further; and (3) the releasee must be encouraged to recognize the need for increasing his/her educational level to remain in the free world and learn to function as a productive citizen. Pursuant to the Texas Government Code, sec.508.318, the TDCJ and the TEA shall set forth the respective responsibilities of the department and the agency in implementing a continuing education program to increase the literacy of releasees. One change was made since the section was proposed. In subsection (a), the term "board" was changed to read "department". No comments were received on the proposed new section. The new section is adopted under the Texas Government Code, sec.508.318, as added by the 75th Texas Legislature, 1997, Chapter 165, sec.12.01, which authorizes the Texas Department of Criminal Justice and the Texas Education Agency to adopt a memorandum of understanding that establishes the respective responsibilities of the department and the agency in implementing a continuing education program to increase the literacy of releases. sec.89.1311.Memorandum of Understanding to Provide Educational Services to Released Offenders. (a) Purpose. This memorandum of understanding is a non-financial, mutual agreement between the Texas Department of Criminal Justice (TDCJ) and the Texas Education Agency (TEA). Pursuant to the Texas Government Code, sec.508.318, the TDCJ and the TEA shall set forth the respective responsibilities of the department and the agency in implementing a continuing education program to increase the literacy of releasees. (b) Objective. This memorandum of understanding is to realize a human service system that offers releasees choices and opportunities, within the realm of educational services, to remain outside prison and achieve maximum integration in the community. The following guiding principles should be considered to accomplish the objectives of this memorandum: (1) the releasee will achieve more success outside of prison if a support system is in place to promote educational growth; (2) the releasee may be less likely to become a repeat offender if he/she pursues education further; and (3) the releasee must be encouraged to recognize the need for increasing his/her educational level to remain in the free world and learn to function as a productive citizen. (c) Participation. (1) The Texas Department of Criminal Justice (TDCJ) will: (A) establish a continuing education system to increase literacy for releasee(s) in the Day Resource Centers; (B) establish a system whereby the TDCJ will inform adult education cooperatives of the process and requirements for continued education of the releasee(s); (C) provide adult education cooperatives with assessment and educational profile information that will facilitate student placement in appropriate programs; (D) coordinate with adult education cooperatives in implementing a system for identification of student needs and barriers, student referral, outreach activities, and releasee's compliance with educational requirements; (E) identify resources that assist local adult education cooperatives in expanding services for releasees; and (F) participate in training necessary to develop the capacity at the local level to access and interact effectively with adult education service providers. (2) The Texas Education Agency will: (A) coordinate with the TDCJ to inform local parole offices of services available through the adult education cooperative system in which local school districts, junior colleges, and educational service centers provide instructional programs throughout the state; (B) assist the TDCJ in identifying barriers to provide adult education services to released offenders; (C) assist local adult education programs in developing the capacity to serve the released offender population; (D) coordinate with the TDCJ in establishing a referral process between local parole offices and local adult education cooperatives whereby releasees will be referred to adult education programs; (E) assist local adult education cooperatives in providing services to releasees in adult education programs on a first-come, first-served basis and to the extent the funds and classroom space are available; (F) assist local adult education cooperatives in communicating and coordinating with local parole offices on prospective students awaiting referral to education programs, availability of services, identification of financial resources, and other educational programs available for released offenders; (G) coordinate with the TDCJ in developing program objectives and collecting data to establish educational performance standards for released offenders; (H) coordinate with the TDCJ in providing training to assist local parole officers with the coordination of adult education services to released offenders; and (I) monitor program quality and compliance of local adult education programs serving released offenders. (d) Terms of the memorandum of understanding. This memorandum of understanding shall be adopted by rule by each participating agency and shall be effective October 1, 1998. The memorandum may be considered for expansion, modification, or amendment at any time upon the mutual agreement of the executive officers of the named agencies. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813792 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS PART XXIX. Texas Board of Professional Land Surveying CHAPTER 661. General Rules of Procedures and Practices SUBCHAPTER A. The Board 22 TAC sec.sec.661.3, 661.4, 661.9, 661.11 The Texas Board of Professional Land Surveying adopts amendments to sec.sec.661.3, 661.4, 661.9, and 661.11, concerning the board without changes to the proposed text as published in the July 17, 1998, issue of the Texas Register (23 TexReg 7324) and will not be republished. The amendments are adopted for clarification on existing rules and language in the Texas Board of Professional Land Surveying Practices Act (Act). No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 5282c, sec.9, which provides the Texas Board of Professional Land Surveying with the authority to make and enforce all reasonable and necessary rules, regulations and bylaws not inconsistent with the Texas Constitution, the laws of this state, and this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813769 Sandy Smith Executive Director Texas Board of Professional Land Surveying Effective date: September 20, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 452-9427 SUBCHAPTER E. Contested Case 22 TAC sec.661.63, sec.661.75 The Texas Board of Professional Land Surveying adopts amendments to sec.661.63 and sec.661.75, concerning contested case without changes to the proposed text as published in the July 17, 1998, issue of the Texas Register (23 TexReg 7325) and will not be republished. The amendments are adopted for clarification on existing rules and language in the Texas Board of Professional Land Surveying Practices Act (Act). No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 5282c, sec.9, which provides the Texas Board of Professional Land Surveying with the authority to make and enforce all reasonable and necessary rules, regulations and bylaws not inconsistent with the Texas Constitution, the laws of this state, and this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813770 Sandy Smith Executive Director Texas Board of Professional Land Surveying Effective date: September 20, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 452-9427 CHAPTER 663. Standards of Responsibility and Rules of Conduct SUBCHAPTER A. Ethic Standards 22 TAC sec.sec.663.5, 663.7, 663.10 The Texas Board of Professional Land Surveying adopts amendments to sec.sec.663.5, 663.7, and 663.10, concerning ethical standards without changes to the proposed text as published in the July 17, 1998, issue of the Texas Register (23 TexReg 7326) and will not be republished. The amendments are adopted for clarification on existing rules and language in the Texas Board of Professional Land Surveying Practices Act (Act). Comments were received in favor of the amendments. The amendments are adopted under Texas Civil Statutes, Article 5282c, sec.9, which provides the Texas Board of Professional Land Surveying with the authority to make and enforce all reasonable and necessary rules, regulations and bylaws not inconsistent with the Texas Constitution, the laws of this state, and this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813771 Sandy Smith Executive Director Texas Board of Professional Land Surveying Effective date: September 20, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 452-9427 SUBCHAPTER B. Professional and Technical Standards 22 TAC sec.sec.663.16, 663.17, 663.19 The Texas Board of Professional Land Surveying adopts amendments to sec.sec.663.16, 663.17, and 663.19, concerning professional and technical standards without changes to the proposed text as published in the July 17, 1998, issue of the Texas Register (23 TexReg 7327) and will not be republished. The amendments are adopted for clarification on existing rules and language in the Texas Board of Professional Land Surveying Practices Act (Act). Comments were received in favor of the amendments. The amendments are adopted under Texas Civil Statutes, Article 5282c, sec.9, which provides the Texas Board of Professional Land Surveying with the authority to make and enforce all reasonable and necessary rules, regulations and bylaws not inconsistent with the Texas Constitution, the laws of this state, and this Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813772 Sandy Smith Executive Director Texas Board of Professional Land Surveying Effective date: September 20, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 452-9427 PART XXXV. Texas State Board of Examiners of Marriage and Family Therapists CHAPTER 801.Licensure and Regulation of Marriage and Family Therapists SUBCHAPTER A.Introduction 22 TAC sec.801.2 The Texas State Board of Examiners of Marriage and Family Therapists (board) adopts amendments to sec.sec.801.2, 801.19, 801.20, 801.143, 801.144, 801.203, 801.204, 801.263, 801.264, 801.265, 801.266, and 801.268 concerning the regulation of persons performing marriage and family therapy. Sections 801.2, 801.19, 801.144, 801.263, 801.264, and 801.265 are adopted with changes to the proposed text as published in the June 5, 1998, issue of the Texas Register (23 TexReg 5925). Sections 801.20, 801.143, 801.203, 801.204, 801.266, and 801.268 are adopted without changes, and therefore the sections will not be republished. The amendments implement Texas Civil Statutes, Article 4512c-1 and provide for the effective regulation and licensure of marriage and family therapists. Section 801.2 is amended to identify definitions by number for ease in reference. Section 801.19 is amended to increase fees for examination, renewal and late renewal and by adding new fees for continuing education sponsors and for licensure verification to produce sufficient revenue to cover the cost of administering the Act. Section 801.20 is amended to clarify language concerning lost, misdirected or undelivered mail to assure proper responsibilities. Section 801.143 is amended by deleting the requirement of supervisor specific continuing education to provide equity in the renewal process. Section 801.144 is amended to clarify language concerning the relationships of supervisors and associates to provide a clearer understanding of responsibilities. The section is also amended to allow for a shared liability during this arrangement. Section 801.203 is amended to require proper documentation from individuals licensed by endorsement to assure equivalent education and training. Section 801.204 is amended to extend the period of temporary licensure to allow for more time to gain experience and supervision. Section 801.263 is amended to adjust the number of continuing education hours to allow for equity among the mental health providers. Section 801.264 is amended to expand the types of continuing education activities to allow for a more comprehensive education experience. Section 801.265 is amended to allow for a fee for continuing education sponsors. The section is also amended to require a more frequent renewal of continuing education sponsorship to allow for an adequate monitoring system. Section 801.266 is amended to allow continuing education credit for clinical supervision of an intern or associate. Section 801.268 is amended to decrease the number of continuing education hours required for renewal to be more consistent with other mental health board requirements. No comments were received on the proposed rules during the comment period. However, the staff has made minor editorial changes to clarify the intent and improve the accuracy of the sections. Change: Concerning sec.801.2(23) and (24), the definitions of "Regionally accredited institutions" and "Recognized religious practitioner" were placed in alphabetical order. Also, sec.801.2(32), the definition of "Year" was deleted. Change: Concerning sec.801.19(b)(5)(A) and (B), parentheses were deleted from the fee amounts. Change: Concerning sec.801.144(l), the phrase "have no more than two" was added and "only have one" was deleted. Change: Concerning sec.801.263, the phrase "three clock-hour" was changed to "3 clock-hour". Change: Concerning sec.801.264(8), the phrase "Ethics may not" was changed to "Ethic hours may not". Change: Concerning sec.801.265, fourth sentence, the word "presenters" was changed to "presenter's". Also, sec.801.265(4), the word "effective" was added, and "good" was deleted; and the phrase "date of receipt" was added and "receipt of said fee" was deleted. The amendments are adopted under Texas Civil Statutes, Article 4512c-1, sec.sec.12, 13, and 21 which provides the board with authority to: establish fees to produce sufficient revenues to cover the cost of administering the Act; to draft rules for its own procedures and to determine the qualifications of fitness of applicants; and to establish a mandatory continuing education program including the minimum requirements for the renewal of a license. sec.801.2.Definitions. The following words and terms when used in this chapter shall have the following meanings unless the context indicates otherwise. (1) Act - The Licensed Marriage and Family Therapist Act relating to the licensing and regulation of marriage and family therapists, Texas Civil Statutes, Article 4512c-1. (2) Administrative Law Judge (ALJ) - A person within the State Office of Administrative Hearings who conducts hearings under this subchapter on behalf of the Board. (3) APA - The Administrative Procedure Act, Texas Government Code, Chapter 2001. (4) Associate - A marriage and family therapist associate. (5) Board - The Texas State Board of Examiners of Marriage and Family Therapists. (6) Completed application - The official marriage and family therapy application form, fees and all supporting documentation which meets the criteria set out in sec.801.73 of this title (relating to Required Application Materials). (7) Contested case - A proceeding in accordance with the APA and this chapter, including, but not limited to, rule enforcement and licensing, in which the legal rights, duties, or privileges of a party are to be determined by the board after an opportunity for an adjudicative hearing. (8) Department - The Texas Department of Health (9) Family systems - An open, on-going, goal-seeking, self-regulating, social system which shares features of all such systems. Certain features such as its unique structuring of gender, race, nationality and generation set it apart from other social systems. Each individual family system is shaped by its own particular structural features (size, complexity, composition, life stage), the psychobiological characteristics of its individual members (age, race, nationality, gender, fertility, health and temperament) and its socio-cultural and historic position in its larger environment. (10) Formal hearing - A hearing or proceeding in accordance with this chapter, including a contested case as defined in this section to address the issues of a contested case. (11) Group supervision - Supervision that involves a minimum of three and no more than six marriage and family supervisees or associates in a clinical setting during the supervision hour. A supervision hour is sixty minutes. (12) Individual supervision - Supervision of no more than two marriage and family therapy supervisees or associates in a clinical setting during the supervision hour. A supervision hour is sixty minutes. (13) Investigator - A professional complaint investigator employed by the Texas Department of Health. (14) License - A marriage and family therapist license, a temporary marriage and family therapist associate license, or a provisional marriage and family therapist license. (15) Licensed marriage and family therapist - An individual who offers to provide marriage and family therapy for compensation. (16) Licensee - Any person licensed by the Texas State Board of Examiners of Marriage and Family Therapists. (17) Marriage and family therapist associate - A person who holds a temporary license issued by the Texas State Board of Examiners of Marriage and Family Therapists to practice marriage and family therapy under the supervision of a board-approved supervisor. (18) Marriage and family therapy - The rendering of professional therapeutic services to individuals, families, or married couples, singly or in groups, and involves the professional application of family systems, theories, and techniques in the delivery of therapeutic services to those persons. The term includes the evaluation and remediation of cognitive, affective, behavioral, or relational dysfunction within the context of therapy. (19) Month - A calendar month. (20) Party - Each person, governmental agency, or officer or employee of a governmental agency named by the Administrative Law Judge (ALJ) as having a justiciable interest in the matter being considered, or any person, governmental agency, or officer or employee of a governmental agency meeting the requirements of a party as prescribed by applicable law. (21) Person - An individual, corporation, partnership, or other legal entity. (22) Pleading - Any written allegation filed by a party concerning its claim or position. (23) Regionally accredited institutions - An institution accredited by one of the following accreditation associations will be accepted for licensing purposes: Middle States Association of Colleges and Schools, New England Association of Schools and Colleges, North Central Association of Colleges and Schools, Northwest Association of Schools and Colleges, Southern Association of Colleges and Schools, and Western Association of Schools and Colleges. (24) Recognized religious practitioner - A rabbi, clergyman, or person of similar status who is a member in good standing of and accountable to a legally recognized denomination or legally recognizable religious denomination or legally recognizable religious organization and other individuals participating with them in pastoral counseling if: (A) the therapy activities are within the scope of the performance of their regular or specialized ministerial duties and are performed under the auspices of sponsorship of an established and legally cognizable church, denomination or sect, or an integrated auxiliary of a church as defined in Federal Tax Regulations, 26, Code of Federal Regulation 1.6033-2,(g)(5)(i), (1982); (B) the individual providing the service remains accountable to the established authority of that church, denomination, sect, or integrated auxiliary; and (C) the person does not use the title of or hold himself or herself out as a licensed marriage and family therapist. (25) Rules - The rules in this chapter are covering the designated policies and procedures of operation for the board and for individuals affected by the Act. (26) Supervision - The guidance or management of an associate in the provision of direct clinical services. (27) Supervisor - A person meeting the requirements set out in sec.801.143 of this title (relating to Supervisor Requirements), to supervise an associate and/or marriage and family therapist. (28) Texas Open Meetings Act - Government Code, Chapter 551. (29) Texas Open Records Act - Government Code, Chapter 552. (30) Therapist - For purposes of this chapter, a Texas licensed marriage and family therapist. (31) Waiver - The suspension of educational, professional, and/or examination requirements for applicants who meet the criteria for licensure under special conditions. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813801 George Pulliam Chairman Texas State Board of Examiners of Marriage and Family Therapists Effective date: September 20, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 458-7236 SUBCHAPTER B.The Board 22 TAC sec.801.19 and sec.801.20 The amendments are adopted under Texas Civil Statutes, Article 4512c-1, sec.sec.12, 13, and 21 which provides the board with authority to: establish fees to produce sufficient revenues to cover the cost of administering the Act; to draft rules for its own procedures and to determine the qualifications of fitness of applicants; and to establish a mandatory continuing education program including the minimum requirements for the renewal of a license. sec.801.19.Fees. (a) The Texas State Board of Examiners of Marriage and Family Therapists (Board) has established the following fees for licenses, license renewals, examinations, and all other administrative expenses under the Licensed Marriage and Family Therapists Act (Act). (b) The schedule of fees shall be as follows: (1) (No change.) (2) licensure examination - $195; (3) (No change.) (4) renewal fee - $65; (5) late renewal fee - late renewal fees shall be set as follows: (A) on or before 90 days - renewal fee plus one-half of the examination fee - $162.50; and (B) longer than 90 days but less than one year - renewal fee plus fee equal to the examination fee - $260.00; (6)-(9) (No change.) (10) continuing education sponsor fee - $50; (11) child support reinstatement fee - $40; and (12) verification fee - $10. (c)-(e) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813802 George Pulliam Chairman Texas State Board of Examiners of Marriage and Family Therapists Effective date: September 20, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 458-7236 SUBCHAPTER G.Experience Requirements for Examination and Licensure 22 TAC sec.801.143 and sec.801.44 The amendments are adopted under Texas Civil Statutes, Article 4512c-1, sec.sec.12, 13, and 21 which provides the board with authority to: establish fees to produce sufficient revenues to cover the cost of administering the Act; to draft rules for its own procedures and to determine the qualifications of fitness of applicants; and to establish a mandatory continuing education program including the minimum requirements for the renewal of a license. sec.801.144.Other Conditions for Supervised Experience. (a)-(e) (No change.) (f) During the post graduate supervision, both the supervisor and the associate may have disciplinary actions taken against their licenses for violations of the rules. (g) (No change.) (h) If an associate enters into contracts with both a supervisor and an organization with which the supervisor is employed or affiliated: (1) the therapeutic services shall be performed on the site(s) of the organization; and (2) clients records shall remain the property of the organization. (i)-(k) (No change.) (l) An associate may have no more than two board-approved supervisors at a time, unless given prior approval by the board or its designee. (m) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813803 George Pulliam Chairman Texas State Board of Examiners of Marriage and Family Therapists Effective date: September 20, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 458-7236 SUBCHAPTER I.Issuance of a License 22 TAC sec.801.203 and sec.801.204 The amendments are adopted under Texas Civil Statutes, Article 4512c-1, sec.sec.12, 13, and 21 which provides the board with authority to: establish fees to produce sufficient revenues to cover the cost of administering the Act; to draft rules for its own procedures and to determine the qualifications of fitness of applicants; and to establish a mandatory continuing education program including the minimum requirements for the renewal of a license. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813804 George Pulliam Chairman Texas State Board of Examiners of Marriage and Family Therapists Effective date: September 20, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 458-7236 SUBCHAPTER K.Continuing Education Requirements 22 TAC sec.sec.801.263-801.266, 801.268 The amendments are adopted under Texas Civil Statutes, Article 4512c-1, sec.sec.12, 13, and 21 which provides the board with authority to: establish fees to produce sufficient revenues to cover the cost of administering the Act; to draft rules for its own procedures and to determine the qualifications of fitness of applicants; and to establish a mandatory continuing education program including the minimum requirements for the renewal of a license. sec.801.263.Clock Hour Requirements for Continuing Education. A licensee must complete 15 clock hours of continuing education acceptable to the Texas State Board of Examiners of Marriage and Family Therapists (board) each year as described in sec.801.262(b) of this title (relating to Deadlines). On or after September 1, 1995, a 3 clock-hour marriage and family ethics course must be submitted every third year. A clock-hour shall be 60 minutes of attendance and participation in an acceptable continuing education experience. sec.801.264.Types of Acceptable Continuing Education. Continuing education undertaken by a therapist shall be acceptable to the board as credit hours if it is offered by an approved sponsor(s) in the following categories: (1)-(6) (No change.) (7) by teaching a graduate or undergraduate course in marriage and family therapy at a college or university (graduate work instruction may count for no more than one-half of annual continuing education); and (8) by completing correspondence courses, satellite or distance learning courses, and/or audio-video courses relative to marriage and family therapy (no more than 4 hours per year). Ethic hours may not be obtained in this manner. sec.801.265.Continuing Education Sponsor. The Texas State Board of Examiners of Marriage and Family Therapists (board) is not responsible for approving individual continuing education programs. The Texas State Board of Examiners of Marriage and Family Therapists (board) will approve an institute, agency, office, organization, association, or individual as a continuing education sponsor of continuing education units. The board will grant a three-year certificate to organizations which shall permit the organizations to approve continuing education units for their marriage and family therapy courses, seminars, and conferences. These organizations must submit an annual list of their seminars, workshops and courses with the presenter's name(s) to the board. Any university, professional organization, or individual who meets the required criteria may advertise as approved sponsors of continuing education for licensed marriage and family therapists. (1)-(3) (No change.) (4) Sponsors shall pay a continuing education sponsor fee which will be effective for three years from date of receipt. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813805 George Pulliam Chairman Texas State Board of Examiners of Marriage and Family Therapists Effective date: September 20, 1998 Proposal publication date: June 5, 1998 For further information, please call: (512) 458-7236 TITLE 30. ENVIRONMENTAL QUALITY PART I. Texas Natural Resource Conservation Commission CHAPTER 90.Regulatory Flexibility SUBCHAPTER A.Purpose, Applicability, and Eligiblity 30 TAC sec.90.1, sec.90.2 The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts new sec.sec.90.1, 90.2, 90.10, 90.12, 90.14, 90.16, 90.18, and 90.20, concerning Regulatory Flexibility. Sections 90.2, 90.10, 90.12, 90.14, 90.16, and 90.20 are adopted with changes to the proposed text as published in the May 8, 1998, issue of the Texas Register (23 TexReg 4519). Sections 90.1 and 90.18 are adopted without changes and will not be republished. EXPLANATION OF ADOPTED RULES Senate Bill (SB) 1591, 75th Legislature, 1997, provides the commission with the authority to exempt an applicant from a requirement of a statute or commission rule related to the control or abatement of pollution if the applicant applies an alternative method or standard that is at least as protective of the environment and is not inconsistent with federal law. This authority provides for the use of innovative methods of compliance that could potentially result in greater environmental performance. SB 1591 further directs the commission to specify by rule the procedure for obtaining an exemption, which must include public notice and public participation provisions. The purpose of this rulemaking is to comply with the requirements of SB 1591 by establishing Regulatory Flexibility Order (RFO) application requirements and provisions for public notice/public participation. Section 90.1, concerning Purpose, states the purpose of the new chapter, which is to provide regulatory flexibility to an applicant who proposes an alternative method or alternative standard to control or abate pollution. This section clearly identifies the objective of the adopted chapter and the authority under which the commission is adopting the new chapter. Section 90.2, concerning Applicability and Eligibility, establishes that the adopted chapter applies to anyone subject to an environmental statute or commission rule. This section also establishes that persons referred to the attorney general and who incur a judgment, and persons convicted of willfully or knowingly committing an environmental crime are ineligible for three years. The program is a voluntary program meant for those persons who have demonstrated a willingness to comply with environmental requirements. The eligibility requirements were therefore written to allow persons with a less than perfect compliance history to remain eligible, while specifically excluding persons who are guilty of major or willful infractions. Section 90.10, concerning Application for a Regulatory Flexibility Order, specifies the procedures for applying for an RFO, establishes minimum requirements for the application, and establishes a $250 application fee. Minimum requirements were developed to ensure consistency in applications received by the commission, to ensure consistency in the review of those applications, and to minimize the amount of time spent requesting additional information from the applicant. Section 90.12, concerning Additional Fees; Cost Recovery, establishes a provision for additional fees if the executive director determines that the application is significant and complex. Under this provision, the executive director may require the applicant to enter into a cost recovery agreement in order for the commission to recover all costs associated with the review and approval of the application. This allows the commission to recover costs associated with the review and approval of applications, particularly those that require changes to existing permits or authorizations, or otherwise require extensive staff time and commission resources. Section 90.14, concerning Commission Action on Application, establishes that the commission will act on the application consistent with provisions found in 30 Texas Administrative Code (TAC) Chapter 50, Subchapter B, concerning Action by the Commission, as applicable. Section 90.14 provides that the commission will consider, during review of the application, the applicant's compliance history and efforts made to achieve local community participation and support. This section was included to clearly indicate how the application will be processed and to ensure that potential applicants understand that their compliance history and efforts to involve the local community will be a factor in consideration of the proposal. Compliance history is important because it gives an indication of the applicant's ability or willingness to comply with an RFO. Local community participation is important because it identifies the preferences of the community relative to the proposal, exposes issues of importance to those in the locality, and provides the applicant with the information needed to address any potential community concerns prior to entering the application process. Section 90.16, concerning Public Notice, Comment, and Hearing, establishes public notice and participation requirements. Public notice is divided into three segments: the first provides that applicants must comply with public notice requirements associated with the statute or commission rule for which they are seeking an exemption; the second establishes public notice requirements if the statute or commission rule for which an applicant is requesting an exemption does not require public notice; and the third allows for the use of alternative public notice, provided the alternative is reasonably likely to provide greater public notice and opportunity for participation. In addition, this section establishes minimum requirements for public notice. The public notice provision was divided into three segments because it is meant to provide for the greatest or most effective means of public notice. In addition, in light of the fact that the adopted rule is meant to provide flexibility, the alternative notice provision is meant to allow for the use of an alternative, provided that the alternative is likely to be more effective. Section 90.18, concerning Amendment/Renewal, establishes the procedures for amending or renewing an RFO. This section specifies that an application for amendment or renewal may be filed in the same manner as a new application. In addition, this section provides that if an application for renewal is submitted at least 180 days prior to the expiration date of the current RFO, the applicant can continue to operate under the existing order until such time as a decision is made on the renewal application. This provision clarifies the procedures for amending or renewing an RFO, and in the event an RFO expires, provides that the applicant can continue to operate under that order provided the renewal application is submitted within the specified time frame. This minimizes the chance of the applicant being penalized because the commission does not act on the renewal application prior to expiration of the order. Section 90.20, concerning Termination, details termination procedures by the recipient and the commission. This section provides that if the RFO is terminated by the recipient, then the recipient must be in compliance with all existing statutes or commission rules at the time of termination. Termination language was included to allow the recipient to terminate the order in the event that the alternative does not result in an environmental or economic benefit. The recipient is required to immediately be in full compliance with existing statutes or commission rules, because it could operate under the RFO until such time as it is able to operate in full compliance with existing statutes or commission rules. The commission may terminate the order if it finds that the recipient is not in compliance with the order or if the alternative is not or ceases to be at least as protective of the environment or public health, or becomes inconsistent with federal requirements. This section provides the recipient 30 days to request a show cause hearing before the commission to contest the decision to terminate. This section also provides that the executive director may grant a reasonable grace period to allow the recipient to come into full compliance with all existing statutes or commission rules. Otherwise, the recipient would be in immediate noncompliance upon termination. FINAL REGULATORY IMPACT ANALYSIS The commission has reviewed the adopted rulemaking in light of the regulatory analysis requirements of Texas Government Code (the Code), sec.2001.0225, and has determined that the rulemaking is not subject to sec.2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the Code, and it does not meet any of the four applicability requirements listed in sec.2001.0225(a). The specific goal of these rules is to provide flexibility from existing statutes and commission rules, provided the proposed alternative is at least as protective as the statute or commission rule it replaces. These rules do not create or impose any additional burdens on the regulated community. This rulemaking will not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety. On the contrary, these rules are expected to have a positive effect on the economy and the environment. This rulemaking will not exceed any state or federal requirement or a requirement of a delegation agreement or contract between the state and an agency or representative of the federal government. RFOs issued under these rules may create additional requirements for applicants, such as reporting or recordkeeping, beyond those already contained in the commission's rules. However, since the program is voluntary, no additional requirements will be imposed on the regulated community at large. RFOs may be surrendered at any time, without penalty, provided all existing requirements are met. The commission did not receive any public comments on the Draft Regulatory Impact Analysis. TAKINGS IMPACT STATEMENT The commission has prepared a takings impact assessment for these rules under Texas Government Code, sec.2007.043. The following is a summary of that assessment. The specific purpose of the rules is to implement the commission's authority under Texas Water Code, sec.5.123, to provide regulatory flexibility to an applicant who proposes an alternative method or standard to control or abate pollution. The rules will substantially advance this specific purpose by establishing application and public notice/public participation procedures as required by SB 1591, 75th Legislature, 1997 (the legislation authorizing and requiring the commission to develop a regulatory flexibility program). Promulgation and enforcement of these rules will not affect private real property which is the subject of the rules because the Regulatory Flexibility Program is strictly voluntary, and therefore does not impose any burden. Applicants should be fully aware of any additional burdens as a result of program participation, and have the opportunity to withdraw at any time. The commission did not receive any public comments on the Takings Impact Assessment. COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has reviewed the adopted rulemaking and found that the rulemaking is identified in Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11, relating to Actions and Rules Subject to the Coastal Management Program (CMP), and will affect an action/authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11. The commission has prepared a consistency determination for the adopted rules under 31 TAC sec.505.22 and has found that the rulemaking is consistent with the applicable CMP goals and policies. The following is a summary of that determination. CMP goals applicable to the adopted rule include: 1) protecting, preserving, restoring, and enhancing the diversity, quality, quantity, functions, and values of coastal natural resource areas (CNRAs); 2) ensuring sound management of all coastal resources by allowing for compatible economic development and multiple human uses of the coastal zone; 3) balancing the benefits from economic development and multiple human uses of the coastal zone, the benefits from protecting, preserving, restoring, and enhancing CNRAs, the benefits from minimizing loss of human life and property, and the benefits from public access to and enjoyment of the coastal zone; 4) coordinating agency and subdivision decision-making affecting CNRAs by establishing clear, objective policies for the management of CNRAs; 5) making agency and subdivision decision- making affecting CNRAs efficient by identifying and addressing duplication and conflicts among local, state, and federal regulatory and other programs for the management of CNRAs; and 6) making coastal management processes visible, coherent, accessible, and accountable to the people of Texas by providing for public participation in the ongoing development and implementation of the Texas CMP. CMP policies applicable to the adopted rules include the policies in the following policy categories: Category 3-Discharges of Wastewater and Disposal of Waste from Oil and Gas Exploration and Production Activities; Category 4- Construction and Operation of Solid Waste Treatment, Storage, and Disposal Facilities; Category 6-Discharge of Municipal and Industrial Wastewater to Coastal Waters; Category 7-Nonpoint-source Water Pollution; Category 8- Development in Critical Areas; Category 10-Dredging and Dredged Material Disposal and Placement; Category 13-Development Within Coastal Barrier Resource System Units and Otherwise Protected Areas on Coastal Barriers; Category 17- Emission of Air Pollutants; Category 18-Appropriations of Water; Category 19- Levee and Flood Control Projects; Category 20-Policy for Major Actions; and Category 21-Administrative Policies. Promulgation and enforcement of these rules will not violate any standards identified in the applicable CMP goals and policies because the adopted rules are by definition consistent with the goals and policies of the CMP because any alternative must be shown to be consistent with federal law and to be at least as protective of human health and the environment as the rule for which an alternative is requested; and procedures are established for public notice, comment, and hearing. The commission did not received any public comment on the consistency of these rules with the Coastal Management Plan. HEARING AND COMMENTERS A public hearing on these rules was held in Austin on June 2, 1998, and the public comment period closed on June 8, 1998. No oral comments were received at the public hearing, but written comments were submitted by Texas Association of Business and Chambers of Commerce (TABCC), Texas Chemical Council (TCC), United States Environmental Protection Agency (EPA), Henry, Lowerre, Johnson, Hess & Frederick (Henry, Lowerre), Texas Utilities Services (TU), and Brown McCarroll & Oaks Hartline, L.L.P. (Brown McCarroll). Comments were submitted in regard to the following categories: Public Notice/Participation, Application Requirements, Terminology, Fees, Renewal, Termination, Scope of Flexibility, Procedures, and Eligibility. GENERAL COMMENTS TU, TCC, and TABCC expressed support for the rules, but recommended changes. Brown McCarroll did not express support or opposition to the rules, but recommended changes. The EPA expressed support for reinvention and partnership efforts between the two agencies, but expressed concerns over the scope of flexibility that might be granted under these rules and recommended changes. Henry, Lowerre expressed opposition to the rules, suggested limitations to the scope of the program, and recommended changes. SPECIFIC COMMENTS PUBLIC NOTICE/PARTICIPATION The TABCC commented that the public notice requirements included in sec.90.16(b) could be costly for small businesses. Specifically, the commenter mentioned the requirement to publish notice in a newspaper of largest general circulation. The TABCC suggested that the notice be published in a newspaper of general circulation, but not necessarily the largest circulation. In addition, the TABCC suggested that the rule allow notice to be placed in the classified advertising or legal section. Finally, the TABCC commented that small businesses could not utilize sec.90.16(c), because it only allows an alternative notice procedure that would provide greater public notice, and therefore, would result in a greater cost to the applicant. The commission agrees, and believes that publication in a newspaper of general circulation is sufficient. The commission believes that there is no qualitative difference between the classified, advertising, or legal sections of the newspaper, and has therefore decided that notice should be allowed in any of these sections. The commission does not agree that sec.90.16(c) would necessarily result in a greater cost to the applicant, and suggests that other lower cost methods of public notice may be available, including alternate publication, radio broadcast, placarding, etc. Such proposals will be reviewed on a case-by-case basis, as provided for in sec.90.16(c). The TABCC commented that sec.90.16(b)(2) contains more onerous public notice, comment, and hearing requirements for the applicant than would have been required under the rule for which the applicant is seeking flexibility. The commission acknowledges the TABCC's comments, but does not agree with its concerns. The commission believes that the public notice, comment, and hearing procedures laid out in the rule are appropriate, and believes that providing meaningful opportunities for public participation is appropriate. If a rule for which an applicant is seeking an exemption contains public notice, comment, and hearing requirements, then sec.90.16(b)(2) does not apply. The TCC commented that community involvement should vary, depending on the type of regulatory flexibility being sought, and that applicants should be encouraged to discuss proposals at local citizen advisory panels as appropriate. The commission agrees that local community involvement should vary, depending on the scope of the proposal. Although the rule language does not, strictly speaking, require local community support, efforts made to achieve local community participation and support will be a factor in the decision by the commission to approve or deny the proposal. To the degree citizen advisory panels are available, the commission encourages utilizing those as a mechanism to inform and involve the public. The TCC commented that public notice and public participation requirements are inconsistent and duplicative, may require applicants to go beyond regular public notice processes, and that a notice and comment type of hearing should suffice for an RFO. The commission disagrees. Except for changes to sec.90.16(b)(2), concerning public comment, the commission believes that the public notice, comment, and hearing procedures laid out in the rules are appropriate. The public participation procedures in the rule reference the existing procedures for the underlying requirements. Where there are no existing public notice requirements, the commission believes that providing meaningful opportunities for public participation is appropriate. Henry, Lowerre commented that sec.90.16(a) requires applicants to comply with all public notice and participation requirements associated with the statutes or commission rules for which the applicant is seeking an exemption; however, the statutes and commission rules provide for no notice or participation requirements for RFOs. Therefore, Henry, Lowerre believes that the rules do not meet the public notice or participation requirements of Texas Water Code, sec.5.123. The commission disagrees. An applicant seeking an exemption from statutes or commission rules which contain public notice and participation requirements must comply with those requirements. It is not necessary for those requirements to specify public notice and participation requirements for RFOs. They apply to specific activities undertaken which are affected by those rules, and a request for an exemption from those rules would be an activity which requires public notice and participation in accordance with those rules. Henry, Lowerre commented that limiting comments to 30 days after the notice is given is not appropriate, and does not allow the public to submit comments on the proposed action of the executive director. The commenter stated that after notice is given, many changes could be made to the application and the position of the executive director, and that the proposed approval of the RFO should be subject to public notice, comment, and possibly a hearing. The commission acknowledges Henry, Lowerre's concerns. Although orders issued by the commission do not provide for public notice of the final order, the public will be able to follow development of RFOs during the process and will be able to comment during the commission agenda in which the proposal is considered. In the event substantial changes have been made to the application from the time of public notice to consideration during commission agenda, the public has the opportunity to address this issue and ask the commission to consider asking for additional public notice. Henry, Lowerre commented that the requirement for "greater public notice and opportunity for participation" under sec.90.16(c) was not defined, and that such alternative notice and participation could possibly violate EPA requirements for federally delegated programs. The commenter further stated that the rules do not provide guidance on when alternative public notice and participation can be authorized by the commission. The commission acknowledges Henry, Lowerre's concerns and reiterates that each proposal will be considered on a case-by-case basis. This will allow for comprehensive review to determine if greater public notice will be provided under the proposed alternative. Additional guidance is not needed in the rule to ensure that EPA requirements are met. The statute requires an exemption to not be inconsistent with federal law. The proposed rule provides that the application must demonstrate that an exemption will not be inconsistent with federal law, including any requirement for a federally approved or authorized program. This includes any federal requirements for public notice and participation. TU suggested that the alternative public notice provisions in sec.90.16(c)(2) allow for equivalent, and not only greater, public notice and opportunity for participation than sec.90.16(a) or (b) provides. The commission disagrees. The focus of these rules is to provide dual opportunities for improved environmental performance and decreased costs. The commission believes that if a variance is to be granted from standard notice requirements already duly set out by statute and rule, it should only be granted if the variance will result in improved notice. Brown McCarroll commented that sec.90.16(b) should not provide for a public hearing for an alternative method of compliance when one is not required for the original method of compliance. The commission agrees. It was the commission's intent to provide an opportunity for public comment, but not for a hearing, in cases under sec.90.16(b). The language has been modified to clarify this intent. APPLICATION REQUIREMENTS The TABCC commented that small businesses will be reluctant to certify that "all information is true, accurate, and complete," as required in sec.90.10(c), because of a lack of confidence where environmental compliance is concerned. In addition, Brown McCarroll suggested that the certification be modified to read "to the best of my [the applicant's] knowledge, the application information is true, accurate and complete." The commission agrees, and the language in sec.90.10(c) has been modified to read as follows: "The application must be signed by the applicant or its duly authorized agent and must certify that all information is true, accurate, and complete to the best of that person's knowledge." The TCC commented that the language of sec.90.10(3) could be construed to mean that some type of continuous monitoring is required. The TCC suggested revisions which would allow recordkeeping and/or reporting to suffice when appropriate. The commission agrees that the language is unclear and has made the following change to sec.90.10(3): "an implementation schedule which includes a proposal for monitoring, recordkeeping, and/or reporting, where appropriate, of environmental performance and compliance under the RFO." Henry, Lowerre commented that three copies of the application, as required by sec.90.10(c), is not a sufficient number of copies. The commenter suggested that the rule require the submittal of eight to ten copies and the placement of one application in a public facility accessible to the public in the affected area. The commission disagrees that eight to ten copies of applications are necessary. Section 90.10(d) is consistent with or more stringent than other commission rules relating to submission of applications, and the commission does not want to mandate the generation of unnecessary copies which may go unused. The commission agrees that copies should be made available to the public in the affected area. This is accomplished by requiring that a copy be sent to the appropriate regional office. An original copy will also be maintained in the Central Records file in the central office. Interested persons can review or procure copies from Central Records. Henry, Lowerre commented that the rules do not contain adequate quality control provisions, such as a quick revocation process, requirements for engineer seals on applicable materials, and a requirement for engineer certification. The commission acknowledges Henry, Lowerre's comments, but points out that 30 TAC sec.305.66(f) provides for revocation of a permit if the permit holder or applicant made a false or misleading statement in connection with an application. This rule is applicable to RFOs, because an RFO meets the definition of permit in 30 TAC sec.3.2. Otherwise, termination of RFOs is sufficiently handled under sec.90.20. Requirements for engineer seals and certifications will be required on a case-by-case basis as appropriate to the request being considered. TERMINOLOGY The TABCC and Brown McCarroll expressed reservations about the use of the word "exemption" in sec.90.10(b)(1) and sec.90.16(a), and suggested that a more accurate word or phrase be used to describe this alternative method of compliance. Brown McCarroll suggested that the term "exemption" be dropped and the term "alternative compliance method" be substituted to reflect the fact that the applicant does not seek an exemption from compliance, but rather a different method of compliance. The commission acknowledges the concern, but the term "exemption" is taken verbatim from the statutory language of Texas Water Code, sec.5.123. If granted, an RFO would provide an exemption from a requirement of a statute or commission rule regarding the control or abatement of pollution, and not an exemption from regulatory compliance. Brown McCarroll commented that the phrase "incurring a judgment" is overly broad and could be construed to include agreed settlements. The commission disagrees, and believes that the term "judgment" does not encompass agreed administrative settlements. A judgment in the context of these rules includes only final actions of a court of law as a result of a referral to the Texas or United States attorneys general. FEES The TCC commented that the preamble discussion of sec.90.12, which states that additional fees may be assessed if the application requires a permit amendment, is unclear and a separate and additional amendment should not be required. The commission agrees. The language in the preamble and rule have been modified to simplify the fee structure. Specifically, sec.90.12(a) has been deleted from the rule. RENEWAL The TCC commented that RFOs should not require renewal unless they necessitate changes to a permit. The commission disagrees. Because of the innovative nature of the Regulatory Flexibility Program, the commission believes that it is appropriate and prudent to review RFOs on a periodic basis. Renewal of RFOs will be considered on a case-by-case basis with factors including, but not limited to, compliance with original RFO, demonstration that the alternative is at least as protective of the environment and public health, and the expiration date of any underlying permit or authorization, as applicable. TERMINATION The TCC commented that the commission should terminate an RFO only if there is a substantial violation of the order or subchapter. The commission disagrees. In the event an RFO holder disagrees with a commission initiated termination, the RFO holder may request a show cause hearing before the commission, as provided in newly revised sec.90.20(b). Henry, Lowerre commented that the rules provide for renewal of RFOs, but not for a termination or life of such RFO. In addition, it commented that RFOs which allow for changes to the operation of a facility that is authorized by a permit or other commission authorization should expire with the permit or authorization. The commission acknowledges Henry, Lowerre's comment concerning termination dates. The commission intends to review each application on a case-by-case basis and establish a termination date based on the issue or request. Each order will establish a termination date as appropriate. In the event an RFO allows for changes to the operation of a facility that is authorized by a permit or other commission authorization, that order shall include a termination date which does not extend past the termination date of such permit or authorization unless such permit or authorization is renewed. Brown McCarroll suggested providing some mechanism of notice and comment opportunity to the RFO holder prior to the termination of the RFO. The commission agrees, and has modified the provisions of sec.90.20(b)(1) to give notice of intent to terminate and give the holder of the RFO an opportunity to request a show cause hearing before the commission. SCOPE OF FLEXIBILITY The EPA submitted several comments addressing the scope of the Regulatory Flexibility Program. Specifically, the EPA expressed concerns regarding the use of the Regulatory Flexibility Program to vary federal requirements or state requirements which implement federal program requirements, and the phrase "not inconsistent with federal law," which, according to the EPA, could be interpreted to allow the commission to vary federally approved programs without EPA approval. The commenter recommended a language change to sec.90.2(a) similar to language in the national pollutant discharge elimination system (NPDES) Memorandum of Agreement to clarify this issue. In addition, EPA recommended language referring applicants seeking a variance to federal requirements to federal reinvention mechanisms. The commission acknowledges EPA's comments and reiterates that orders entered under the authorizing statute, Water Code, sec.5.123, and this rule will not conflict with legal requirements for federally delegated or authorized programs. Neither the authorizing statute nor this rule authorizes the commission to grant an exemption that is inconsistent with the requirements for a federally approved program. The attorney general of Texas has so informed EPA, in his letter dated March 13, 1998, concerning the commission's application for NPDES authorization. As EPA points out in its comment, to vary the required elements of a federally authorized program without federal approval would violate (that is, be inconsistent with) federal law. As the attorney general noted, the authorizing statute does not authorize this. The sentence from the proposed NPDES Memorandum of Agreement cited by EPA is a restatement of the law; it neither narrows nor expands the authority granted by Texas Water Code, sec.5.123. Except as specified in other interagency agreements, applications received by the commission which affect federally authorized or delegated programs will be forwarded to EPA for a consistency review in accordance with the terms of Texas Water Code, sec.5.123. Henry, Lowerre commented that the commission should initially limit the scope of the rules and provide flexibility only through the permit process. The commenter suggested that the commission could gain experience with the process before it receives a flood of applications for which, according to them, there are no clear rules. The commission acknowledges Henry, Lowerre's comments concerning the scope of flexibility. The commission's intent is to address a variety of issues consistent with SB 1591, which relate to environmental regulation, and to promote improvement of the environment. The commission believes it was the legislature's intent to implement a broad-based regulatory flexibility program. Henry, Lowerre commented that an RFO issued to a facility operating under a standard air exemption, general water permit, permit-by-rule, production area authorization, or any other exception to individual permits would violate the rule establishing the exception and disqualify the facility from the rule. To change a specific requirement with an RFO would eliminate the use of the general permit and require an individual permit. The commenter stated that the rules should specifically exclude these types of authorizations. The commission acknowledges Henry, Lowerre's concern; however, it also reiterates its intent to implement a broad-based regulatory flexibility program in accordance with the language in SB 1591. The commission emphasizes that each application will be reviewed on a case-by-case basis to ensure that it is at least as protective of the environment and not inconsistent with federal law. Henry, Lowerre commented that the Regulatory Flexibility Program should exclude requirements under the Texas Audit Privilege Law, recordkeeping or reporting requirements, water quality standards, and minimum technology requirements. The commission disagrees. The rulemaking provides for the use of innovative methods of compliance that could potentially result in greater environmental performance. Therefore, except for compliance history reasons, the commission has not restricted the activities which could be subject to an RFO. In addition, water quality standards and some minimum technology requirements are federally- based. The statute provides that an exemption not be inconsistent with federal law, and the rules provide that a demonstration be made in the application that an exemption will not be inconsistent with federal law, including any requirement for a federally-approved or authorized program. Each application will be reviewed and judged on a case-by-case basis. PROCEDURES Henry, Lowerre commented that the rules do not contain guidance on commission approval of applications. Specifically, it commented that sec.90.14(a) references 30 TAC sec.50.17, which does not provide actual procedures for approval or denial of RFO applications. Additionally, it commented that the rule lacked a provision specifying when motions for rehearing or motions for reconsideration are required. The commission acknowledges Henry, Lowerre's concerns. Each application will be processed in accordance with the provisions set forth in Chapter 50, Subchapter B of the commission rules, as applicable. Henry, Lowerre commented that although sec.90.14(b) allows the commission to consider compliance history in its decision to approve or deny an application, it does not indicate how compliance history will be provided to the commission, or what that compliance history would include. The commission acknowledges Henry, Lowerre's comments. The commission has procedures in place for compiling compliance histories and will use that protocol. Each application will be considered on a case-by-case basis. Compliance history will be one factor for the commission to consider in weighing the advantages against the risks of each proposal. The commission also has the ability to request compliance history information under sec.90.10(b)(7). Henry, Lowerre commented that the rules need to provide for compliance and enforcement by requiring easy access to the RFO, provisions for self-reporting of violations, and routine compliance inspections by commission inspectors. The commission acknowledges Henry, Lowerre's concerns, but it intends for RFOs to be maintained in the same way as all permits, copies of which are located in the Central Office of the agency, as well as in the regional office where the facility is located. This procedure is already in practice, and does not need to be established by rule. RFOs meet the definition of permit and are subject to self-reporting and compliance requirements applicable to all permits. Henry, Lowerre commented that the commission should not allow the use of the Regulatory Flexibility Program to avoid repeat violations. The commenter suggested that requirements for which a notice of violation was issued should not be eligible for regulatory flexibility. The commission acknowledges Henry, Lowerre's concern, but expects to receive innovative, pilot project-type applications that could potentially result in greater compliance and environmental improvement. The commission does not envision, nor intend to allow, RFOs to be used as a means merely to circumvent enforcement. ELIGIBILITY Brown McCarroll commented that not all misdemeanor convictions of environmental laws should be grounds for automatic ineligibility under the rules. The commenter suggested, instead, that only willful or knowing criminal offenses should trigger automatic ineligibility. The commission agrees, and has modified the language in sec.90.2 to provide for knowing or willful violations of environmental law. Evidence of negligent or reckless violations of environmental laws will be considered by the commission under sec.90.14(b) when deciding whether to issue an RFO. STATUTORY AUTHORITY The new sections are adopted under Texas Water Code, sec.5.123, which authorizes the commission to exempt an applicant from a requirement of a statute or commission rule regarding the control or abatement of pollution if the applicant proposes to control or abate pollution by an alternative method or by applying an alternative standard that is at least as protective of the environment and the public health and is not inconsistent with federal law. Texas Water Code, sec.5.123, requires the commission to adopt rules specifying the procedure for obtaining an exemption and requires that the rules provide for public notice and public participation. sec.90.2. Applicability and Eligibility. (a) This chapter applies to any statute or commission rule regarding the control or abatement of pollution, except that it does not apply to requirements for storing, handling, processing, or disposing of low-level radioactive materials. (b) Any person subject to any statute or commission rule regarding the control or abatement of pollution may be eligible to receive a Regulatory Flexibility Order, except that: (1) a person who has been referred to the Texas or United States attorney general, and has incurred a judgment, is ineligible for a period of three years from the date the judgment was final; (2) a person who has been convicted of willfully or knowingly committing an environmental crime in this state or any other state is ineligible for a period of three years from the date of the conviction. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813783 Margaret Hoffman Environmental Law Division Texas Natural Resource Conservation Commission Effective date: September 17, 1998 Proposal publication date: May 8, 1998 For further information, please call: (512) 239-1966 SUBCHAPTER B.General Provisions 30 TAC sec.sec.90.10, 90.12, 90.14, 90.16, 90.18, 90.20 STATUTORY AUTHORITY The new sections are adopted under Texas Water Code, sec.5.123, which authorizes the Texas Natural Resource Conservation Commission (commission) to exempt an applicant from a requirement of a statute or commission rule regarding the control or abatement of pollution if the applicant proposes to control or abate pollution by an alternative method or by applying an alternative standard that is at least as protective of the environment and the public health and is not inconsistent with federal law. Texas Water Code, sec.5.123, requires the commission to adopt rules specifying the procedure for obtaining an exemption and requires that the rules provide for public notice and public participation. sec.90.10. Application for a Regulatory Flexibility Order. (a) An application for a Regulatory Flexibility Order (RFO) must be submitted to the executive director. (b) The application must, at a minimum, include: (1) a narrative summary of the proposal, including the specific statutes or commission rules for which an exemption is being sought; (2) a detailed explanation, including a demonstration as appropriate, that the proposed alternative is: (A) at least as protective of the environment and the public health as the method or standard prescribed by the statute or commission rule that would otherwise apply; and (B) not inconsistent with federal law, including any requirement for a federally approved or authorized program; (3) an implementation schedule which includes a proposal for monitoring, recordkeeping, and/or reporting, where appropriate, of environmental performance and compliance under the RFO; (4) an identification, if applicable, of any proposed transfers of pollutants between media; (5) a description of efforts made or proposed to involve the local community and to achieve local community support; (6) an application fee of $250; and (7) any other information requested from the applicant by the executive director during the application review period. (c) The application must be signed by the applicant or its duly authorized agent and must certify that all information is true, accurate, and complete to the best of that person's knowledge. (d) The applicant shall submit an original and two copies of the signed application to the executive director for review, and shall send one additional copy to the commission's regional office for the region in which the facility is located. 90.12. Additional Fees; Cost Recovery. sec.90.12. Additional Fees; Cost Recovery. (a) The executive director may determine that the application for a Regulatory Flexibility Order constitutes a significant and complex application for which the recovery of all reasonable costs for review and approval by the commission is appropriate. Upon notice to the applicant of such finding, the applicant shall execute a cost recovery agreement in a form approved by the executive director. (b) Final consideration of an application by the commission is contingent on the applicant's agreement to pay the reasonable costs of review, as determined by the executive director. (c) If an application is withdrawn prior to the commission's consideration of the application, the executive director may void the cost recovery agreement and retain the initial application fee. (d) The executive director shall determine the commission's costs to administer this chapter, establish rates to recover those costs, and publish the rates in the Texas Register. The rates established under this section shall not exceed the rates established by the commission under Health and Safety Code, sec.361.613 or Chapter 333 of this title (relating to Voluntary Cleanup Programs). sec.90.14. Commission Action on Application. (a) Commission action on an application under this chapter shall be consistent with the provisions set forth in Chapter 50, Subchapter B of this title (relating to Action by the Commission), as applicable. (b) The commission may consider in its decision, among other factors, the applicant's compliance history and efforts made to involve the local community and achieve local community support. sec.90.16. Public Notice, Comment, and Hearing. (a) The applicant shall comply with all public notice, comment, and hearing requirements associated with the statute or commission rule for which the applicant is seeking an exemption, except as provided in subsection (b) or (c) of this section. (b) If the statute or commission rule for which an applicant is seeking flexibility does not require public notice, or an opportunity for comment or hearing, the following requirements shall apply. (1) The applicant shall publish notice at least once in a newspaper of general circulation in the county in which the facility is located or proposed to be located. The notice shall be published within 30 days after submittal of the application. Notice under this section shall not be smaller than that normally used in the newspaper's classified advertising section. (2) The commission shall accept public comment for 30 days after the last publication of the notice of application. (c) Alternative public notice. (1) An applicant may request to provide public notice and an opportunity for comment or hearing in an alternative manner to the requirements of subsection (a) or (b) of this section. (2) The executive director may authorize alternative public notice and participation opportunities if he determines that the alternative is reasonably likely to provide greater public notice and opportunity for participation than subsection (a) or (b) of this section. (d) Notice under this section shall, at a minimum, include: (1) a brief description of the proposal and of the business conducted at the facility or activity described in the application; (2) the name and address of the applicant and, if different, the location of the facility for which regulatory flexibility is sought; (3) the name and address of the commission; (4) the name, address, and telephone number of a commission contact person from whom interested persons may obtain further information; (5) a brief description of the public comment procedures, and the time and place of any public meeting or public hearing; and (6) the date by which comments or requests for hearing must be received by the commission. sec.90.20. Termination. (a) By the recipient. (1) A recipient of a Regulatory Flexibility Order (RFO) may terminate the RFO at any time by sending a notice of termination to the executive director by certified mail. (2) The recipient must be in compliance with all existing statutes or commission rules at the time of termination. (b) By the commission. (1) Noncompliance with the terms and conditions of an RFO, Texas Water Code, sec.5.123, or any provision of this chapter, may result in the RFO being voided, except that the recipient of the RFO shall be given written notice of the noncompliance and provided an opportunity not less than 30 days from the date the notice was mailed to show cause why the RFO should not be voided. Procedures for requesting a show cause hearing before the commission shall be included in the written notice. (2) In the event an RFO becomes void, the executive director may specify an appropriate and reasonable transition period to allow the recipient to come into full compliance with all existing commission requirements, including time to apply for any necessary agency permits or other authorizations. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813784 Margaret Hoffman Environmental Law Division Texas Natural Resource Conservation Commission Effective date: September 17, 1998 Proposal publication date: May 8, 1998 For further information, please call: (512) 239-1966 CHAPTER 321.Control of Certain Activities By Rule SUBCHAPTER B.Concentrated Animal Feeding Operations 30 TAC sec.sec.321.31-321.46 The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts amendments to sec.sec.321.31-321.46, concerning the updating of technical requirements and simplifying administrative procedures related to authorizations of concentrated animal feeding operations (CAFOs). Sections 321.31-321.37, 321.39-321.42, 321.44 and 321.46 are adopted with changes to the proposed text as published in the March 6, 1998, issue of the Texas Register (23 TexReg 2230). Sections 321.38, 321.43 and 321.45 are adopted without changes and will not be republished. The purpose for adopting the amendments to these rules is to create, together with a new general permit currently proposed and under consideration, a variety of vehicles available for the regulation and authorization of air emissions and water discharges by CAFOs, tailored according to regulatory needs including the sizes and natures of the facilities and their discharges, statutory requirements, and the necessary administrative burdens both on the commission and on the dischargers. As adopted, the amendments to this subchapter offer or require, as appropriate, authorization by individual permit or by registration under a permit by rule. In combination with the new proposed general permit, these regulatory options provide a full spectrum of options for the commission to regulate CAFOs by suitable and efficient means. The commission has taken into consideration the following state and federal actions in adopting these amendments to Subchapter B: 1) Senate Bill 2, 72nd Texas Legislature, First Called Session (1991): Consolidation of the Texas Air Control Board, Texas Water Well Drillers Board, Texas Board of Irrigators, Texas Water Commission and selected programs from the Texas Health Department into the TNRCC with the express purpose and instruction that the new TNRCC streamline permit procedures and promote more comprehensive and more expeditious review of proposed facilities. 2) Senate Bill 503, 73rd Texas Legislature (1993), that allows the Texas State Soil and Water Conservation Board to assist small agricultural and silvicultural facilities in meeting water quality requirements in the state through financial assistance and the development of certified water quality management plans. 3) The United States Environmental Protection Agency (EPA) Region VI General Permit for CAFOs (March, 1993), which establishes technical and procedural requirements substantially identical to those contained in these adopted amendments for CAFOs to meet in order to receive federal authorization to discharge under the National Pollutant Discharge Elimination System (NPDES). 4) Section 26.040 of the Texas Water Code, under which Subchapter B was originally adopted and which regulate and set requirements and conditions for discharges of waste. As amended, sec.26.040 allows the commission to amend rules it promulgated thereunder prior to its amendment. 5) House Bill 1542, 75th Texas Legislature (1997), which amended sec.26.040 of the Texas Water Code to allow the TNRCC to authorize the discharge of wastewaters through the issuance of general permits. Discharges under such general permits are limited to no more than 500,000 gallons in a 24-hour period. This bill further specifies that all current rules adopted by the TNRCC under sec.26.040 as it read prior to the effective date of the HB 1542 should remain in effect, as they may be amended by the commission from time to time as appropriate, and provides that the commission's authority for subsequent amendments or modifications is not affected by the changes made by the bill. 6) The General Appropriation Acts of 73rd, 74th and 75th Sessions of the Texas Legislature which have limited the number of employees and funds allocated to the various programs of the TNRCC. The commission has applied for authorization under Section 402(b) of the federal Clean Water Act to administer the NPDES in Texas. The EPA has informed the commission that its application is complete. Under the terms of the application and federal law, the commission must regulate CAFOs in conformity with federal requirements, either by rule, general permit or individual permit. Currently, the EPA regulates all CAFOs in Region VI under its jurisdiction by general permit. One reason for the adoption of these amendments and the proposed general permit is to enable the commission to perform this task efficiently through the use of permits by rule and a general permit that are consistent with the federal NPDES general permit. TNRCC recognizes that additional amendments may be necessary if NPDES authorization becomes effective. The amendments adopted today are, however, generally equivalent to the EPA Region VI general CAFO permit. Thus by adopting these amendments, the commission fulfills the requirements for NPDES authorization and also avoids the inefficiency and duplication of permitting each CAFO operation individually, but all with the same NPDES standards. The nature of CAFOs is such that uniform standards of performance and management, as reflected in the EPA Region VI general permit and in these rules, are sufficient to carry out the state and federal regulatory mandates and provide ample protection of the state's air and water resources. Under this adoption of amendments to Subchapter B, the commission changed the existing technical and procedural requirements for some CAFOs. The permitting procedure as it operated prior to these adopted amendments required the agency to invest significant resources and manpower performing repetitive technical reviews and evaluations in order to develop individual draft permits for all CAFOs, even though federal and state experience establishes that permits for most CAFO facilities should contain basically uniform technical requirements. The agency was criticized by applicants, local economic development organizations, agricultural commodity groups, local chambers of commerce, and legislators for taking too long to process applications under the previous Subchapter B. Such criticism indicated that the long timeframe for processing applications under the previous Subchapter B, and the differing technical requirements from the existing EPA Region VI general permit, were combining to force potential CAFO facilities to locate in other states, depriving our state of economic development opportunities and made it difficult and burdensome to obtain the necessary state and federal authorizations. Partially in response to these expressions of concern, the TNRCC adopted Subchapter K. By judgement rendered in ACCORD Agriculture, Inc. v TNRCC (Cause Number 96-00159), 353rd Judical District of Travis County (Accord) in May 1998, Subchapter K was set aside due to procedural defects in its adoption. These amendments to Subchapter B have been developed and adopted both to address the substantive problems Subchapter K was created to ameliorate and to correct the defects in the adoption of Subchapter K cited by the court. The commission and other state agencies have been required through the appropriations process in the last several legislative sessions to reduce the number of their employees and overall costs of conducting their various programs. Since its consolidation in 1993, the commission has continued to evaluate its programs to find ways to reduce its overall human resources costs and associated expenses, while providing for the continued protection of the quality of the state's resources under its jurisdiction. The commission identified CAFOs as one of the number of types of facilities for which it is appropriate to modify the commission's authorization procedure from entirely an individual permitting process to one that partly utilizes permits-by-rule, so as to provide a performance-based system with a less time-consuming and labor- intensive administrative process while maintaining a high level of protection for the environment. To permit each facility individually would lead to a backlog of such permitting actions, similar to occurrences before the implementation of permits by rule through the former Subchapter K. Of the 46 major amendment applications received between 1992 and 1994, 21 applications exceeded a technical review time of 180 days and thus considered in backlog. Of the 119 new applications received between 1992 and 1994, 41 applications exceeded a technical review time of 180 days and thus considered in backlog. Overall, there was a 38% backlog of new and major amendment applications received between 1992 and 1994. The commission believes its resources would be better spent conducting full individual permitting procedures mostly for those facilities that regularly discharge waste into surface waters, and thereby have a greater potential for pollution, while regulating by uniform rule or general permit most facilities that are not allowed to discharge into a stream or water body unless there is a rainfall greater than a 25-year, 24-hour event. Such action is consistent with the provisions and philosophy of the EPA Region VI General Permit for CAFOs. The adopted amendments to Subchapter B together with the new general permit will provide a process of gaining authorization similar in nature and structure to that used by EPA Region VI. They also bring the technical requirements of the state program up to the those of the federal program, allowing the CAFOs in the state to achieve a single set of standards and providing the basis for the state to quickly and efficiently assume administration of the NPDES CAFO program upon authorization of the program from EPA. In addition to the previous provisions of Subchapter B, an applicant wanting to construct a new CAFO facility or amend or renew an authorization for an existing facility was required to obtain a separate air quality authorization from the Commission through a separate and distinct process under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification). The adopted amendments to Subchapter B are consistent with the provisions of the EPA Region VI General Permit for CAFOs and go even further by including additional requirements which address the commission's concerns and responsibilities for protection of both groundwater resources and of air quality. The adopted amendments to Subchapter B provides a process under which CAFOs will gain coverage or authorization fully protective of both air and water quality through a single process. This will give commission the ability to combine processes and save limited resources and manpower. Amendments to Subchapter B are being adopted, in part, to replace the judicially nullified Subchapter K and to make state requirements for new facilities consistent with existing federal EPA requirements contained in 40 CFR Part 122, relating to concentrated animal feeding operations. In addition to providing more consistency with the federal permit, the adopted amendments to this subchapter will enable the commission to regulate these facilities in a manner that conserves scarce resources, and will relieve burdens on the commission and the CAFOs by consolidating air and water quality authorization requirements into a single process. The adopted amendments to Subchapter B allow a CAFO to obtain an air quality standard permit through the procedures identified in this amended subchapter, regardless of whether its water quality authorization takes the form of an individual permit, registration under the permit by rule or coverage under the proposed general permit. Section 382.0518(a) of the Texas Clean Air Act (TCAA) states that a permit is required to construct a new facility or to modify an existing facility that may emit air contaminants. As authorized by TCAA sec.382.051(b)(3), the standard permit under this subchapter satisfies the TCAA requirements for these facilities, that would otherwise be subject to sec.382.0518, so that a separate air quality authorization will not be necessary. The CAFO standard permit is not a new requirement, but provides an alternative to the New Source Review permit process of Chapter 116, Subchapter B. The standard permit alternative specifies design, location, operational, and maintenance requirements that are typically included in an air quality permit under Chapter 116 and are adequate to protect the public's health, safety, and use of physical property. The air quality requirements of this subchapter essentially reflect the control technology that would be required as BACT for a facility applying for an individual permit, including the requirement to develop and operate under a pollution prevention plan, design criteria for lagoons, operational requirements for single and multi-stage lagoon systems, requirements for wastewater irrigation practices and waste application practices, maintenance scheduling and reporting requirements for solids removal from lagoons, requirements for manure stockpiling, minimum buffer distance for nighttime application of liquid and solid waste, flushing and scraping schedules for manure, maintenance and design of earthen pens, operational requirements for settling basins, dead animal disposal limitations, and inspection requirements. Many of these requirements affect both air and water quality, and are required regardless of whether an owner/operator seeks separate air authorization. Those that are required only when seeking air authorization are identified as "(Air quality only)" in this subchapter. In addition, sec.321.46 outlines minimum buffer distances and the requirement to submit an odor control plan for certain CAFOs. As adopted, sec.321.46 states that a CAFO is entitled to an air quality standard permit authorization in lieu of the requirement to obtain a separate air quality authorization under Chapter 116 (relating to Control of Air Pollution by Permits for New Construction or Modification) if it either (1) meets all of the requirements for registration or individual permit outlined in this subchapter, or (2) meets all of the requirements for operating under a CAFO general permit and satisfies all the applicable air quality only requirements including any applicable buffer distances and the odor control plan. If an applicant cannot meet the air quality criteria of this amended subchapter, or if the CAFO is a major source or major modification as defined in Chapter 116 of this title, then a separate air quality permit will be required. The amended registration or permit by rule process will relieve the commission of the unproductive burden of processing individual permit applications for those CAFOs that either do not qualify for, or choose not to be, covered by an adopted general permit, but are nevertheless appropriately regulated if they comply with the requirements of the permit by rule. These adopted amendments also preserve the commission's flexibility to require any facility to apply for and obtain an individual permit, for any reason that within the commission's judgment makes it necessary or appropriate that they do so. In this way, the commission will be able to use its resources efficiently to concentrate individual attention more directly where it is needed. This type of efficiency is possible in the regulation of CAFOs because, as reflected in this amended permit by rule, most CAFOs, if designed and operated properly in conformity with uniform standards, will avoid discharging into surface water except under exceptional circumstances. Those that fall outside of that group will still receive individually tailored permits and provisions. For registrations, these amendments adopt a public participation procedure similar to that used by the commission for registrations under Chapter 312 of this title, (relating to Sludge Use, Disposal and Transportation). These include notice of technically complete applications both published in the locality of the proposed operation and mailed to potentially affected landowners and other interested persons and governmental authorities, opportunity for public comment, consideration by the executive director of such comment timely received, and procedures for commenters or the applicant to ask the commission for reconsideration of the executive director's action on a registration application. For those who have exhausted their administrative remedies and otherwise have standing, there is then the ability to appeal the commission's final decision to state district court under Texas Water Code, sec.5.351. Thus, these amendments provide for full public notice, scrutiny and input, as well as commission and judicial review, while reserving for those cases where an individual permit is appropriate the full contested case hearing provided for under sec.26.028 of the Water Code. Mindful that even the most simple contested case hearing costs the agency several thousand dollars in staff time alone, the commission has adopted these amendments, in part, as a way to devote such resources only to those cases where circumstances make an individual permit necessary for effective regulation. EXPLANATION OF ADOPTED RULE As adopted sec.321.31, Waste and Wastewater Discharge and Air Emission Limitations, provides the general restrictions or limitations to the discharge of wastewater from a CAFO. These limitations are consistent with existing federal requirements for CAFOs. The adopted rule also provides that facilities must be operated in such a manner as to prevent a nuisance or a condition of air pollution as provided by Texas Health and Safety Code, Chapters 341 and 382. As amended sec.321.32, Definitions, reflects a significant number of additional terms being defined, a small number being deleted and a few existing definitions being modified to reflect the consistency between state and federal programs. As adopted sec.321.33, Applicability, provides that any existing CAFO holding an individual permit issued either under Subchapter B or under other authority prior to the effective date of these amendments shall continue to be regulated under such individual permit. It also provides that any animal feeding operation may be required by the executive director to file an application to obtain an individual permit under circumstances identified in this amended section. Any CAFO which does not gain coverage under an adopted CAFO general permit or does not hold an existing individual permit or other currently valid TNRCC authorization must file an application for registration in accordance with the provisions of sec.321.35 of this title, (relating to Procedures for Making Application for Registration). CAFOs in the Dairy Outreach Program Areas having greater than or equal to 300 animal units but less than 1,000 animal units are required to file an application for registration under this subchapter and meet the education requirements of sec.321.41 of this title, (relating to Other Requirements). Any CAFO which is not required to file an application for registration or an individual permit under the provisions of this subchapter shall comply with all the requirements under sec.sec.321.38-321.42 of this title, (relating to Proper CAFO Operation and Maintenance, Pollution Prevention Plans, Best Management Practices, Other Requirements, and Monitoring and Reporting Requirements). This amended section also prohibits new facilities on the Edward's Aquifer recharge zone. The changes also allow certain CAFOs to obtain an air quality standard permit authorization by meeting air quality criteria contained in this amended subchapter. Qualification for the air quality standard permit authorization will be determined in the consolidated review and authorization process provided by sec.321.34, Procedures for Making Application for an Individual Permit or sec.321.35, Procedures for Making Application for Registration. However, certain CAFOs are prohibited from using the standard permit authorization and must obtain a separate air quality permit. Any CAFO which cannot meet the air quality criteria in this amended subchapter must obtain a separate air quality authorization under Chapter 116 of this title. Any CAFO which is a new major source or major modification as defined in Chapter 116 of this title must obtain an air quality permit under Chapter 116 of this title. Additionally, animal feeding operations that are not required to obtain a CAFO permit under this amended subchapter may be required to obtain air quality authorization under Chapter 116 of this title (certain operations may qualify for an exemption from air quality permitting requirements). Regardless of any authorization granted pursuant to this amended subchapter, CAFOs must comply with any applicable federal air quality regulations including, but not limited to, National Emission Standards for Hazardous Air Pollutants ("NESHAPs") or New Source Performance Standards ("NSPS"). Additionally, any CAFO that constitutes a major source as defined in Chapter 122 of this title must obtain a federal operating permit under that chapter. The adopted changes also exempt from this amended subchapter any existing AFO which is operating under a certified water quality management plan or any facility which qualifies and obtains such a plan from the Texas State Soil and Water Conservation Board, unless the AFO or facility is referred by the Board to the commission for non-compliance pursuant to Texas Agriculture Code sec.201.026. This section also creates a mechanism for transition to coverage under Subchapter B for facilities that obtained authorization under Subchapter K and whose authorizations were not terminated by the judgement in Accord. Provided they are in good standing with regard to compliance with the technical requirements of Subchapter K, these facilities may transfer their Subchapter K registration to a Subchapter B registration without reapplying. A Subchapter K facility seeking such a transfer must file a request with the Executive Director. The Commission will notify those persons who would be entitled to receive mailed notice of an application by the facility for registration under sec.321.35 of this title (relating to Procedures for Making Application for Registration). If no objection is received from anyone entitled to the notice, the transfer will be granted. Finally, changes to this section provide that by written request of the owner/operator a facility currently authorized by an individual permit may request a transfer of authorization from an individual permit to a registration. Such a request and application will be processed in accordance with the provisions of sec.321.35 of this title, (relating to Procedures for Making Application for Registration). As adopted Section 321.34, Procedures for Making Application for an Individual Permit, provides application content requirements and associated fees. Applications filed under this section will be processed in accordance with the applicable provisions of Chapter 305 of this title (relating to Consolidated Permits), unless specified otherwise in this amended section. Individual permits issued under this amended subchapter shall not exceed a term of five years. In accordance with Texas Water Code sec.26.028(e), sec.321.34, Procedures for Making Application for an Individual Permit, provides that an application to renew a permit for a confined animal feeding operation which was issued between July 1, 1974, and December 31, 1977, may be renewed by the commission at a regular meeting without holding a public hearing if the applicant does not seek to discharge into or adjacent to waters in the state and does not seek to change materially the pattern or place of disposal. In accordance with Texas Water Code sec.26.028(a), sec.321.34 also reflects the commission's judgment that no person will be affected by the renewal of a permit if no major amendment is proposed to the permit provisions and if the permittee has operated in compliance with its permit conditions throughout the term of the expiring permit. In addition, the changes to this section require that an application for renewal of an individual permit be filed not later than the 180th day prior to the date the permit is to expire. The section also includes content requirements and associated fees. Finally, an application for renewal for an individual permit may be granted without a public notice if no change to the facility is being proposed and no formal enforcement action has been brought against the facility during the previous 36-month period. In order to qualify for the renewal process identified in the previous sentence and in addition to the provisions described in this paragraph, for renewal of an individual permit within a Dairy Outreach Program Area, an annual compliance inspection must have been completed within 12 months of the date the executive director declares the application for permit renewal administratively complete. An application for renewal of an individual permit failing to meet the above provisions will be processed as a new application. As adopted, the changes to sec.321.35, Procedures for Making Application for Registration, set out application content requirements and associated fees. Registrations authorized under this amended subchapter shall not exceed a term of five years. In addition, under the changes to this section an application for renewal of a registration must be filed not later than the 180th day prior to the date the authorization is to expire. This section also provides content requirements and associated fees for the renewal process. Finally, an application for renewal of a registration may be granted without a public notice if no change to the facility is being proposed and no formal enforcement action has been brought against the facility during the previous 36-month period. To qualify for this renewal process for renewal of an existing registration within a Dairy Outreach Program Area also requires that an annual compliance inspection has been completed within 12 months of the date the executive director declares the application for renewal administratively complete. Any application for renewal of a registration failing to meet the above provisions will be processed as a new application. As adopted changes to sec.321.36, Notice of Application for Registration, require applications for registration to be reviewed by the executive director for administrative and technical completeness within 30 working days of receipt. If the application is not complete, the executive director must notify the applicant within this review period and allow the applicant a maximum 30-day period to provide the necessary information. If the applicant does not timely submit such information, the application shall be returned. This section also provides notice content requirements, a 30-day public comment period, notice published in a local newspaper and mailed notice to persons, including adjoining landowners, county judges, river authorities in the Dairy Outreach Program Areas, and where applicable, groundwater districts. These provisions are consistent with those for other types of applications covered by Chapter 305 of this title. As amended, sec.321.37, Action on Applications for Registration, provides that any person may comment to the executive director within 30 days of the mailed notice. Comments will be considered by the executive director in determining whether the application meets the requirements of the rules and should be granted. The executive director may grant or deny the application, in whole or in part, deny with prejudice, suspend an activity or modify a proposed activity requested by the applicant. The executive director will provide a copy of the determination in writing to the applicant and to any persons timely submitting written information on the application. Finally, this amended section provides that persons submitting timely written comments or the applicant may file a motion with the chief clerk requesting the commission to reconsider the final determination of the executive director. For efficiency of procedures, the commission will use and has cross-referenced the procedures in sec.50.39 (b-f) of this title (relating to Motions for Reconsideration) for the processing of such motions under this subchapter. As amended, sec.321.38, Proper CAFO Operation and Maintenance, requires the owner/operator of any CAFO authorized by this subchapter to implement and document best management practices set out in sec.321.40 of this title as well as other necessary measures contained in the facility's pollution prevention plan as required by sec.321.39 of this title or a Natural Resources Conservation Service (NRCS) plan, whichever is applicable. Copies of records and plans shall be provided to the executive director upon request. As amended sec.321.39, Pollution Prevention Plans, requires each facility, authorized under this amended subchapter, to develop and implement a Pollution Prevention Plan (PPP) providing pollution prevention and abatement measures as specified in the rule. Provisions contained in a NRCS plan may be adopted by reference in the PPP. As amended sec.321.40, Best Management Practices, provides a list of best management practices that must be utilized by all CAFOs authorized under this amended subchapter, where reasonable and appropriate, and based upon existing physical conditions. Where provisions in a NRCS plan are equivalent to or more protective than those provided by this amended section, such provisions may be substituted. In accordance with sec.26.048 of the Texas Water Code, a CAFO authorized to discharge agricultural waste into a playa or to use a playa as a wastewater retention facility for agricultural waste before the effective date of sec.26.048 may continue such discharge provided water samples from wells at the site are tested for chlorides and nitrates. If the test results indicate a significant increase in the levels of these contaminants, the commission shall investigate the cause and require necessary corrective action. Amended sec.321.41, Other Requirements, contains the additional conditions for authorizations and individual permits including education and training (Dairy Outreach Program Areas only), inspections and recordkeeping, internal reporting procedures, and visual and site inspections. The owners/operators of CAFOs with greater than or equal to 300 animal units in the Dairy Outreach Program Areas and that are covered by this amended subchapter are required to: 1) within 12 months of becoming subject to the this amended subchapter, complete an eight hour course in animal waste management; and 2) complete an additional eight hours of continuing animal waste management education within each 24 month period after the initial course. As amended sec.321.42, Monitoring and Reporting Requirements, requires the owner or operator of a facility authorized under this amended subchapter to report to the executive director any discharge from the CAFO to or adjacent to waters in the state. Such report must be made orally within 24 hours and in writing within five working days of the discharge. These provisions are consistent with those contained in Chapter 305 of this title. In addition, the section prescribes the data and information that shall be maintained on-site and/ or submitted to the executive director. As amended sec.321.43, Notification, requires all new animal feeding operations which plan or propose to confine more than 300 animal units or more than 300 head of any species not specifically listed under the definition of a CAFO in this amended subchapter to notify the executive director of the location and size of their operation. No fees will be imposed as the result of this notification. Facilities that have no potential to discharge into waters in the state are not required to notify the executive director. As amended sec.321.44, Dairy Outreach Program Areas, designates those counties in the state which are involved in the Dairy Outreach Program as of the effective date of these rules. The areas include all of the following counties: Erath, Bosque, Hamilton, Comanche, Johnson, Hopkins, Wood and Rains. Such areas must be delineated by rule. This section of the rules shall be reviewed by the commission on at least a triennial basis to determine whether counties should be added or deleted from designation. As amended sec.321.45, Effect of Conflict or Invalidity of Rule, contains a standard severability clause providing that the invalidity of any one provision shall not affect the validity of any of the remaining provisions. Additionally, to the extent of any irreconcilable conflict between the provisions of this amended subchapter and those outside the subchapter, the former shall control. As amended sec.321.46, Air Standard Permit Authorization provides that a facility that locates and is managed in compliance with an authorization under a CAFO general permit, registration, or individual permit, and operates in compliance with all of the "(Air Quality Only)" requirements of this subchapter, is entitled to an air quality standard permit in lieu of the requirement to obtain an air quality permit under Chapter 116. As adopted, for new CAFOs and expansions of new CAFOs, the applicant must submit evidence, at the time of the initial application, of either a minimum air quality buffer of one-quarter mile and an odor control plan, or a minimum air quality buffer of one-half mile from any occupied residence or business structure, school (and associated recreational areas), church, or public park unless the owner of such property gives written consent, in order to qualify for consolidated air quality standard permit and a water quality authorization (individual permit or application for registration). For expansion projects at existing CAFOs or at AFOs proposing to become CAFOs, the applicant must provide a minimum air quality buffer of one- quarter mile or an odor control plan. FINAL REGULATORY IMPACT ASSESSMENT The commission has reviewed the rulemaking in light of the regulatory analysis requirement of Texas Government Code sec.2001.0225 and has determined that the rulemaking is not subject to sec.2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the act. Although the intent of the rule is to protect the environment and to reduce risks to human health, this rule affects an industry and the individual facilities that are already regulated in substantially similar manner to that described in the rule. As set out in the fiscal note accompanying the proposal of these amendments, this rule will not have an adverse economic effect on small business. This is because potential cost increases to existing businesses will be mitigated by the cost savings realized due to the elimination of requirements associated with application for separate water quality and air quality authorizations, and because most of the cost increase that may result is attributable to the federal requirement to comply with the EPA general permit for concentrated animal feeding operations, and would occur regardless of these amendments. Also, these rules provide an exception for most small facilities, which are eligible to operate under a certified water quality management plan from the Texas State Soil and Water Conservation Board. Therefore, this rule will have no material adverse effect on the economy, productivity, competition, jobs, the environment or the public health and safety of the state or a sector of the state. Further, this rule does not meet any of the four applicability requirements listed in sec.2001.0225(a). It does not exceed a standard set by federal law or an express requirement of state law, since standards for CAFO authorizations are required, but not set, by federal and state law; nor does it exceed a requirement of a delegation agreement or contract between the state and the federal government. There is currently no such agreement, and these rules do not exceed any requirement in the program. Finally, these rules are adopted under the specific authority of Water Code Section 26.040 and Health and Safety Code Sections 382.011, 382.012 and 382.051, as well as the general authority of Water Code Section 5.103 and Health and Safety Code sec.382.017. TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code Annotated, sec.2007.043. The following is a summary of that Assessment. The specific purpose of the proposed amendments is to create, together with the proposed general permit, a variety of vehicles available for the regulation and authorization of air emissions and wastewater discharges by CAFOs, tailored according to regulatory needs including the sizes and natures of the facilities and their discharges, statutory requirements and the burdens both on the commission and on the discharges. Promulgation and enforcement of these adopted amendments will not affect private real property which is the subject of the rules. COASTAL MANAGEMENT PLAN (CMP) Under 31 TAC sec.505.11, permits for a new CAFO within one mile of a Coastal Natural Resource Area (CNRA) must be consistent with the applicable goals and polices of the CMP contained in Chapter 501, Subchapter B of Title 31. These amended rules would specifically require CAFOs within one mile of a CNRA to obtain an individual permit for the specific purpose of ensuring consistency with applicable CMP goals and policies. The commission has reviewed this rulemaking for consistency with the CMP goals and policies in accordance with regulations of the Coastal Coordination Council and has determined that the rulemaking is consistent with the applicable CMP goals and policies. The following is a summary of that determination. CMP goals applicable to the amended rules include the protection, restoration and enhancement of the diversity, quality, quantity, functions and values of CNRA and to ensure sound management of all coastal resources by allowing for compatible economic development and multiple human uses of the coastal zone. CMP policies applicable to the amended rules include the following: 1) discharges shall comply with water-quality-based effluent limits; 2) discharges that increase pollutant loadings to coastal waters shall not impair designated uses of coastal waters and shall not significantly degrade coastal water quality unless necessary for important economic or social development; and 3) to the greatest extent practicable, new wastewater outfalls shall be located where they will not adversely affect critical areas. Promulgation and enforcement of these amended rules will not violate (exceed) any standards identified in the applicable CMP goals and policies because any new proposed CAFO located within one mile of a CNRA will be required to pursue an individual permit which will allow the commission to consider the effects of such a facility on the CNRA, establish effluent limits, if necessary, on any discharges from the proposed facility to maintain applicable water quality standards and allow opportunity for notice, public comment and public hearing. HEARINGS AND COMMENTERS A public hearing was held on April 7, 1998. Oral testimony was received from thirty-one persons representing the following: Representative Warren Chisum (District 88); Representative David Swinford (District 87); ACCORD Agriculture, Inc.; North Plain Ground Water Conservation District; Greenbelt Municipal and Industrial Water Authority; City of Crowell; City of Childress; Childress Chamber of Commerce; Childress Economic Development Corporation.; County of Childress; City of Clarendon; Agri-Waste Technology, Inc.; Texas Poultry Federation; Texas Farms, Inc.; Dairy Farmers of America; Red River Authority; Texas Pork Producers Association; Texas Cattle Feeders Association; three individuals representing themselves as farmers/ranchers in Ochiltree County and one attorney representing several landowners and former city officials in Johnson and Ochiltree Counties. Oral comments provided by the Greenbelt Municipal and Industrial Water Authority; City of Crowell; City of Childress; Childress Chamber of Commerce; Childress Economic Development Corporation; County of Childress; and the City of Clarendon are listed in the analysis of testimony and comments under the name of Greenbelt Municipal and Industrial Water Authority. The public comment period closed on April 13, 1998. One hundred-thirty two commenters submitted written comments. The Texas Pork Producers Association, Dairy Farmers of America, ProAg, and the Texas Poultry Federation either supported the rules as written or generally supported the rules with suggested changes. ACCORD Agriculture, Inc.; ACAFO; Lone Star Chapter of the Sierra Club; Henry, Lowerre, Johnson, Hess and Frederick; City of Quanah, Childress County; Greenbelt Municipal and Industrial Water Authority; Red River Authority; Brazos River Authority; and 48 individuals from the Panhandle area of the state either opposed the rules as written or generally opposed the rules and recommended changes be made to the rules as proposed. Texas Farm Bureau; Texas Association of Dairymen; Farm Credit Bank; Continental Grain Company; Maddox and Sons; Agri- Waste Technology, Inc.; Rice Construction; Murphy Family Farms; DeKalb Swine Breeders, Inc.; Texas Cattle Feeders Association; Hereford Feed Yards, Inc.; Jennings Land and Cattle, Inc.; Perry Feeders, Inc.; Benzer Beef; Coyote Lake Feedyard; Dimmitt Feed Yard, Inc.; Morris Stock Farm; Tri-State Cattle Feeders; Canadian Feedyards, Inc.; Comstock Cattle Corp.; Farwell Feed Yards; Perryton Feeders, Inc.; Bartlett Cattle Co., L.P.; Stratford Feedyard; Sugarland Feed Yards, Inc.; McLean Feedyards, Inc.; Live Oak Feedlot, Inc.; Frontier Feedyards, Inc.; Bar-G Feedyard; Koch Beef Co. (Hale Center); Koch Beef Co. (Lubbock); Veribest Cattle Feeders, Inc.; Perryton Economic Development Corporation; Wrangler Feedyard; Jade Cattle Feeders; Pilgrim's Pride Corporation; Mahard Egg Farms, Inc.; North Plains Ground Water Conservation District No. Two; United States Department of Agriculture; NRCS; United States Department of Interior, Fish and Wildlife Service; Mayor, City of Perryton; Texas Agricultural Extension Service "TAEX"(College Station); Texas Agricultural Extension Service "TAEX" (Amarillo) and an attorney representing landowners in Johnson and Ochiltree Counties did not generally support or oppose the rulemaking, but suggested changes to the rules as proposed. Written comments provided by the ACCORD Agriculture, Inc.; ACAFO; Lone Star Chapter of the Sierra Club and Henry, Lowerre, Johnson, Hess and Frederick are listed in the analysis of testimony and comments under the name of ACCORD Agriculture, Inc. A second public hearing on the air quality components of the rules was held on June 25, 1998, in order to fulfill the requirement of sec.382.017(b) of the Texas Health and Safety Code. Oral testimony was received from two organizations and one individual from Ochiltree County. The organizations represented ProAg, who supported adoption of the rules; and ACCORD Agriculture, Inc., who generally opposed the rules and recommended changes be made to the rules as proposed. The individual opposed adoption of the rules as proposed. Nineteen additional written public comments were received in response to notice of the June 25, 1998, hearing, all of which were either opposed to the rules or generally opposed the rules and recommended changes be made. Many of these individuals had previously submitted comments, some of which, were reiterated in these comments. ANALYSIS OF TESTIMONY AND COMMENTS sec.321.31 Waste and Wastewater Discharge and Air Emissions Limitations Texas Cattle Feeders Association suggested that in the last sentence of subsection (b), "process wastewaters" should be replaced with "process generated wastewaters" because "process wastewater" is the sum of "process generated wastewater" and the volume of runoff from precipitation. The commission agrees that modification of the language in the subsection is appropriate for clarification purposes, and has changed the language of the last sentence as follows: "Retention structures shall be designed in accordance with sec.321.39 of this title." In addition, the terms "process generated wastewater" and "process wastewater" will be redefined to maintain consistency with EPA. Fifty individuals in the Panhandle area of the state, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc., ACAFO, Lone Star Chapter of the Sierra Club; Henry, Lowerre, Johnson, Hess and Frederick recommended that all or some of the following changes be made to the proposed rules: Add a requirement that owner/operator has to provide filters on fans in hog operating barns to prevent the emissions of odors and hydrogen sulfide; add standards for reducing the odors from lagoons; BACT should be a priority in the new rules; and swine CAFOs should be required to use dry waste disposal methods or use BMPs to be sure the waste and air emitted is safely treated. The commission disagrees that the rules should be modified to require that filters be added to hog barns because this technology has not been established as Best Available Control Technology (BACT), and would not be required of a facility seeking an individual permit under sec.382.0518. However, the rules do not prohibit the use of filters or other controls to help control odors including hydrogen sulfide. The commission also believes that the design and operational requirements such as the weekly flush schedule requirement in sec.321.39(f)(24)(J), and the ASAE design criteria for single and two stage lagoons in sec.321.39(f) (7) and (13) would be required of swine operations seeking individual permits under sec.382.0518. In addition, sec.321.46 outlines minimum buffer distances and the requirement to submit an odor control plan for certain CAFOs. It should also be pointed out that CAFOs, like all facilities, remain subject to property line standards for hydrogen sulfide in Chapter 112 of this title (relating to Sulphur Compounds). The commission agrees that anaerobic lagoons or innovative technologies are allowed under the air quality standard permit provided they are designed and constructed in accordance with proper engineering practices. The commission disagrees that BACT or any state or federal standard can be prioritized in the rulemaking process. The rule contains air pollution requirements that are substantially equivalent to BACT. The commission agrees that odors from swine operations are often perceived to be different than odors from cattle operations by off-site receptors and can have a different make-up of compounds that collectively form "odors" from waste handling operations. The use of dry waste disposal methods is not prohibited in the rules, however, this technology has not been established as BACT, and would not typically be required of a facility seeking an individual permit under sec.382.0518. In addition, the requirements outside of Texas referenced in the comments were not submitted for review by the commission. With the buffer requirements, odor control plan and design criteria in the rules, it is believed that air contaminants from animal confinement operations can be safely emitted without additional treatment or mandatory dry waste handling. An individual from the Panhandle area requested that the commission inform him of the amount of chemicals being emitted, the amount of small particles from barns, and the effects that these have on his and nearby residences. The commission responds that there is not sufficient or reliable data to calculate and report the expected amounts of the many compounds that may be emitted from CAFOs. In addition, there is not a clear correlation between the detection of these compounds and the expected off-site odor detection level. An individual from the Panhandle area recommended that these rules require no odors from CAFOs. The commission disagrees with the presumed opinion that these regulations should allow "no odors." The Health and Safety Code sec.382.085 allows for air contaminants to be emitted, but only at levels that do not cause or contribute to a condition of "air pollution." In addition, the design criteria and buffer requirements in these rules along with good management practices will help to minimize odors for CAFOs operating under this subchapter. USFWS recommended that more stringent standards be applied to facilities located in watersheds which contain multiple CAFOs, and that wastewater retention systems should be designed to contain a 50 to 100-year, 24-hour event. The commission responds that as to potential cumulative impacts from multiple CAFOs within the same watershed, the agency has designated Dairy Outreach Program Areas (DOPA) in eight counties of the state. This designation was based on documented water quality problems that were being experienced in the Bosque and Lake Fork watersheds in the designated counties. Facilities located within these eight counties are required to meet more stringent requirements such as filing for registration for facilities with between 300 animal units and 1,000 animal units, and obtaining training and education credits for owners/operators every two years. Implementing a requirement for retention systems to be designed to contain a 50 to 100 year, 24-hour event would be more stringent than the standards and requirements of the EPA or other states. sec.321.32. Definitions. TAEX (College Station) recommended that the definition of agronomic rates be changed by replacing the word "needed" with "required." The commission responds that the recommended modification would not change the interpretation or implication of the provision. If a recommendation for an application rate has been made, then that information must be used in the land application of the waste. ACCORD Agriculture, Inc., ACAFO, Lone Star Chapter of the Sierra Club and Henry, Lowerre, Johnson, Hess and Frederick (ACCORD) recommends that the definition for AFO should be expanded to ensure that confinement areas that do not sustain vegetative growth throughout virtually the entire area are included in the definition. It is unclear what associated areas, in addition to the actual confinement area, fall within this definition. The commission responds that the current definition of Animal Feeding Operation is consistent with the federal definition found at 40 CFR sec.122.23. This federal definition is applicable to state NPDES programs, therefore the commission declines to change this definition. The commission believes the definition of AFO as written is comprehensive enough in providing the agency staff with the necessary elements in determining whether an individual facility is an AFO rather than a open-range type operation. Greenbelt Municipal and Industrial Water Authority recommends that the definition of AFO be revised to clarify its applicability to facilities that feed individual animals for only a short period of time before moving them on to other locations. The commission has reviewed the definition and determined that changes are not necessary to the definition. The commission interprets that the criteria used in determining whether a facility is an AFO or not as being based on the total number of animals in confinement for the time specified, regardless of whether the individual animals remain in confinement for a few hours or 365 days. USFWS recommended that swine nursery facilities housing immature swine (less than 55 lbs) be defined as CAFOs and covered by this rule. Thirty-eight individuals from the Panhandle area, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that swine under 55 lbs should be covered by this regulation. Texas Pork Producers Association recommended that the definition for animal unit be modified to add a multiplier for weaned pigs weighing less than 55 pounds of 0.1. The commission believes that the requested change would be a substantive change from the rules as proposed. However, due to the interest shown in this issue the commission is directing the executive director to study this and other identified issues related to CAFOs and provide the commission with recommendations on suggested rules changes after the adoption date of these amendments. TAEX (College Station) recommended that the definition for Best Management Practices be modified by adding "and conservation" after "management." The commission agrees that conservation practices are a necessary part of any BMP utilized by the agricultural community, including CAFOs and has made the corresponding changes to the definition. ACCORD Agriculture, Inc. recommended that the rules include a procedure and criteria for designating AFOs as significant contributors of pollution and a mechanism for adversely affected persons to initiate the process. The commission responds that such a procedure already exists. Any person who believes they are adversely affected by the operation of an AFO may contact one of the commission's field offices to initiate a complaint. If the commission determines that an AFO is a significant contributor of pollution, the executive director will designate that facility as a CAFO. The commission believes that these rules and other rules and policies of the agency already provide well defined mechanisms for determining compliance with state rules and initiating procedures to obtain corrective action whether by issuance of a notice of violation (NOV) or by formal enforcement action. Such procedures and criteria are not amenable to the exact definition required by rulemaking. Rather they should be flexible enough to accommodate the many different situations that will be encountered. The agency has traditionally responded and will continue to respond to legitimate complaints questioning whether a particular facility is compliant with the provisions of this subchapter or other applicable rules and regulations of the commission. The commission believes that this is the most appropriate process for making such determinations within existing fiscal and staffing constraints. Agri-Waste Technology, Inc. recommended that facility size should not be a criteria for varying degrees of regulation. The TNRCC should adopt defined criteria that apply to all sizes of CAFOs. The commission has developed performance related criteria in these adopted rules to apply uniformly to all animal feeding operations. All animal feeding operations must locate, construct and manage waste control facilities and land application areas in accordance with the technical requirements of sec.sec.321.38-321.40 of the title. Larger facilities are required under these rules to obtain authorization prior to operation due to their potential to discharge larger quantities of wastewater. Texas Farm Bureau and Continental Grain Company recommended that Part C of the CAFO definition should include the opening sentence: "Provided, however, that no AFO is a CAFO as defined above if such AFO discharges only in the event of a 25- year, 24-hour storm event." The commission responds that the suggested additional sentence would be contradictory to the intent of the rules to regulate all facilities above a certain size. Texas Cattle Feeders Association recommended that the definition Control Facility be modified by deleting the words "collection and" from the second sentence. The commission feels that the language provides sufficient clarification. The term "control facility" is meant to be a general term intended to cover all the facilities used in controlling manure and wastewater at the CAFO. The recommended change would significantly change the meaning and intent of this term as it is used in these rules. Texas Farm Bureau and Continental Grain Company recommended that the definition Feedlot should be deleted since there is a definition for CAFOs. The commission agrees this term is no longer necessary for these rules as amended. Brazos River Authority recommended that the definition for Land Application should be revised to "....distribution and incorporation into the soil..." The commission responds that it is not practical to require that in every case waste be incorporated into the soil, such as beneficial application on pasture land. The commission believes it is not necessary to limit the beneficial use of manure on a statewide basis to incorporation into the soil. It can be beneficially used on pasture land with minimum effects, if it is properly applied and managed. Texas Cattle Feeders Association recommended that the definition for New Concentrated Animal Feeding Operations does not recognize valid authorizations that were issued under Subchapter K. The CAFOs under these valid permits should not be considered "new CAFOs." These rules do not address retroactive application of the court's invalidation of Subchapter K in Accord. The judge rendering that decision indicated the court "expresses no opinion on the validity of permits issued to others not before the Court." No other court has expressed an opinion on the status of the Subchapter K authorizations that were not specifically nullified in the Accord judgement, and that decision itself is still on appeal. The intent of these rules is to require that all CAFOs that do not have currently valid authorizations shall, and in combination with the proposed general permit, if adopted, will have an avenue to, obtain TNRCC authorization for properly conducted operations. To clarify this, sec.sec.321.32(21), 321.33, 321.34 and 321.35 have been modified from the proposal. The definition of "New Concentrated Animal Feeding Operation" has been modified as follows: "A concentrated animal feeding operation which was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules." The commission believes that its responsibility to maintain effective and efficient regulation of the industry will best be served if those facilities that held unexpired, uncancelled Subchapter K authorizations are encouraged to convert expeditiously into Subchapter B. To that end, the proposed rules have been modified to allow most facilities that have operated in compliance with and in reliance on Subchapter K to transfer to Subchapter B registrations through an expedited process. Texas Cattle Feeders Association and Continental Grain Company recommended that the definition No Discharge should be applicable only to point sources; land application sites should be exempt from this definition. The commission responds that Chapter 26 of the Texas Water Code prohibits any discharge of waste into or adjacent to waters in the state regardless of source, unless authorized by rule, permit or order of the commission. Texas Farm Bureau recommended that the definition of Permittee should be modified to read: "any person issued an individual permit or order, permit-by- rule or granted authorization under the requirements of this subchapter." The commission agrees with the comment and has modified the final rules to reflect the change. The commission has made the recommended changes plus additional clarifying language to provide a better description of all types of authorizations which have been or will be granted or recognized under this subchapter. Texas Farm Bureau recommended that the definition for Process Generated Wastewater be changed to "processed wastewater." The commission agrees with the comment and has modified the definition accordingly to maintain consistency with EPA. To clarify the use of the two terms as they are used in these adopted rules, the commission is adding the following definition for process-generated wastewater. Process-generated wastewater - Any water directly or indirectly used in the operation of a CAFO (such as spillage or overflow from animal or poultry watering systems which comes in contact with waste; washing, cleaning or flushing pens, barns, manure pits, direct contact swimming, washing, or spray cooling of animals; and dust control) which is produced as wastewater. Farm Bureau recommended that the definition for Recharge Feature be changed to the one used under the original Subchapter K. The commission responds that the Subchapter K definition has been modified to provide greater scope in the evaluation. Artificial features have been added to the definition to recognize the potential of recharge by way of various man-made conduits such as wells. Also, the term hydrologic connection has been replaced in the definition because it only refers to potential recharge from surface impoundments or retention structures. North Plains Ground Water Conservation District No. Two recommended that the definition for Recharge Feature be reworded as follows: replace "where" with "which"; add "their existence" after "due to" delete "artificial means or surface and/or geologic features"; add "provide or create" before "a significant pathway"; delete "exists"; and delete "active, abandoned, or dry" at the end of the last sentence. The commission agrees that the recommended changes makes this definition more precise and has made the changes to the rules accordingly. Greenbelt Municipal and Industrial Water Authority recommended that the definition for Qualified groundwater scientist should be revised to ensure that non-engineers are not authorized to engage in the practice of engineering. The commission responds that these amended rules do not authorize non-engineers to practice engineering. However, there are certain non-engineering activities under these rules that may be performed by a qualified groundwater scientist. North Plains Ground Water Conservation District No. Two recommended that the definition for Qualified groundwater scientist be clarified to make it clear that it would include an engineer or scientist who has received the appropriate education, training and experience. The commission agrees that the commenter's interpretation is correct, but believes that the current language of the definition already provides for the necessary education, training and experience of a scientist or engineer. No alternative language was suggested in the comment. Thirty-eight individuals from the Panhandle area, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that the definition Waters in the state be modified to require that all penetrations on a piece of land be properly plugged. The commission believes that all penetrations that are a potential conduit for contamination must either be properly plugged or protected from allowing any contaminated wastewater to reach a groundwater resource. The commission responds that the definition of recharge feature has been expanded under these adopted rules to include a reference to artificial penetrations and therefore need not be included in this definition. Continental Grain Company recommended that the definition for Well should be modified to clarify that the definition would only cover penetrations into the ground surface that would create a significant hydrologic connection. The commission responds that the proposed change would limit its evaluation to only those penetrations which would cause a hydrologic connection with surface waters only. The commission's intent in adding this definition is to make it clear that any penetrations through the earth's surface which would create a conduit to groundwater or surface water must be addressed in the manner identified under these rules. North Plains Ground Water Conservation District No. Two recommended that the definition for Well be reworded as follows: "Any artificial excavation into and/or below the surface of the earth whether in use, unused, abandoned, capped or plugged that may be further described as one or more of the following: 1) Excavation designed to explore for, produce, capture, recharge or recover water, any mineral, compound, gas, or oil from beneath the land surface; 2) Excavation designed for the purpose of monitoring any of the physical or chemical properties of water, minerals, geology, or geothermal properties that exist or may exist below the land surface; 3) Excavation designed to inject or place any liquid, solid, gas, vapor, or any combination of liquid, solid, gas or vapor into any soil or geologic formation below the land surface; or 4) Excavation designed to lower a water or liquid surface either temporarily or permanently for any reason." The commission agrees with the recommended changes and adopts the suggested language with minor changes. The recommended changes provide a more simplified definition of the term. sec.321.33. Applicability. Texas Cattle Feeders Association recommended that this section should recognize the validity of final permit authorizations issued under Subchapter K and applications for Subchapter B permits submitted prior to the effective date of these rules. These rules do not address retroactive application of the court's invalidation of Subchapter K in Accord. The judge rendering that decision indicated the court "expresses no opinion on the validity of permits issued to others not before the Court." No other court has expressed an opinion on the status of the Subchapter K authorizations that were not specifically nullified in the Accord judgement, and that decision itself is still on appeal. The intent of these rules is to require that all CAFOs that do not have currently valid authorizations shall, and in combination with the general permit, will have an avenue to, obtain TNRCC authorization for properly conducted operations. To clarify, this intent sec.sec.321.32(21), 321.33, 321.34 and 321.35 have been modified from the proposal. The first sentence of subsection (a) has been modified as follows: "A CAFO operating under a currently valid authorization granted prior to the effective date of these amended rules shall continue to be authorized and regulated in accordance with the terms of its existing authorization. Any application... (no change)." The commission agrees with the recommended changes and adopts the suggested language. ACCORD Agriculture, Inc. recommended that the term "existing feedlot" in subsection (a) is not a defined term and should be eliminated. The commission agrees that this term is no longer necessary, and has replaced it with "CAFO." Texas Farm Bureau and Continental Grain Company commented that the language of the second sentence of subsection (a) is unclear as to whether additional requirements will be placed on existing permitted CAFOs following renewal, amendment or transfer. Suggest a third sentence as follows: "No new conditions, provisions or requirements will be placed upon existing CAFO that submits an application for renewal, amendment or transfer, if the existing CAFO was authorized under this subchapter prior to the effective date of these rules. The commission responds that its intent in this subsection is to require all facilities to meet the basic technical requirements of these rules. This includes existing facilities renewing their existing permit and/or expanding their operations in the future. However, it is not the intent of the commission to require existing facilities to modify their existing control facilities, unless they expand or are ordered to do so through an enforcement action of the agency. The commission believes that its regulation of CAFOs in the state should be consistent for all facilities similar in nature to the EPA Region VI CAFO NPDES general permitting program since the agency is in the process of obtaining authorization to administer the NPDES program. One reason the state is seeking NPDES delegation is to end the duplicative and burdensome "dual permitting" situation in which Texas dischargers must seek and comply with both a state and a federal authorization for the same operation. It would be counter-productive for these rules to be substantially different from the federal NPDES requirements. Texas Cattle Feeders Association recommended that in subsection (b)(2) the term "fresh water" should be replaced with "waters in the state"; and ACCORD Agriculture, Inc. recommended that this same standard should not be limited to protection of fresh water. Salt water also should be protected from pollution that would result in adverse effects. The commission agrees with both comments and will modify language of subsection (b)(2) to replace "fresh water" with "waters in the state." The change will maintain consistency with Chapter 26 of the TWC. ACCORD Agriculture, Inc. commented that subsection (d) does not appear to provide any limit on facilities that legally could be covered by a "certified water quality management plan." This exemption is not authorized by statute. Section 26.121 exempts from regulation only discharges of "other wastes." The commission responds that this provision recognizes a Memorandum of Understanding (MOU) developed between the commission and the Texas State Soil and Water Conservation Board (TSSWCB) memorialized in 30 TAC 7.102. The MOU specifies which facilities the TSSWCB can work with to provide technical and financial assistance. In addition, the MOU and statutes are clear that the commission has the authority to enforce against any animal feeding facility which does not maintain compliance with a certified water quality management plan approved by the TSSWCB. This provision is authorized by sec.201.026 of the Texas Agriculture Code and sec.26.1311 of the Texas Water Code. ACCORD Agriculture, Inc. commented that proposed language of subsection (f) seems to preclude a CAFO owner or operator from applying for an individual permit. That option should still be available. The commission agrees that a CAFO should not be precluded from applying for an individual permit. The commission has added language to the subsection to enact that intent. ACCORD Agriculture, Inc. recommended that the language in subsection (g) be revised to clarify as follows: change "or" after "general permit" to "nor," insert the word "which" before the phrase "is located in," and substitute the word "which" for the word "that" before the phrase "is designed to stable..." The commission agrees with this comment and has made the suggested changes for the purpose of clarification. ACCORD Agriculture, Inc. recommended that the language in subsection (h) should require a PPP for an AFO in a DOPA. The commission disagrees with the comment. The commission has defined any AFO with more than 300 animal units in a DOPA as being a CAFO and therefore subject to the requirements of this subsection as adopted. This is a more stringent requirement than that imposed by the current EPA Region VI CAFO General Permit. The commission feels that these rules articulate in subsection (e) that all AFOs are required to "locate, construct and manage waste control facilities" in accordance with the standard and technical requirements in these rules. This subsection does not require AFO operators to actually develop a PPP, but it does hold them to the general standards for waste discharge and air emissions required under sec.321.31 of this title (relating to Waste and Wastewater Discharge and Air Emissions Limitations) of facilities authorized in this subchapter. ACCORD Agriculture, Inc. recommended that the language in subsection (i) be amended because it is inconsistent with sec.382.0518 of the Health and Safety Code. The commission disagrees that sec.382.0518 is applicable for air standard permit authorization. However, the commission feels that prior authorization is needed and the final rules have incorporated changes to subsection (i) to require written authorization prior to construction for those CAFOs seeking the air quality standard permit under this subchapter. ACCORD Agriculture, Inc. recommended that the language in subsection (j) be changed to read simply that a CAFO having an existing, valid air emissions permit need not obtain other authorization. The commission responds that the intent of the opening sentence in (j) is to clarify that the air quality standard permit contained under this subchapter is an optional authorization in lieu of obtaining traditional air authorization (such as an individual air quality permit under Chapter 116), and that the design, location, and operational requirements that make up the standard permit are not applicable if the facility currently holds a Chapter 116 authorization. The statement "...does not have to meet the air quality criteria of this subchapter" is not intended to suggest that certain CAFOs are exempt from the prohibition against creating a nuisance in sec.321.31(c), since that prohibition would also be required by sec.101.4 of the TNRCC General Rules. In addition, the commission does not agree that "valid air emissions permits" adequately describes the various types of air authorizations that are available to operators (for example: exemptions, standard exemptions, special exemptions, other standard permits, and "grandfathered" facilities as defined in Chapter 116). Continental Grain Company recommended that subsection (j) should be amended to allow existing CAFOs to obtain air quality standard permit authorization under this subchapter, suggesting adding the words "or existing" in the second sentence, between words, "new" and "CAFO." The commission agrees with this recommended change and has deleted the term "new" to remove the implied limitation. It is not the commission's intent to prohibit existing CAFOs either with or without Chapter 116 authorizations from voiding their existing air authorizations and substituting combined air and water authorizations under this subchapter. Dekalb Swine Breeders, Inc., Pilgrim's Pride, Inc., Texas Poultry Federation, Wrangler Feedyards, Jade Cattle Feeders, Koch Beef Company, Veribest Cattle Feeders, Inc., Bar G Feedyard, Frontier Feedyards, Inc., Coyote Lake Feedyard, Live Oak Feedlot, Inc., McLean Feedyard, Inc., Sugarland Feed Yards, Inc., Stratford Feedyard, Bartlett Cattle Company, L.P., Perryton Feeders, Inc., Bezner Beef, Jennings Land and Cattle, Inc., Canadian Feedyards, Inc., Comstock Cattle Corp., Tri-State Cattle Feeders, Dimmitt Feed Yard, LLC. and Texas Cattle Feeders Association recommended that under subsection (j) the commission issue a combined water and air quality authorization. Creating a separated air permit would be an unnecessary bureaucratic addition to the system. The commission disagrees that separate air quality permits for certain facilities which cannot meet the air quality criteria of this subchapter are unnecessarily burdensome on the regulated community. The air quality standard permit in Chapter 321 is intended to authorize only those facilities that meet predetermined design, location, and operational requirements considered standard for the industry, as identified in these rules. Those operations that cannot satisfy these requirements can apply for case-by-case permit authorization under Chapter 116. Prohibiting this avenue for individual permit authorization would be an unreasonable limitation on the commission's ability to tailor the type of regulation to the circumstances of a particular situation. Continental Grain Company and Texas Cattle Feeders Association recommended that the language of subsection (k) be clarified so a that "major modification" does not result in a CAFO losing coverage under the air provision of this subchapter and require a Chapter 116 permit. What is the difference in "major modification" and "major amendment" as used in this subsection? The commission disagrees that a "major modification" should be allowed under Chapter 321. A "major modification", defined in Chapter 116.12(11) of this title, typically means any new construction or modification to an existing facility which results in emissions increases above the significant levels as defined in federal rules (i.e., Prevention of Significant Deterioration (PSD), Nonattainment (NA), Maximum Achievable Control Technology (MACT)...). The commission believes that all "major sources" are significant and should be reviewed under the case-by-case permit application process in Chapter 116. The terms "major modification" and "major amendment" are not synonymous within the context of this subsection. This subsection covers only air quality related changes and not those associated with the water quality aspects of the facility."Major amendment" is defined in sec.305.62 of this title as an amendment that changes a substantive term, provision, requirement, or limiting parameter of a permit. A major amendment to a permit does not necessarily require a Chapter 116 permit. ACCORD Agriculture, Inc. commented that subsection (l) offers no justification for waiving the requirements of these rules for facilities that are transferred in from individual authorizations, suggesting that facilities may not be authorized by these rules unless they meet the requirements of the rules, both for air and water quality purposes. The commission believes that for facilities with prior water and/or air quality authorization applying for transfer into this subchapter, it is reasonable to waive certain requirements. The commission further believes that requiring operators to retrofit existing facilities by making structural changes and/or acquiring additional buffer distances would be cost prohibitive and/or could force some existing owners/operators to go out of business. However, as stated in subsection (l), any transfers that would not otherwise satisfy this amended subchapter would include all special conditions/provisions from the existing permit. Brazos River Authority recommended that subsection (l) should recognize compliance history and siting conditions in respect to surface and groundwater as factors in allowing transfers. The commission does not agree the proposed change is necessary because the rule currently gives the commission the flexibility to consider compliance issues. The rule allows the commission to impose additional conditions on facilities previously authorized under this subchapter that wish to transfer from an individual permit to a registration if there is substantial modification to the facility or to address compliance problems with the facility. Texas Farm Bureau and Continental Grain Company recommended that subsection (l) should allow transfers without hearing and notice. In addition, this subsection should not require the implementation of sec.sec.321.39(f)(1)(B) and 321.39(f)(32) of this subchapter. The commission disagrees that transfers should be allowed under these rules without hearing and notice. The commission's view is that such transfers must meet the basic procedural and technical requirements in order to gain coverage under these amended provisions. This transfer provision is at the election of the permittee. If the permittee wishes to remain under their existing authorization, they may do so until the permit is up for renewal. In addition, the commission responds that its intent in this subsection is to require all facilities who transfer their existing authorization to meet the basic technical requirements of these rules. This would include existing facilities that renew their existing permit and/or expand their operation (without the need to construct additional control facilities). However, it is not the intent of the commission to require physical changes to the facility if it was properly constructed according to the rules in place at the time of construction, unless ordered to do so through an enforcement action of the agency or required to do so because of a proposed expansion which would require additional or new construction. The commission believes that its regulation of CAFOs should be consistent for all facilities, similar in nature to the EPA Region VI CAFO NPDES general permitting program since the agency is in the process of obtaining authorization to administer NPDES. A CAFO covered under an EPA NPDES CAFO General Permit is required to develop and implement a PPP similar to what is required under these rules. The two provisions for which an exemption is requested are not included in the EPA General Permit because it does not cover air quality or protection of groundwater. The commission agrees that facilities with prior authorization under this subchapter which hold an existing Chapter 116 permit and request to transfer authorization under this amended subchapter should not be required to submit an odor control plan required in sec.321.46 unless the project includes an expansion of the facility. As adopted, the requirements to submit an odor control plan (previously termed odor abatement plan) are listed in sec.321.46. Brazos River Authority recommended that subsection (n) be modified to require CAFOs located within a DOPA to meet the same stricter standards as being located within one mile of Coastal Natural Resource Area. The commission responds that facilities located within the DOPA are required to meet stringent requirements such as filing for registration between 300 animal units and 1,000 animal units, and obtaining training and education credits for owners/operators every two years. New CAFOs within one mile of a Coastal Natural Resource Area are required to obtain an individual permit because under the CMP any such facility which discharges must have effluent limitations established through an individual permitting process. Greenbelt Municipal and Industrial Water Authority proposed adding a new subsection (o) establishing a water quality buffer zone to protect surface water bodies used for municipal water supply. In addition, it suggested that any new or expanding CAFO must be located at a distance greater than 10 miles upstream from the conservation level of the surface water body. Also proposed a reduction in the total number of animals allowed at a CAFO qualifying for the streamlined process. Red River Authority and Greenbelt Municipal and Industrial Water Authority proposed adding a new subsection (o) which would require any CAFO located within the drainage area 10 miles upstream of reservoir used to store municipal water supply shall only apply for and obtain an individual permit and may not commence physical construction and/or operation of any waste management facilities w/o first obtaining a final effective permit. Texas Cattle Feeders Association recommended that in reference to a comment at the public hearing asking for the TNRCC to set a 10 mile buffer zone around municipal surface water impoundments, no concept for such a setback requirement was published in the proposed rules and therefore should not be considered in the final rules. Significant study of this important issue is needed before establishing policy and permit requirements. The commission believes that to add such a provision as requested to the rules would constitute such a substantial change to the proposed rules as to make it necessary to repropose them before adoption. The commission is interested in this issue and will direct the executive director to study the recommended actions and provide a recommendation to the commission after the adoption of these rules. Greenbelt Municipal and Industrial Water Authority proposed that new subsections be added which would prohibit CAFOs if: 1) any CAFO levee would put one person at risk; 2) embankment materials used for the levee are dispersive soil or contain sufficient quantities of soluble gypsum; and 3) the pond or levee is situated in a 100-year floodplain. The commission responds that under these rules CAFO facilities must be constructed with good engineering practices; facilities located within the 100- year floodplain must meet the National Flood Insurance Program requirements for participating communities and must be protected from inundation by the 100-year flood. Any structures, located in the floodplain must be certified by a licensed Professional Engineer as designed appropriately and adequate to protect the facility from damage and failure. Agri-Waste Technology, Inc., Pilgrim's Pride Corp., Texas Poultry Federation, Wrangler Feedyards, Bezner Beef, and Coyote Feedyard recommended that the commission allow existing Subchapter K permits to continue in effect until such permits are amended or expire; or in the alternative that current holders of Subchapter K permits be allowed to operate under the new revised Subchapter B permit, without submitting any additional documentation. These rules do not address retroactive application of the court's invalidation of Subchapter K in Accord. The judge rendering that decision indicated the court "expresses no opinion on the validity of permits issued to others not before the Court." No other court has expressed an opinion on the status of the Subchapter K authorizations that were not specifically nullified in the Accord judgement, and that decision itself is still on appeal. The intent of these rules is to require that all CAFOs that do not have currently valid authorizations shall, and in combination with the general permit, will have an avenue to, obtain TNRCC authorization for properly conducted operations. To clarify, this intent sec.sec.321.32(21), 321.33, 321.34 and 321.35 have been modified as follows: "A CAFO that was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules." An individual from the Panhandle area recommended that a distinction should be made between swine, cattle, and other animals regulated by these rules. Odors from a swine CAFO is of a different kind and intensity than other CAFOs. The commission disagrees that swine operations should be regulated differently because they produce "different" odors. However, these rules do contain conditions that will routinely apply only to swine operations due to differences in design technology typically associated with swine operations (such as weekly scraping of pens and weekly flushing of pits). These rules utilize ASAE standards, which were intended for use nationwide, for designing anaerobic treatment lagoons to minimize odors. These standards do take into account species-specific factors for manure production and the number of confinement hours per day in calculating the total daily waste generated, and calculate the necessary treatment volume based on geographic factors. For example, a hog operation and a dairy farm with the same number of head, utilizing the same technology and located in the same area of the state, would likely result in differently sized treatment ponds for the two facilities. Where common technologies such as the anaerobic treatment lagoons described above are utilized, the commission believes that common design criteria should be used for a given amount of waste, regardless of species type. An attorney representing landowners in Johnson and Ochiltree Counties recommended that the rules be modified such that the following feedlots/CAFOs facilities would be not eligible for application for registration: A facility that is subject of an unexpired enforcement order or other order issued by the commission in response to an alleged violation; a facility that is subject to an unresolved notice of violation (NOV), a pending enforcement referral, a pending executive director's report and petition, or other formal enforcement action involving the actual or potential release of discharge of pollutants; a facility that has been constructed and operated without prior written authorization of the commission (including an operation that has maintained more animals than authorized); a facility deemed by the executive director to be in substantial noncompliance; a facility that has been the subject of two or more enforcement or remedial commission orders at any time or the subject of an enforcement referral to the Office of the Attorney General; a facility whose operations have resulted in the unauthorized release or discharge of pollutants onto the property of another in the last five years; or a facility whose operation have resulted in the pollution of groundwater or surface water during the past five years or whose continued operation are likely to result in the pollution of surface or ground waters. An attorney representing landowners in Johnson and Ochiltree Counties recommended that the rules be modified such that the following owners/operators of feedlots/CAFO facilities are ineligible for coverage for an application for registration: An owner/operator who has been the subject of two or more enforcement referrals from the TNRCC regional offices during the past 36 months; An owner/operator whose operations in the state during the past five years have been subject to two or more enforcement or referral commission orders or whose operations have been the subject of an enforcement referral to the Office of the Attorney General; An owner/operator whose operations have resulted in the unauthorized release or discharge of pollutants onto the property of another in the past thirty-six months; or a facility whose operation have resulted in the pollution of groundwater or surface water during the past thirty-six months. The commission does not agree with these comments and has not changed the rule. As adopted, these rules give the executive director the discretion to require an individual permit application from owners/operators with a poor compliance history. These rules are intended to complement the proposed general permit, the availability of which is proposed to be more limited. This rule is designed to provide the executive director with more flexibility to determine the type of authorization a particular facility will be required to seek. The commission does not believe that the executive director should be limited by the suggestions provided by the commenter. sec.321.34. Procedures for Making Application for an Individual Permit. Brazos River Authority proposed that subsection (a) be amended to add specific criteria whereby the commission may extend the permit term. The commission agrees that the section needs clarification and has removed "unless stated otherwise in the permit or extended by order of the commission" to provide for such clarification. ACCORD Agriculture, Inc. recommended that subsection (a) in its reference to any "person" should be clarified as referring to any owner or operator of a CAFO. The commission does not agree with this comment and has made no change to this comment. The commission believes the term "person" is reasonably interpreted to include owners and operators of CAFO's. The commission's definition of the term "person" in Chapter 3 of this title (relating to Definitions) would provide further clarification of the use of this term. Texas Farm Bureau proposed under subsection (a) that the commission's recognition of an applicant's permit under Subchapter K should be recognized and application under Subchapter B should be transferred with the least amount of technical review. These rules do not address retroactive application of the court's invalidation of Subchapter K in Accord. The judge rendering that decision indicated the court "expresses no opinion on the validity of permits issued to others not before the Court." No other court has expressed an opinion on the status of the Subchapter K authorizations that were not specifically nullified in the Accord judgement, and that decision itself is still on appeal. The intent of these rules is to require that all CAFOs that do not have currently valid authorizations shall, and in combination with the general permit, will have an avenue to, obtain TNRCC authorization for properly conducted operations. To clarify, this intent sec.sec.321.32(21), 321.33, 321.34 and 321.35 have been modified as follows: "A CAFO that was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules." It was the commission intent to include the reference to all applicable fees for CAFOs in this subchapter for easy reference in subsection (a) of this section. CAFOs are subject to a Clean Rivers Program fee. The commission has added language to subsection (a) to clarify that CAFO obtaining authorization under this section will be subject to a fee under sec.220.21 of this title (relating to Water Quality Assessment Fees). Brazos River Authority recommended that language in subsection (b) be modified from "major enforcement actions" to "no major violations." The commission does not agree with this comment and has made no change to the rule. The commission believes that the term "major enforcement actions" is more specific and applicable than the term "major violations" which is a very broad term susceptible to a variety of subjective interpretations. This term is consistent with the commission's recent adoption of rules in Chapter 205 of this title (related to General Permits for Waste Discharges). ACCORD Agriculture, Inc. recommended that subsection (b)(2) must be amended to address compliance history for other violations of air requirements such as property line standards for dust regardless of whether the violation is considered to constitute a nuisance. In addition, some form of public participation process is needed for renewals of permits. Although emissions from CAFOs have been historically compared to the nuisance rule to determine compliance with applicable standards, the commission agrees that any violation of an applicable property line standard or nuisance should be considered a violation subject to major enforcement action when renewing a permit under this subchapter. The adopted version of the rule has been modified to reference nuisance and "any violation of a state property line standard or federal ambient air quality standard." The commission does not believe that additional public participation is required for renewals of individual permits in which there are no changes in terms and which are not under enforcement by the commission. The renewal procedures for CAFO's are similar to existing procedures and criteria for renewals of other water quality permits issued by the commission. Texas Farm Bureau and Continental Grain Company recommended that language in subsection (b)(2) be amended by changing the words "any other changes" in the first sentence to read: "any other major change or modifications." The commission responds by clarifying the language as follows: "any changes which constitute a major amendment as defined in Chapter 305 of this title or major source or major modification as defined in Chapter 116 of this title." Texas Cattle Feeders Association proposed that subsection (f) be modified to require that the notice of expiration should be sent by certified mail-return receipt requested. The commission agrees with this comment, and has changed the rule accordingly. Texas Cattle Feeders Association recommended that language in subsection (g) be amended as follows: the phrase "which is not authorized by an individual permit according to this section" should be added between the words "operator" and "shall" The commission agrees in part with the comment and has clarified the language of subsection (g) by changing "that a permit is required" to "that an individual permit is required." Continental Grain Company proposed that a new subsection be added which states that a major amendment of an individual permit authorized by this permit shall also constitute a renewal of the individual permit. The amended permit should not have to be renewed for 5 years. Texas Cattle Feeders Association proposed adding new subsections (h-k) as follows: (h) If an application for renewal requests a major amendment, as defined by 305.62 of this title (relating to Amendment), of the existing individual permit, an application shall be filed in accordance with subsection (a) of this title. The commission agrees that major amendments can be authorized for an additional five years, in accordance with sec.305.62(h) of this title, because a thorough review takes place prior to issuance of the amendment and the applicant has paid the appropriate fee. This has been the policy of the commission under the previous Subchapters B & K. (i) If renewal procedures have been initiated before the individual permit expiration date, the existing individual permit will remain in full force and effect and will not expire until action on the application for renewal is final. The commission agrees with this comment, this change will be made for the purpose of clarification. (j) The Executive Director may deny an application for renewal for the grounds set forth in sec.305.66 of this title (relating to Revocation and Suspension). The commission responds that a application for renewal may be denied for a variety of reasons, including but not exclusively of the grounds set forth in sec.305.66 of this title. (k) A major amendment or transfer of an individual or permit by registration authorized under this subchapter shall also constitute a renewal of the individual or permit by registration. This will ensure that permits are reauthorized for five years when major amendments or transfers are approved. The commission agrees that major amendments can be authorized for an additional five years because full application procedures, including public notice and comment, are required and the applicant has paid the appropriate fee. The commission disagrees that a transfer should allow the expiration date to be changed, since full application procedures are not required. The Mayor of the City of Perryton recommended that local groundwater districts should receive a complete copy of the application for review and comment. The groundwater district and TNRCC regional office should visually inspect the proposed site prior to, during and after completion of construction. Operations should not begin prior to the TNRCC's and the groundwater district's final inspection. The commission does not agree with this comment and has made no change to the rule. The rules currently require operations located within the jurisdiction of a groundwater district to mail notice of application to that district. The commission does not have the authority to require a local groundwater district to visually inspect a proposed site prior to, during and after completion of construction. Greenbelt Municipal and Industrial Water Authority recommended that additional technical requirements mandatory liners, underground monitoring devices, annual sampling (sample taken on same day each year and results reported to TNRCC) of lagoons should be required of any CAFO locating within a water quality buffer zone to prevent releases or minimize the impact of releases. The commission does not agree with this comment and has made no change to the rule. The commission believes that the requirements in these rules for liners, monitoring and sampling are equal to or more stringent than existing federal requirements and are protective of surface and groundwater quality. The commission is interested in the concept of a water quality buffer zone and will direct the executive director to study the need for such and provide a recommendation to the commission in the future. sec.321.35. Procedures for Making Application for Registration. ACCORD Agriculture, Inc. recommended that language in subsection (a) should be amended to refer to any owner or operator of a CAFO. Current language improperly fails to provide the option for CAFOs to be regulated by individual permit. The commission does not agree with this comment and has made no change to the rule. The commission believes the term "person" is reasonably interpreted to include owners and operators of CAFO's. In addition, the commission believes the rules are clear that a CAFO may be required or choose to obtain an individual permit. Texas Farm Bureau and Texas Cattle Feeders Association suggests that current language of subsection (a) does not recognize current permit by rule authorizations under Subchapter K. These rules do not address retroactive application of the court's invalidation of Subchapter K in Accord. The judge rendering that decision indicated the court "expresses no opinion on the validity of permits issued to others not before the Court." No other court has expressed an opinion on the status of the Subchapter K authorizations that were not specifically nullified in the Accord judgement, and that decision itself is still on appeal. The intent of these rules is to require that all CAFOs that do not have currently valid authorizations shall, and in combination with the general permit, will have an avenue to, obtain TNRCC authorization for properly conducted operations. To clarify, this intent sec.sec.321.32(21), 321.33, 321.34 and 321.35 have been modified as follows: "A CAFO that was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules." Texas Cattle Feeders Association suggests that subsection (c) be modified by deleting the requirement of providing the TNRCC regional office with "one additional copy of the application with attachments to the appropriate..." To what extent does the regional office utilize the complete application? Would the time and resources of the regional office staff, permittee and engineering consultant be better served if a complete copy of the application was not sent to the regional office since it is available at a location for public review? The commission responds that regions offices utilize the document in any communication with the Agriculture Section during the authorization process, during any inspection or complaint and having the document available for public review. No change was made in response to this comment. An attorney representing landowners in Johnson and Ochiltree Counties recommended that subsection (c) be amended to add the following: Each groundwater district, river authority, and city/county government shall be provided a complete copy of the application by the applicant (proof of service required) no later that the date of filing with the executive director. The applicant shall allow the groundwater district, river authority and city/county government to inspect the propose site during normal business hours or as otherwise agreed. The groundwater district, river authority, city/county government should be allowed to submit written comments, including any objections and formal recommendations to the executive director (with a copy to the applicant). The executive director shall respond in writing to any objections and recommendations prior to the executive director's final decision. The groundwater district shall be notified in writing at least 48 hours prior to the plugging of any artificial penetration and may inspect and oversee such activity. The facility shall comply with all applicable rules and other requirements of the groundwater district concerning plugging and the protection of groundwater. The commission does not agree with this comment. The commission does not believe it is efficient to require applicants to submit copies of the application to groundwater districts, river authorities, and city and county governments. Instead, the commission rules require that notice of application be mailed to city and county governments, river authorities (for those applications in the Dairy Outreach Program) and groundwater districts (for applications located in an area within the jurisdiction of such a district). Notice of application will allow river authorities, local governments, and water districts to make a determination whether they wish to obtain a copy of an application. This commission has no authority to grant any entity the authority to enter onto a facility covered by these rules. An attorney representing landowners in Johnson and Ochiltree Counties further recommended that subsection (c) be amended to add the following: The appropriate regional office shall be provided a complete copy of the application no later than the date of filing with the executive director. The regional office shall conduct an inspection of the proposed site to confirm general accuracy and completeness of the information provided in the application. A permit can not be approved until such inspection has occurred. The regional office shall be notified in writing at least 48 hours prior to the plugging of any artificial penetration and may inspect such activity. The facility shall comply with all applicable rules and other requirements of the TNRCC concerning plugging and the protection of groundwater. The commission agrees that the regional office should be sent a copy of the application at the time of filing with the executive director and this is already a part of the requirements under this section. However, the commission does not believe that it is necessary for these rules to require the regional office to inspect a facility prior to an authorization being approved. Such inspections will be left to the discretion of the executive director based upon a case-by-case review and the availability of manpower in a regional office to perform such functions. These rules require that the applicant locate all artificial penetrations at the site and submit a plan to address how the applicant will address the protection of the associated groundwater resource. The commission believes this sufficient notification of what the applicant will do to protect the groundwater resources. Any facility under these rules is already required to comply with the TNRCC regulations for plugging and the protection of groundwater. ACCORD Agriculture, Inc. suggested that language in subsection (c)(5) does not make clear, what is intended by "land operated or controlled by the applicant."Needs further definition. The rules should make clear that storage areas for all wastes must be included in the site plan. Information on adjacent landowners falling within the appropriate buffer zone should be included in order to assess buffer zone compliance. The commission disagrees with the comment and believes that "land operated or controlled by the applicant" clearly refers to land owned or leased by the applicant and used as part of the CAFO. The subsection requires all types of control or retention facilities to be included in the site plan including storage areas. For air quality applications, sec.321.35(c)(12) requires submittal of an area land use map identifying residences, animal feeding operations, businesses or occupied structures within a mile of the permanent odor sources. The buffer zone requirement in sec.321.46 is modified to apply to air authorizations only. Texas Cattle Feeders Association recommended that language in subsection (c)(5) needed further clarification. A "final" site plan cannot be submitted with confidence. The word "final" should be replaced with the word "proposed" because the construction of a facility has not yet begun and may be many months from "final." A facility certification is submitted by a professional engineer upon completion of construction, and as such can reflect any changes to the proposed site plan and can verify the proposed site plan as final. The commission agrees in part and has changed the language to add the word "proposed" to assure there is no confusion on what is required from the applicant. ACCORD Agriculture, Inc. recommended that additional language be added to subsection (c)(7) which would require that additional information should be provided for areas downstream of any part of the facility where waste materials are, or may be, present. One mile is not an appropriate cut-off for larger facilities. They have a greater potential to cause significant problems for many miles downstream. The commission responds that the one mile distance is an appropriate cut-off for facilities designed for no discharge and the requirements for these facilities are the same as other no-discharge municipal and industrial wastewater facilities. ACCORD Agriculture, Inc. recommended that the second sentence in subsection (c)(9) should be rephrased. It needs to say that the requirement does not apply to land not owned, operated or controlled by the applicant that is used solely for the off-site application of manure that has been sold or given to others for beneficial use, provided the owner/operator is not involved in the application of the manure. The commission agrees with the comment and has adopted the following language "....beneficial use, provided the owner/operator of the CAFO is not involved in the application of the manure." The language provides clarification to prevent misunderstanding of this provision. An attorney representing landowners in Johnson and Ochiltree Counties proposed that subsection (c)(10) be amended to include that all potential recharge features existing on and within a 500 foot radius of the proposed site be plotted on a grid map, visually inspected by a registered professional engineer, assigned an identifying number and properly evaluated by providing a specific list of technical information related to ten specified items. The commission responds that the rules require that any recharge features located on the CAFO property must be identified on the site plan. This commission has no authority to require an adjoining landowner to allow an applicant access to their property to perform a visual inspection. A visual inspection or research of all available records may still not locate all features at a proposed site, especially those hidden just below the surface of the earth. A plan to prevent impacts from any recharge feature located on the site must be prepared and submitted by the applicant for each identified feature, even if these features are identified after construction begins. The requirements provide for a thorough evaluation of the site. Plus, any discharges of waste or wastewater onto a neighbor's property would violate the authorization and be subject to enforcement. Texas Cattle Feeders Association proposes that a new subparagraph (A) be added to subsection (c)(10) as follows: "The following records and/or maps shall be reviewed to locate artificial recharge features (abandoned wells): (1) Railroad Commission, (2) Groundwater Conservation District, if site is within a district, (3) Water Well Drillers Board, (4) Farm Service Agency and (5) Engineer site inspection." Dekalb Swine Breeders, Inc., Agri-Waste Technology, Inc. and Texas Poultry Federation recommended that the rules be modified to specifically define the sources of that discovery so it is clear when the search and discovery procedure is adequately completed. The commission agrees in part with the comments and has modified the suggested revision and added it to the final rules as follows: "At a minimum, the records and/or maps of the following entities/agencies shall be reviewed to locate any artificial recharge features: (1) Railroad Commission; (2) Groundwater District, if applicable; (3) Texas Water Development Board; (4) TNRCC; (5) Natural Resource Conservation Service; (6) previous owner of site, if available, and (7) on-site inspection of site with a NRCS engineer, licensed professional engineer or qualified groundwater scientist. This modified provision will provide a basis by which a certification can be developed to determine whether a recharge feature exists on the site proposed under an application. North Plains Ground Water Conservation District No. Two proposed deleting subsection (c)(10) and rewording subsection (c)(11) as follows: "The applicant shall document the presence or absence of recharge features on the tracts for which an application is being filed. The final site plan shall also indicate the specific location of recharge features that have been documented and/or located on any property owned, operated or controlled by the applicant and utilized under the application as certified by a NRCS engineer, licensed professional engineer, or qualified groundwater scientist. Documentation, by the certifying party shall identify the sources and/or methods used to identify presence or absence of recharge features. The applicant shall also submit a plan, developed by a NRCS engineer or licensed professional engineer, to prevent impacts on any located recharge feature and associated groundwater formation which may include the following: (A) Installation of the necessary and appropriate protective measures for each located recharge feature such as impervious cover, berms or other equivalent protective measures; or (B) no change; or (c) Any other similar method or approach demonstrated by the applicant to be protective of any associated recharge feature; and (D) Any method or approach to be used by the applicant to identify previously unidentified and/or undocumented recharge features that may be discovered during the time of construction." The commission agrees in part with the recommendation. The commission has modified the existing language of subsection (c)(10) and (11) to reflect the substance of the changes recommended by the commenter. Such changes further clarify the intent of the commission to assure the recharge features are properly located at the time of application or during construction and that the appropriate plans are developed and implemented to assure that such features do not become conduits to the underlying groundwater resources. Appropriate changes have been made to the subsection. ACCORD Agriculture, Inc. recommended that language in both subsections (c)(11)(B) and (c)(11)(C) be modified as follows: monitoring should be required in addition to the installation of appropriate control measures not as an alternative to use of such measures; and language is too broad, there needs to be some standard to measure protectiveness against. Monitoring of groundwater may be an appropriate practice in a plan to protect recharge features. However, we disagree that in all cases, monitoring is necessary to protect recharge features. A licensed professional engineer will determine the elements of each plan on a case-by-case basis. ACCORD Agriculture, Inc. recommended in subsection (c)(12) that the use of "should" rather than "shall" is inappropriate. A one-mile radius is not adequate for considering air impacts. Parks and other recreational areas need to be included. The commission agrees with the proposed language change and has modified (c)(12) to reflect the use of the word "shall" instead of "should." The commission, however, disagrees that the "1 mile" reference needs to be increased when the air quality buffer requirements in sec.321.46 is less than one mile. The 1 mile radius referenced in this paragraph was not intended for use in considering air impacts; rather, as a tool to ensure compliance with any applicable buffer requirements in sec.321.46. Requiring a land use map with a 1 mile radius is believed to be sufficient for determining compliance with the requirements in sec.321.46. The commission also agrees that the language should be modified to include "public park" to be consistent with the requirements in sec.321.46. The commission does not agree that "other recreational areas" needs to added because this term is considered too broad and difficult to define. In addition, this subsection has been modified by adding the phrase "to show compliance with sec.321.46" to the end of first sentence to clarify the intent of this requirement. ACCORD Agriculture, Inc. recommended in subsection (c)(13) that a copy of the application should always be available at a local library or other public site in the county where the CAFO is located. Interested persons must be allowed to examine and copy an application in relative privacy. The commission agrees that interested persons should have the opportunity to review a copy of an application in relative privacy. The commission has changed the rule in response to this comment. North Plains Ground Water Conservation District No. Two recommended in subsection (c)(13) to replace "regular" with "normal" in second sentence, and add the following new sentence between the second and third: " For the purposes of this section, normal business hours shall be at a minimum of: from 9:00 a.m. to noon and from 1:00 p.m. to 5:00 p.m., Monday through Friday allowing for the observance of state and/or federal holidays." The commission agrees with this comment and has changed the rule accordingly. It was the commission intent to include the reference to all applicable fees for CAFOs in this subchapter for easy reference in subsection (d) of this section. CAFOs are subject to a Clean Rivers Program fee. The commission has added language to subsection (d) to clarify that CAFO obtaining authorization under this section will be subject to a fee under sec.220.21 of this title (relating to Water Quality Assessment Fees). ACCORD Agriculture, Inc. recommended in subsection (f) the basis that would be considered appropriate for extending effectiveness of a registration beyond five years should be provided. The commission agrees with this comment and has changed the rule for the purpose of clarity by removing the language related to extension. ACCORD Agriculture, Inc. recommended in subsection (g) The structure of this provision is unclear. A one-size fits all approach simply is not appropriate. Although « mile may be adequate for small facilities, very large facilities will require buffer zones of several miles. The term "public recreation area (e.g., golf course)" should be substituted for public park. It is not clear in measuring buffer zones if playgrounds and outdoor sports facilities at schools are appropriately considered. A buffer zone must be determined based on the odor potential of the individual facility. As adopted, sec.321.46 outlines buffer requirements and odor control plans required for new CAFOs and expansion of existing CAFOs. The commission believes that a « mile separation distance or 1/4 mile separation with an odor control plan for new CAFOs is reasonable and intends it to be the minimum distance required. Likewise, the commission believes it is appropriate for expansion of existing CAFOs to either submit an odor control plan or provide a 1/4 mile separation distance. In addition to these requirements, the proposed rules contain several provisions which aid in minimizing odors such as pond sizing, application limitations, manure scraping schedules, and manure handling requirements. It would be difficult to establish a relationship between herd size and needed buffer zones for different animal species and different waste management designs. The compliance history established by the TNRCC (and TACB) on existing animal feeding operations does not support different buffer zone distances for different herd sizes. Regardless of buffer distances, operators are still required to adhere to the general prohibition against "nuisance." The commission disagrees that the term "public recreation area" should be substituted for the term "public park," because it is too broad. Section 321.46 has been modified to clarify that recreational areas associated with a school will be considered along with schools in the list of included items. In the commentor's example, a golf course would be considered either a public park or a business, depending on whether it is open to members of the general public. In addition, the requirements under this subsection, as proposed, has been moved to sec.321.46 to clarify that this requirement is only applicable to applications seeking both air and water authorization. Farm Credit Bank of Texas suggested in subsection (g) that the « mile buffer requirement will adversely effect the ability of financial institutions to extend credit to CAFOs because compliance with this regulation will require a disproportionate amount of capital investment relative to expected return. After review of the comments submitted regarding buffer zones, the commission has modified the language of sec.321.46 to state that new CAFOs shall provide either a half-mile air quality buffer; or shall provide a quarter-mile air quality buffer and submit an odor control plan. For expansion of existing CAFOs, sec.321.46 has been modified to require either a quarter-mile buffer or an odor control plan. The commission agrees that requiring a « mile buffer zone for all facilities could add a financial burden on the owner/operator of the facility; however, the rules do not specify that the buffer zone be owned by the owner/operator of the facility. The applicant also retains the option of 116 authorization which has no established minimum buffer distance. Greenbelt Municipal and Industrial Water Authority suggested in subsection (g) for reasons of law and policy, the TNRCC should not allow individuals to "consent" to violations of the public rights created by the TCAA. The commission disagrees that allowing land owners to consent to CAFOs, regarding siting criteria, is a violation of any rights created by the TCAA. The commission believes that under some circumstances, with input from adjacent land owners, the buffer requirements should be optional. Fifty individuals in the Panhandle area of the state, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that all or some of the following changes be made to the buffer zone requirements: increase the buffer anywhere from two to five miles; two miles is the requirement set by recent Oklahoma and Kansas legislation, and this is much more reasonable; set the distance for hog operations, which emit more hydrogen sulfide and odors than other CAFOs at two miles unless landowner affected gives written consent. An individual in the Panhandle area suggested in subsection (g) the setback requirements should be much greater, more in accordance with other states. Feel that a setback of even 5 miles from any residence or state park or church from a facility of 50,000, 100,000 or even 300,000 is completely inadequate. The odor from these facilities are intensive, travel far and affect a wide area. The commission is aware of recent legislation passed in the states of Oklahoma and Kansas that would require up to a 2 mile buffer zone for certain CAFOs. However, the commission does not believe it would be appropriate or necessary to require a 2 mile buffer zone for Texas CAFOs, based solely on species type. A buffer zone of this magnitude would severely limit where CAFOs could locate in the state. The commission believes that design and operational requirements outlined in these rules combined with smaller buffer zones and/or odor control plans, when applicable, will adequately protect the health and welfare of the public. An individual in the Panhandle area requested that in subsection (g) the buffer zone between a feedlot and a home on adjoining land be « mile. An individual in the Panhandle area suggested in subsection (g) that one mile is too close to be healthy. The commenter lives one mile from a Texas Farm facility and the odor is too strong. Sixteen individuals from the Panhandle reported experiencing odors at their residences, which are located between « and five miles away from nearby CAFOs. Nine individuals from the Panhandle area state concerns regarding health effects associated with CAFO emissions. The commission believes that the buffer distances established in this rule, when applicable, are reasonable for properly designed and operated CAFO facilities seeking air authorization under this subchapter. Regardless of the manner in which air authorization is obtained, the sec.101.4 Nuisance rule is applicable and anyone adversely affected by emissions from a facility should report the conditions to the TNRCC regional office in their area. The commission believes that facilities constructed and operated in accordance with the rules as adopted will not adversely affect human health or welfare at offsite receptors. Although odors will be experienced at times by individuals living in close proximity to certain CAFOs, these odors are not expected to be of such concentration and such duration as to adversely affect human health or welfare. Wrangler Feedyards, Jade Cattle Feeders, Koch Beef Company, Veribest Cattle Feeders, Inc., Bar G Feedyard, Frontier Feedyards, Inc., Coyote Lake Feedyard, Live Oak Feedlot, Inc., McLean Feedyard, Inc., Sugarland Feed Yards, Inc., Stratford Feedyard, Bartlett Cattle Company, L.P., Perryton Feeders, Inc., Bezner Beef, Jennings Land and Cattle, Inc., Canadian Feedyards, Inc., Comstock Cattle Corp., Tri-State Cattle Feeders, Farwell Feed Yards, Perry Feeders, Inc., Dekalb Swine Breeders, Inc. and Texas Cattle Feeders Association suggested in subsection (g) the ½ mile buffer distance is acceptable, but should not be made retroactive to units built prior to the requirement. Texas Farm Bureau suggests in subsection (g) the ½ mile separation distance is acceptable. An individual in the Panhandle area suggested in subsection (g) that the rule should be adopted. It is unjust for existing landowners and homeowners to be subjected to a feedlot within ½ mile of their homestead. TAEX (Amarillo) suggested in subsection (g) the change to ½ mile separation distance is an improvement. It could be increased to a greater distance in site specific circumstances at the discretion of the TNRCC. However, it is not practicable or desirable to apply this subsection to expansions of existing operations. The commission agrees that it is reasonable to distinguish between new, existing, and expanding facilities when establishing buffer zone requirements. The adopted rules require that new CAFOs either satisfy the « mile buffer requirement, or satisfy a 1/4 mile buffer requirement and submit an odor control plan. For existing CAFOs with previous air authorization obtained under Subchapter K or through an individual air quality permit under Chapter 116, authorization may be transferred into this subchapter without acquiring additional buffer and without making structural changes to the site. However, owners and operators utilizing this option will be required to operate under the special provisions/conditions of their previous authorization being transferred. For facilities that can satisfy the buffer requirements in this subchapter, the special provisions/conditions of their previous authorization do not have to be met, and instead, such facilities may operate under the provisions of this subchapter similar to a new facility. For expansion of existing CAFOs, the adopted sec.321.46 requires either a 1/4 mile buffer or submittal of an odor control plan. Expansion of new CAFOs would have the same requirements as a new CAFO in sec.321.46. Rice Construction suggested in subsection (g) that the 1/4 mile set back is sufficient for CAFOs. The Phillips refinery in Borger does not have such requirements. Approximately 25% of the population (12,000) of Borger is closer than ½ mile to the refinery. Believe « mile is unnecessary, and would have the effect of excluding reasonable sites from registration. Mahard Egg Farms, Inc., Pilgrim's Pride, Inc. and Texas Poultry Federation urged TNRCC to adopt 1/4 mile requirement as previously established. The commission does not believe that it is appropriate to compare the nuisance potential of a CAFO and a refinery and to establish a buffer zone for CAFOs based on that comparison. The types of air contaminants expected from these two industries are different, and the manner in which climatic conditions affect CAFO emissions do not support common regulatory requirements However, the commission agrees that the 1/4 mile buffer for some facilities is appropriate. As adopted, sec.321.46 outlines various options for buffer zone requirements and/or the submittal of an odor control plan. See comments above. Texas Association of Dairymen and Dairy Farmers of America suggested in subsection (g) with respect to the expansion of existing facilities, TNRCC should eliminate the ½ mile buffer zone requirement and reduce the requirement to 1/4 mile with respect to construction of new facilities. Twenty- seven poultry producers are opposed to ½ mile air quality buffer. Odors can be alleviated when producers incorporate BMPs. As stated earlier, the commission agrees that it is reasonable to consider expansion of existing CAFOs differently than new CAFOs or expansion of new CAFOs in determining buffer zone requirements. The adopted version of the rule reduces requirements for expansions of existing facilities (see responses to related comments above). In addition, the commission agrees that for new, CAFOs when an odor control plan is submitted, which encompass BMP's, the buffer zone requirement will be reduced to 1/4 mile. Brazos River Authority recommended that in subsection (h) in reference to renewal occurring without public notice, if the facility has had no "major enforcement actions" this should be changed to "no major violations." Reviewing the referenced language, the commission determined that it should emphasize and more precisely describe the types of compliance problems that will prevent automatic renewals. The rule has been changed from the proposal to do so. In the commission's view the term "formal enforcement action," coupled with a description of the exact subject matter and procedural status of such an action, is more specific than either "major enforcement actions" or "major violations." ACCORD Agriculture, Inc. recommended in subsection (h)(1) other violations of air requirements such as property line standards for dust must be addressed with respect to compliance history regardless of whether the violation is considered to constitute a nuisance. Some form of public participation process is needed for renewals of permits. Although emissions from CAFOs have been historically compared to the nuisance rule to determine compliance with applicable standards, the commission agrees that any violation of an applicable property line standard or nuisance should be considered a major violation when renewing a permit under this subchapter. The adopted version of the rule has been modified to clarify that any violation of a state property line standard under this title, or federal ambient air quality standard shall be considered a major enforcement action in addition to violations of the nuisance rule. On the issue of public participation, the commission feels that once an applicant has gone through either the initial individual permit or application for registration procedure, which includes public participation through notice, comment and either a contested case or motion for reconsideration process, they should be given an incentive to remain in compliance with their authorization. These amendments provide a more streamlined renewal process for facilities that do not have any major enforcement actions over the past 36 months and do not plan any changes to the facility. The commission notes that this is an issue that may require reexamination after assumption of the federal NPDES program. Texas Farm Bureau, Continental Grain Company and Texas Cattle Feeders Association recommended that in subsection (h)(1) the end of the first sentence should be clarified as follows " granted by the executive director without public notice, comment or a public hearing." The commission responds that the rule is clear and does not need to be changed. Registration renewals which propose no changes to the existing authorization and where there has been no related formal major enforcement action against the facility during the last 36 months may be granted by the executive director without public notice. However, if the executive director receives information, via a comment or otherwise, indicating that the facility does not quality for renewal under this provision (e.g., changes have occurred at the facility which are inconsistent with the existing authorization), the executive director may consider this information and act accordingly. ACCORD Agriculture, Inc. recommended that in subsection (h)(3) renewals should never be automatic. The executive director should have the discretion to require an individual permit, if determined to be appropriate. The commission responds that the rule is clear that renewal will not be automatic in all cases. The executive director has the authority under these rules to require a facility to submit an application for an individual permit. However, if a facility is compliant with the provisions of these rules and is not making substantial changes, an expedited process is sufficient for renewal since the applicant went through a more thorough review at the time of the original application. ACCORD Agriculture, Inc. recommended that in subsection (h)(5) the language should make it clear that the failure of the executive director to provide notice does not excuse the registrant's obligation to submit a timely application. Applications should never be allowed to be submitted less than at least one month before the expiration date. Texas Cattle Feeders Association recommended in subsection (h)(5) that the notice of expiration should be sent by certified mail, return receipt requested. The commission believes that registrants are responsible for timely submitting an application for renewal. The commission agrees that the notice of expiration should be sent by certified mail, return receipt requested, and has changed the rule accordingly. Greenbelt Municipal and Industrial Water Authority proposes a reduction (to 300 animal units) in the total number of animals allowed at a CAFO qualifying for the registration process. The commission disagrees that an individual permit is required for all facilities which have more than 300 animal units. There are certain situations which do require an individual permit. The commission has seen no link through it enforcement processes in the number of animals confined to the number of violations for a particular size facility. The registration process gives the public opportunity to comment on the application. The commission believes that these rules are consistent with similar provisions of the EPA Region VI General Permit for CAFOs. Greenbelt Municipal and Industrial Water Authority suggested that TNRCC should revise its proposal to prevent installation of multiple CAFOs in a given area under the authority of the registration process. The commission does not agree with this comment and has made no change to the rule. The commission does not believe that it is necessary, for the purposes of environmental protection, to restrict the number of CAFOs in a given area provided that the CAFOs are being operated in a manner consistent with these rules. Further, the commission does not have any statutory authority to limit land use development except through its authority to limit discharges in accordance with state law. An individual in the Panhandle area recommended that all soil penetrations should be identified and plugged before any construction begins. The commission responds that the applicant is required under these rules to identify all artificial wells, excavations, and penetrations located on the site in the recharge feature evaluation. If features are identified, a plan to protect the feature must be prepared and submitted by an engineer. In addition, if any recharge features are found during the construction process, the applicant is responsible for having the feature located and a plan prepared and submitted by an engineer on how it will be addressed and not become a conduit for any pollutants to groundwater or surface water. The Mayor of the City of Perryton proposed that the applicant should be required to formally locate and identify on the initial application all active, abandoned and inoperative wells, oil and gas wells and any other artificial penetrations as determined by the TNRCC within « mile of the boundaries of the proposed facility in addition to the site itself. The commission disagrees with the comment and believes that the requirements for identification of wells, penetrations, etc. under the adopted rules are comprehensive and protective and also maintain consistency with other current commission rules. The regulations require that the applicant identify all private water wells (abandoned or in use) and public wells located within 500 feet of the land application areas, open lots and control facilities whether or not the wells are located on the property. The applicant is required to identify all wells and excavations located on the property in the recharge feature evaluation. Agri-Waste Technology, Inc. recommended that all penetrations that may be identified during construction should be appropriately plugged by licensed professionals. Any changes to the site plan due to identification of penetrations discovered during construction should be reported to the TNRCC by the applicant. The commission responds that the applicant is required under these rules to identify all artificial wells, excavations, and penetrations located on the site in the recharge feature evaluation. If features are identified, a plan to protect the feature must be prepared and submitted in accordance with sec.321.35(c)(11). In addition, if any recharge features are found during the construction process, the applicant is responsible for having the feature located and a plan prepared and submitted in accordance with the above referenced subsection on how it will be addressed and not become a conduit for any pollutants to the groundwater or surface water. The Mayor of the City of Perryton recommended that the rules be modified to require the applicant to locate playa lakes and recharge features in the initial application. The commission agrees with the comment and would note that the applicant is required under sec.321.35 of these rules to identify and locate all playa lakes on the USGS topographic map(s) and all recharge features located on the site in the recharge feature evaluation. The Mayor of the City of Perryton recommended that the rules be modified to require the applicant to locate any municipal and public water supply sources within one mile of the proposed facility. Facilities near water supply sources should have to meet a higher design standard. The commission is interested in this issue and will direct the executive director to study the recommended action and provide a recommendation to the commission. The Mayor of the City of Perryton suggested that TNRCC should ask Texas A&M University or another research center to conduct a study on the possible adverse effects on the Ogallala from the existence of numerous artificial penetrations. The focus of such study should be on the increased potential for migration of contaminants from large-scale swine production facilities. The commission responds that the initiation of a study is beyond the scope of these rules. The Mayor of the City of Perryton proposed that the rules be modified to require applicants to fully uncover and disclose all material facts in their applications. The burden of proof must rest with the applicant not the adjacent landowners. Applicants are not penalized for submitting incomplete or inaccurate applications. Applicants are allowed to fix discrepancies. Applications should be correct and properly certified when submitted. The commission responds that an application will not be declared administratively and technically complete until all required information is submitted by the applicant. If an application is not complete, a letter of deficiency will be sent to the applicant requesting additional information. Any registration which was approved based on incorrect information is subject to review, and possible revocation, by the commission. The commission agrees that applications must be accurate. The applicant is required to certify to the accuracy of the application in accordance with 30 TAC 305.44 of this title. Penalties may be assessed for knowingly submitting false information. Agri-Waste Technology, Inc. recommended that the rules be modified to specify amounts of time that can be taken by the executive director to review and comment on application materials. The commission notes that applications under this subchapter will be processed in accordance with the provisions herein and Chapters 281 and 305 of this title. Chapter 281 specifically references timeframes for processing applications. An attorney representing landowners in Johnson and Ochiltree Counties recommended that the following be added to this section: For facilities utilizing synthetic liners with leak detection and/or groundwater monitoring capability: a waste management unit at a feedlot shall not be located within 500 feet of any existing public water supply source nor within 150 feet of a private water source without the written consent of the property owner; or a waste management unit at a CAFO shall not be located within 1,000 feet of any existing public water supply source nor within 500 feet of a private water source without the written consent of the property owner. For facilities utilizing in situ or compacted clay liners without leak detection and/or groundwater monitoring capability: a waste management unit at a feedlot shall not be located within 1,000 feet of any existing public water supply source nor within 500 feet of a private water source without the written consent of the property owner; a waste management unit at a CAFO shall not be located within 2000 feet of any existing public water supply source nor within 1,000 feet of a private water source without the written consent of the property owner; or the application shall be accompanied with a professional determination and engineering certification the liners are sufficient to protect the quality of any existing public water supply located within « miles radius and any private water supply within 1/4 mile radius of the facility. The commission agrees that buffer zones between potential pollutant sources and water wells are necessary. The buffer zones are protective and consistent with other state requirements. The regulations require a 150-foot buffer zone for private water wells and a 500-foot buffer zone for public water supply wells. All retention structures constructed with a liner must have engineer certification submitted prior to utilization of the facilities to ensure that the facilities are properly constructed. sec.321.36. Notice of Application for Registration. An attorney representing landowners in Johnson and Ochiltree Counties recommended that subsection (a) amended to add the following: the executive director may deny coverage under the application for registration and require the applicant to pursue an individual permit, if the applicant fails to submit an administratively and technically complete application. Definition for administratively complete application: " is one that contains all of the items required by the commission's rules to be included with the application. Inadvertent omission that are remedied through the submission of previously developed information(e.g. a missing attachment) within one week following a request by the executive director shall not render an application administratively incomplete." A technically complete application is one that is administratively complete and which reasonably demonstrates that the proposed facility will be sited, designed, constructed and operated in accordance with the commission's rules. The failure to address a material issue in the siting, design, construction or operation of the proposed facility will render the application technically incomplete, if the applicant either knew or reasonably should have known about the issue (e.g. material omission or misrepresentation of a material fact). The submission of an administratively or technically incomplete application and the failure to timely correct such deficiency shall result in a denial of coverage. The executive director determination of administrative or technical completeness establishes a rebuttable presumption that the application is administratively or technically complete and may be challenged during the applicable comment period. The commission responds that these rules allow the executive director to require any animal feeding operation to obtain an individual permit under sec.321.33 (b). These rules give the executive director some discretion in determining which facilities should be required to obtain an individual permit. The commission believes this is preferable to adopting rules which require facilities to obtain an individual permit regardless of the circumstances. ACCORD Agriculture, Inc. proposed that subsection (b) be amended to require that the notice must always include the proposed size of the facility as well as a description of the receiving waters for any discharge. The commission agrees that notice should include the proposed size of the facility and has changed the rule to include the requested additional information in the notice. This information will be useful for those individuals who receive notice of application and will assist those individuals who intend to submit comments to the commission. Continental Grain Company and Texas Cattle Feeders Association recommended that the language in subsection (b)(7) be clarified as follows: The words "not" and "less than" should be deleted to avoid confusion about the length of the comment period. The commission agrees with this comment and has changed the rule accordingly. This change provides clarity and a better description of the commission's intent on this provision. ACCORD Agriculture, Inc. recommended that subsection (e) be modified to include the following: mailed notice should be provided to any owners or operators of any public drinking water source located within five miles of the proposed facility. The county judge and health officials of the county immediately downstream should also be notified. River authorities should always receive notice. The rules should provide that a registration will not be granted if notice requirements have not been met. The purpose of the notice requirements is to notify those individuals who are most likely to be affected by a facility. The commission does not believe that owners or operators of public drinking water facilities are likely to be affected. However, the rule provides that notice may be sent to persons who may be affected in the judgement of the executive director. Similarly, persons who request to be on the mailing list will be sent notice. The rules require that notice be sent to the county judge and the health officials of the county in which the facility is located or in which waste will be disposed of. The commission does not believe it is also necessary to notify the county judge and health officials of any counties downstream, as they are less likely to be affected by a facility. sec.321.37. Actions on Applications for Registration. ACCORD Agriculture, Inc. recommended that the rules be modified to require the executive director to provide a written response to all significant comments received. The commission agrees with this comment, and has made the change. Dekalb Swine Breeders, Inc. recommended that the rules be modified to require that the application process should limit a motion for reconsideration to those who originally supplied public comment and the applicant and the commission should set a time limit on this motion and on action to be taken by the executive director. The commission agrees generally that motions for reconsideration should only be available to those individuals who have originally supplied public comment to the executive director. However, an exception should be made in the case where an individual who should have been sent notice was not noticed. Under sec.50.39 of the commission's rules, the commission must take action on a motion for reconsideration within ninety days. As to establishing a time limit on the executive director's response to comments, the commission feels that it is not appropriate at this time to establish a hard time limit since it is difficult to project how many comments will be submitted and how much time the executive director will need to evaluate such comments, perform any research or collect information and whether an investigation would be necessary to render a complete and accurate decision. Agri-Waste Technology, Inc., Texas Poultry Federation, Wrangler Feedyards, Jade Cattle Feeders, Koch Beef Company, Veribest Cattle Feeders, Inc., Bar G Feedyard, Frontier Feedyards, Inc., Coyote Lake Feedyard, Live Oak Feedlot, Inc., McLean Feedyard, Inc., Sugarland Feed Yards, Inc., Stratford Feedyard, Bartlett Cattle Company, L.P., Perryton Feeders, Inc., Bezner Beef, Jennings Land and Cattle, Inc., Canadian Feedyards, Inc., Comstock Cattle Corp., Tri- State Cattle Feeders, Farwell Feed Yard and Perry Feeders, Inc. proposed that the rules be modified to clearly identify who should be considered as an affected party and what time lines for which comments can be received by the agency. In addition, the issues that the TNRCC should consider from affected parties should be clearly defined. Other current rules (Chapter 55 of this title relating to Request for Contested Case Hearings; Public Comment) define how the commission will determine whether someone is an affected person for hearing purposes. Affected person status is not a prerequisite for eligibility to comment on an issue to the commission. Pilgrim's Pride, Inc. requested that the commission assure that the final administrative process requirements are fair to all parties. The commission believes that these rules will provide a fair and equitable process for all parties and will be protective of the environment. Continental Grain Company suggested that the following sentence in subsection (a) "Only written comment received within the 30 day period are considered timely" is ambiguous because there is no explanation of how timely comments will be handled differently than untimely comments. The word "are" should be changed to "will be" and the word "timely" should be deleted. The commission agrees with this comment and will make this change to provide clarification of its intent under this provision. Continental Grain Company and Texas Cattle Feeders Association recommended that subsection (c) modified as follows: the word "timely" should be deleted and the words "received within the 30 day comment period "added after the word "comments." The commission agrees that subsection needed clarification. This subsection has been modified and expanded to further define and clarify the requirements and process for a motions for reconsideration. Brazos River Authority suggested that in the proposed language motions for reconsideration provide little procedural protection for protestants because the executive director makes both the initial decision and decides the appeal. The commission responds that the Motions for Reconsideration, which are filed pursuant to these rules, are not considered by the executive director. The commission has delegated this responsibility to the general counsel of the commission. Once a Motion for Reconsideration has been filed on an executive director's action, the general counsel's office determines whether to set an item on the commission's agenda or let the Motion For Reconsideration expire as a matter of law. Motions For Reconsideration are an effective means for protestants to state their objections to an executive director's action. An attorney representing landowners in Johnson and Ochiltree Counties recommended that this section be modified to add that the executive director may deny a request for coverage or revoke under the application for registration on the basis of a determination of good cause, which is to include the criteria suggested for addition in the Applicability section. Anyone denied coverage shall apply for and obtain a final individual permit prior to beginning operation of the facility. Anyone whose coverage has been revoked for reasons other than the actual or likely release or discharge of pollutants or the actual or likely pollution of surface or ground water sources may continue to operate until such time as a final decision is rendered by the commission and such application is filed within sixty days following notification of revocation of coverage. The commission responds that the proposed change is not necessary because the executive director may approve or deny an application for a registration in whole or in part, deny with prejudice and suspend a registration under sec.321.35 (e). An applicant who is denied coverage always has the option to apply for an individual permit under these rules. An attorney representing landowners in Johnson and Ochiltree Counties recommended that the language in this section be modified to add that any affected person may file a complaint and petition with the executive director citing good cause to deny or revoke coverage under the application for registration. The executive director shall respond in writing to the petition within thirty days with a preliminary determination. Final action shall be completed by the executive director within sixty days with written notice provided to the petitioner and the facility operator. The executive director decision to deny or revoke coverage under an application for registration is not subject to a contested case proceeding but is reviewable upon the filing of a motion for reconsideration, however, this shall not extend any proposed applicable deadlines for the filing of an individual permit application. The commission responds that the sec.321.37 (a) allows a person to provide the commission with written comments on any applications for registrations for which notice was issued. This rule states that the executive director shall review any written comments when they are received within 30 days of mailing the notice. The commission agrees that the executive director should respond in writing and has changed the rule in response to this comment. The commission agrees that the executive director's decision is reviewable upon the filing of a motion for reconsideration, and this is reflected in sec.321.37(c). An attorney representing landowners in Johnson and Ochiltree Counties recommended that the language in this section be modified to add that a facility owner/operator that has been denied coverage or had his coverage revoked for a general permit may make an application for registration unless the basis for denial or revocation was due to: the issuance of multiple enforcement/remedial orders; the unauthorized release or discharge of pollutants onto the property of another person within the recommended time frame state above; or it resulted from the actual or the potential pollution of surface or ground water. The commission does not agree with this comment. The commission does not believe it should limit the ability of an applicant to be eligible for a registration because an applicant was not eligible for a general permit. The level of review is higher for a registration than for a general permit, and the commission has the discretion to require an applicant with a poor compliance history to apply for an individual permit. sec.321.38. Proper CAFO Operation and Maintenance. The Mayor of the City of Perryton recommended that in this section engineering certification requirements for permit applications be expanded to include post construction statements that the facility has been constructed in strict accordance with the approved application and permit, the engineer has personally inspected all waste management facilities and that the facility is in full compliance and ready for operation. The commission responds that the recommendation would constitute a substantive change to the rules. The additional requirements are beyond the scope of the rules as proposed. The commission notes that it may in response to an inspection of the facility or complaint investigation determine compliance with the provisions of the rules. ACCORD Agriculture, Inc. recommended that the commission needs to make a determination about the adequacy of NRCS management plans. The rules must provide a process and the standards against which those plans will be measured. Further, ACCORD Agriculture, Inc. recommended that in sec.321.39 (b) the commission may not simply delegate its responsibilities to another agency. The discussion of what plans NRCS " considers" to be adequate is meaningless. The permit must establish explicit, enforceable requirements. It is not acceptable for TNRCC to say it will base its regulatory decisions on what another agency "considers" adequate. The commission disagrees with this comment. The commission believes that this provision is sufficiently clear that NRCS animal waste management plans may be submitted for the BMPs and PPP requirements as long as the NRCS plan has applicable and equivalent measures. These rules further specify that the executive director can request a copy of a PPP, evaluate such PPP and require the owner to change such plan if the executive director determines that such plan does meet the requirements of these rules. The commission by adoption of these rules has determined that NRCS management plans are adequate in accordance with provisions of sec.321.39(b) and is consistent with the current Region VI CAFO General Permit. TAEX (College Station) recommended that BMPs should retain the same definition as they suggested it be redefined in the definitions section of the rules. The term "BMPs" as utilized in this section is defined in sec.321.32 "Definitions." The definition of "BMPs" in sec.321.32 has been modified in response to the commenter's suggestion and applies throughout the subchapter. sec.321.39. Pollution Prevention Plans. TAEX (College Station) suggested that the terms Pesticide Use be deleted in title. The commission agrees that these terms should be deleted. The Texas Register uses brackets in its publications to indicate all text that will be deleted. Thirty-eight individuals from the Panhandle area, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that the language in subsection (a) be modified to address the following: The statement "should include measures necessary to prevent...." does not require anything. This statement must be changed in order to protect the waters of the state and to prevent nuisance and odor conditions to read: "PPPs shall be prepared in accordance with good engineering practices and must include measures necessary to prevent the discharge of pollutants to waters in the state and nuisance conditions and minimize odor conditions. This plan must be approved by the TNRCC and by an independent engineer before the permit can be allowed. Greenbelt Municipal and Industrial Water Authority recommended that subsection (a) be modified to require the PPP to be prepared and sealed by a licensed professional engineer. The commission agrees in part on the first issue that measures are required, therefore the word "should" has been replaced with "shall." However, the commission does not believe that the plan must be approved by a professional engineer. Certain components of the plan which directly involve engineering are required to be sealed by an engineer, but the plan includes many components which are not engineering-related. ACCORD Agriculture, Inc. recommended that subsection (a) be modified as follows: the use of the verb "should" in the last sentence of this subsection is inappropriate, it needs to be changed to "shall" to avoid enforceability issues. The commission agrees and has changed the rules accordingly to provide enforceability. ACCORD Agriculture, Inc. suggested in subsection (d) it is not clear how PPP reviews relate to actions on registration applications. Registration applications without adequate PPPs will be denied. The executive director should have authority to require changes more quickly than 90 days if the risks are significant enough to support it. The commission responds that a PPP which is considered adequate at the time of application may become inadequate at a later date because of a number of reasons such as substantial changes to the facility. This provision allows the executive director authority at any time, such as during an inspection, to notify the permittee of deficiencies in the plan. The provision does not restrict the executive director authority to request that changes be submitted during a time frame other than 90 days. ACCORD Agriculture, Inc. proposes that the current language of subsection (e) suggests that the general objectives of the PPP include creating nuisance conditions rather than avoiding them. The requirement to submit an odor control plan has been relocated to sec.321.46, therefore the reference to nuisance conditions has been deleted from the adopted subsection (e). However, the intent of the proposed language was to ensure that the PPP include provisions to prevent nuisances not "create" nuisances. Five individuals from the Panhandle commented that the commission's complaint and investigation procedures are not adequate in protecting citizens against nuisance conditions. Their comments suggest that complaints are not responded to quickly enough to enable the investigator to document nuisance conditions, and therefore, odor problems are not resolved. Three commenters do not believe it is appropriate that only odors at a house can be reported, and assert that this removes the right of adjacent landowners who do not have a house at their property to report nuisance conditions. The commission responds that in certain cases it may not be possible for a TNRCC investigator to travel to the area being complained of in time to document the complaint. This is an unfortunate reality that results from the extremely large area of our state, rapid changes in climatic conditions that affect the dispersion of air contaminants, and the agency's limited resources. However, TNRCC regional offices are diligent with regard to complaint responses, and investigators make every effort to respond to complaints in a timely manner. The general prohibition against nuisance does not require that the complaint be generated from a house or other permanent structure. As the term "nuisance" is defined in the TNRCC Rules, consideration must be given to the ways in which the normal use and enjoyment of property is being affected. The issue of whether a permanent dwelling is present is typically considered in determining whether an individual's property rights have been interfered with, as opposed to brief exposures to odor conditions that may occur in public places such as roads, undeveloped property such as farm land, and facilities with similar emissions. It should also be noted that the intent of these rules is not to establish new procedures for complaint investigations, but to provide an alternative means of authorization for certain CAFOs. Facilities that construct and operate pursuant to these rules continue to be subject to the general prohibition against nuisance and the public is urged to continue to report any nuisance odor conditions to the appropriate regional office. ACCORD Agriculture, Inc. suggests that the second sentence of subsection (f)(1) is too vague to be useful. The rule should establish at least a nonexclusive list of activities that are known to be potential sources. The term "should" is not adequately enforceable. The commission responds that the subsection already includes a nonexclusive list of activities that are known to be potential sources. However, the commission does agree that the word "should" should be replaced with the word "shall" and has made the change accordingly. Continental Grain Company and Texas Cattle Feeders Association recommended that in subsection (f)(1) the word "significant" should be inserted in the first sentence before the word "potential." In addition, a sentence should be added between the first and second sentences which states: "A list of significant materials that are used, stored or disposed of at the CAFO should be included in the PPP. Everything following the sentence "An evaluation of potential pollutant..." should be deleted because it creates more confusion than clarity. The commission responds that changes are necessary since potential pollutant sources are defined in the next sentence. The commission further believes that the recommended additional language is confusing and that the current language clarifies the process and requirements for evaluating pollution sources. Texas Farm Bureau recommended that subsection (f)(1) adds excessive details that are unnecessary, prefer old Subchapter K language. The commission responds that the excessive details as indicated by the commenter are necessary and that these details clarify the process and requirements for evaluating pollution sources. Continental Grain Company and Texas Cattle Feeders Association recommended that in subsection (f)(1)(A) the site plan/map should be limited to the CAFO property. Insert the word "CAFO" before "property." The commission agrees in part that the site plan/map should be limited to the property related to the operation; however, size should not be a factor. The commission believes that the language in this section already provides for that requirement. Texas Cattle Feeders Association recommended that in subsection (f)(1)(A) the words "beneficial utilization on land owned, operated or controlled by the CAFO" should be substituted for "disposal activities of the concentrated animal feeding area." Animal manure and wastewater are fertilizers and soil amendments which are beneficially used for crop production, not "disposed" of as waste with no value. The commission agrees that "disposal" is not an appropriate term and has replaced "disposal" with "utilization" which better describes the intent of the provision. ACCORD Agriculture, Inc. recommended that in subsection (f)(1)(C) the reference to the effective date of these rules is unclear. Does it refer to the initial rules or these amendments. A facility should be required to maintain a list of all spills occurring since the facility was subject to regulation. The commission responds that it would be unreasonable to require a facility which began operation in "1990" to maintain records from that date when the rules were not effective until 1998. ACCORD Agriculture, Inc. recommended that in subsection (f)(2) the reference to identified sources of nuisance is unclear. How is the decision made regarding what management controls are "appropriate for the facility"? This sentence is so vague and ambiguous that is virtually meaningless. The rules should at least require that controls be included to address all sources of pollutants and air emission at the CAFO. As previously stated, the requirement to address air quality issues through an odor control plan has been relocated to sec.321.46. Due to this relocation, any references to nuisance in subsection (f)(2) have been deleted. However, the commission believes that the language regarding appropriateness of controls is not meaningless. Permittees must develop management controls which are appropriate for each site. TNRCC staff can evaluate each plan to determine if controls are appropriate and adequate. The intent of the second sentence in subsection (f)(2) was to ensure that the PPP include control strategies for both water pollutants and air contaminants specific to the facility. As adopted, only those CAFOs which apply for air quality authorization and are subject to submitting an odor control plan are required to submit information on "sources of air contaminants." ACCORD Agriculture, Inc. recommended that in subsection (f)(3) the term "structural control" needs to be defined. Who must perform this inspection? Unless the inspection is performed by a knowledgeable person, it would serve no useful function. The commission responds that the term structural control does not need defining. This term is a commonly used term throughout this industry and others. The commission does agree that clarification on who can inspect structural controls for integrity and maintenance is needed. The commission will require that the individuals responsible for inspection should be those identified in the PPP as responsible for development, implementation, maintenance, and revisions of the plan. ACCORD Agriculture, Inc. recommended that in subsection (f)(4) there should be a standard identified in the permit to measure the analysis against. Can anyone perform a "hydrologic needs analysis" or is an engineer required? The commission responds that an engineering degree is not needed to perform a hydrologic needs analysis. The commission believes that the minimum components required in a hydrologic needs analysis are included in this section. ACCORD Agriculture, Inc. recommended that in subsection (f)(5) and (6) the use of "should" rather than "shall" is not acceptable. The commission agrees that the word "should" should be replaced with the word "shall" the corresponding changes have been made. Greenbelt Municipal and Industrial Water Authority recommended that in subsection (f)(6) be revised with regard to the minimum freeboard requirements, to account for settlement and slope stability and require initial freeboard to exceed two feet and include a 10-foot minimum width at top of levee with a slope no less than 3:1. The commission agrees with the comment in part and has added the following language: "not less than" was added prior to "two feet" and "and in no case less than one foot" was deleted. A second sentence was added "Freeboard shall account for settlement and slope stability of the materials used at the time of design and construction." These additional requirements will only apply to new facilities constructed after the effective date of the rules. The commission responds that the recommendation to include limits on the levee width and slope would constitute a substantive change to the rules. The additional requirements are beyond the scope of the rules as proposed. ACCORD Agriculture, Inc. recommended that in subsection (f)(7) the inclusion of the option to use "other site-specific data" does not establish an enforceable standard. The commission responds that site-specific data provide for greater accuracy in designing treatment lagoons. Any site-specific data used in the development of the PPP is subject to review by the executive director at any time. If the review reveals that such data does not meet the minimum requirements of this subchapter, the owner/operator must amend the plan. Five individuals from the Panhandle recommended additional requirements for ponds and methods for waste treatment, including covering lagoons to recapture gasses for use at the operation, using aerobic lagoons, and using lagoon additives. The commission responds that the rules do not preclude CAFOs from utilizing innovative technologies that go beyond the requirements of the rule. As adopted, the rules already contain design and operational criteria for anaerobic and evaporative pond systems, which are the most common methods for treatment of waste at Texas CAFOs. The use of aerobic ponds, covered ponds with vapor recovery systems, and the utilization of additives in pond systems have not been established as BACT and absent additional scientific data it would be considered unreasonable to require these measures for all CAFOs, or certain CAFOs based solely on species type. ACCORD Agriculture, Inc. recommended that in subsection (f)(8) there is not an adequate standard for the hydrologic needs analysis. The commission believes that the minimum components required in a hydrologic needs analysis are included in this section. ACCORD Agriculture, Inc. recommended that in subsection (f)(9) the use of the word "should" is inappropriate. The general types of site specific information to be used must be specified. The commission disagrees with the comment and responds that the existing language allows the applicant to utilize best available information when site- specific information is not available. Greenbelt Municipal and Industrial Water Authority recommended that subsection (f)(10) should be revised to require that embankments be designed in accordance with NRCS, Corps of Engineers, Bureau of Reclamation and ASCE requirements. Greenbelt Municipal and Industrial Water Authority further recommended that subsection (f)(10)(C) clarify that required certification include: use of proper testing methods; determination that compaction of the embankment was done in accordance with design standards; and that the certifying engineer was on site and witnessed the testing. The commission responds that embankment design and construction should be in accordance with appropriate engineering standards as specified in the rules. The commission will add language to include engineer certification of embankment design in accordance with NRCS, Corps of Engineers, Bureau of Reclamation or American Society of Civil Engineers (ASCE) requirements and post-construction certification of compaction testing with accompanying test results and documentation. Such language will be added in subsection (f)(10)(C) by removing "Site specific variation in" and by replacing "certification by a licensed professional engineer, or" with "and." ACCORD Agriculture, Inc. recommended that in subsection (f)(11) the requirement that dewatering equipment must be available whenever needed is inadequate as an enforceable standard. The rules should require the dewatering equipment to be there to avoid a violation. The rules should establish a deadline for restoring capacity after rainfall events. The commission responds that the provision is enforceable and disagrees that equipment must be on-site to provide adequate environmental protection. The commission responds that the recommendation to establish a deadline would constitute a substantive change to the rules. The additional requirements are beyond the scope of the rules as proposed. The commission notes that it may in response to an inspection of the facility or a complaint investigation determine compliance with the provisions of the rules. ACCORD Agriculture, Inc. recommended that in subsection (f)(12) the use of the term "impracticable" is too vague to establish an enforceable requirement. The commission agrees that the term "impractical" may be vague and will amend the language as follows: "...periods where the net effect of evaporation and rainfall would require the addition of fresh water to maintain the treatment volume." Continental Grain Company and Texas Cattle Feeders Association recommended that in subsection (f)(12) it is unnecessary for a CAFO that is operated by means of a total evaporation system to maintain and record the level(s) in retention facilities. Instead they suggested adding a sentence to this subsection which states: "A permanent marker (measuring device) is not required for a CAFO that has been properly designed, constructed and maintained as total evaporation only." The commission responds that monitoring the level of wastewater is a necessary management tool that should be used by the owner/operator of any retention facility. ACCORD Agriculture, Inc. recommended that in subsection (f)(14) the permit should provide that the frequency of monitoring and log recordation must be no less than every 24 hours. The commission responds that 24-hour monitoring of rainfall is necessary to meet the intent of the provision. However, the commission feels that it is overly burdensome to require that the facility operator record a non-event in their on- site records. This provision does clearly make it a requirement that any rainfall event occurring at the facility must be recorded. ACCORD Agriculture, Inc. recommended that in subsection (f)(16) the term "significant amounts of pollutants" should be defined. Without a definition, the certification requirement is not very meaningful. The commission believes that the existing language is not consistent with provisions in sec.321.31 and will amend the language as follows: replacing "leakage of significant amounts of pollutants into" with "a significant hydrologic connection between the contained wastewater and." ACCORD Agriculture, Inc. recommended that in subsection (f)(17) the rules need to require certification of construction in compliance with these requirements. The use of the term "should" is inappropriate. The commission agrees with the comment in part and will replace "should" with "shall." The commission disagrees with the recommendation to require a construction certification. The commission feels this is an unnecessary expense since these rules require that the facilities be designed and constructed in accordance with good engineering practices and the facilities are subject to the inspection of the executive director at any time. If any discrepancies are found, the owner/operator is subject to enforcement, penalties and the appropriate repairs to the facility to achieve compliance. During the pendency of this rulemaking, it came to the commission's attention that the NRCS technical reference in subsection (f)(17) to SCS Technical Note 716 has been replaced with an updated technical document known as Appendix 10d of the NRCS Agricultural Waste Management Handbook. The rules as published made reference to the old standard yet indicating that if a more current standard existed it would apply. The commission changed the reference from "SCS Technical Note 716" to "Appendix 10d of the NRCS Agricultural Waste Management Handbook." Thirty-nine individuals in the Panhandle area of the state, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that in subsection (f)(18) all new operations be required to use plastic liners in addition to tamped clay liners in their lagoons. The commission disagrees that synthetic liners should be required for all facilities. The rules require the applicant to certify lack of hydrologic connection for each retention structure. Lack of hydrologic connection can be achieved by utilizing in-situ materials, or the placement of a liner. Liners may be constructed of earthen materials or may be composed of synthetic material. The licensed professional engineer will determine the appropriate construction methods on a case-by-case basis. Rice Construction recommended that in subsection (f)(18) the construction requirements and specifications for the waste lagoons of the CAFOs are equally as stringent as those we construct for hazardous chemicals. They suggested the agency not promulgate regulations which will impose a higher burden on this agricultural industry than is reasonable. The commission believes that the construction and liner requirements are reasonable and adequate for the type of waste and wastewater that is being generated at CAFOs. Agri-Waste Technology, Inc. suggested that in subsection (f)(18) liner criteria for many states are less than what TNRCC has had in place. The criteria proposed by TNRCC meets or exceeds that found in EPA Region VI General Permit for CAFOs. The commission agrees that the criteria in these rules meet and/or exceed that found in EPA Region VI General Permit for CAFOs and most other states. An individual in the Panhandle area recommended that in subsection (f)(18) facilities should be inspected during and after construction by an independent engineer. Under no circumstances should the engineer who constructed the site be named in the PPP. The commission feels this is an unnecessary expense since these rules require that the facilities be designed and constructed in accordance with good engineering practices and the facilities are subject to the inspection of the executive director at any time. If any discrepancies are found, the owner/operator is subject to enforcement, penalties and the appropriate repairs to the facility to achieve compliance. Thirty-nine individuals in the Panhandle area of the state, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that subsection (f)(18) be amended to include under lagoon monitoring systems, which represent a very minor cost and insure that lagoon leaks can be identified quickly before underground water is affected. The commission responds that leak detection systems are not appropriate for all retention structures. If a significant potential exists for the contamination of waters in the state or drinking water, leak detection systems or other monitoring systems may be required. An individual for the Panhandle area recommended that subsection (f)(18) be amended to require installation of leak detectors under the lagoons and inspection of lagoons before and after they are built and to require some means of clean-up after the owners/operators have finished using the lagoons. The commission responds that leak detection systems are not appropriate for all retention structures. If a significant potential exists for the contamination of waters in the state or drinking water, leak detection systems or other monitoring systems may be required. In response to lagoon clean-up, the commission requires the removal and proper disposal of all solids, sludges, manure and other pollutants as a Best Management Practice under sec.321.40 and also requires the submission of a plan under sec.321.42 when ceasing all operations after loss of control or ownership. ACCORD Agriculture, Inc. recommended that in subsection (f)(18) the term "shall" needs to be substituted for "will" to make clear that a mandatory requirement is being imposed. The use of the first year's monitoring data for establishing a baseline does not make sense if monitoring has not been required for a facility since it was first constructed. If monitoring wells are not established until the groundwater already has been polluted, baseline values must be determined in another location unaffected by pollution. The commission agrees and has replaced the word "will" with "shall." The commission agrees in part that in certain circumstances, the first year's sampling may not be an appropriate baseline to use for comparisons and has revised the language to include "unless otherwise provided by the executive director" at the end of the provision. ACCORD Agriculture, Inc. recommended that in subsection (f)(19)(A) it is not clear what "discharge or drainage of irrigated wastewater" is referring to. Does this language mean that irrigated wastewater may be allowed to drain off of an irrigated field even if drainage is adjacent to waters in the state as long as it does not run directly into waters in the state. Irrigated wastewater simply should not be allowed to discharge or drain from an irrigated field. The commission agrees that clarification of the provision is necessary to remain consistent with sec.321.31 of this title and Section 26.121 of the Texas Water Code. The phrase "of pollutants into or adjacent" has been added after "will result in a discharge." ACCORD Agriculture, Inc. recommended that in subsection (f)(19)(B) phosphorus levels should be measured periodically regardless of known water quality issues. The frequency of such monitoring should be increased when phosphorus is a known water quality risk. The commission responds that as required in sec.321.39(f)(28)(F), phosphorus is analyzed on an annual basis regardless of any known water quality problems and that under these rules the commission has the authority to establish through a public hearing process any greater frequency or sampling analysis. TAEX (College Station) recommended that in subsection (f)(19)(B) delete "needed" should be deleted and after crop uptake the following should be added: ", based upon crop and realistic yield goal." The commission agrees with the comment and has made the recommended revisions. This revision will clarify the intent of the rules. ACCORD Agriculture, Inc. recommended that in subsection (f)(19)(D) irrigation practices should be required to avoid, rather than just reduce or minimize, contamination of waters in the state or nuisance conditions. Such contamination and nuisance conditions must be prohibited. The intent of this paragraph was to insure that nuisance conditions be prevented while irrigating. The commission agrees with this comment and has clarified the language by adding the word "prevents" before the phrase "...the occurrence of nuisance conditions" and changing the term "contamination" to "pollution" which is a defined term. Dairy Farmers of America recommended that in subsection (f)(20) the notice of solids removal from the treatment lagoon is unnecessary. The commission disagrees with the comment. Solids removal from lagoons is not a common, routine activity. There is the potential for increased odors, improper disposal of solids and liquids, as well as pond liner damage if not done properly. Notice provides the opportunity for technical assistance to the facility owner/operator as well as for monitoring a potentially problematic activity. ACCORD Agriculture, Inc. and Greenbelt Municipal and Industrial Water Authority recommended that in subsection (f)(21) the term "significant pollutants" needs to be defined or clarified. It is not clear whether it is intended to be a category or pollutants of a quantative limitation. The commission agrees that the term "significant" is unclear and the language has been revised to be consistent with sec.321.31. The language will be revised as follows: remove "significant." TAEX (College Station) recommended that in subsection (f)(22) the commission should change "any" to "all" ; delete "needed" and add after crop uptake ", based upon crop and realistic yield goal." The commission agrees with the comment and has made the revisions to clarify the intent of the provision. TAEX (College Station) recommended that in subsection (f)(23) the commission should change "any" to "all." The commission disagrees with the comment. The commission believes the use of the term "any" in this subsection has the same meaning as "all." No change will be made. ACCORD Agriculture, Inc. recommended that in subsection (f)(24)(A) the term "adequate" as it refers to manure storage capacity needs to be defined and that there needs to be a standard for determining what constitutes adequate berms or other structures. Land application should not be allowed in the 100-year floodplain. The commission agrees the term "adequate" is unclear in the context of the referenced subsection and it will be removed. On the other recommendations the commission responds that adequate berms or other structures refers to protection from the 25-year, 24-hour rainfall event. There are many cases where land application of manure is beneficial within the 100-year floodplain. TAEX (College Station) recommended that in subsection (f)(24)(A) the commission should change "agricultural" to "agronomic" The commission agrees that the term "agronomic" better describes the intent of this paragraph and has made the revision. ACCORD Agriculture, Inc. recommended that in subsection (f)(24)(B) the commission should require that at least at large facilities, manure stockpile areas must be lined as must areas collecting runoff from such areas. The commission responds that if manure stockpiling is managed according to these rule requirements, downward migration of contaminants will be minimized similar to open lots. TAEX (College Station) recommended that in subsection (f)(24)(D) the commission should add "agronomic" before "rates." The commission agrees with the comment and has made the revision to clarify the intent of the provision. ACCORD Agriculture, Inc. recommended that in subsection (f)(24)(F) the permit should establish some minimum width for grassed strips and for determining when land is subject to excessive erosion. The commission responds that the recommendation to establish a minimum width for grassed strips would constitute a substantive change to the rules. The additional requirement is beyond the scope of the rules as proposed. The commission notes that the width of an edge-of-field, grassed strip shall be determined appropriately on a site-specific basis, but if the plan proves to be ineffective in controlling pollutants in discharges or preventing a nuisance condition, the commission will require amendments to the plan to achieve those objectives. The applicant is already required to identify areas which have a high potential for erosion and to submit a plan identifying measures used to limit erosion on those lands. Two individuals from the Panhandle recommended that subsection (f)(24)(J) be modified to require daily flushing of pits. The commission disagrees that it is necessary or reasonable to require that all buildings with flush systems be flushed on a daily basis. The rule stipulates that buildings with flush systems be required to flush at least once per week, or as often as necessary to maintain the design efficiency. This would not preclude operators from designing a system that requires daily flushing. Daily flushing has not been established as BACT. Greenbelt Municipal and Industrial Water Authority recommended that in subsection (f)(25) changes should be made to require that levee maintenance must be in accordance with TNRCC "Guidelines for Operation and Maintenance of Dams in Texas" The commission disagrees with the comment. The commission does not want to limit maintenance to just the referenced document. The consulting engineer may have specific maintenance requirements that has been identified for the owner that should be adhered to based on the engineer's design criteria. The commission would certainly recommend the referenced document or other such documents provide the owner and/or consulting engineer with recommendations on how a maintenance schedule and program for their structure should be implemented. Brazos River Authority recommended that in subsection (f)(28) it is assumed that the language "land owned or operated by permittee" would include land not owned by the permittee but that is operated by others on behalf of the permittee. If this is not the case, then this wording should be clarified. The commission disagrees with the interpretation of the commenter. The commission interprets the language to indicate that land owned or operated by the permittee refers to land actually owned, leased or controlled in some fashion by the applicant and used as part of the CAFO. ACCORD Agriculture, Inc. recommended that in subsection (f)(28)(C) the word "similar" be added prior to "management practices" to make clear that a separate analysis is needed for similar soils if different management practices will be used on that particular tract. The commission generally agrees with the comment and has revised the language to add "similar" to clarify the intent of the provision. TAEX (Amarillo) and Texas Cattle Feeders Association recommended that in subsection (f)(28)(F) the rules should not require only one selection of phosphorus extraction method. If the commission chooses to limit the extractant, they prefer Mehlich III. Dairy Farmers of America requested that in subsection (f)(28)(F) the phosphorus test be the Mehlich III or P1 Weak Bray rather than the TAMU extractant. Mahard Egg Farm, Inc., Wrangler Feedyards, Jade Cattle Feeders, Koch Beef Company, Veribest Cattle Feeders, Inc., Bar G Feedyard, Frontier Feedyards, Inc., Coyote Lake Feedyard, Live Oak Feedlot, Inc., McLean Feedyard, Inc., Sugarland Feed Yards, Inc., Stratford Feedyard, Bartlett Cattle Company, L.P., Perryton Feeders, Inc., Bezner Beef, Jennings Land and Cattle, Inc., Canadian Feedyards, Inc., Comstock Cattle Corp., Tri-State Cattle Feeders, Hereford Feed Yards Co., Farwell Feed Yards and Texas Farm Bureau recommended that in subsection (f)(28)(F)(ii) the commission state there is no technical basis for limiting analytical methods for phosphorus to the TAMU extractant. Suggest consistent use of extractant versus generalized limitation. Pilgrim's Pride, Inc. and Texas Poultry Federation suggests that the existing rule allowing use of TAMU, Bray and Mehlich should be continued until more definitive data is available to indicate which test method clearly provides the most accurate data. Agri-Waste Technology, Inc. suggested that for phosphorus testing a widely accepted testing extractant such as Bray P1 or Mehlich III should be adopted. The commission agrees in part with the comments and has modified the language to include the Mehlich III method. TAEX College Station recommended that in subsection (f)(28)(F)(ii) the commission add "see Section 321.39(28)(G)" after "ppm" for a table being proposed at that location and add under TAMU extractant "Bray I (soils (G)(I) below and after "Zone 1" "(0-6 inch increment or weighted average of the 0-2 and 2-6 inch increments." The commission responds that it would like to study this issue further and will direct the executive director to meet with soil chemistry and testing experts and bring the commission a recommendation on which extractant or extractants should be used and under what conditions and limits. Agri-Waste Technology, Inc. recommended that in subsection (f)(28)(G) any phosphorus regulation should be restricted to locations where phosphorus contamination to surface water and groundwater represents some reasonable potential. Texas Cattle Feeders Association recommended that in subsection (f)(28)(G) this paragraph should not apply to areas of the state which are not susceptible to phosphorous loading due to a lack of surface water. Where land application sites are isolated from surface waters and no potential exists for phosphorous runoff to reach any waters in the state, the soil levels of extractable phosphorous may exceed 200 ppm upon approval by the Executive Director. The commission responds that when levels of phosphorus exceed certain thresholds in the soil, potential exists for runoff containing phosphorus to reach waters in the state. In addition, higher levels of phosphorus negatively affect most crop production rates, thereby defeating the use of the waste or wastewater as a beneficial reuse product. Mahard Egg Farm, Inc. recommended that in subsection (f)(28)(G) additional sampling for topically applied manure is unnecessary and should not be adopted. Twenty-seven poultry producers suggested that in relation to subsection (f)(28)(G) the Texas A&M Extension Service has developed guidelines on soil sampling which recommends samples be taken at 0-6 inch depth. The scientific community and NRCS are in the process of developing guidance for phosphorus based animal waste management plans. If application limits are to be based on phosphorus, then NRCS and scientific research community should be the leaders on the issue, not a regulatory agency. The commission responds that phosphorus movement in the soil is extremely inhibited. Without incorporation, phosphorus has a greater tendency to remain in the upper two inches, thereby increasing the potential for erosion and phosphorus loading in surface waters. Recent research has shown that there is a greater potential for topically applied manure compared to manure which is incorporated into the soil, and that a 0-2 inch soil test will better reflect whether this potential exists. TAEX (College Station) recommended that a new table be established in subsection (f)(28)(G) setting different concentrations of phosphorus as a function of the pH of the soil and for each different extractant method. TAEX (College Station) recommended that in subsection (f)(29) the commission add "Also copper and zinc for swine and copper, zinc and boron for poultry. The commission responds that it would like to study this issue further and will direct the executive director to meet with soil chemistry and testing experts and bring the commission a recommendation on which extractant or extractants should be used and under what conditions and limits. ACCORD Agriculture, Inc. recommended that in subsection (f)(31) samples should be required from all wells subject to the control or management of the owner or operator, and located within the general area of the operation, rather than just those providing water for the facility. The commission responds that the provisions of this subsection are consistent with the requirements found in sec.26.048 of the Texas Water Code. Texas Farm Bureau and Texas Cattle Feeders Association recommended that subsection (f)(31) should be modified by deleting the words: " At a minimum," at the beginning of the last sentence. Requirements in these rules should be consistent with sec.26.048 of the Water Code. The commission responds that the language in question is consistent with the intent of the requirements found in sec.26.048 of TWC. This language only reflects that this is the minimum that is required. ACCORD Agriculture, Inc. recommended that in subsection (f)(32) it is essential that a plan for odor abatement be developed for each facility and the requirement also must include criteria against which to measure the adequacy of such a plan. TAEX (Amarillo) recommended that in subsection (f)(32) the requirement for an odor abatement plan is not sufficiently clear and, in fact, may be off-target. You should specify "odor reduction methods" and state that these should cover such things as facility design, manure collection, manure and wastewater storage and treatment, land application, dead animal recovery/disposal and other feature that contribute to odor reductions. Pilgrim's Pride Inc. suggests that in subsection (f)(32) odors cannot be abated. Name should be changed to "Odor Control Plan." The commission agrees that the term "odor abatement plan" does not accurately describe the intended purpose of this requirement, and has been replaced with the term "odor control plan", to be consistent with similar requirements in other states. Because the requirement to submit an odor control plan has been relocated to sec.321.46, (f)(32) has been deleted and the requirements contained in that subsection relocated to sec.321.46. As adopted, sec.321.46 has been modified to reflect certain items that must be addressed in the plan, when required. At a minimum, the plan would identify all maintenance and operational practices associated with storage, treatment, and land application of manure and wastewater, manure collection, dead animal handling, pen maintenance, and dust control. The commission disagrees that each facility should be required to develop an odor control plan. The commission believes odors can be adequately controlled with additional buffer requirements as outlined in sec.321.46. Texas Cattle Feeders Association recommended that in subsection (f)(32) the PPP requirements in the proposed rules already contain many provisions and requirements that address management practices related to reduction of odor and nuisance conditions. The provision for an odor abatement plan should be removed. The commission agrees that many of the provisions in this amended chapter address the control of odors, however, the requirement to provide an odor control plan is believed to be reasonable and necessary for certain facilities. Section 321.46 has outlined options for CAFOs depending on available buffer and whether they were existing prior to adoption of these amended rules. In addition, any CAFO required to submit an odor control plan under this Chapter maintains the option of obtaining air quality authorization under Chapter 116 in lieu of satisfying the air quality standard permit in this subchapter. The odor control plan is intended to allow CAFOs the flexibility to design and operate a facility that incorporates the appropriate technology to maximize the control of emissions from their facility. Rice Construction recommended that in subsection (f)(32) the commission not institute regulations which are unreasonable and cost prohibitive in the area of odor control unless the TNRCC is prepared to implement these regulations on a state-wide basis to all industries. CAFOs should not be singled out. OSHA regulations establish levels of hydrogen sulfide which are harmful based on temporary and continuous exposure. No hydrogen sulfide regulations are needed for the state. The commission develops and enforces regulations that deal with off-property emissions as opposed to OSHA which regulates emissions on-site. These rules do not contain any new hydrogen sulfide regulations. The commission does not agree that the adopted regulations are unreasonable or cost prohibitive. Our experience suggests that odors are one of the primary concerns relating to CAFOs. These regulations do not impose additional prohibitions for CAFOs, rather it offers an alternate method for obtaining authorization. As adopted, sec.321.46 only requires an odor control plan for those CAFOs applying for air authorization. In addition, certain expansion projects and certain CAFOs with additional buffer distances may not be required to submit an odor control plan. Agri-Waste Technology, Inc. recommended that in subsection (f)(32) a separate odor abatement plan is not needed. Issues surrounding odor minimization are best handled through prudent site selection, conservative lagoon/waste treatment facility design and BMP implementation. The commission should require that lagoons/waste treatment facilities be managed as designed. Wrangler Feedyards, Jade Cattle Feeders, Koch Beef Company, Veribest Cattle Feeders, Inc., Bar G Feedyard, Frontier Feedyards, Inc., Coyote Lake Feedyard, Live Oak Feedlot, Inc., McLean Feedyard, Inc., Sugarland Feed Yards, Inc., Stratford Feedyard, Bartlett Cattle Company, L.P., Perryton Feeders, Inc., Bezner Beef, Jennings Land and Cattle, Inc., Canadian Feedyards, Inc., Comstock Cattle Corp., Tri- State Cattle Feeders, Morris Stock Farm, Hereford Feed Yards Co., Dimmitt Feed Yard, LLC. and Perry Feeders, Inc. suggested that to create a separate odor abatement plan would merely mimic the requirements and BMPs in the PPP and would create an unnecessary and unjustified burden on permittees. The commission believes that an "odor control plan" is appropriate even though the rules already contain several BMPs and design criteria aimed at reducing odors. In certain circumstances, additional measures to address the control of odors may be necessary to ensure that nuisances will not be created. It is intended that the odor control plan be more detailed and describe the day to day operation of the facility and not merely commit to compliance with the pre- determined operational requirements in the rules. As adopted, sec.321.46 only requires an odor control plan for those CAFOs applying for air authorization. In addition, certain expansion projects and certain CAFOs with additional buffer distances may not be required to submit an odor control plan. Texas Poultry Federation proposes that in relation to subsection (f)(32) the Texas Poultry Federation has BMPs currently in effect that reduce odors. The commission commends the Poultry Federation for developing BMPs to be utilized by its constituency and recognizes that such BMPs may be appropriate for inclusion in an odor control plan. However, the commission believes that it is necessary that certain CAFOs, as required by sec.321.46, develop and implement a site specific odor control plan for their facility. These rules were not intended to prohibit associations or organizations from developing a recommended list of BMPs as long as those standards do not conflict with the requirements in this subchapter. Dairy Farmers of America suggests that in subsection (f)(32) an odor abatement plan utilizing BMPs would be a sensible way to address odor concerns rather than increasing the buffer requirements. The commission agrees that an odor control plan utilizing BMPs can help minimize odors at CAFOs, and has modified the rule to include the plan in conjunction with reduced buffer zones and certain expansion projects. USFWS recommended that all wastewater retention systems be constructed with an appropriate exclusion methodology to prevent access to migratory avian species and any other wildlife. The commission disagrees with the comment and responds that the suggested modification is beyond the scope of these rules and the requirements for these facilities are the same as other no-discharge municipal and industrial wastewater facilities. sec.321.40. Best Management Practices. ACCORD Agriculture, Inc. recommended that the qualification of the requirement for use of BMPs, as appropriate, based upon "existing physical and economic condition, opportunities, and constraints" makes the requirement illusory. The BMPs set out in this section are basic design and construction or operational requirements, not BMPs. These types of basic requirements may not be waived. The commission disagrees with the comment and responds that the listed practices are recognized as Best Management Practices (BMPs). To establish new practices and standards as BMPs would constitute a substantive change to the rules and is beyond the scope of the rules as proposed. ACCORD Agriculture, Inc. recommended that in paragraph (2) the commission should make clear that an amendment application must be submitted and approved before expansion occurs. The commission responds that BMPs are for all facilities, regardless of whether they are operating under permit, registration, or by-rule. The commission agrees that facilities operating under permits and registrations are required to obtain approval prior to expansion. ACCORD Agriculture, Inc. suggested that under paragraph (3) the rules need to include an additional requirement that such ditches, dikes, berms, terraces, or other structures be maintained to meet design standards. The commission agrees with the comment and would note that this requirement is already in the pollution prevention plan requirements (see sec.321.39(f)(25)). ACCORD Agriculture, Inc. recommended that in paragraph (4) no CAFO that has been built in a "stream, river, lake, wetland, or playa lake" should be authorized by any mechanism other than an individual permit, if it is authorized at all. Special conditions would be essential to provide adequate protection in such situations. The commission disagrees with the comments. The provisions in these rules related to the location of facilities in relation to a stream, river, lake, wetland or playa lake are consistent with the requirements in the current EPA Region VI CAFO General Permit. The rules provide a distinction between existing versus new construction in a manner similar to the federal requirements. Greenbelt Municipal and Industrial Water Authority recommended that in paragraph (4) the terms "stream, river, lake, wetland and playa lake" should be defined. The commission disagrees that these terms should be defined in these rules. These terms are commonly used terms which are either defined in this title or by statute. ACCORD Agriculture, Inc. recommended that in paragraph (5) the commission require facilities to be designed and located so that waters in the state do not come into contact with waste materials at a CAFO facility. The commission agrees with the comment and believes that the regulations already provide for such design requirements and that any discharges to waters in the state can only occur in accordance with provisions described in these rules or in accordance with a general permit issued by the commission. ACCORD Agriculture, Inc. recommended that in paragraph (6) if retention ponds are going to be allowed within the 100-year floodplain, the permit must provide specific performance standards for ensuring that failure of those structures will be prevented. A general requirement that they be protected from damage is inadequate. The commission responds that any structures designed in the floodplain must be certified by a licensed professional engineer that the design is appropriate and adequate to protect the facility from damage and failure. Greenbelt Municipal and Industrial Water Authority requests that in paragraph (6) the location of a levee or retention pond within a 100-year floodplain be prohibited. The term "100-year floodplain" should be defined. The commission responds that the recommendation would constitute a substantive change to the rules. The additional limitation is beyond the scope of the rules as proposed. The commission notes that any structures designed in the floodplain must be certified by a licensed professional engineer that the design is appropriate and adequate to protect the facility from damage and failure. The commission responds that the term "100-year floodplain" is a commonly used term which is defined under Chapter 301 of this title and is so referenced in a change to this section. ACCORD Agriculture, Inc. recommended that in paragraph (7) the indicated proximity to water wells is inadequate to provide adequate protection and should be 1,000 feet from public water supply wells and 300 feet from private water wells. If facility seeks to locate more closely, an individual review of the potential for pollution is needed. Brazos River Authority suggests that in paragraph (7) the standard that waste management facilities be located a minimum of 150 feet from all water wells, if practicable, is weak. Other improvements to the rules would make siting of recharge facilities mandatory. The commission responds that the buffer distances in these rules are consistent with such distances in Chapter 238 of this title (relating to Water Well Drillers Rules) and Chapter 290 of this title (relating to Water Utilities). ACCORD Agriculture, Inc. suggests that paragraph (8) is so general as to be virtually meaningless. It fails to provide useful guidance, what state guidelines are being referred to? The commission disagrees that this section is meaningless. It does provide general guidance to the facility owner/operator in development or utilization of any management practices. Such practices cannot create a nuisance or health hazard, result in contamination of drinking water or be in non-compliance with agency regulations. The commission does agree that the use of the term "guidelines" is not needed and has been removed. ACCORD Agriculture, Inc. recommended that in paragraph (9) the commission define the term "significant pollutants" needs to be defined. The commission agrees in part with the comment and will clarify the meaning by removing the "significant." ACCORD Agriculture, Inc. recommended that in paragraph (10) the prohibition of the creation of a nuisance should include, but not be limited to, air issues. The definition of the term limits it to air issues. The commission disagrees with the comment and responds that this nuisance prohibition was only intended to address air quality issues, since there is already a prohibition against unauthorized discharges into the waters of the state. ACCORD Agriculture, Inc. recommended that in paragraph (11) the reference to "proper disposal" of dead animals is too general to be meaningful. The permit must set out the specific procedures to be followed for disposing of dead animals. The commission responds that this requirement needs modification to require proper disposal within 48 hours to be consistent with air quality permitting requirements and to reduce the potential for nuisance conditions. Proper disposal may include rendering, burial, or other methods which do not cause a nuisance or detrimental impact to water quality. ACCORD Agriculture, Inc. recommended that in paragraph (12) the reference to "recognized practices of good agricultural management" is too general to be meaningful. The commission disagrees that the comment is not meaningful and responds that the wide scope of the provision demands a general reference to agricultural management practice. ACCORD Agriculture, Inc. recommended that in paragraph (13) this requirement belongs in the PPP and must be reviewed as part of the approval process. The commission responds that these requirements are best management practices and will be considered in meeting the technical and administrative requirements in the approval process. USFWS recommend that vegetated buffer zones at least 50 meters wide be added as a BMP. The commission responds that the recommendation to establish a minimum width would constitute a substantive change to the rules. The additional requirement is beyond the scope of the rules as proposed. The commission notes that the width of a vegetated buffer zone shall be determined appropriately on a site- specific basis, but if the plan proves to be ineffective in controlling pollutants in discharges or preventing a nuisance condition, the executive director will require amendments to the plan to achieve those objectives. sec.321.41. Other Requirements. Thirty-eight individuals from the Panhandle area, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that in subsection (c) the authorized person in the PPP must be a person who was not used as an engineer in building the facility nor should it be a person from the TNRCC. This independent authorized person must be able to make on-site inspections and file reports that will have weight with both the TNRCC and the owner of the operation. This would include large financial penalties which would make such inspection cost minimal. ACCORD Agriculture, Inc. recommended that in subsection (e) the report documenting inspections should be verified to make to the owner or operator the significance of falsifying any entries. The commission responds that the agency will conduct separate inspections which may include the review of any site inspection required under these rules. The commission believes it would create an undue economic burden on the facility to require independent third party inspections. Brazos River Authority suggests that the guidance given in this section that the permittee is responsible for determining appropriate training frequency for personnel is vague and weak. The approved PPP should determine the employees to be trained. The commission disagrees with the comment and responds that different personnel completing different tasks at each facility will require different levels of training and at different frequencies. The owner/operator of the facility should be able to determine training frequency on a case-by-case basis. The requirements of the PPP identify those employees, responsible for work activities which relate to compliance with this subchapter, and therefore who must be trained. sec.321.42. Monitoring and Reporting Requirements. ACCORD Agriculture, Inc. recommended that in subsection (a)(4) monitoring should be required for any discharges to waters in the state from the facility regardless of whether they are from the retention facilities. The commission disagrees with the comment. Under these rules, storm water runoff from all contaminated areas of the CAFO are required to be directed into the retention facility. Any storm water runoff from non-contaminated areas are outside the scope of these rules, and therefore, the agency does not require CAFO operators to sample these non-contaminated storm water discharges every time it rains. This would put an undue burden on the facility operators. ACCORD Agriculture, Inc. recommended that in subsection (a)(7) to ensure enforceability, the commission should rewrite this provision should be rewritten to require sample collection for all discharges and then create an exception for adequately documented situations where sample collection was not possible. The commission does not agree with this comment and has not made any change to the rule. The rule requires sampling for all discharges except under conditions where the discharger is unable to collect samples due to climatic conditions which prohibit the collection of samples. The commission believes this exception is necessary to account for dangerous conditions when sampling cannot take place. ACCORD Agriculture, Inc. recommended that in subsection (b) the commission should require discharge information to be routinely submitted to the TNRCC. If the number of discharges are so large that TNRCC cannot deal with the information then it is clear that the design and operation standards are not adequate. The commission disagrees with the comment. This section of the rules requires that the agency is to be notified by the owner of any discharges that occur when the design capacity is exceeded. In addition, this section clearly describes when and how sampling of the discharge is to occur, and that all records and data shall be maintained at the facility. It further provides that the executive director can, at any time, require that such data and information be provided to the agency. This type of process provides the agency with the needed tools and flexibility it needs in monitoring compliance, while at the same not being overly burdensome on the TNRCC or regulated entities. Texas Farm Bureau and Texas Cattle Feeders Association suggest that in subsection (g) the commission increase the 60 days to 120 days to prevent non- compliance by an owner/operator due to action outside of his control (e.g. backlog of samples at the laboratory). The commission disagrees with the comment. The commission believes that a 60 day timeframe will give ample time to take samples, have them analyzed and submit the necessary reports. If the only reason for non-compliance with this provision is due to actions outside the control of the owner/operator of the facility, the executive director will exercise the necessary enforcement discretion in approaching any enforcement. sec.321.43. Notification. No comments. sec.321.44. Dairy Outreach Program Areas. ACCORD Agriculture, Inc. recommended that the statement that the DOPAs "involve" all of the listed counties is ambiguous. The provision should simply state that all portions of those counties are included. The provision should also make clear the commission can designate additional areas at any time. The commission agrees with the comment and has modified the language to clarify that the designation includes all the area within those counties in the DOPAs. It was the clear intent under this provision that the commission at any time may through the rulemaking process add or delete areas from the DOPA designation. Language will be added to this section to make that intent clear. Texas Association of Dairymen request the TNRCC eliminate these subjective designations. These designations were not based upon science. Dairy Farmers of America request the deletion of the DOPAs. The commission disagrees with the comments. These areas of the state are currently being evaluated through an intensive enforcement effort and legislative directive. If after all data and information has been assimilated, evaluated and there is a determination by the commission that such a designation is no longer the needed, the commission will consider such. sec.321.45. Effect of Conflict or Invalidity of Rule. No comments. sec.321.46. Air Standard Permit Authorization for a CAFO General Permit. Greenbelt Municipal and Industrial Water Authority recommended that the proposed air quality standard permit must be published in a newspaper. The commission agrees that Section 382.017 of the Texas Clean Air Act requires notice of a hearing on air quality rules having statewide effect to be published in at least three newspapers, the combined circulation of which will, in the commission's opinion, give reasonable circulation throughout the state. The commission published notice of the air quality portions of this subchapter as required by Section 382.017, and held another hearing on June 25, 1998, for the purpose of soliciting public comment on the air quality portions of this subchapter, in accordance with this requirement. Comments were received in response to this notice and responses have been incorporated in this adoption package. ACCORD Agriculture, Inc. recommended that the prerequisites for an air quality standard air permit must be set out in the rules. The rules must ensure BACT and avoidance of conditions of air pollution. That requirement may not be met by reference to a general permit that will not be issued through the rulemaking process and which has not even been adopted. Section 382.051 does not authorize that. The commission agrees that the prerequisite for obtaining an air quality standard permit in combination with either a registration or individual permit for water quality is not clear. Section 321.46 has been modified to include a statement that a CAFO is also entitled to an air quality standard permit if all of the requirements of this subchapter for registration or individual permit are met. In addition, the heading for this section has been modified by deleting the phrase "for a CAFO general permit" to clarify this point. The commission disagrees that sec.382.051 does not authorize the creation of an air quality standard permit such as the one in this subchapter. Section 382.051 (b)(3) authorizes the commission to create standard permits by rule for numerous similar facilities subject to sec.382.0518. Additionally, the commission believes that the air quality requirements of this subchapter essentially reflect what would be required of similar facilities seeking individual permits under sec.382.0518, and will protect the public's health and safety and use of physical property. Eight individuals from the Panhandle commented that the rules should require best available control technology, or should require the "latest technology" to reduce odors, regardless of cost. The commission believes that the requirements in the rule substantially reflect the application of best available control technology. The commission disagrees, however, that cost should not be a factor in determining the appropriate level of control technology. It should be pointed out that because this is a permit by rule, there will not be a case-by-case determination for BACT for each facility seeking authorization under this rule. These are minimum requirements which must be satisfied in order to obtain authorization under an air quality standard permit; if circumstances warrant, additional controls may be necessary to ensure that conditions of air pollution are avoided, and the commission encourages operators of CAFOs to implement any measures designed to control odors. General Comments Thirty-seven individuals from the Panhandle area, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended that public hearings under an impartial judge be allowed, as they were in Subchapter B. Rules should be changed to "The commission must hold public hearings before an impartial judge in the county of the site listed in the permit application if objections to the permit are received." Two individuals from the Panhandle area and Brazos River Authority recommended that adjacent or affected landowners should be able to request a contested case hearing under these rules. The commission agrees that contested case hearings should be available to affected persons who object to the issuance of an individual permit via a reasonable hearing request. However, for registrations, public participation includes mailed notice of technical completeness, opportunity for public comment, consideration by the executive director of such timely received comments and opportunity to file motions for reconsideration for those who have timely filed comments. Thus the rules provide for significant public participation while reserving for those cases where an individual permit is appropriate the opportunity for a contested case hearing provided for under sec.26.028 of the Water Code. Thirty-seven individuals from the Panhandle area, Mayor of the City of Perryton, JRG Farms, Inc., J.R. Stump Family Trusts A&B, and ACCORD Agriculture, Inc. recommended the rules should require inspections on an annual or semi-annual basis of these facilities to see that the structures are properly maintained. The requirement for an annual inspection should be a minimum standard. An individual from the Panhandle area suggested that each proposed permit site be inspected before permitting is allowed by the TNRCC and adjoining landowners. What is on paper is not always how the site really is! The commission disagrees with the comment. It is impractical for the agency to mandate annual inspections or inspections prior to authorization for CAFOs. The agency is responsible for thousands of domestic, municipal, industrial and other types of facilities across the state related to the different programs it manages. The agency will perform inspections in all its various programs as the commission determines its priorities on an annual basis and in relation to the resources that it has available. An individual from the Panhandle area suggested that any company who comes to operate in the Panhandle be required to do their part to keep our groundwater safe and clean. The commission agrees with this comment and believes that the rules contain many provisions which are intended to preserve groundwater quality. For example, sec.321.39(f)(1)(B) requires the pollution prevention plan to identify the specific location of any recharge features identified within any tracts of land that will be utilized and to locate and describe the function of all measures installed to prevent impacts to identified recharge features. Pursuant to the definition in sec.321.32(32), recharge features include both natural and artificial features. Section 321.39(f)(16) requires that the pollution prevention plan include documentation that the facility does not contain any significant hydrologic connection between the contained wastewater and waters in the state, which includes groundwater. If this cannot be documented the facility's ponds, lagoons, and basins of the retention facilities must have liners which will prevent the potential contamination of surface and ground waters. The specific liner requirements are set out in sec.321.39(f)(17). In addition, pursuant to sec.321.39(f)(18), the executive director may require the installation of a leak detection system or monitoring wells if significant potential exists for the contamination of drinking water or waters in the state, which includes groundwater. An individual from the Panhandle area suggested that property owners whose land, air and water should have rights to protect their property. Even though they pay damages to the state, property owners should receive their damages too. The commission responds that any property owners whose land, air or water is damaged by other property owners have the right to pursue legal action through the civil courts. Nothing in the commission's rules protects persons who damage another person's property interests. An individual from the Panhandle area suggested that there should be a regulation on the number of hogs in any one county. There should be a maximum allowed. The commission does not have the authority to enact zoning regulations which would be required to set a maximum limit. In addition, there is no evidence that a maximum limit is necessary to protect the environment. Greenbelt Municipal and Industrial Water Authority suggests that the TNRCC has failed to cite statutory provisions adequate to authorize all portions of the proposed rules. The commission agrees that in the rules as proposed, some of the relevant citations to the Texas Clean Air Act were omitted. In addition to citing sec.382.017, which contains the general rulemaking authority of the commission, the statutory authority cited should have included sec.382.011, which authorizes the commission to establish the level of quality to be maintained in the state's air; sec.382.051, which authorizes the commission to issue a standard permit developed by rule for numerous similar facilities; and sec.382.012, which authorizes the commission to prepare and develop a general, comprehensive plan for the proper control of the state's air. Greenbelt Municipal and Industrial Water Authority suggests that the proposed rules are a major environmental rule, which has been proposed without the required analysis. The commission has reviewed the rulemaking in light of the regulatory analysis requirement of Texas Government Code sec.2001.0225 and has determined that the rulemaking is not subject to sec.2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the act. Although the intent of the rule is to protect the environment and to reduce risks to human health, this rule affects only an industry and the individual facilities that are already regulated in substantially similar manner to that described in the rule. Therefore, this rule will have no material adverse effect on the economy, productivity, competition, jobs, the environment or the public health and safety of the state or a sector of the state. Further, this rule does not meet any of the four applicability requirements listed in sec.2001.0225(a). It does not exceed a standard set by federal law or an express requirement of state law, since standards for CAFO authorizations are required, but not set, by federal and state law; nor does it exceed a requirement of a delegation agreement or contract between the state and the federal government. There is currently no such agreement, and these rules do not exceed any requirement in the program. Finally, these rules are adopted under the specific authority of Water Code Section 26.040 and Health and Safety Code Sections 382.011, 382.012 and 382.051, as well as the general authority of Water Code Section 5.103 and Health and Safety Code Section 382.017. Greenbelt Municipal and Industrial Water Authority suggests that the proposed rules are inconsistent with applicable statutory provisions (definition of air contaminant is inconsistent with statutory definition). The commission agrees that the definition of "air contaminant" in the rules differs from the statutory definition in that the sentence "Water vapor is not an air contaminant." has been added. This addition reflects the commission's interpretation of its legislative mandate. The commission routinely offers further definition of statutory terms to provide the regulated community and general public of a better understanding of what is and is not regulated within the context of a given statute. Greenbelt Municipal and Industrial Water Authority suggests that there is a variance of language between preamble and rules (1/4 buffer requirement under 321.34). The commenter is correct, there was a variance in language between the proposed preamble and rules related to the proposed air buffer requirement. The commission apologizes for any inconvenience or misunderstanding this may have caused. The referenced language has been changed in this adoption preamble and rules. Greenbelt Municipal and Industrial Water Authority suggests that the proposal delegates (improperly) discretionary decision making authority to the executive director. The commission disagrees with this comment. The proposed rules do not improperly delegate discretionary decision making authority to the executive director. The executive director's determination of whether to approve or deny an application for a new or amended registration is subject to review by the commission through a motion for reconsideration. Accordingly, although the determination to approve or deny an application is initially delegated to the executive director, the rules make such determination subject to review by the commission. County of Childress recommends that the TNRCC enact whatever rules necessary to protect municipal water supplies from even a remote possibility of contamination by any type of confined livestock or poultry operation. The commission believes that these rules do protect the municipal as well as domestic water supplies in the state. These rules provide a clear and definitive set of regulations under which a CAFO and AFO can operate in the state. If a CAFO or AFO does not comply with these requirements, the commission will use whatever enforcement powers it has at its discretion to assure that the water supplies of this state are protected. Perryton Economic Development Corp. strongly encourages the TNRCC to adopt new rules that only considers public input that call attention to the failure of an applicant to meet the requirements of the permitting process. The commission believes that these adopted rules do provide a streamlined process for granting an authorization to operate a CAFO which requires the executive director to evaluate the application itself and all comments received against all relevant requirements of this subchapter. Murphy Family Farms found these rules to be consistent with other states in the region. It urges the TNRCC to work with Texas Pork Producers to understand how these rules will affect pork producers and other CAFO groups. The commission agrees with the comment and is committed to working with both the public and livestock and poultry industry in implementing these rules. Rice Construction suggests that Texas has some of the most stringent environmental regulations of any state in the U.S. The commission believes that these rules are consistent with other states in the region and are protective of the state's natural resources. Rice Construction recommended that reasonable penalties should be established to prevent abuse from the industry and from those who repeatedly file unsubstantiated complaints. The commission responds that reasonable penalties are in place to prevent abuse from the industry and the commission does not believe it is necessary to establish penalties for individuals who file complaints. Such penalties would be extremely difficult to enforce and would discourage those individuals who wish to file bona fide complaints from doing so. Rice Construction suggested that regulations previously implemented were more than sufficient for the CAFO industry and that new regulations be based on sound science. A permitting process that the CAFO industry can understand and which follows a reasonable schedule must be established. The commission agrees that the rules should be easily understood and based on sound science and believes that these rules meet those requirements. Twenty-seven poultry producers suggested that any measures developed must be supported by scientific findings. Experts such as Texas A&M Extension Service and NRCS have already developed conservation programs. These programs should be allowed to continue until new measures can be developed and implemented by all producers. The commission believes that the measures and requirements of these rules are supported by scientific evidence and findings. The agency routinely works with the Texas A&M Extension Service and the NRCS on this and other agency programs and will continue into the future to solicit their input. For example, NRCS animal waste management plans are considered acceptable for inclusion into a PPP as long as such plan addresses the necessary components specified in this subchapter. These rules reflect the commission's mandate to assure that the quality of waters in the state and the air quality are protected. In addition, the requirements set out in these rules are consistent with those established by EPA Region VI in their current CAFO General Permit. ACCORD Agriculture, Inc. suggested that the TNRCC does not have the authority for the creation of new permits-by-rule. The "savings clause" included in the recent amendment to Section 26.040 of the Water Code does not authorize the creation of these proposed new permits-by-rule whether they are created overtly or through the artifice of a rule amendment such as that proposed here. TNRCC lacks the authority for the proposed standard air permits included in the proposed rules, and have not demonstrated that CAFOs meet the statutory prerequisites of Sections 382.051 (b)(3) and 382.0518 of the Health and Safety Code. There is no adequate mechanism for ensuring that BACT will be employed by each facility. Rules must ensure that each individual facility, as that term is defined in Section 382.003 of Health and Safety Act, making up an AFO will utilize BACT. In ensuring compliance with BACT requirements, TNRCC must demonstrate compliance with its own BACT guidance. The commission disagrees with the comment. As the commenter points out, the savings clause continued the effectiveness of all the rules existing as of the date of the amendment, including both Subchapters K and B. The legislature unequivocally authorized the commission to continue to regulate by rule all the facilities that were so regulated prior to the amendments to sec.26.040. The savings clause just as clearly contemplates that the commission will continue to be able to amend its existing rules as circumstances require. Nothing in the APA or in the savings clause of sec.26.040 limits the agency's amendment authority as posited by the commenter. It is true that Subchapter K was judicially revoked after the effective date of the sec.26.040 amendments; however, the basis for that judgment was not that CAFOs could not have lawfully been the subject of permits by rule. Consequently, neither the Legislature in the savings clause nor the court in its judgment on Subchapter K refuted the commission's authority to continue to regulate CAFOs by rule and to amend the existing rules. Even if the commenter's narrow interpretation of the savings clause were correct, it would not preclude adoption of these amendments. These amendments do not "bring whole new groupings of facilities into the permit-by-rule scheme." Subchapter B, as it read before today's amendments, provided that "all feedlot operations may be regulated by rule...provided such operations comply with sec.sec.321.35-321.39 of this title. The provisions of this subsection are applicable to all feedlot operations, either housed or open lots, including beef cattle; dairy cattle or milk production areas; swine; sheep; goats; horses; chickens, including broilers, layers and/or breeders; turkeys, including breeders and/or feeders; and auction markets" (30 TAC sec.321.33(a)). Former sec.321.33(d) set maximum numbers of animals above which an operator was required to obtain an individual permit. The amendments adopted today alter the standard under which a facility is automatically required to obtain an individual permit from one determined by number of animals to one determined by the location of the facility or its status as a source of air emissions. However, these amendments continue the scheme of the original Subchapter B by: (1) specifying which CAFO facilities can be regulated by rule and (2) setting out uniform terms for those facilities. As amended, Subchapter B continues to regulate by rule what the original Subchapter B called "feedlots;" it amends only the terms of the permit by rule to require higher standards both for operating practices and for registration, record keeping and reporting to the TNRCC. The commission disagrees that case-by-case BACT determinations must be conducted in standard permits-by-rule. Texas Clean Air Act (TCAA), Texas Health and Safety Code sec.382.051(b)(3) states that "the commission may issue: . . .; (3) a standard permit developed by rule for numerous similar facilities subject to sec.382.0518." The only reasonable interpretation of the language "subject to sec.382.0518" is that standard permits developed by rule are allowed for facilities that would otherwise be subject to sec.382.0518. The language of sec.382.0518 sets out requirements that logically apply to individual facilities seeking permits, including application of Best Available Control Technology (BACT), impacts review, and opportunity for hearing under sec.382.056(d). This type of case-by-case process is antithetical to the entire concept of permits by rule, since there would be no savings of effort, time or procedure by applicants or TNRCC staff. The Legislature could not have intended such an absurd result, and such a statutory reading flies in the face of the Code Construction Act's presumption that "a just and reasonable result is intended." Government Code sec.311.021(3). The TNRCC's long-standing "administrative construction of the statute" is also entitled to deference. Id. sec.311.023; State v. Public Util. Comm'n, 883 S.W.2d 190, 196 (Tex. 1994). However, the commission is mindful of its obligation to protect human health and the environment. In light of this, the TNRCC has reviewed the control measures set forth by the proposed rule, and has confirmed that they essentially reflect the level of control technology that would typically be required of a similar facility seeking an individual air quality permit under sec.382.0518. The air quality requirements of this subchapter substantially reflect the application of best available control technology for CAFOs, including the requirement to develop and operate under a pollution prevention plan, design criteria for lagoons, operational requirements for single and multi-stage lagoon systems, requirements for wastewater irrigation practices and waste application practices, maintenance scheduling and reporting requirements for solids removal from lagoons, requirements for manure stockpiling, minimum buffer distance for nighttime application of liquid and solid waste, flushing and scraping schedules for manure, maintenance and design of earthen pens, operational requirements for settling basins, dead animal disposal limitations, and inspection requirements. The commission also affirms that the proposed rule will be protective of human health and the environment, based upon the Commission's experience with Texas CAFOs. Dairy Farmers of America requests that provision be made in the process to assist a producer who may wish to build a new facility on an existing operating dairy location. A new facility can be located on a more environmentally and neighborly friendly site than the old facility. It would make sense to allow this to occur without requiring a new permit for the relocation. Although the commission sympathizes with the situation presented, the commission believes that it necessary under the provision of existing state law and the requirements of the federal NPDES program, for which the TNRCC has made application for delegation, that such a suggested relocation would require a new permit/authorization to be obtained. If such a situation would qualify for coverage under the TNRCC general permit for CAFOs, a more streamlined process would be available. Otherwise, it is necessary that such a relocation would require the need to develop a new PPP for the new location, perform the necessary recharge feature evaluations and certification for the new site and meet the other siting, administrative and technical provisions of this subchapter. ProAg offered support in concept for the amendments to Subchapter B. It is imperative that these rules be based upon technical merit, solid science, sound engineering, reason and common sense to provide predictable time frames for companies making huge investments in agriculture. The commission agrees with the comment. An individual from the Panhandle area recommended that regulations are needed which will protect the present landowners and make it possible for us to continue to produce agricultural products. The commission agrees with the comment and believes the proposed rules satisfy the commenters concern. An individual from the Panhandle area suggested that the public should be notified of circumstances such as the expansion of CAFO near them, which could have a negative economic impact on their home and they should be allowed to voice their opinion. It could be treated similar to a variance in urban areas where a person is notified and could refuse to allow a trailer house to be placed next to their brick home. ACCORD Agriculture, Inc. recommended that the TNRCC must extend the comment period at least 120 days and notify each and every adjoining property owner to these 56 permitted facilities and the 24 pending permits, to allow the affected persons the time to seek counsel and participate in the adoption of the new rules. Their rights were adversely affected by Subchapter K and so their rights in part must be addressed by their notification via certified mail to allow for their participation in the rules now being considered by the TNRCC. The commission believes that the rules provide for sufficient notice and opportunities for public participation to potentially affected persons of an application for a new or expanded CAFO. For example, pursuant to sec.321.36(e)(2)(A), notice of such applications are provided to all potentially affected landowners named on the final site plan submitted with the application. Pursuant to sec.321.35(c)(5) those would be all adjacent landowners within 500 feet of the property line of all tracts containing facilities and all on-site or off-site (unless not owned, operated, or controlled by the CAFO operator) waste disposal areas. Notice is also provided to local city and county authorities pursuant to sec.321.36(e)(2)(B) and (C), and to any persons who request to be put on the mailing list pursuant to sec.321.36(e)(2)(G). Finally, sec.321.36(c) requires that notice of the application be published in a newspaper of general circulation within the county or area where the proposed facility is to be located. Pursuant to sec.321.37(a) a person may provide the commission with public comment on any application for registration for which notice has been issued within 30 days of mailing of the notice. Timely comments will be utilized by the executive director in determining what action to take on an application for registration. With respect to applications for an individual permit an affected person may participate through the contested case hearing process if they submit a reasonable hearing request pursuant to Chapter 55 of this title (Relating to Request for Contested Case Hearings; Public Comment). The commission disagrees that the variance procedure described by the commenter is necessary. The rules already contain significant restrictions on the location of AFO's which may in the future seek to be registered or permitted as CAFOs. For example, pursuant to sec.321.46(1), an AFO constructed after the date of adoption of these rules, when seeking registration or an individual permit as a CAFO under these rules must show that they will not locate any permanent odor sources within 0.50 miles of an occupied residence or business structure, school, church, or public park without written consent and approval from the landowner unless they develop and implement an odor abatement plan in which case they may not locate any permanent odor sources within 0.25 miles of an occupied residence or business structure, school, church, or public park without written consent and approval from the landowner. In addition, pursuant to sec.321.46(2) any AFO constructed prior to the adoption of these rules, when seeking registration or an individual permit as a CAFO under these rules must either show that they will not locate any permanent odor sources within 0.25 miles of any occupied residence or business structure, school, church, or public park without written consent and approval from the landowner or develop and implement a pollution abatement plan. Finally, the commission disagrees with the commenters suggestion that notice and opportunity to comment on these rules should be expanded. Notice of the proposed rules was published in the Texas Register pursuant to the legal requirements set out in the in the Administrative Procedure Act. Persons had 30 days from the date of publication of the notice to submit written comment on the proposed rules. In addition, a public meeting was held in which the public was given an opportunity to submit oral comment on the proposed rules. Notice and opportunity to comment on these proposed rules was ample as evidenced by the numerous comments that were received from interested persons. North Plains Ground Water Conservation District No. Two suggested that the agency use groundwater as one word throughout the document. The commission agrees with the comment and has made the suggested revision to the rules. Rep. Warren Chisum asked that the commission listen to the concerns of constituents from his district. Let him know if the agency does not have enough authority to protect municipal water supplies. The commission recognizes Representative Chisum and his concerns and will consider and respond to all concerned citizens that comment on the rules. Rep. David Swinford urged the agency to come up with a set of rules that will allow the environment and agriculture to coexist and prosper. The commission recognizes Representative Swinford and believes that these rules satisfy his concerns. An individual from the Panhandle area urged the changing of the rules to require every CAFO to upgrade their facilities before a renewed permit is allowed. The commission believes that all CAFO facilities should be operated according to the best available technology and management practices. If at any time, the facility's pollution prevention plan proves to be ineffective in controlling pollution, then the plan must be amended and the facility upgraded immediately. ACCORD Agriculture, Inc. believes facilities seeking permits should have designated places for the waste (manure) product to be applied (people signed up and willing to take responsibility). The commission agrees that operators which plan to do their own land application must have land available. Facilities which do not have land available are required to supply a contract hauler's agreement where the contractor agrees to haul the waste off-site. Some contractor's haul the waste to a facility for bagging and use within metropolitan areas. Currently, the need for manure as a fertilizer far exceeds the amount of manure generated. ACCORD Agriculture, Inc. recommended that the TNRCC should adopt rules that only allow the development of the swine industry, as long as farmers are willing to contract their services to the industry. The commission disagrees that the specie specific rules are needed to protect the environment. Contract growing of swine may be an option, but the commission does not have the authority to dictate the development of the CAFO industry. ACCORD Agriculture, Inc. recommended that the TNRCC should not allow pollution control exemptions on equipment at the swine facilities. The commission responds that this exemption was created by the 73rd legislature with the passage of HB 1290. The commission therefore must follows the directive of the legislature. If the commenters wish to change this law, they should contact their legislative representatives. STATUTORY AUTHORITY These amendments are adopted under the Texas Water Code, sec.26.040, under which the commission has authority to amend rules adopted under sec.26.040 prior to its amendment in 1997, and sec.5.102, which provides the commission with the authority to carry out duties and general powers of the commission under its jurisdictional authority as provided by Texas Water Code sec.5.103. These amendments are also adopted under sec.26.028(c), 26.040 and 26.041 of the Texas Water Code and sec.sec.382.011, 382.012, 382.017 and 382.051 of the Texas Health and Safety Code. sec.321.31. Waste and Wastewater Discharge and Air Emission Limitations. (a) It is the policy of the Texas Natural Resource Conservation Commission that there shall be no discharge or disposal of waste and/or wastewater from animal feeding operations into or adjacent to waters in the state, except in accordance with subsection (b) of this section, any individual permits issued under this subchapter prior to the effective date of these rules, any CAFO general permits, or sec.305.1 of this title (relating to Scope and Applicability). Waste and/or wastewater generated by a concentrated animal feeding operation under this subchapter shall be retained and utilized or disposed of in an appropriate and beneficial manner as provided by commission rules, orders, registrations, authorizations, CAFO general permits or individual permits. (b) Wastewater may be discharged to waters in the state whenever rainfall events, either chronic or catastrophic, cause an overflow of process wastewater from a facility designed, constructed and operated to contain process generated wastewaters plus the runoff (storm water) from a 25-year, 24-hour rainfall event for the location of the point source (facility authorized under this subchapter). There shall be no effluent limitations on discharges from retention structures constructed and maintained to contain the 25-year, 24-hour storm event if the discharge is the result of a rainfall event which exceeds the design capacity and the retention structure has been properly maintained. Retention structures shall be designed in accordance with sec.321.39 of this title (relating to Pollution Prevention Plans). (c) Facilities shall be operated in such a manner as to prevent the creation of a nuisance or a condition of air pollution as mandated by Texas Health and Safety Code, Chapters 341 and 382. sec.321.32. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: (1) Agronomic rates - The land application of animal wastes and/or wastewater at rates of application which provide the crop or forage growth with needed nutrients for optimum health and growth. (2) Air contaminant - Particulate matter, radioactive material, dust, fumes, gas, mist, smoke, vapor, or odor or any combination thereof produced by processes other than natural. Water vapor is not an air contaminant. (3) Animal feeding operation - A lot or facility (other than an aquatic animal production facility) where animals have been, are, or will be stabled or confined and fed or maintained for a total of 45 days or more in any 12-month period, and the animal confinement areas do not sustain crops, vegetation, forage growth, or post harvest residues in the normal growing season. Two or more animal feeding operations under common ownership are a single animal feeding operation if they adjoin each other, or if they use a common area or system for the disposal of wastes. (4) Animal unit - A unit of measurement for any animal feeding operation calculated by adding the following numbers: the number of slaughter and feeder cattle and dairy heifers multiplied by 1.0, plus the number of mature dairy cattle multiplied by 1.4, plus the number of swine weighing over 55 pounds multiplied by 0.4, plus the number of sheep multiplied by 0.1, plus the number of horses/mules multiplied by 2.0. (5) Aquifer - A saturated permeable geologic unit that can transmit, store and yield to a well, the quality and quantities of groundwater sufficient to provide for a beneficial use. An aquifer can be composed of unconsolidated sands and gravels, permeable sedimentary rocks such as sandstones and limestones, and/or heavily fractured volcanic and crystalline rocks. Groundwater within an aquifer can be confined, unconfined or perched. (6) Best Management Practices ("BMPs") - The schedules of activities, prohibitions of practices, maintenance procedures , and other management and conservation practices to prevent or reduce the pollution of waters in the state. Best Management Practices also include treatment requirements, operating procedures, and practices to control site runoff, spillage or leaks, sludge or waste disposal, or drainage from raw material storage. (7) CAFO general permit - A general permit issued by the commission in accordance with Texas Water Code, sec.26.040 for the express purpose to regulate discharges from concentrated animal feeding operations on a statewide or geographic basis. (8) Chronic or catastrophic rainfall event - For the purposes of these rules, these terms shall mean a series of rainfall events which would not provide opportunity for dewatering and which would be equivalent to or greater than the 25-year, 24-hour storm event or any single event which would be equivalent to or greater than the 25-year, 24-hour storm event. Catastrophic conditions could include tornados, hurricanes, or other catastrophic conditions which could cause overflow due to the high winds or mechanical damage. (9) Concentrated animal feeding operation ("CAFO") - Any animal feeding operation which the executive director designates as a significant contributor of pollution or any animal feeding operation defined as follows: (A) Any new and existing operations which stable and confine and feed or maintain for a total of 45 days or more in any 12-month period more than the numbers of animals specified in any of the following categories: (i) 1,000 slaughter or feeder cattle; (ii) 700 mature dairy cattle (whether milkers or dry cows); (iii) 2500 swine weighing over 55 pounds; (iv) 500 horses; (v) 10,000 sheep; (vi) 55,000 turkeys; (vii) 100,000 laying hens or broilers when the facility has unlimited continuous flow watering systems; (viii) 30,000 laying hens or broilers when facility has a liquid waste handling system; (ix) 5000 ducks; or (x) 1,000 animal units from a combination of slaughter steers and heifers, mature dairy cattle, swine over 55 pounds and sheep. (B) Any new and existing operations covered under this subchapter which discharge pollutants into waters in the state either through a man-made ditch, flushing system, or other similar man-made device, or directly into the waters in the state, and which stable or confine and feed or maintain for a total of 45 days or more in any 12-month period more than the numbers or types of animals in the following categories: (i) 300 slaughter or feeder cattle; (ii) 200 mature dairy cattle (whether milkers or dry cows); (iii) 750 swine weighing over 55 pounds; (iv) 150 horses; (v) 3000 sheep; (vi) 16,000 turkeys; (vii) 30,000 laying hens or broilers when the facility has unlimited continuous flow watering systems; (viii) 9000 laying hens or broilers when facility has a liquid waste handling system; (ix) 1500 ducks; or (x) 300 animal units from a combination of slaughter steers and heifers, mature dairy cattle, swine over 55 pounds and sheep. (C) Poultry facilities that have no discharge to waters in the state normally are not considered a concentrated animal feeding operation. However, poultry facilities that use a liquid waste handling system or stockpile litter near watercourses or dispose of litter on land such that stormwater runoff or flooding will be transported into surface water or groundwater may be considered a concentrated animal feeding operation. For the purposes of air quality, the term CAFO, as used in this subchapter, includes any associated feed handling and/or feed milling operations located on the same site as the CAFO. (10) Control facility - Any system used for the retention of wastes on the premises until their ultimate disposal. This includes the collection and retention of manure, liquid waste, process wastewater and runoff from the feedlot area. (11) Dairy Outreach Program Areas - The areas include all of the following counties: Erath, Bosque, Hamilton, Comanche, Johnson, Hopkins, Wood and Rains. (12) Edwards Aquifer - That portion of an arcuate belt of porous, waterbearing predominantly carbonate rocks known as the Edwards (Balcones Fault Zone) Aquifer trending from west to east to northeast in Kinney, Uvalde, Medina, Bexar, Comal, Hays, Travis and Williamson Counties; and composed of the Salmon Peak Limestone, McKnight Formation, West Nueces Formation, Devils River Limestone, Person Formation, Kainer Formation, Edwards Group and Georgetown Formation. The permeable aquifer units generally overlie the less-permeable Glen Rose Formation to the south, overlie the less-permeable Comanche Peak and Walnut formations north of the Colorado River, and underlie the less-permeable Del Rio Clay regionally. (13) Edwards Aquifer recharge zone - Generally, that area where the stratigraphic units constituting the Edwards Aquifer crop out, including the outcrops of other geologic formations in proximity to the Edwards Aquifer, where caves, sinkholes, faults, fractures, or other permeable features would create a potential for recharge of surface waters into the Edwards Aquifer. The recharge zone is identified as that area delineated as such on official maps located in the appropriate regional office and groundwater conservation districts. (14) Flushwater waste handling system - A system in which freshwater or wastewater is recycled or used in transporting waste. (15) Groundwater - Subsurface water that occurs below the water table in soils and geologic formations that are saturated, and is other than underflow of a stream or an underground stream. (16) Hydrologic connection - The interflow and exchange between control facilities or surface impoundments and waters in the state through an underground corridor or connection. (17) Lagoon - An earthen structure for the biological treatment for liquid organic wastes. Lagoons can be aerobic, anaerobic, or facultative depending on their design and can be used in series to produce a higher quality effluent. (18) Land application - The removal of wastewater and waste solids from a control facility and distribution to, or incorporation into the soil mantle primarily for beneficial reuse purposes. (19) Liner - Any barrier in the form of a layer, membrane or blanket, naturally existing, constructed or installed to prevent a significant hydrologic connection between liquids contained in retention structures and waters in the state. (20) Natural Resources Conservation Service ("NRCS") - An agency of the United States Department of Agriculture which includes the agency formerly known as the Soil Conservation Service ("SCS"). (21) New concentrated animal feeding operation - A concentrated animal feeding operation which was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules (1998). (22) No discharge - The absence of flow of waste, process generated wastewater, contaminated rainfall runoff or other wastewater from the premises of the animal feeding operation, except for overflows which result from chronic or catastrophic rainfall events. (23) Nuisance - Any discharge of air contaminant(s), including but not limited to odors, of sufficient concentration and duration that are or may tend to be injurious to or which adversely affects human health or welfare, animal life, vegetation, or property, or which interferes with the normal use and enjoyment of animal life, vegetation, or property. (24) Open lot - Pens or similar confinement areas with dirt, concrete, or other paved or hard surfaces wherein animals or poultry are substantially or entirely exposed to the outside environment except for small portions of the total confinement area affording protection by windbreaks or small shed-type shade areas. For the purposes of this subchapter, the term open lot is synonymous with the terms dirt lot, or dry lot, for livestock or poultry, as these terms are commonly used in the agricultural industry. (25) Operator - The owner or one who is responsible for the management of a concentrated animal feeding operation or an animal feeding operation subject to the provisions of this subchapter. (26) Permanent odor sources - those odor sources which may emit odors 24 hours per day. For the purposes of this subchapter, permanent odor sources include but are not limited to pens, confinement buildings, lagoons, retention facilities, manure stockpile areas and solid separators. For the purposes of this subchapter, permanent odor sources shall not include any feed handling facilities, land application equipment or land application areas. (27) Permittee - Any person issued or covered by an individual permit or order, permit-by-rule or granted authorization under the requirements of this subchapter. (28) Pesticide - A substance or mixture of substances intended to prevent, destroy, repel, or mitigate any pest, or any substance or mixture of substances intended for use as a plant regulator, defoliant, or desiccant. (29) Process wastewater - Any process generated wastewater directly or indirectly used in the operation of a CAFO (such as spillage or overflow from animal or poultry watering systems which comes in contact with waste); washing, cleaning or flushing pens, barns, manure pits, direct contact swimming, washing, or spray cooling of animals; and dust control), and precipitation which comes into contact with any manure or litter, bedding, or any other raw material or intermediate or final material or product used in or resulting from the production of animals or poultry or direct products (e.g. milk, meat or eggs). (30) Process generated wastewater- Any water directly or indirectly used in the operation of a CAFO (such as spillage or overflow from animal or poultry watering systems which comes in contact with waste; washing, cleaning or flushing pens, barns, manure pits, direct contact swimming, washing, or spray cooling of animals; and dust control) which is produced as wastewater. (31) Qualified groundwater scientist - A scientist or engineer who has received a baccalaureate or post-graduate degree in natural sciences or engineering and has sufficient training and experience in groundwater hydrology and related fields as may be demonstrated by state registration, professional certification, or completion of accredited university programs that enable that individual to make sound professional judgements regarding groundwater monitoring, contamination fate and transport, and corrective action. (32) Recharge feature - Those natural or artificial features either on or beneath the ground surface at the site under evaluation which, due to their existence, provide or create a significant pathway between the ground surface and the underlying groundwater within an aquifer. Examples include, but are not limited to: a permeable and porous soil material that directly overlies a weakly cemented or fractured limestone, sandstone, or similar type aquifer; fractured or karstified limestone or similar type formation that crops out on the surface, especially near a water course; or wells. (33) Retention facility or retention structure - All collection ditches, conduits and swales for the collection of runoff and wastewater, and all basins, ponds, pits, tanks and lagoons used to store wastes, wastewaters and manures. (34) 25-Year, 24-Hour rainfall event/25-Year event - The maximum rainfall event with a probable recurrence interval of once in 25-years, with a duration of 24 hours, as defined by the National Weather Service in Technical Paper Number 40, "Rainfall Frequency Atlas of the United States", May 1961, and subsequent amendments, or equivalent regional or state rainfall information developed therefrom. (35) Waste - Manure (feces and urine), litter, bedding, or feedwaste from animal feeding operations. (36) Wastewater - Water containing waste or contaminated by waste contact, including process-generated and contaminated rainfall runoff. (37) Waters in the state - Groundwater, percolating or otherwise, lakes, bays, ponds, impounding reservoirs, springs, rivers, streams, creeks, estuaries, marshes, inlets, canals, the Gulf of Mexico inside the territorial limits of the state, and all other bodies of surface water, natural or artificial, inland or coastal, fresh or salt, navigable or nonnavigable, and including the beds and banks of all watercourses and bodies of surface water, that are wholly or partially inside or bordering the state or inside the jurisdiction of the state. (38) Well - Any artificial excavation into and/or below the surface of the earth whether in use, unused, abandoned, capped or plugged that may be further described as one or more of the following: (A) Excavation designed to explore for, produce, capture, recharge or recover water, any mineral, compound, gas, or oil from beneath the land surface; (B) Excavation designed for the purpose of monitoring any of the physical or chemical properties of water, minerals, geology, or geothermal properties that exist or may exist below the land surface; (C) Excavation designed to inject or place any liquid, solid, gas, vapor, or any combination of liquid, solid, gas or vapor into any soil or geologic formation below the land surface; or (D) Excavation designed to lower a water or liquid surface below the land surface either temporarily or permanently for any reason. sec.321.33. Applicability. (a) A CAFO operating under a currently valid authorization granted prior to the effective date of these amended rules shall continue to be authorized and regulated in accordance with the terms of its existing authorization. Any application that has been determined administratively complete prior to the effective date of these amendments will be reviewed and issued under the provisions of the rules in effect at the time the application was declared administratively complete. Any application for permit renewal, amendment or transfer for any permit issued under this subchapter prior to the effective date of these rules shall be reviewed and/or issued under the provisions of sec.321.34 of this title (relating to Procedures for Making Application for an Individual Permit). (b) The executive director may designate any animal feeding operation as a CAFO and require it to comply with any of the requirements of this subchapter, including those to apply for, receive and comply with an individual permit under sec.321.34 of this title (relating to Procedures for Making Application for an Individual Permit), in order to achieve the policy and purposes enumerated in the Texas Water Code, sec.sec.5.120 and 26.003; the Health and Safety Code, Chapters 341, 361 and 382; and sec.321.31 of this title (relating to Waste and Wastewater Discharge and Air Emission Limitations). Cases for which an individual permit may be required include, but are not limited to, situations where: (1) (No change.) (2) compliance with standards in addition to those listed in this subchapter is necessary in order to protect waters in the state from pollution; (3) the operation is not in compliance with the standards of this subchapter; (4) the operation is under formal commission enforcement or has been referred to the commission for enforcement by the Texas State Soil and Water Conservation Board; or (5) the owner and/or operator has submitted an application for registration or for a major amendment to a registration which does not comply with the requirements for administrative and technical completeness in sec.321.36(a)(1) of this title (relating to Notice of Application for Registration). (c) New CAFOs are prohibited on the Edwards Aquifer recharge zone. (d) Any facility which qualifies for, obtains and is operating under a certified water quality management plan from the Texas State Soil and Water Conservation Board is not a CAFO for purposes of this subchapter and is not covered by the provisions of this subchapter, unless referred to the commission in accordance with the Texas Agriculture Code, sec.201.026 (e) Operators of animal feeding operations not required to submit an application for either a registration or an individual permit under this subchapter or authorized by a CAFO general permit in accordance with the notice of intent requirements of the general permit must locate, construct and manage waste control facilities and land application areas to protect surface and groundwaters and prevent nuisance conditions and minimize odor conditions in accordance with the technical requirements of sec.sec.321.38-321.40 of this title (relating to Proper CAFO Operation and Maintenance, Pollution Prevention Plan and Best Management Practices). (f) Any existing, new or expanding CAFO which is neither authorized by a CAFO general permit in accordance with the notice of intent requirements of the general permit or authorized pursuant to subsections (a) or (b) of this section and which is designed to stable or confine and feed or maintain for a total of 45 days or more in any 12-month period more than the numbers of animals specified in the definition of CAFO in sec.321.32(9)(A) of this title (relating to Definitions) shall apply for registration in accordance with sec.321.35 of this title (relating to Procedures for Making Application for Registration) or individual permit in accordance with sec.321.34 of this title. (g) Any existing, new or expanding animal feeding operation which is neither authorized by a CAFO general permit in accordance with the notice of intent requirements of the general permit nor authorized pursuant to subsections (a) or (b) of this section, which is located in areas specified in the definition of Dairy Outreach Program Areas in sec.321.32 of this title, and which is designed to stable or confine and feed or maintain for a total of 45 days or more in any 12-month period more than the number of animals specified in the definition of CAFO in sec.321.32(9)(B) of this title, but less than or equal to the number of animals specified in the definition of CAFO in sec.321.32(9)(A) of this title shall apply for registration in accordance with sec.321.35 of this title or individual permit in accordance with sec.321.34 of this title. (h) Any CAFO authorized under this subchapter must develop and implement a pollution prevention plan in accordance with the provisions of this subchapter. (i) Any existing, new or expanding CAFO, which is required to submit an application for registration or an application for an individual permit in accordance with this subchapter, may not commence operation of any waste management facilities or the construction of any facility that has the potential to emit air contaminants without first receiving authorization in accordance with this subchapter or in accordance with a commission order. (j) Any CAFO which has existing authority under the Texas Clean Air Act (TCAA) does not have to meet the air quality criteria of this subchapter. Upon request, pursuant to the TCAA, sec.382.051, any CAFO which meets all of the requirements of this subchapter is hereby entitled to an air quality standard permit authorization under this subchapter in lieu of the requirement to obtain an air quality permit under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification). Those CAFOs which would otherwise be required to obtain an air quality permit under Chapter 116 of this title, which cannot satisfy all of the requirements of this subchapter shall apply for and obtain an air quality permit pursuant to Chapter 116 of this title in addition to any authorization required under this subchapter. Those animal feeding operations which are not required to obtain authorization under this subchapter may be subject to requirements under Chapter 116 of this title. Any change in conditions such that a person is no longer eligible for authorization under this section requires authorization under Chapter 116 of this title. No person may concurrently hold an air quality permit issued under Chapter 116 of this title and an authorization with air quality provisions under this subchapter for the same site. Any application for a permit renewal, amendment or transfer for any permit issued under the TCAA shall be reviewed and/or issued under the provisions of Chapter 116 of this title. (k) Any animal feeding operation authorized under this subchapter which is a new major source, or major modification as defined in Chapter 116 of this title shall obtain a permit under Chapter 116 of this title. (l) By written request to the executive director, the owner/operator of any facility authorized by the commission may request a transfer of authorization from an individual permit to an application for registration. Such transfer shall be processed in accordance with the provisions of sec.sec.321.35-321.37 of this title (relating to Procedures for Making Application for Registration, Notice of Application for Registration and Actions on Applications for Registration). If approved, such transfer under this subsection shall include all special conditions/provisions from the existing permit, and in addition, shall not impose any additional conditions or other requirements unless there is substantial modification to the facility constituting a major amendment as defined by sec.305.62 of this title (relating to Amendment) or to address compliance problems with the facility or its operations in accordance with a commission order or amendment. If approved, transfer of authorization under this subsection will require compliance with the appropriate provisions of sec.sec.321.38-321.42 of this title (relating to Proper CAFO Operation and Maintenance, Pollution Prevention Plans, Best Management Practices, Other Requirements, and Monitoring and Reporting Requirements). If approved, such transfer shall not require any changes to existing structural measures which are documented to meet design and construction standards in effect at the time of installation. (m) No person may concurrently hold an individual permit or approved registration under this subchapter and an authorization under a CAFO general permit in accordance with the notice of intent requirements of the general permit for the same site. (n) Any new CAFO located within one mile of Coastal Natural Resource Areas as defined by sec.33.203(1) of the Texas Natural Resources Code shall apply for and obtain an individual permit in accordance with sec.321.34 of this title (relating to Procedures for Making Application for an Individual Permit). Any owner/operator who is required to obtain an individual permit under this subsection may not commence physical construction and/or operation of any waste management facilities without first having submitted an application and received a final effective permit. (o) By written request to the executive director, the owner/operator of any facility holding an unexpired authorization granted under Subchapter K of this Chapter (relating to Concentrated Animal Feeding Operations) may request a transfer of their authorization to a registration under this subchapter. A Subchapter K authorization that has been specifically set aside by court order shall not be eligible for transfer under this subsection. Such request shall include: (1) the name and address of the applicant(s); (2) the TNRCC identification number the Subchapter K authorization to be transferred; (3) any change that has occurred in the information contained in the application upon which the Subchapter K authorization was granted; (4) the names and addresses of the potentially affected landowners required to be identified on the final site plan that would be required under sec.321.35 of this title (relating to Procedures for Making Application for Registration); (5) certification that the facility is not the subject of an unexpired final enforcement order or of an unresolved TNRCC enforcement action in which the executive director has issued written notice that enforcement has been initiated; (6) the signatures and certifications of the applicant(s) as provided in sec.sec.305.43 and 305.44 of this title (relating to Who Applies and Signatories to Applications); and (7) the application fee required under sec.321.35(d) of this title. (p) Within five working days of receipt of a complete and accurate request, the executive director shall prepare a notice of the receipt of the request that is suitable for mailing and forward that notice, together with a copy of the request, to the chief clerk. The notice shall include a statement that the request for transfer will be granted by the executive director unless within 30 days after the date the notice is mailed, the chief clerk receives a written objection from a person described in sec.321.36(e) of this title (relating to Notice of Application for Registration). The chief clerk shall transmit the notice and a copy of the request to the persons and in the manner described in sec.321.36(e) of this title. If no such objection is timely received, the executive director shall approve the transfer. If the transfer is disapproved, and not withdrawn by the applicant, the request for transfer shall be processed under sec.sec.321.35-321.37 of this title (relating to Procedures for Making Application for Registration, Notice of Application for Registration and Actions on Applications for Registration). If the request is approved either as a transfer or as a new registration under sec.sec.321.35-321.37 of this title, such authorization will require compliance with the provisions of sec.sec.321.38-321.42 of this title (relating to Proper CAFO Operation and Maintenance, Pollution Prevention Plans, Best Management Practices, Other Requirements, and Monitoring and Reporting Requirements), except that no changes shall be required to existing structural measures which are documented to meet design and construction standards in effect at the time of installation or to any buffer zone requirement satisfied under the prior Subchapter K authorization. sec.321.34. Procedures for Making Application for an Individual Permit. (a) A CAFO that was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules shall apply for an individual permit in accordance with the provisions of this section or shall apply for an application for registration in accordance with the provisions of sec.321.35 of this title (relating to Procedures for Making Application for Registration). Application for an individual permit shall be made on forms provided by the executive director. The applicant shall provide such additional information in support of the application as may be necessary for an adequate technical review of the application. At a minimum, the application shall demonstrate compliance with the technical requirements set forth in sec.321.38-321.42 of this title (relating to Proper CAFO Operation and Maintenance, Pollution Prevention Plan, Best Management Practices, Other Requirements and Monitoring and Reporting Requirements and shall demonstrate compliance with the requirements specified in sec.321.35(c)(1)-(13) of this title (relating to Procedures for Making Application for Registration). Applicants shall comply with sec.sec.305.41, 305.43-305.44 and 305.46-305.47 of this title (relating to Applicability; Who Applies; Signatories to Applications; Designation of Material as Confidential and Retention of Application Data). Each applicant shall pay an application fee as required by sec.305.53 of this title (relating to Application Fees). An annual waste treatment inspection fee is also required of each permittee as required by sec.305.503 and sec.305.504 of this title (relating to Fee Assessments and Fee Payments). An annual Clean Rivers Program fees is also required as required under sec.220.21(d) of this title (relating to Water Quality Assessment Fees). Except as provided in subsections (b)-(e) of this section, each permittee shall comply with sec.sec.305.61-305.68 of this title (relating to Applicability, Amendment, Renewal, Transfer of Permits, Permit Denial, Suspension and Revocation; Revocation and Suspension Upon Request or Consent; and Action and Notice on Petition for Revocation or Suspension). Each permittee shall comply with sec.305.125 of this title (relating to Standard Permit Conditions). Individual permits granted under this subchapter shall be effective for a term not to exceed five years. To qualify for the air quality standard permit, the applicant must meet the requirements in sec.321.46 of this title (relating to Air Standard Permit Authorization). (b) Permit renewal will be according to the following procedure: (1) An application to renew a permit for an animal feeding operation which was issued between July 1, 1974, and December 31, 1977, may be renewed by the commission at a regular meeting without holding a public hearing if the applicant does not seek to discharge into or adjacent to waters in the state and does not seek to change materially the pattern or place of disposal. (2) Except as provided by sec.305.63(3) of this title (relating to Renewals), an application for a renewal of a permit may be granted by the executive director without public notice if it does not propose any change which constitutes a major amendment as defined in Chapter 305 of this title or a major source as defined under Chapter 116 of this title. Renewal under this paragraph shall be allowed only if there has been no related formal enforcement action against the facility during the last 36 months of the term of the permit in which the commission has determined that: (A) a violation occurred that contributed to pollution of surface or ground water, or an unauthorized discharge has occurred, or a violation of sec.101.4 of this title (relating to Nuisance) has occurred or any violation of an applicable state or federal air quality control requirement has occurred; and (B) that such discharge or air emission violation was within the reasonable control of the permittee; and (C) such discharge or air emission violation could have been reasonably foreseen by the permittee. In addition to the provisions of subparagraphs (A)-(C) of this paragraph, for any application for renewal of a permit within an area specified in the definition of Dairy Outreach Program Areas in sec.321.32(11) of this title (relating to Definitions), an annual compliance inspection shall have been completed within 12 months of the date the executive director declares the application administratively complete. (c) Each applicant shall pay an application fee as required by sec.305.53 of this title (relating to Application Fees). (d)-(f) (No change.) (g) Notice provided by the executive director under subsection (f) of this section shall be sent by certified mail, return receipt requested. (h) A facility owner/operator shall submit a complete application within 90 days of notification from the executive director that an individual permit is required. (i) If an application for renewal requests a major amendment, as defined by sec.305.62 of this title (relating to Amendment), of the existing individual permit, an application shall be filed in accordance with subsection (a) of this section. (j) If a renewal application has been filed before the individual permit expiration date, the existing individual permit will remain in full force and effect and will not expire until action on the application for renewal is final. sec.321.35. Procedures for Making Application for Registration. (a) A CAFO that was not authorized under a rule, order or permit of the commission in effect at the time of the adoption of these amended rules shall apply for and receive registration under this section or shall apply for an individual permit in accordance with the provisions of sec.321.34 of this title (relating to Procedures for Making Application for An Individual Permit). A person who requests a registration or an amendment, modification, or renewal of such registration granted under this subchapter shall submit a complete and accurate application to the executive director, according to the provisions of this section. (b) Applicants shall comply with the applicable provisions of sec.sec.305.43, 305.44, 305.46, and 305.47 of this title (relating to Who Applies; Signatories to Applications; Designation of Material as Confidential; and Retention of Application Data). (c) Application for registration under this section shall be made on forms prescribed by the executive director. The applicant shall submit an original completed application with attachments to the executive director at the headquarters in Austin, Texas, and one additional copy of the application with attachments to the appropriate Texas Natural Resource Conservation Commission regional office. The completed application shall be submitted to the executive director signed and notarized and with the following information: (1) The verified legal status of the applicant. (2) The payment of applicable fees. (3) The signature of the applicant, in accordance with subsection (b) of this section. (4) The maximum number of animals for which the facilities have been designed. (5) A proposed final site plan for the facility showing the boundaries of land owned, operated or controlled by the applicant and to be used as a part of a CAFO, the locations of all pens, lots, ponds, disposal areas, and any other types of control or retention facilities, and all adjacent landowners within 500 feet of the property line of all tracts containing facilities and all on-site or off-site waste disposal areas, including their name, address and telephone number. As used in this subchapter, the term "disposal area" does not apply to any lands not owned, operated or controlled by the CAFO operator for the purpose of off-site land application of manure, wherein the manure is given or sold to others for beneficial use. (6) A County General Highway Map (with graphic scale clearly shown) to identify the relative location of the CAFO and at least a one mile area surrounding the facility. (7) One original (remainder in copies) United States Geological Survey 7 « minute quadrangle topographic map or an equivalent high quality copy showing the boundaries of land owned, operated, or controlled by the applicant and to be used as a part of a CAFO, and within 500 feet of the outer boundary of the land application area(s), open lots and control facilities, the location of all private water wells (abandoned or in use) and public wells and all springs, lakes, or ponds within one mile of the outer boundary of the retention facility and downstream of the facility. (8) A copy of the pollution prevention plan for the CAFO for which the application is filed. Prior to utilization of wastewater retention facilities, documentation of liner certifications by a licensed professional engineer must be submitted (if applicable). (9) A copy of a recorded deed or tax records showing ownership, or a copy of a contract or lease agreement between the applicant and the owner/operator of any lands to be utilized under the proposed CAFO. This requirement does not apply to any lands not owned, operated, or controlled by the applicant for the purpose of off-site land application of manure wherein the manure is given or sold to others for beneficial use, provided the owner/operator of the CAFO is not involved in the application of the manure. (10) A certification by a NRCS engineer, licensed professional engineer or qualified groundwater scientist documenting the absence or presence of any recharge features identified on any tracts of land owned, operated or controlled by the applicant and to be used as a part of a CAFO. Documentation, by the certifying party shall identify the sources and/or methods used to identify the presence or absence of recharge features. The documentation shall include the method or approach to be used to identify previously unidentified and/or undocumented recharge features that may be discovered during the time of construction. At a minimum, the records and/or maps of the following entities/agencies shall be reviewed to locate any artificial recharge features: (A) Railroad Commission; (B) Groundwater District, if applicable; (C) Texas Water Development Board; (D) TNRCC; (E) Natural Resource Conservation Service; (F) previous owner of site, if available, and (G) on-site inspection of site with a NRCS engineer, licensed professional engineer or qualified groundwater scientist. (11) Where the applicant can not document the absence of recharge features on the tracts for which an application is being filed, the proposed final site plan shall also indicate the specific location of any and all recharge features found on any property owned, operated or controlled by the applicant under the application as certified by a NRCS engineer, licensed professional engineer, or qualified groundwater scientist. The applicant shall also submit a plan, developed by a NRCS engineer or licensed professional engineer, to prevent impacts on any located recharge feature and associated groundwater formation which may include the following: (A) Installation of the necessary and appropriate protective measures for each located recharge feature such as impervious cover, berms or other equivalent protective measures covering all affected facilities and disposal areas; or (B) Submission of a detailed groundwater monitoring plan covering all affected facilities and disposal areas. At a minimum, the ground-water monitoring plan shall specify procedures to annually collect a ground-water sample from representative wells, have each sample analyzed for chlorides, nitrates and total dissolved solids and compare those values with background values for each well; or (C) Any other similar method or approach demonstrated by the applicant to be protective of any associated recharge feature. (12) Area land use map (Air quality only). This map shall identify the property line, the permanent odor sources and the distance and direction to any residences, animal feeding operations, businesses, public parks or occupied structures within a one mile radius of the permanent odor sources to show compliance with sec.321.46 of this title (relating to Air Standard Permit Authorization). The map shall include the north arrow and scale of map. (13) The applicant shall indicate in the application the location and times where the application may be inspected by the public. Within 48 hours of receiving notice of administrative and technical completeness, the applicant shall either make a copy of the application available for public inspection at the applicant's place of business during normal business hours, Monday through Friday, and shall provide a copy of the application to a public place within the county where the proposed facility is to be located so that the copy may be made available for inspection at a public place during normal business hours. For the purposes of this section, normal business hours shall be at a minimum of: 9:00 a.m. to noon and from 1:00 p.m. to 5:00 p.m., Monday through Friday allowing for the observance of state and/or federal holidays. Such places may include, but are not limited to, public libraries; district, county, or municipal court offices; community recreation centers; or public schools. (d) Each applicant shall pay an application fee as required by sec.305.53 of this title (relating to Application Fees). An annual waste treatment inspection fee is also required of each registrant as required by sec.305.503 and sec.305.504 of this title (relating to Fee Assessment and Fee Payment). An annual Clean Rivers Program fees is also required as required under sec.220.21(d) of this title (relating to Water Quality Assessment Fees). No fees under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification) shall be required of an applicant for an authorization issued under this section. (e) Each registrant shall comply with and is subject to the provisions of sec.sec.305.61, 305.64 and 305.66-305.68 of this title (relating to Applicability, Transfer of Permits, Permit Denial, Revocation and Suspension, Revocation and Suspension Upon Request or Consent, Action and Notice on Petition for Revocation or Suspension). (f) Registrations approved under this subchapter shall be effective for a term not to exceed five years. (g) (Air Quality Only). To qualify for the air quality standard permit, the applicant must meet the requirements in sec.321.46 of this title (relating to Air Standard Permit Authorization). (h) Renewal of a registration under this section will be according to the following procedures: (1) Except as provided by sec.305.63(3) of this title (relating to Renewals), an application for a renewal of a registration may be granted by the executive director without public notice if it does not propose any other change to the registration as approved. Renewal under this paragraph shall be allowed only if there has been no related formal enforcement action against the facility during the last 36 months of the term of the registration in which the commission has determined that: (A) a violation occurred that contributed to pollution of surface or ground water, or an unauthorized discharge has occurred, or a violation of sec.101.4 of this title (relating to Nuisance) has occurred or any violation of an applicable state or federal air quality control requirement has occurred; and (B) that such discharge or air emission violation was within the reasonable control of the registrant; and (C) such discharge or air emission violation could have been reasonably foreseen by the registrant. In addition to the provisions of subparagraphs (A)-(C) of this paragraph, for any application for renewal of a registration within an area specified in the definition of Dairy Outreach Program Areas in sec.321.32(11) of this title (relating to Definitions), an annual compliance inspection shall have been completed within 12 months of the date the executive director declares the application administratively complete. (2) Each applicant shall pay an application fee as required by sec.305.53 of this title (relating to Application Fees). (3) A registrant submitting an application for renewal of a registration satisfying the criteria in paragraph (1) of this subsection will automatically be issued a renewal for the existing registration by the executive director. (4) If the application for renewal of a registration cannot meet all of the criteria in paragraph (1) of this subsection, then an application for renewal of the registration shall be filed in accordance with subsection (a) of this section and processed in accordance with sec.sec.321.36-321.37 of this title (relating to Notice of Application for Registration and Action on Applications for Registration). (5) Any registrant with an effective registration shall submit an application for renewal at least 180 days before the expiration date of the effective registration, unless permission for a later date has been granted by the executive director. The executive director shall provide the registrant notice of deadline for the application for renewal by certified mail, return receipt requested, at least 240 days before the registration expiration date. The executive director shall not grant permission for applications to be submitted later than the expiration date of the existing registration. sec.321.36. Notice of Application for Registration. (a) Administrative and Technical Review. (1) Applications for registration or major amendments to such registrations under this subchapter shall be reviewed by the executive director for administrative and technical completeness within 30 working days of receipt of the application by the executive director. Upon determination that the application contains the information and attachments required under this subchapter, the executive director shall declare that the application is administratively and technically complete. (2) Within five working days of declaration of administrative completeness, the executive director shall assign the application a number for identification purposes, and prepare a statement of the receipt of the application and declaration of administrative and technical completeness which is suitable for publishing or mailing, under the requirements of sec.321.186(b) of this title (relating to Notice of Application), and shall forward that statement to the applicant. (b) Notice of application. The notice of application for registration and administrative/ technical completeness shall contain the following information: (1) the identifying number given the application for registration by the commission; (2) the type of authorization being sought under the application; (3) the name and address of the applicant; (4) the date on which the application for registration was submitted; (5) a brief summary of the information included in the application for registration, including but not limited to the general location of facilities and disposal areas associated with the application, the proposed size of the facility, a description of the receiving water for any discharge and the location where a copy of the application for registration may be reviewed by interested persons; (6) the format for submission of a comment in accordance with this subchapter to the executive director regarding the application for registration; and (7) the date, time, and place where all comments are to be received by the executive director in relation to the numbered application for registration, such comment period shall be 30 days from the actual date of publication (c) Publication. (1) The applicant shall cause the notice of application for registration and administrative/technical completeness approved by the executive director to be published once in a newspaper regularly published, and generally circulated within the county and area wherein the proposed facility is to be located, and within an adjoining county wherein any potential affected person may reside. (2) The date of publication for notice of application for registration and administrative/technical completeness shall not be later than the date set by the chief clerk. (3) The applicant is responsible for the cost of publication. The applicant shall notify the chief clerk verbally or by facsimile within 24 hours of the first available working day after the publication of the notice, and shall provide the chief clerk a certified copy of the publication, within 20 calendar days of the date established by the chief clerk for publication. If the applicant does not provide the chief clerk with the appropriate publisher's affidavit within 20 days of the date established by the executive director, the executive director shall cease processing and return the application. (d) Application returned. If an application for registration is received which is not administratively/technically complete, the executive director shall notify the applicant of the deficiencies prior to expiration of the review period (30 working days) by certified mail return receipt requested. If the additional requested information is received within 30 days of receipt of the deficiency notice, the executive director will evaluate the information within eight working days and, where applicable, shall prepare a statement of receipt of the application for registration and declaration of administrative/technical completeness in accordance with subsection (a) of this section. If the requested information is not submitted by the applicant within 30 days of the date of receipt of the deficiency notice, the executive director shall return the incomplete application to the applicant. (e) Notice by mail. (1) The chief clerk will transmit the notice of application for registration and administrative/technical completeness by first-class mail to persons listed in paragraph (2) of this subsection and to other persons who, in the judgment of the executive director, may be affected. The applicant is responsible for the cost of required notice. A record on file with the chief clerk which includes the list of persons to whom notice was mailed and the date of mailing, signed by a person with personal knowledge that the mailout occurred, shall create a presumption that notice was mailed in accordance with this section. (2) the notice shall be mailed by the chief clerk to the following: (A) the potentially affected landowners named on the final site plan submitted with the application; (B) the mayor and health officials of the city or town in which the facility is or will be located or in which waste is or will be disposed of; (C) the county judge and health authorities of the county in which the facility is located or in which waste is or will be disposed of; (D) the Texas Department of Health; (E) the Texas Parks and Wildlife Department; (F) the applicant; (G) persons who request to be put on the mailing list, including participants in past commission proceedings for the facility who have submitted a written request to be put on the mailing list; (H) state and federal agencies for which notice is required in 40 Code of Federal Regulations sec.124.10(c); (I) for applications regarding operations located in an area specified in the definition of Dairy Outreach Program Areas in sec.321.32 of this title (relating to Definitions), notice shall be mailed to the river authority whose jurisdictional watershed includes that location; and (J) for applications regarding operations located in an area within the jurisdiction of a groundwater district, notice shall be mailed to such district. (3) the date of mailing for a notice of application for registration and administrative/technical completeness shall be established by the chief clerk. (4) The notice shall include instructions regarding the requirements contained in sec.321.37(a) of this title (relating to Public Comment on Applications for Registration) providing the manner and timeframe for the submission of comments to the proposed application for registration. sec.321.37. Actions on Applications for Registration. (a) Public Comment on Applications for Registrations. A person may provide the commission with written comments on any applications for registration for which notice has been issued under this subchapter. The executive director shall review any written comments when they are received within 30 days of mailing the notice. Only written comments received within the 30 day period will be considered. The written information received will be utilized by the executive director in determining what action to take on the application for registration, pursuant to subsection (b) of this section (b) The executive director shall determine, after review of any application for registration, if he will approve or deny an application for registration in whole or in part, deny with prejudice, suspend the authority to conduct an activity for a specified period of time, or amend or modify the proposed activity requested by the applicant. The determination of the executive director shall include review and action on any new applications or changes, renewals, and requests for major amendment of any existing application. In consideration of such an application for registration, the executive director will consider all relevant requirements of this subchapter and consider all information pertaining to those requirements received by the executive director regarding the application for registration. The written determination on any application for registration, including any authorization granted, shall be mailed by the Office of Chief Clerk to the applicant upon the decision of the executive director. At the same time the executive director's decision is mailed to the applicant, a copy or copies of this decision shall also be mailed by the Office of Chief Clerk to all persons who timely submitted written information on the application, as described in subsection (a) of this section. The written determination of the executive director shall include a response to all significant comments received. (c) Motion for reconsideration. The applicant or any person submitting comments in accordance with subsection (a) of this section may file with the chief clerk a motion for reconsideration, under the procedures of sec.50.39(b)-(f) of this title (relating to Motion for Reconsideration), of the executive director's final approval of an application. Any person who was entitled to but not given proper notice of an application and subsequently did not submit comments within the 30 day comment period may file a motion for reconsideration. sec.321.39. Pollution Prevention Plans. (a) A pollution prevention plan shall be developed for each CAFO covered under this subchapter. Pollution prevention plans shall be prepared in accordance with good engineering practices and shall include measures necessary to limit the discharge of pollutants to waters in the state. The plan shall describe and ensure the implementation of practices which are to be used to assure compliance with the limitations and conditions of this subchapter. The plan shall identify a specific individual(s) at the facility who is responsible for development, implementation, maintenance, and revision of the pollution prevention plan. The activities and responsibilities of the pollution prevention personnel shall address all aspects of the facility's pollution prevention plan. (b) Where a NRCS plan has been prepared for the facility, the pollution prevention plan may refer to the NRCS plan when the NRCS plan documentation contains equivalent requirements for the facility. When the operator uses a NRCS plan as partial completion of the pollution plan, the NRCS plan must be kept on site. Design and construction criteria developed by the NRCS can be substituted for the documentation of design capacity and construction requirements (see subsection (f) of this section) of the pollution prevention plan provided the required inspection logs and water level logs in subsection (f)(3) and (11) of this section are kept with the NRCS Plan. Waste management plans developed by the NRCS can be substituted for the documentation of application rate calculations in subsection (f) (19) and (24) of this section. NRCS Waste Management Plans which have been prepared since January 1, 1989 are considered by the Natural Resources Conservation Service to contain adequate management practices. To insure the protection of water quality, the Natural Resources Conservation Service has determined that NRCS plans prepared prior to 1989 must be submitted for renewal with the Natural Resources Conservation Service or a waste management professional before December 1995. NRCS has determined that all plans should be reviewed every five (5) years to insure proper management of wastes. (c) The plan shall be signed by the operator or other signatory authority in accordance with sec.305.44 of this title (relating to Signatories to Applications), and be retained on site. The plan shall be updated as appropriate. (d) Upon completion of a plan review, the executive director may notify the operator at any time that the plan does not meet one or more of the minimum requirements of this subchapter. After such notification from the executive director, the operator shall make changes to the plan within 90 days after such notification unless otherwise provided by the executive director. (e) The operator shall amend the plan prior to any change in design, construction, operation, or maintenance, which has a significant effect on the potential for the discharge of pollutants to waters in the state or if the pollution prevention plan proves to be ineffective in achieving the general objectives of controlling pollutants in discharges from concentrated animal feeding operations. (f) The plan shall include, at a minimum, the following items: (1) Each plan shall provide a description of potential pollutant sources. Potential pollutant sources include any activity or material that may reasonably be expected to add pollutants to waters in the state from the facility. An evaluation of potential pollutant sources shall identify the types of pollutant sources, provide a description of the pollutant sources, and indicate all measures that will be used to prevent contamination from the pollutant sources. The type of pollutant sources found at any particular site varies depending upon a number of factors including site location, historical land use, proposed facility type, waste disposal practices, etc. The evaluation shall encompass all land that will be used as part of the CAFO as indicated in the site plan. Each potential pollutant source must be identified in the plan. A thorough site inspection of the facility is recommended to ensure that all sources have been identified. Potential pollutant sources found at CAFO facilities include, but are not limited to, the following: manure; sludge; wastewater; dust; silage stockpiles; fuel storage tanks; pesticide storage and applications; lubricants; disposal of any dead animals associated with production at the CAFO; land application of waste and wastewater; manure stockpiling; pond clean-out; vehicle traffic; and pen clean-out. Each plan shall include: (A) A site plan/map, or topographic map indicating, an outline of the property that will be used in the waste generation and utilization activities of the concentrated animal feeding area; each existing structural control measure to reduce pollutants in wastewater and precipitation runoff; and surface water bodies. (B) The plan shall identify the specific location of any recharge features identified on any tracts of land planned to be utilized under the provisions of this subchapter. In addition, the plan should also locate and describe the function of all measures installed to prevent impacts to identified recharge features. (C) A list of any significant spills of these materials at the facility after the effective date of these rules, or for new facilities, since date of operation. (D) All existing sampling data. (2) The pollution prevention plan for each facility shall include a description of management controls appropriate for the facility, and the operator must implement such controls. The appropriateness and priorities of any controls shall reflect the identified sources of pollutants at the facility. (3) The plan shall include the location and a description of structural controls. Structural controls shall be inspected, by those individuals identified in the PPP as responsible for development, implementation, maintenance and revision of the plan, at least four times per year for structural integrity and maintenance. The plan shall include dates for inspection of the retention facility, and a log of the findings of such inspections. The appropriateness of any controls shall reflect the identified sources of pollutants at the facility. (4) The plan must include documentation of the assumptions and calculations used in determining the appropriate volume capacity of the retention facilities. In addition to the 25-year, 24-hour rainfall, the volume capacity of the retention facility shall be designed to meet the demands of a hydrologic needs analysis (water balance) which demonstrates the irrigation water requirements for the cropping system maintained on the wastewater application site(s). Precipitation inputs to the hydrologic needs analysis (water balance) shall be the average monthly precipitation taken from an official source such as the "Climatic Atlas of Texas", LP-192, published by the Texas Department of Water Resources, dated December, 1983, or the most recent edition, or successor publication. The consumptive use requirements of the cropping system shall be developed on a monthly basis, and shall be calculated as a part of the hydrologic needs analysis (water balance). The following volumes shall be considered in determining the analysis: (A) the runoff volume from all open lot surfaces; (B) the runoff volume from all areas between open lot surfaces that is directed into the retention facilities; (C) the rainfall multiplied by the area of the retention and waste basin; (D) the volume of rainfall from any roofed area that is directed into the retention facilities; (E) all waste and process generated wastewater produced during a 21 day, or greater, period; (F) the estimated storage volume for a minimum one year of sludge accumulation; (G) the storage volume required to contain all wastewater and runoff during periods of low crop demand; (H) the evaporation volume from retention facility surfaces; (I) the volume applied to crops in response to crop demand; (J) the minimum treatment volume required for waste treatment, if treatment lagoon; and/or (K) any additional storage volume required as a safety measure as determined by the system designer. (5) The maximum required storage value calculated by the hydrologic analysis requirements shall not encroach on the storage volume required for the 25-year, 24-hour rainfall event. Wastewater application rates utilized in the hydrologic needs analysis (water balance) shall not induce runoff or create tailwater. (6) In addition, the retention facility shall include a top freeboard of not less than two feet. Freeboard shall account for settlement and slope stability of the materials used at the time of design and construction. (7) (Air quality only) A lagoon in a single lagoon system and a primary lagoon in a multi-stage lagoon system shall be designed to maintain the necessary treatment volume or surface area as calculated using the manure production data (mean plus one standard deviation) published by American Society of Agricultural Engineers (ASAE) standards D384.1, dated June, 1988, and applicable updates to comply with anaerobic lagoon design criteria as established by ASAE standards EP-403.2, dated December, 1992, and applicable updates, or other site-specific data documented in the PPP. (8) Evaporation systems shall be designed to withstand a 10-year (consecutive) period of maximum recorded monthly rainfall (other than catastrophic), as determined by a hydrologic needs analysis (water balance), and sufficient freeboard (not less than one foot) shall be maintained to dispose of rainfall and rainfall runoff from the 25-year, 24-hour rainfall event without overflow. In the hydrologic needs analysis determination, any month in which a catastrophic event occurs the analysis shall replace such an event with not less than the long term average rainfall for that month. (9) Site specific information should be used to determine retention capacity and land application rates. All site specific information used must be documented in the pollution prevention plan. (10) The plan shall include a description of the design standards for the retention facility embankments. The following minimum design standards are required for construction and/or modification of a retention facility: (A) Soils used in the embankment shall be free of foreign material such as trash, brush, and fallen trees; (B) The embankment shall be constructed in lifts or layers no more than six inches thick and compacted at optimum moisture content; (C) Embankment construction must be accompanied by compaction testing and certified to be in accordance with NRCS, Corps of Engineers, Bureau of Reclamation or ASCE design standards. Compaction tests must be certified by a licensed professional engineer; and (D) All embankment walls shall be stabilized to prevent erosion or deterioration. (11) The plan must include a schedule for liquid waste removal. A date log indicating weekly inspection of wastewater level in the retention facility, including specific measurement of wastewater level will be kept with the plan. Retention facilities shall be equipped with either irrigation or evaporation or liquid removal systems capable of dewatering the retention facilities. Operators using pits, ponds, tanks or lagoons for storage and treatment of storm water, manure and process generated wastewater, including flush water waste handling systems, shall maintain in their wastewater retention facility sufficient available capacity to contain rainfall and rainfall runoff from a 25-year, 24- hour rainfall event. The operator shall restore such capacity to store all runoff from a 25-year, 24-hour rainfall event after any rainfall event or accumulation of wastes or process generated wastewater which reduces such capacity, weather permitting. Equipment capable of dewatering the wastewater retention structures of waste and/or wastewater shall be available whenever needed to restore the capacity required to accommodate the rainfall and runoff resulting from the 25-year, 24-hour rainfall event. (12) A permanent marker (measuring device) shall be maintained in the wastewater retention facilities to show the following: the volume required for a 25-year, 24-hour rainfall event; and the predetermined minimum treatment volume within any treatment pond. The marker shall be visible from the top of the levee. At no time shall a treatment lagoon at a CAFO that is operated under an air quality authorization be dewatered to a level below the predetermined treatment volume, except for cleanout periods or periods where the net effect of evaporation and rainfall would require the addition of fresh water to maintain the treatment volume without pumping fresh groundwater from an aquifer. (13) (Air quality only) The primary lagoon in a multi-stage lagoon system shall be designed and operated so that the lagoon maintains a constant level at all times unless prohibited by climatic conditions. Where practical, any contaminated runoff should be routed around the primary lagoon into the secondary lagoon. (14) A rain gauge shall be kept on site and properly maintained. A log of all measurable rainfall events shall be kept with the pollution prevention plan. (15) Concentrated animal feeding operations constructing a new or modifying an existing wastewater retention facility shall insure that all construction and design is in accordance with good engineering practices. Where site specific variations are warranted, the operator must document these variations and their appropriateness to the plan. Existing facilities which have been properly maintained and show no signs of structural breakage or leakage will be considered to be properly constructed. Structures built in accordance with site specific Natural Resources Conservation Service plans and specifications will be considered to be in compliance with the design and capacity requirements of this subchapter if the site specific conditions are the same as those used by the NRCS to develop the plan (numbers of animals, runoff area, wastes generated, etc.) All retention structure design and construction shall, at a minimum, be in accordance with the technical standards developed by the NRCS. The operator must use those standards that are current at the time of construction. (16) The operator shall include in the plan, site specific documentation that no significant hydrologic connection exists between the contained wastewater and waters in the state. Where the operator cannot document that no significant hydrologic connection exists, the ponds, lagoons and basins of the retention facilities must have a liner which will prevent the potential contamination of surface waters and groundwaters. (A) The operator can document lack of hydrologic connection by either: documenting that there will be no significant leakage from the retention structure; or documenting that any leakage from the retention structure would not migrate to waters in the state. This documentation shall be certified by a NRCS engineer, licensed professional engineer or qualified groundwater scientist and must include information on the hydraulic conductivity and thickness of the natural materials underlying and forming the walls of the containment structure up to the wetted perimeter. (B) For documentation of no significant leakage, in-situ materials must, at a minimum, meet the minimum criteria for hydraulic conductivity and thickness described below. Documentation that leakage will not migrate to waters in the state must include maps showing groundwater flow paths, or that the leakage enters a confined environment. A written determination by a NRCS engineer, or a licensed professional engineer that a liner is not needed to prevent a significant hydrologic connection between the contained wastewater and waters in the state will be considered documentation that no significant hydrologic connection exists. (17) Site-specific conditions shall be considered in the design and construction of liners. NRCS liner requirements or liners constructed and maintained in accordance with NRCS design specifications in Appendix 10d of the Agricultural Waste Management Handbook (or its current equivalent) shall be considered to prevent hydrologic connections which could result in the contamination of waters in the state. Liners for retention structures shall be constructed in accordance with good engineering practices. Where no site specific assessment has been done by a NRCS engineer, licensed professional engineer, or qualified groundwater scientist the liner shall be constructed to have hydraulic conductivities no greater than 1 X 10-7 cm/sec, with a thickness of 1.5 feet or greater or its equivalency in other materials. (18) Where a liner is installed to prevent hydrologic connection the operator must maintain the liner to inhibit infiltration of wastewaters. Liners shall be protected from animals by fences or other protective devices. No trees shall be allowed to grow within the potential distance of the root zone. Any mechanical or structural damage to the liner shall be evaluated by a NRCS engineer or a licensed professional engineer within 30 days of the damage. Documentation of liner maintenance shall be kept with the pollution prevention plan. The operator shall have a NRCS engineer, licensed professional engineer, or qualified groundwater scientist review the documentation and do a site evaluation every five years. If notified by the executive director that significant potential exists for the contamination of waters in the state or drinking water, the operator shall install a leak detection system or monitoring well(s) in accordance with that notice. Documentation of compliance with the notification must be kept with the pollution prevention plan, as well as all sampling data. In the event monitoring well(s) are required, the operator must sample each monitor well annually for nitrate as nitrogen, chloride, and total dissolved solids using the methods outlined in the PPP, and compare the analytical results to the baseline data. If a ten percent deviation in concentration of any of the sampled constituents is found, the operator must notify the executive director within 30 days of receiving the analytical results. Data from any monitoring wells must be kept on site for three years with the pollution prevention plan. The first year's sampling shall be considered the baseline data and must be retained on site for the life of the facility unless otherwise provided by the executive director. (19) Retention facilities shall be equipped with either irrigation or evaporation systems capable of dewatering the retention facilities, or a regular schedule of wastewater removal by contract hauler. The pollution prevention plan must include all calculations, as well as, all factors used in determining land application rates, acreage, and crops. Land application rates must take into account the nutrient contribution of any land applied manures. If land application is utilized for disposal of wastewater, the following requirements shall apply: (A) The discharge or drainage of irrigated wastewater is prohibited where it will result in a discharge of pollutants into or adjacent to waters in the state. (B) When irrigation disposal of wastewater is used, application rates shall not exceed the nutrient uptake of the crop coverage or planned crop planting with any land application of wastewater and/or manure. Land application rates of wastewaters should be based on the available nitrogen content, however, where local water quality is threatened by phosphorus, the operator shall limit the application rate to the recommended rates of available phosphorus for crop uptake, based upon crop and realistic yield goals, and provide controls for runoff and erosion as appropriate for site conditions. (C) Wastewater shall not be irrigated when the ground is frozen or saturated or during rainfall events (unless in accordance with subparagraph (E) of this paragraph. (D) Irrigation practices shall be managed so as to reduce or minimize ponding or puddling of wastewater on the site, pollution of waters in the state, and prevents the occurrence of nuisance conditions. (E) It shall be considered proper operation and maintenance for a facility which has been properly operated in accordance with this subchapter, and that is in danger of imminent overflow due to chronic or catastrophic rainfall, to discharge wastewaters to land application sites for filtering prior to discharging to waters in the state. Only that portion of the total retention facility wastewater volume necessary to prevent overflow due to chronic or catastrophic rainfall shall be land applied for filtering prior to discharging to waters in the state. Monitoring and reporting requirements for such discharges shall be consistent with sec.321.42 of this title (relating to Monitoring and Reporting Requirements). (F) Facilities including ponds, pipes, ditches, pumps, diversion and irrigation equipment shall be maintained to insure ability to fully comply with the terms of this subchapter and the pollution prevention plan. (G) Adequate equipment or land application area shall be available for removal of such waste and wastewater as required to maintain the retention capacity of the facility for compliance with this subchapter. (H) Where land application sites are isolated from surface waters and groundwaters and no potential exists for runoff to reach any waters in the state, application rates may exceed nutrient crop uptake rates only upon written approval of the executive director. No land application under this subsection shall cause or contribute to a violation of water quality standards or create a nuisance. (20) Solids shall be removed in accordance with a pre-determined schedule for cleanout of all treatment lagoons to prevent the accumulation of solids from exceeding 50% of the original treatment volume. Removal of solids shall be conducted during favorable wind conditions that carry odors away from nearby receptors and the operator shall notify the regional office of the commission as soon as the lagoon cleaning is scheduled, but not less than 10 days prior to cleaning, and verification shall be reported to the same regional office within five days after the cleaning has been completed. At no time shall emissions from any activity create a nuisance. Any increase in odors associated with a properly managed cleanout under this subsection will be taken into consideration by the executive director when determining compliance with the provisions of this subchapter. (21) Manure and Pond Solids Handling and Land Application. Storage and land application of manure shall not cause a discharge of pollutants to waters in the state, cause a water quality violation in waters in the state or cause a nuisance condition. At all times, sufficient volume shall be maintained within the control facility to accommodate manure, other solids, wastewaters and contaminated storm water (rainwater runoff) from the concentrated animal feeding areas. (22) Where the operator decides to land apply manures and pond solids the plan shall include: a description of waste handling procedures and equipment availability; the calculations and assumptions used for determining land application rates; and all nutrient analysis data. Land application rates of wastes should be based on the available nitrogen content of the solid waste. However, where local water quality is threatened by phosphorus, the application rate shall be limited to the recommended rates of available phosphorus for crop uptake, based upon crop and realistic yield goals, and provide controls for runoff and erosion as appropriate for site conditions. (23) If the waste (manure) is sold or given to other persons for disposal, the operator must maintain a log of: date of removal from the CAFO; name of hauler; and amount, in wet tons, dry tons or cubic yards, of waste removed from the CAFO. (Incidental amounts, given away by the pick-up truck load, need not be recorded.) Where the wastes are to be land applied by the hauler, the operator must make available to the hauler any nutrient sample analysis from that year. (24) The procedures documented in the pollution prevention plan must ensure that the handling and disposal of wastes as defined in sec.321.32 of this title (relating to Definitions) comply with the following requirements: (A) Manure storage capacity based upon manure and waste production and land availability shall be provided. Storage and/or surface disposal of manure in the 100-year flood plain, near water courses or recharge feature is prohibited unless protected by adequate berms or other structures. The land application of wastes at agronomic rates shall not be considered surface disposal in this case and is not prohibited. (B) When manure is stockpiled, it shall be stored in a well drained area with no ponding of water, and the top and sides of stockpiles shall be adequately sloped to ensure proper drainage. Runoff from manure storage piles must be retained on site. (C) Waste shall not be applied to land when the ground is frozen or saturated or during rainfall events. (D) Waste manure shall be applied to suitable land at appropriate times and at agronomic rates. Discharge (run-off) of waste from the application site is prohibited. Timing and rate of applications shall be in response to crop needs, assuming usual nutrient losses, expected precipitation and soil conditions. (E) All necessary practices to minimize waste manure transport to waters in the state shall be utilized and documented to the plan. (F) Edge-of-field, grassed strips shall be used to separate water courses from runoff carrying eroded soil and manure particles. Land subject to excessive erosion shall be avoided. (G) Where land application sites are isolated from surface waters and no potential exists for runoff to reach waters in the state, application rates may exceed nutrient crop uptake rates only upon written approval by the executive director. No land application under this subchapter shall cause or contribute to a violation of surface water quality standards, contaminate groundwater or create an nuisance condition. (H) Nighttime application of liquid and/or solid waste shall only be allowed in areas with no occupied residence(s) within 0.25 mile from the outer boundary of the actual area receiving waste application. In areas with an occupied residence within 0.25 mile from the outer boundary of the actual area receiving waste application, application shall only be allowed from one hour after sunrise until one hour before sunset, unless the current occupants of such residences have in writing agreed to such nighttime applications. (I) Accumulations of solids on concrete cow lanes at dairies and concrete swine pens, without slotted floors, shall be scraped or flushed at least once per week or in accordance with proper design and maintenance of the facility. Farrowing pens at swine facilities which are not scraped or flushed once per week shall be scraped/flushed after each group of sows have been removed from the facility. (J) Buildings designed with mechanical flush/scrape systems shall be flushed/scraped at least once per week or as often as necessary to maintain the design efficiency. This provision would include, but would not be limited to swine and caged poultry operations. (K) Earthen pens shall be designed and maintained to ensure good drainage and to prevent ponding. (L) Facilities that utilize a solid settling basin(s) shall remove solids from the basin as often as necessary to maintain the design efficiency. (25) The plan shall include an appropriate schedule for preventative maintenance. Operators will provide routine maintenance to their control facilities in accordance with a schedule and plan of operation to ensure compliance with this subchapter. The operator shall keep a maintenance log documenting that preventative maintenance was done. A preventive maintenance program shall involve inspection and maintenance of all runoff management devices (mechanical separators, catch basins) as well as inspecting and testing facility equipment and containment structures to uncover conditions that could cause breakdowns or failures resulting in discharge of pollutants to waters in the state or the creation of a nuisance condition. (26) The plan shall identify areas which, due to topography, activities, or other factors, have a high potential for significant soil erosion. Where these areas have the potential to contribute pollutants to waters in the state the pollution prevention plan shall identify measures used to limit erosion and pollutant runoff. (27) The operator shall document to the pollution prevention plan as soon as possible, any planned physical alterations or additions to the permitted facility. The operator must insure that any change or facility expansion will not result in a discharge in violation of the provisions of this subchapter or will require an amendment to an existing authorization in force at the time of modification. (28) Prior to commencing wastewater irrigation and/or waste application on land owned or operated by the operator, and annually thereafter, the operator shall collect and analyze representative soil samples of the wastewater and waste application sites according to the following procedures: (A) Sampling procedures shall employ accepted techniques of soil science for obtaining representative and analytical results. (B) Samples should be taken within the same 45 day time-frame each year. (C) Obtain one composite sample for each soil depth zone per land management unit and per uniform (soils with the same characteristics and texture) soil type within the land management unit. For the purposes of this subchapter, a land management unit shall be considered to be an area associated with a single center pivot system or a tract of land on which similar soil characteristics exist and similar management practices are being used. (D) Composite samples shall be comprised of 10 - 15 randomly sampled cores obtained from each of the following soil depth zones: (i) Zone 1: 0-6 inches for land application areas where the waste is incorporated directly into the soil or 0-2 inches for land application areas where the waste is not incorporated into the soil; if a 0-2 inch sample is required under this subsection, then an additional sample from the 2-6 inch soil depth zone shall be obtained in accordance with the provisions of this section, and (ii) Zone 2: 6 - 24 inches. (E) Soil samples shall be submitted to a soil testing laboratory along with a previous crop history of the site, intended crop use and yield goal. Soil reports should include nutrient recommendations for the crop yield goal. (F) Chemical/nutrient parameters and analytical procedures for laboratory analysis of soil samples from wastewater and waste application sites shall include the following: (i) Nitrate reported as nitrogen in parts per million (ppm) (ii) Phosphorus (extractable, ppm) - Texas Agricultural Extension Service Soil Testing Laboratory - TAMU extractant or Mehlich III, (iii) Potassium (extractable, ppm), (iv) Sodium (extractable, ppm), (v) Magnesium (extractable, ppm), (vi) Calcium (extractable, ppm), (vii) Soluble salts/electrical conductivity (dS/m) - determined from extract of 2:1 (v/v) water/soil mixture, (viii) Soil water pH, (G) When results of the annual soil analysis for extractable phosphorus in subparagraph (F) of this paragraph indicates a level greater than 200 ppm of extractable phosphorus (reported as P) in Zone 1 for a particular waste and/or wastewater disposal field or if ordered by the commission to do so in order to protect the quality of waters in the state, then the operator shall limit waste and/or wastewater application on that site to the recommended P rates based on crop uptake. Waste and/or wastewater application shall remain limited to recommended P rates until soil analysis indicates extractable phosphorus levels have been reduced below 200 ppm P, or to a lower level as ordered by the commission. (29) The operator shall annually analyze at least one representative sample of irrigation wastewater and one representative sample of solid waste for total nitrogen, total phosphorus and total potassium. (30) Results of initial and annual soils, wastewater and solid waste analyses shall be maintained on-site as part of the pollution prevention plan. (31) Operators submitting applications for renewal or expansion of existing facilities authorized under this subchapter to utilize a playa lake as a wastewater retention structure shall within 90 days of the effective date of the renewal, submit a groundwater monitoring plan to the Agriculture Section, Water Quality Division of the Texas Natural Resource Conservation Commission. At a minimum, the ground water monitoring plan shall specify procedures to annually collect a ground water sample from each well providing water for the facility, have each sample analyzed for chlorides and nitrates and compare those values to background values for each well. sec.321.40. Best Management Practices. The following Best Management Practices (BMPs) shall be utilized by concentrated animal feeding operations owners/ operators, as appropriate, based upon existing physical and economic conditions, opportunities and constraints. Where the provisions in a NRCS plan are equivalent or more protective the operator may refer to the NRCS plan as documentation of compliance with the BMPs required by this subchapter. (1) Control facilities must be designed, constructed, and operated to contain all process generated wastewaters and the contaminated runoff from a 25-year, 24-hour rainfall event for the location of the point source. Calculations may also include allowances for surface retention, infiltration, and other site specific factors. Waste control facilities must be constructed, maintained and managed so as to retain all contaminated rainfall runoff from open lots and associated areas, process generated wastewater, and all other wastes which will enter or be stored in the retention structure. (2) Facilities shall not expand operations, either in size or numbers of animals, prior to amending or enlarging the waste handling procedures and structures to accommodate any additional wastes that will be generated by the expanded operations. (3) Open lots and associated wastes shall be isolated from outside surface drainage by ditches, dikes, berms, terraces or other such structures designed to carry peak flows expected at times when the 25-year, 24-hr. rainfall event occurs. (4) New or expanding facilities shall not be built in any stream, river, lake, wetland, or playa lake (except as defined by and in accordance with the Texas Water Code sec.26.048). (5) No waters in the state shall come into direct contact with the animals confined on the concentrated animal feeding operation. Fences and other methods may be used to restrict such access. (6) Wastewater retention facilities or holding pens may not be located in the 100-year flood plain, as defined in Chapter 301 of this title, unless the facility is protected from inundation and damage that may occur during that flood event. (7) There shall be no water quality impairment to public and neighboring private drinking water wells due to waste handling at the permitted facility. Facility wastewater retention facilities, holding pens or waste/wastewater disposal sites shall not be located closer than 500 feet of a public water supply well or 150 of a private water wells, except in accordance with Chapter 238 of this title (relating to Water Well Drillers). (8) Waste handling, treatment, and management shall not create a nuisance condition or an environmental or a public health hazard; shall not result in the contamination of drinking water; shall conform with State regulations for the protection of surface and ground water quality. (9) Solids, sludges, manure, or other pollutants removed in the course of treatment or control of wastewaters shall be disposed of in a manner such as to prevent pollutants from being discharged into waters in the state or creation of a nuisance condition. (10) The operator shall prevent the discharge of pesticide contaminated waters into waters in the state. All wastes from dipping vats, pest and parasite control units, and other facilities utilized for the application of potentially hazardous or toxic chemicals shall be handled and disposed of in a manner such as to prevent any significant pollutants from entering the waters in the state or create a nuisance condition. (11) Dead animals shall be properly disposed of within three days as required by statute or by rules of the commission unless otherwise provided for by the executive director. Animals shall be disposed of in a manner to prevent contamination of waters in the state or creation of a nuisance or public health hazard. (12) Collection, storage, and disposal of liquid and solid waste should be managed in accordance with recognized practices of good agricultural management. The economic benefits derived from agricultural operations carried out at the land disposal site shall be secondary to the proper disposal of waste and wastewater. (13) Appropriate measures necessary to prevent spills and to clean up spills of any toxic pollutant shall be taken. Where potential spills can occur materials, handling procedures and storage shall be specified. Procedures for cleaning up spills shall be identified and the necessary equipment to implement a clean up shall be available to personnel. sec.321.41. Other Requirements. (a) Education and Training. (1) Any CAFO owner/operator with greater than 300 animal units and located within an area specified in the definition of Dairy Outreach Program Areas in sec.321.32 of this subchapter (relating to Definitions) shall obtain authorization under this subchapter and, within twelve months of receiving such authorization, the owner/operator or his designee with operational responsibilities shall complete an eight hour course or its equivalent on animal waste management. In addition, that owner/operator shall also complete at least eight additional hours of continuing animal waste management education for each two year period after the first twelve months. The minimum criteria for the initial eight hours and the subsequent eight hours of continuing animal waste management education shall be developed by the executive director and the Texas Agricultural Extension Service. Verification of the date and time(s) of attendance and completion of required training shall be documented to the pollution prevention plan. (2) Where the employees are responsible for work activities which relate to compliance with provisions of this subchapter, those employees must be regularly trained or informed of any information pertinent to the proper operation and maintenance of the facility and waste disposal. Employee training shall inform personnel at all levels of responsibility of the general components and goals of the pollution prevention plan. Training shall include topics as appropriate such as land application of wastes, proper operation and maintenance of the facility, good housekeeping and material management practices, necessary recordkeeping requirements, and spill response and clean up. The operator is responsible for determining the appropriate training frequency for different levels of personnel and the pollution prevention plan shall identify periodic dates for such training. (b) Inspections and Recordkeeping. The operator or the person named in the pollution prevention plan as the individual responsible for drafting and implementing the plan shall be responsible for inspections and recordkeeping. (c) Recordkeeping and Internal Reporting Procedures. Incidents such as spills, other discharges or nuisance conditions, along with other information describing the pollution potential and quality of the discharge shall be included in the records. Inspections and maintenance activities shall be documented and recorded. These records must be kept on site for a minimum of three years. (d) Visual Inspections. The authorized person shall inspect designated equipment and facility areas. Material handling areas shall be inspected for evidence of, or the potential for, pollutants entering the drainage system or the creation of a nuisance. A follow-up procedure shall be used to ensure that appropriate action has been taken in response to the inspection. (e) Site Inspection. A complete inspection of the facility shall be done and a report documenting the findings of the inspection made at least once/year. The inspection shall be conducted by the authorized person named in the pollution prevention plan, to verify that the description of potential pollutant sources is accurate; the site plan/map has been updated or otherwise modified to reflect current conditions; and the controls outlined in the pollution prevention plan to reduce pollutants and avoid nuisance conditions are being implemented and are adequate. Records documenting significant observations made during the site inspection shall be retained as part of the pollution prevention plan. Records of inspections shall be maintained for a period of three years. (f) Additional Requirements. No condition of this authorization shall release the operator from any responsibility or requirements under other statutes or regulations, Federal, State or Local. sec.321.42. Monitoring and Reporting Requirements. (a) If, for any reason, there is a discharge to waters in the state, the operator is required to notify the executive director orally within 24 hours and in writing within 14 working days of the discharge from the retention facility or any component of the waste handling or disposal system. In addition, the operator shall document the following information to the pollution prevention plan within 14 days of becoming aware of such discharge: (1) A description and cause of the discharge, including a description of the flow path to the receiving water body. Also, an estimation of the flow and volume discharged. (2) The period of discharge, including exact dates and times, and, if not corrected the anticipated time the discharge is expected to continue, and steps being taken to reduce, eliminate and prevent recurrence of the discharge. (3) If caused by a precipitation event(s), information from the on site rain gauge concerning the size of the precipitation event. (4) Unless otherwise directed by the executive director, facilities authorized under this subchapter shall sample and analyze all discharges from retention facilities. Sample analysis shall be documented to the pollution prevention plan. (5) Samples shall consist of grab samples taken from the over-flow or discharges from the retention structure. A minimum of one sample shall be taken from the initial discharge (within 30 minutes). The sample shall be taken and analyzed in accordance with EPA approved methods for water analysis listed in 40 CFR 136. Measurements taken for the purpose of monitoring shall be representative of the monitored discharge. (6) Sample analysis of the discharge must, at a minimum, include the following: Fecal Coliform bacteria; 5-day Biochemical Oxygen Demand (BOD5); Total Suspended Solids (TSS); ammonia nitrogen; and any pesticide which the operator has reason to believe could be in the discharge. (7) In lieu of discharge sampling data, the operator must document description of why discharge samples could not be collected when the discharger is unable to collect samples due to climatic conditions which prohibit the collection of samples including weather conditions that create dangerous conditions for personnel (such as local flooding, high winds, hurricane, tornadoes, electrical storms, etc.). Once dangerous conditions have passed, the operator shall collect a sample from the retention structure pond or lagoon. The sample shall be analyzed in accordance with paragraph (6) of this subsection. (b) All discharge information and data will be made available to the executive director upon request. Signed copies of monitoring reports shall be submitted to the executive director if requested at the address specified in the request. (c) Any person who knowingly makes any false statement, representation, or certification in any record or other document submitted or required to be maintained under the provisions of this subchapter, including reports of compliance or noncompliance shall be subject to administrative penalties not to exceed $10,000 per violation. Such person(s) may also be subject to civil and criminal penalties pursuant to the Texas Water Code, sec.26.122 and sec.26.213. (d) The operator shall retain copies of all records required by this subchapter for a period of at least three years from the date reported. This period may be extended by request of the executive director at any time. (e) The operator shall furnish to the executive director, within a reasonable time, any information which the executive director mayrequest to determine compliance with the provisions of this subchapter. The operator shall also furnish to the executive director, upon request, copies of records required to be kept by the provisions of this subchapter. (f) When the operator becomes aware that they failed to submit any relevant facts or submitted incorrect information in any report to the executive director, they shall promptly submit such facts or information. (g) All reports or information submitted to the executive director shall be signed and certified in accordance with sec.305.44 of this title (relating to Signatories to Applications). (h) The operator shall maintain ownership, operation or control over the retention facilities, disposal areas and control facilities identified in the final site plan submitted with the application under sec.321.34 or sec.321.35 of this title (relating to Procedures for Making Application for an Individual Permit or Procedures for Making Application for Registration). In the event owner loses ownership, operation or control of any of these areas, the operator shall notify the executive director prior to such loss of control and immediately request and file an application to amend the existing authorization, an application for a new authorization under this subchapter or present the executive director with a plan to cease all concentrated animal feeding operations at that site. (i) Any operator required to obtain authorization under sec.321.33 of this title (relating to Applicability) shall locate and maintain all facilities in accordance with the final site plan submitted with the application as required under sec.321.34 or sec.321.35 of this title (relating to Procedures for Making Application for an Individual Permit or Procedures for Making Application for Registration). In the event the operator does not properly locate and maintain such facilities in accordance with the final site plan they shall be deemed in noncompliance with the provisions of this subchapter. (j) Operator shall furnish to the executive director soil testing laboratory results of all soil samples within 60 days of the date the samples were taken in accordance with the requirements of this subsection. sec.321.44. Dairy Outreach Program Areas. For the purposes of this subchapter the Dairy Outreach Program Areas includes all of the following counties: Erath, Bosque, Comanche, Hamilton, Johnson, Hopkins, Wood and Rains. The commission shall review the areas designated under this section on at least a triennial basis to determine whether counties should be deleted or other areas should be added. At any time, areas under this section may be added or deleted by the commission in accordance with the rulemaking process. sec.321.46. Air Standard Permit Authorization . Pursuant to Texas Clean Air Act sec.382.051, any CAFO which meets all of the requirements for registration or individual permit outlined in this subchapter or all the requirements for operating under a CAFO general permit and which satisfy this section is hereby entitled to an air quality standard permit authorization in lieu of the requirement to obtain an air quality permit under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification). Facilities which meet all the "Air Quality Only" requirements in sec.321.39 of this title (relating to Pollution Prevention Plans) and obtain either a registration or individual permit or a CAFO general permit are eligible for an air quality standard permit. In addition to meeting the "Air Quality Only" requirements, the applicant must also demonstrate compliance with the following: (1) Construction or expansion of a new animal feeding operation. Animal feeding operations not in operation on the date of the adoption of these amended rules, must document compliance with either paragraph (1)(A) or (1)(B) of this section at the time of application for amendment, transfer, registration or an individual permit under this subchapter or for a CAFO general permit. (A) Operator shall not locate any permanent odor sources within 0.50 miles of any occupied residence or business structure, school (including associated recreational areas), church, or public park without written consent and approval from the landowner. For the purposes of this section, any measurement of a buffer distance shall be from the nearest edge of the permanent odor source to the nearest edge of an occupied structure or designated recreational area listed under this subsection; or (B) Operator shall not locate any permanent odor sources within 0.25 miles of any occupied residence or business structure, school (including associated recreational areas), church, or public park without written consent and approval from the landowner. For the purposes of this section, any measurement of a buffer distance shall be from the nearest edge of the permanent odor source to the nearest edge of an occupied structure or designated recreational area listed under this subsection. Operator shall also develop and implement a plan to control odors at the CAFO. Such plan shall identify all structural and/or management practices that the owner/operator will employ to minimize odor and control air contaminants at the facility. The odor control plan should at a minimum address manure collection, manure and wastewater storage and treatment, land application, dead animal handling and dust control measures. The plan shall be kept with the Pollution Prevention Plan. (2) Expansion of an existing animal feeding operation. Animal feeding operations in operation on the date of the adoption of these amended rules must document compliance with either paragraph (2)(A) or (2) (B) of this section at the time of application for transfer, amendment, registration or an individual permit under this subchapter or for a CAFO general permit. (A) Operator shall not locate any permanent odor sources within 0.25 miles of any occupied residence or business structure, school (including associated recreational areas), church, or public park without written consent and approval from the landowner. For the purposes of this section, any measurement of a buffer distance shall be from the nearest edge of the permanent odor source to the nearest edge of an occupied structure or designated recreational area listed under this subsection; or (B) Operator shall develop and implement a plan to control odors at the CAFO. Such plan shall identify all structural and/or management practices that the owner/operator will employ to minimize odor and control air contaminants at the facility. The odor control plan should at a minimum address manure collection, manure and wastewater storage and treatment, land application, dead animal handling and dust control measures. The plan shall be kept with the Pollution Prevention Plan. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 28, 1998. TRD-9813704 Margaret Hoffman Director, Environmental Law Texas Natural Resource Conservation Commission Effective date: September 18, 1998 Proposal publication date: March 6, 1998 For further information, please call: (512) 239-4640 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) adopts amendments 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, without changes to the proposed text as published in the June 26, 1998, issue of the Texas Register (23 TexReg 6695). The text will not be republished. The amendment to sec.506.12(a)(1)(F) adds to the Council's list of federal activities subject to consistency review federal agency approval of restoration/mitigation plans that arise from sec.404 of the Clean Water Act and sec.10 of the Rivers and Harbors Act enforcement actions. While most of these activities are individually inconsequential, they are numerous and frequent. It is appropriate for the Council to list these activities because they may cumulatively affect coastal natural resource areas within Texas' coastal zone. Because of their nature, number, and frequency, however, it would be inefficient for each approval to be individually reviewed by the Council. Therefore, the Council is simultaneously issuing a General Concurrence (GC) deeming consistent all such activities below a certain threshold. This focuses the Council's involvement on those activities that are individually more significant in scope. The particular type of enforcement method employed by federal agencies correlates to the scope or significance of the violation. The GC deems consistent the two methods that are usually employed to resolve routine and relatively minor violations. This relieves the Council of reviewing these individually. The Council has prepared a takings impact assessment for the adoption of these amendments and determined that adoption of the amendments will not result in a taking of private real property. To receive a copy of the takings impact assessment, please send a written request to Ms. Carol Milner, Texas Register Liaison, General Land Office, Legal Services Division, 1700 N. Congress Avenue, Room 626, Austin, Texas 78701-1495, facsimile number (512) 463-6311. Two commenters commented on the proposed amendments. The Galveston District of the U.S. Army Corps of Engineers objected to the proposed amendment. Mobil Oil corporation objected in part. The Galveston District commented that its staff was promised that an interagency staff workgroup would be convened to discuss this matter. The Council expressly solicited the Galveston District's involvement in the workgroup, but the district declined the offer. By letter of February 27, 1998, Council Member John Barrett invited Colonel Eric R. Potts, District Engineer of the Galveston District, to have district staff participate in an interagency staff workgroup that was convened to discuss a specific proposal designed to address the Corps' concerns regarding this matter. By letter of March 30, 1998, however, Colonel Potts replied that it would be premature to participate in the workgroup until the district had received guidance on this matter from Corps headquarters. The guidance, which was issued May 4, 1998, took the position that the Council's proposal was contrary to both federal statute and the U.S. Constitution. This position rendered the workgroup irrelevant, since a staff workgroup can change neither statute nor constitution. The Galveston District commented that actions the Corps either undertakes or declines to undertake to enforce its statutory regulatory authorities are not subject to state consistency review under the federal Coastal Zone Management Act (CZMA). However, the district stated that it would voluntarily submit after- the-fact permits to the Council for consistency review. The Galveston District characterized the Council's position "contrary to the most basic principles of Federal supremacy under the U.S. Constitution." The Council's action is in full keeping with federal supremacy principles because it is an action undertaken pursuant to a congressional waiver of federal supremacy. Congress expressly and unequivocally waived federal supremacy in sec.307 of the CZMA by giving the weight of federal law to state policies contained in federally approved state coastal management programs. Section 307(c)(3)(a) prohibits a federal agency from issuing a permit authorizing an activity in the coastal zone unless the state has certified that the activity will be carried out in a manner that is consistent with state coastal policies. After-the-fact permits fall squarely within this provision. Section 307(c)(1)(A) provides that each activity undertaken directly by a federal agency that "affects any land or water use or natural resource" of a state's coastal zone shall also be consistent with the policies of the state's program. NOAA regulations at 15 CFR sec.930.31 define the term "federal activity" as "any functions performed by or on behalf of a Federal agency in the exercise of its statutory responsibilities." (Emphasis supplied.) Therefore, there is no issue of federal supremacy with respect to the amendments. The only possible issues relate to interpretation of the language in the CZMA and its implementing regulations that delineate what federal actions are subject to sec.307. However, the actions described in the amendment plainly fall within the scope of that language. The Galveston District also commented that the CZMA's implementing regulations misconstrue and "reverse" federal agencies' sec.307 consistency obligations by requiring them to be consistent with state coastal policies unless specifically prohibited by statute. The Corps interprets sec.307 to require federal agencies to be consistent only if specifically authorized by statute. This section of the regulations has been in existence and Congress has been cognizant of its meaning and effect for almost two decades. Congress has reauthorized and amended the CZMA on numerous occasions during that period. By not amending the CZMA to alter that longstanding interpretation, Congress has thereby expressly ratified it. The Galveston District further commented that "to subject enforcement of federal laws to regulation by the states is an extraordinary, unprecedented view with no support in the CZMA or its legislative history," that "the entire focus of the CZMA is to give greater protection to coastal resources," and that "allowing state interference with enforcement of federal laws . . . would be directly contrary to the stated purposes of the CZMA." With respect to legislative history, the Corps' position is that actions related to enforcement are categorically exempt from sec.307. However, the legislative history of the 1990 reauthorization of the CZMA states that "[n]o federal agency activities are categorically exempt from this requirement." See H.R. Conf. Rep. No. 964, 101st Cong., 2d Session. With respect to the CZMA's statutory purposes, protecting coastal resources was only one of many. In sec.303(2), Congress expressly found and declared that one purpose was "to encourage and assist the states to exercise effectively their responsibilities in the coastal zone through the development and implementation of management programs to achieve wise use of the land and water resources of the coastal zone, giving full consideration to ecological, cultural, historic, and esthetic values, as well as the needs for compatible economic development." In sec.303(4), Congress stated that another purpose was "to encourage the participation and cooperation of the public, state and local governments, and interstate and other regional agencies, as well as of the Federal agencies, in carrying out the purposes of this chapter." The primary assistance that Congress gave states to ensure the cooperation of federal agencies was the ability under sec.307 to require federal agencies to comply with the state's coastal policies. Therefore, both the legislative history and the stated purposes of the CZMA support the Council's action. The Galveston District also objected to the amendment on practical grounds. The district pointed out that interagency coordination on a recent enforcement case was extensive and that "the state already has adequate remedies to protect its coastal resources." The district stated that Council involvement would be time consuming, lead to delays, and be wasteful. First, the Council acknowledges the district's views on the adequacy of state law. However, Congress has encouraged states to supplement state authorities with the authority granted under sec.307 of the CZMA. The Council is simply taking advantage of the means Congress has provided to make the state's management of coastal resources even more comprehensive. For example, an authority such as Clean Water Act sec.401 certification may not apply to a restoration/mitigation activity in a particular case because of some procedural technicality. Section 307 could in that case provide the state an alternative means of applying its policies for wetlands resources to that activity. Second, before proposing the amendments, the Council was aware that the Corps was concerned that Texas' exercising its congressionally granted consistency review authority would delay or complicate the Corps' enforcement program. Mobil Oil Corporation submitted a comment letter raising a similar issue. The Council addressed that concern by issuing a General Concurrence (GC) for most Corps enforcement actions simultaneously with the adoption of the rule amendment. As stated in the preamble to the amendment proposal, the net effect of the amendment and GC are that fewer than 3% of the district's enforcement cases will be subject to any form of review by the Council. The effect on the Galveston District's enforcement program will clearly be minimal. Nevertheless, the Council has offered, and remains willing, to work with the Corps to ensure that any review in this small number of cases is efficient and expeditious. The Galveston District commented that the requirements of sec.307 of the CZMA do not apply to the judicial branch of the federal government and that there is no final executive branch agency action to trigger sec.307. The Council agrees that sec.307 does not apply to the judicial branch, but disagrees that there is no final executive branch agency action to review. As stated in the preamble to the amendment proposal, that action is submission of a restoration plan or similar document to the court for its consideration. The district commented that restoration plans are "rarely" developed and that, contrary to the Council's assertion in the preamble to the amendment proposal, 33 CFR sec.326.5 is simply a statement of whether restoration or mitigation should be required, not a plan. Section 326.5 requires the district engineer to prepare a document that, among other things, "will also recommend what, if any, restoration or mitigative measures are required and will provide the rationale for any such recommendation." Clearly, the document describes a course of action that should be taken and therefore can fairly be characterized as a plan. The Council would also point out that it the official policy of the U.S. Department of Justice to consent to an environmental enforcement judgment only after an opportunity is afforded to those who are not party to the litigation to comment on it. Under 28 CFR sec.50.7(b), prior to finalizing the judgment, the Department of Justice "will receive and consider, and file with the court, any written comments, views, or allegations relating to the proposed judgment." This demonstrates that a state's assertion of consistency review authority is not fundamentally incompatible with the process by which federal agencies conduct their enforcement litigation because that process already contains a window for input, albeit very limited input. The amendments are adopted under the Texas Natural Resources Code, Chapter 33, Subchapter C, sec.33.053(a)(10), and the Texas Natural Resources Code, Chapter 33, Subchapter F, 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 CNRAs and to adopt procedural rules for review of federal activities. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813779 Garry Mauro Chairman, Coastal Coordination Council Coastal Coordination Council Effective date: September 20, 1998 Proposal publication date: June 26, 1998 For further information, please call: (512) 305-9129 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 3.Income Assistance Services SUBCHAPTER CC.Claims 40 TAC sec.3.2901 The Texas Department of Human Services (DHS) adopts an amendment to sec.3.2901, in its Income Assistance Services chapter. The amendment is adopted without changes to the proposed text published in the July 17, 1998, issue of the Texas Register (23 TexReg 7361) and will not be republished. The justification for the amendment is to comply with an agency initiative and the Program Simplification Workgroup by making Temporary Assistance for Needy Families (TANF) policies more compatible with current Food Stamp policies. The amendment will function by significantly reducing the amount to be collected for overpayment of TANF benefits. The department received no comments regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendment implements the Human Resources Code, sec.sec.22.001-22.030 and sec.sec.31.001-31.0325. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 25, 1998. TRD-9813509 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER NN.Electronic Benefit Transfer 40 TAC sec.3.4011 The Texas Department of Human Services (DHS) adopts an amendment to sec.3.4011, in its Income Assistance Services chapter. The amendment is adopted without changes to the proposed text as published in the July 17, 1998, issue of the Texas Register (23 TexReg 7362) and will not be republished. The justification for the amendment is to comply with state legislation relating to expunging Temporary Assistance for Needy Families (TANF) benefits after the account has been dormant for 12 months. The amendment will function by ensuring that the state will be in compliance with state legislation and will be compatible with the expungement policy in the Food Stamp Program. The department received no comments regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendment implements the Human Resources Code, sec.sec.22.001-22.030 and sec.sec.31.001-31.0325. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813741 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 17, 1998 For further information, please call: (512) 438-3765 CHAPTER 18.Nursing Facility Administrators 40 TAC sec.sec.18.2-18.10, 18.15, 18.16 The Texas Department of Human Services (DHS) adopts the repeal of sec.sec.18.2- 18.10, 18.15, and 18.16, and new sec.sec.18.2-18.10, 18.15, and 18.16, without changes to the proposed text as published in the July 24, 1998, issue of the Texas Register (23 TexReg 7537). The justification for the repeals and new sections is to comply with Senate Bill 84, passed during the regular session of the 75th Texas Legislature, that administratively transferred the rules from the Texas Board of Nursing Facility Administrators to the Texas Department of Human Services (DHS). The repeals and new sections will function by ensuring that nursing facility administrators meet the necessary requirements to be licensed in the state of Texas and also to promote the safety of nursing facility residents. During the comment period, DHS received the following comment from the Texas Health Care Association (THCA). Comment: Regarding sec.18.2(i)(3), fees, we recommend that the department reexamine the fees that are being charged for licenses, license renewals, and examinations and all other administrative fees under the Act. In previous appropriations, a specific amount was appropriated for the function of licensing administrators and the amount collected using the above fee structure exceeded the appropriation. All excess funds reverted to the general revenue fund and were not applied to expenses. Is this still the case? If so, consideration should be given to reevaluating the fee structure to more closely meet the appropriation request. Response: DHS will evaluate the fees charged in the nursing facility administrator program for licensure, licensure renewal, and state requirements examination. However, the cost of the national examination for administrators is established by the National Association of Board of Examiners of Long Term Care Administration. Senate Bill 84, at sec.242.304(b) does specify that funds DHS collects under Health and Safety Code, Chapter 242, Subchapter I, be deposited in the state treasury to the credit of the general revenue fund. The repeals are adopted under the Texas Health and Safety Code, Chapter 242, Subchapter I, (Nursing Facility Administration, sec.sec.242.301, added by Acts 1997, 75th Legislature, Chapter 1280, sec.1.01), which authorizes the department to license nursing facility administrators. The repeals implement the Texas Health and Safety Code, Chapter 242.302, as added by Acts 1997, 75th Legislature, Chapter 1280, sec.1.01. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813742 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 20, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 438-3765 40 TAC sec.sec.18.2-18.10, 18.15, 18.16 The new sections are adopted under the Texas Health and Safety Code, Chapter 242, Subchapter I, (Nursing Facility Administration, sec.sec.242.301, added by Acts 1997, 75th Legislature, Chapter 1280, sec.1.01), which authorizes the department to license nursing facility administrators. The new sections implement the Texas Health and Safety Code, Chapter 242.302, as added by Acts 1997, 75th Legislature, Chapter 1280, sec.1.01. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813743 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 20, 1998 Proposal publication date: July 24, 1998 For further information, please call: (512) 438-3765 CHAPTER 48.Community Care for Aged and Disabled SUBCHAPTER E.Client-Managed Attendant Services 40 TAC sec.48.2615 and sec.48.2616 The Texas Department of Human Services (DHS) adopts new sec.sec.48.2615 and 48.2616, without changes to the proposed text published in the June 12, 1998, issue of the Texas Register (23 TexReg 6151) and will not be republished. The justification for the new sections is to implement a pilot voucher project statewide as part of DHS's client-managed attendant services (CMAS) program and in conjunction with the personal attendant services (PAS) program of the Texas Rehabilitation Commission. The voucher is a new, third option that a current CMAS or PAS client may select in receiving attendant services. Current CMAS rules in this chapter apply to the pilot as well as these rules. The new sections will function by adding a new payment option for consumers of client-managed attendant services. No comments were received regarding adoption of the new sections. The new sections are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. The new sections implement sec.sec.22.001-22.030 of the Human Resources Code. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 25, 1998. TRD-9813506 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 438-3765 CHAPTER 79.Legal Services SUBCHAPTER T.Administrative Fraud Disqualification Hearings 40 TAC sec.sec.79.1901, 79.1906, 79.1914, 79.1917 and 79.1919 The Texas Department of Human Services (DHS) adopts amendments to sec.sec.79.1901, 79.1906, 79.1914, 79.1917, 79,1919, 79.2003, 79.2009, and 79.2011, in its Legal Services chapter. The amendments are adopted without changes to the proposed text published in the July 10, 1998, issue of the Texas Register(23 TexReg 7178) and will not be republished. The justification for the amendments is to update the existing rules to bring them into compliance with the name change of Aid to Families with Dependent Children (AFDC) to Temporary Assistance for Needy Families (TANF), and 7 CFR 273.16(4) Scheduling of Hearing. The amendments will function by changing the term AFDC to TANF and amending state rules to coincide with federal regulations as related to administrative disqualification hearing procedures. The department received no comments regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendments implement the Human Resources Code, sec.sec.22.001-22.030 and sec.sec.31.001-31.0325. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 25, 1998. TRD-9813507 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 14, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER U.Fraud Involving Recipients 40 TAC sec.sec.79.2003, 79.2009, and 79.2011 The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendments implement the Human Resources Code, sec.sec.22.001-22.030 and sec.sec.31.001-31.0325. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 25, 1998. TRD-9813508 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 14, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 PART XIX. Texas Department of Protective and Regulatory Services CHAPTER 700.Child Protective Services SUBCHAPTER C.Eligibility for Child Protective Services 40 TAC sec.700.316 The Texas Department of Protective and Regulatory Services (TDPRS) adopts an amendment to sec.700.316, without changes to the proposed text as published in the July 10, 1998, issue of the Texas Register (23 TexReg 7180). The justification for the amendment is to allow Child Protective Services (CPS) to provide up to 3 and 1/2 months of transitional state-paid foster care assistance to youth who completed high school (usually in May), but who are not able to move into a college dormitory until August or September. Obtaining short-term housing in these situations can be difficult, as current CPS policy requires that paid foster care end the month the youth graduates from high school. The amendment will function by providing placement services that better meet the needs of individual youth. Youth will have a greater likelihood of following through with their college and vocational goals because they have a continuity of stable living arrangement before they begin their higher educational or vocational program. TDPRS received one comment from Driscoll Children's Hospital in support of the amendment. The amendment is adopted under the Texas Family Code, Title 5, Chapters 261 and 264, which authorizes the department to provide services to alleviate the effects of child abuse and neglect. In addition, the amendment is adopted under Public Law No. 96-272, Title I, which authorizes the department to administer foster-care and adoption assistance programs provided for under the Social Security Act, Title IV-E. The amendment is also adopted under the Human Resources Code (HRC), Chapter 40, which describes the services authorized to be provided by the Texas Department of Protective and Regulatory Services; authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC; grants authority to contract to that department; and establishes the department's rulemaking authority. The amendment implements the HRC, Chapter 40, which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC and which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813758 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER R.Cost-finding Methodology for 24-Hour Child-care Facilities 40 TAC sec.sec.700.1803-700.1806 The Texas Department of Protective and Regulatory Services (TDPRS) adopts amendments to sec.sec.700.1803-700.1806. The amendment to sec.700.1803 is adopted with changes to the proposed text as published in the July 10, 1998, issue of the Texas Register (23 TexReg 7181). The amendments to sec.sec.700.1804- 700.1806 are adopted without changes to the proposed text and will not be republished. The justification for the amendments is to create one set of cost principles and guidelines for both residential child care contractors and purchase-of-service contractors. The basis of the principles and guidelines is found in the federal circulars. The amendments will function by providing residential child care contractors one set of rules for cost reporting and expenditures. Purchase-of-service contractors will no longer have differences between federal circulars and TDPRS's rules, unless the state specifically desires to be more restrictive than federal guidelines. No comments were received regarding adoption of the amendments. However, in sec.700.1803, TDPRS has deleted the phrase "general information" from the beginning of the rule. The amendments are adopted under the Human Resources Code (HRC), Chapter 40, which describes the services authorized to be provided by the Texas Department of Protective and Regulatory Services; and authorizes the department to enter into agreements with federal, state, and other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC; and grants authority to contract to that Department. The amendments implement the HRC, Chapter 40, which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC and which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. 700.1803. Definition of Allowable and Unallowable Costs. The Texas Department of Protective and Regulatory Services (TDPRS) defines allowable and unallowable costs in order to identify the reasonable expenses that a prudent and cost effective provider must incur to provide the 24-hour child-care services specified in the provider's contract or agreement with TDPRS. The primary objective of TDPRS's cost-reporting system is to determine a fair and reasonable reimbursement rate for a prudent and cost effective provider. To achieve this objective, TDPRS compiles a rate base that includes only information about allowable costs. TDPRS reimburses its residential child care contractors only for costs which are allowable, reasonable, necessary, and properly allocated to the specific contract. The cost principles, guidelines, and definitions for allowable and unallowable costs for cost-reporting purposes (such as rate setting) and for expenditure purposes are the same. Those guidelines are published in sec.sec.732.240 and 732.242-732.256 of this title (relating to Contract Administration). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813759 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 CHAPTER 710.Protection of Clients and Staff SUBCHAPTER B.Client Abuse and Neglect in Community Mental Health and Mental Retardation Centers 40 TAC sec.sec.710.41-710.50 The Texas Department of Protective and Regulatory Services (TDPRS) adopts the repeal of sec.sec.710.41-710.50, and adopts new sec.sec.710.41-710.55, in its Protection of Clients and Staff chapter. New sec.sec.710.43, 710.46-710.52, and 710.55 are adopted with changes to the proposed text as published in the May 8, 1998, issue of the Texas Register (23 TexReg 4551). The repeal of sec.sec.710.41-710.50 and new sec.sec.710.41, 710.42, 710.44, 710.45, 710.53, and 710.54 are adopted without changes to the proposed text and will not be republished. The justification for the repeals and new sections is to update the rules regarding investigations of abuse, neglect, and exploitation of persons served by community mental health and mental retardation centers. TDPRS is also changing the title of Subchapter B to be Abuse, Neglect, and Exploitation of Persons Served by Community Mental Health and Mental Retardation Centers. The sections will function by providing efficient procedures for the investigation of abuse, neglect, and exploitation in community mental health and mental retardation centers. During the public comment period, TDPRS received comments from the Texas Department of Mental Health and Mental Retardation, the Center for Health Care Services, the Texas Council of Community Mental Health and Mental Retardation Centers, Inc., Advocacy, Incorporated, and several individuals. A summary of the comments and TDPRS's responses follow: Comment concerning sec.710.42, Application: A commenter thought the language in this section applied only to "adult protective services" investigations of alleged abuse and therefore would not apply to other TDPRS investigative departments. Response: This section does apply only to adult protective services investigations and does not apply to other TDPRS investigative departments. Comments concerning sec.710.43, Definitions: 1) A commenter thought the definition of "adult" should address emancipated minors who have the decision making authority of an adult. Response: Although persons who are under 18 years of age and are emancipated minors are addressed in the definition of a "child," for the sake of clarify, the definition of "adult" is changed to read "A person 18 years of age or older, or a person under 18 years of age who is or has been married or who has had the disabilities of minority removed for general purposes." 2) A commenter suggested that the definition of "agent" be expanded to read "an individual who is not an employee of a community center or contractor but working under the auspices of the community center or contractor, such as a consultant, volunteer or student." Response: TDPRS agrees and has amended the language. 3) A commenter thought that the definition of "clinical practice" should be broadened to include licensed professionals other than physicians, dentists, registered nurses, and licensed vocational nurses. Response: TDPRS agrees and has amended the definition to include all licensed professionals. 4) A commenter thought that the definition of "confirmed" should refer to the preponderance of "creditable" evidence. Response: Preponderance of evidence is defined within this section as "the greater weight of evidence, or evidence which is more credible and convincing to the mind." 5) A commenter noted that in many community centers, the term CEO is used to describe the director, rather than executive director. Response: Section 534.010 of the Health and Safety Code refers to the head of a community center as the executive director. 6) Several commenters recommended that a definition of "legally authorized representative (LAR)" be added and references to legal guardian and parent be deleted. Response: "Legally authorized representative" is a broader term and less descriptive than the current language throughout the rules, which refers to the (alleged) victim, guardian, or parent (if the (alleged) victim is a child), as appropriate. 7) A commenter thought that the definition of "person served" excluded some persons who receive services from a community center and who meet the definition of a disabled person as defined in Human Resources Code, Chapter 48. Response: TDPRS agrees and has amended the definition to include such persons. 8) Several commenters recommended changing the term "person served" to "individual served." Response: The term "person served" is used in the TDMHMR companion rule, TAC 404B, and TDPRS believes consistency between the two rules will reduce confusion. 9) A commenter noted that there was inconsistency between the proposed TDPRS rule and the MHMR draft community center abuse rule in the definition of "serious physical injury." The proposed TDPRS rule included a first degree burn as a serious physical injury, while the MHMR draft rule does not. Response: TDPRS acknowledges the inconsistency and has revised the rule to be consistent with the MHMR draft rule. 10) A commenter noted that the definition of "victim" would be clearer if it was clarified to say, "A person served who is reported to have been abused, neglected, or exploited." Response: TDPRS agrees and has revised the rule. Comments concerning sec.710.44, Abuse, Neglect, and Exploitation of an Adult Defined: 1) In sec.710.44(a)(2), several commenters requested that certain language from the definition of neglect in the Texas Family Code be added to the definition of neglect of an adult. The commenters explained that although some individuals with mental retardation are considered adults because of their age in years, they may function at the level of an infant, and therefore require the same protections as a child. Response: The definition of "neglect of a child" parallels the statutory definition in the Texas Family Code, sec.261.001(4), and applies to persons 17 years of age and under. The definition of "neglect" in sec.710.44(a)(2) provides adequate and appropriate protection for adults with mental retardation including those described by the commenters. 2) In sec.710.44(a)(2)(C), a commenter noted that this section, in part, defines neglect as the failure to provide a safe environment for a person served, including the failure to maintain adequate numbers of appropriately trained staff. Later, in sec.710.44 (b)(3) when describing what abuse, neglect, or exploitation does not include, the rule states that "complaints related to the failure to maintain adequate numbers of appropriately trained staff that do not relate to a specific incident or allegation involving a specific person served" ... are referred to the executive director. The commenter recommends that this qualifying language be added to the definition of neglect. Response: The definition of neglect is consistent with the definition found in the federal Protection and Advocacy for Mentally Ill Individuals Amendments Act of 1991. Comments concerning sec.710.46, Responsibilities of Community Centers: 1) In sec.710.46(a), a commenter thought that the language directing employees, agents, and contractors to report allegations not under the jurisdiction of this rule to the appropriate branch of TDPRS or another state agency, was confusing and should be deleted. Response: The TDMHMR companion rule, Title 25, Texas Administrative Code, Chapter 404, Subchapter B, directs local authorities to clearly identify and display for providers the agency with investigatory responsibility in each of the provider's programs. 2) In sec.710.46(a), several commenters note that this section does not address notification of the legal guardian or parent of the person served that an allegation of abuse has been made. Response: The executive director of the community center is required to make such notification as specified in 25 TAC sec.404.47(a). 3) In sec.710.46(b), regarding the preservation of evidence, a commenter recommended that this section be amended to state, "Each community center shall require of its employees, contractors, and agents that any evidence related to an allegation is appropriately preserved and protected in accordance with instructions from TDPRS." Response: TDPRS agrees and has revised the rule. Comments concerning sec.710.47, Adult Protective Services (APS) Investigator: 1) In sec.710.47(b), a commenter recommended that language regarding training be deleted as it adds nothing of value and is not supported in the stated purpose of the rule. Response: TDPRS feels it is appropriate to make a statement in the rule regarding the scope of investigator training. Further, a statement regarding training directly relates to the purpose of this rule which is in part to " ... define abuse, neglect, and exploitation ... and to describe procedures for its report and investigation." 2) In sec.710.47(b), a commenter suggested that PMAB techniques and restraint/seclusion policies be added to the training elements listed in this section. Response: TDPRS disagrees. The purpose of this section is not to list specific training elements but rather to make a general statement as to training requirements for investigators. PMAB and restraint/seclusion policies are routinely covered in Basic Job Skills Training along with many other equally important policies. TDPRS prefers not to include a list of training elements in the rule. 3) In sec.710.47(c)(1), a commenter recommended that language describing notification of the executive director of an allegation be modified to executive director "or designee." Response: Section 710.43 defines executive director as "the head of a community center or a staff member temporarily or permanently appointed to assume the designated responsibilities of the executive director." 4) In sec.710.47(c)(3), a commenter recommended that the department's notification of law enforcement be consistent with statutory requirements, no more, no less. Response: TDPRS agrees. Historically, stakekholders have wanted TDPRS to notify law enforcement of potential abuse at the beginning of an investigation to enhance the law enforcement agency's ability to collect evidence and build a criminal case. This "up-front" notification exceeds the requirements for law enforcement notification found in HRC sec.48.081(g) which states, "If the department's investigation under this section reveals that an elderly or disabled person has been abused by another person in a manner that constitutes a criminal offense under any law, including Section 22.04, Penal Code, a copy of the investigation shall be submitted to the appropriate law enforcement agency." TDPRS has amended the language in this section to be consistent with statutory requirements and yet maintain prompt notification in the likelihood of a criminal case. 5) In sec.710.47(d)(1), a commenter requests that the term "alleged incidents" be changed to "allegations" for consistency in language. Response: TDPRS agrees and has made this change. 6) In sec.710.47(d)(1)(A), a commenter states that "initiation" of an investigation should be defined as a face-to-face interview with the alleged victim, reporter or witness. Response: TDPRS has set forth requirements for face-to-face contact with the alleged victim in the priority system described in sec.710.47(d)(1)(B). TDPRS has received no comments objecting to the priority system. In addition to the requirements set forth in the priority system, an investigator is required to "initiate" the investigation by contacting the alleged victim or an individual with knowledge of the safety and welfare of the alleged victim within 24 hours, regardless of the assigned priority. This language is consistent with the language in 40 TAC, Chapter 710, Subchapter A (relating to Abuse, Neglect, and Exploitation of Persons Served by TDMHMR Facilities and State-Operated Community Services) and sec.48.087 of the Human Resources Code. 7) In sec.710.47(d)(1)(D) and (E), several commenters state that whenever an allegation involves the clinical practice of a licensed professional, the APS investigator should always report the allegation to the appropriate licensing authority, even if the center has an established professional review process. Response: TDPRS agrees and has amended the definition to require that allegations involving clinical practice of a licensed professional always be reported to the appropriate licensing authority. 8) In sec.710.47(d)(1)(D) and (E), one commenter recommended that the language regarding allegations involving the clinical practice of licensed professionals be clarified to explain when TDPRS will and will not conduct an investigation. Response: TDPRS agrees and has added this information. 9) In sec.710.47(d)(3), one commenter stated that this section should read " ...a finding of inconclusive shall be made ..." rather than " ...a finding of inconclusive may be made..." indicating that in appropriate situations such a finding is mandatory rather than optional. Response: TDPRS agrees and has made the change. Comments concerning sec.710.48, Completion of Investigation: 1) In sec.710.48(b)(1), a commenter recommended that the name of the (alleged) perpetrator be added to the list of information identified as being included in an investigative report provided to the executive director of a community center. This information is currently provided in an investigative report, but for consistency between the TDPRS and MHMR rules, it was suggested that this information be added. Response: TDPRS agrees and has added this information. 2) In sec.710.48(b)(1)(G), a commenter recommended that the term "incident" be replaced with "allegation" in regard to classifying incidents in accordance with the Texas Family Code. Response: Allegations are often changed or modified as information is gathered during the investigative process. In such situations, it would be inaccurate to classify an incident based on the initial allegation rather than the incident itself. 3) In sec.710.48(h)(2), a commenter noted that the proposed language implied that anyone who is notified of an allegation has the right to request an appeal of the finding. Of the persons notified of the finding by the executive director, only the (alleged) victim/guardian has the right to appeal the finding. Therefore it would be clearer to say, "The executive director is responsible for notifying the (alleged) victim, guardian, or parent (if the (alleged) victim is a child) of the finding of the investigation and of the method of appealing the finding." Response: TDPRS agrees and has made the change. 4) In sec.710.48(h)(2), a commenter stated that in addition to notifying the (alleged) victim and guardian of the finding of the investigation and method of appealing the finding, the executive director should also notify Advocacy, Incorporated, in instances where Advocacy, Incorporated, is representing an individual who is legally competent but whose factual competency is in question. Response: TDPRS agrees and has modified the language to state that the executive director will notify Advocacy, Incorporated, if the executive director is aware that Advocacy, Incorporated is representing the (alleged) victim. Comments concerning sec.710.49, Community Center Contractors: 1) In sec.710.49(a)(1), a commenter recommended that the language in this section be modified to read, "An allegation against a contractor or an employee or agent of a contractor shall be reported to the Texas Department of Protective and Regulatory Services ..." Response: TDPRS agrees and the definition has been amended to reflect this change. 2) In sec.710.49(a)(4), a commenter recommended that for consistency with 25 TAC, Chapter 417K (relating to Abuse, Neglect, and Exploitation in TDMHMR Facilities) the executive director as well as the contractor CEO should be able to request a review in cases involving contractor employees. Response: TDPRS agrees. Section 710.51(a) has been amended to clarify that both the executive director and contractor CEO may request a review of the finding. 3) In sec.710.49(b), a commenter questioned whether community centers actually contract with Independent School Districts to provide education services to persons served, and suggests that if this is not occurring, that the reference be deleted. Response: TDPRS agrees and has deleted the language. Comments concerning sec.710.50, Functions of the Office of Adult Protective Services: 1) One commenter recommended that this rule be deleted as it adds nothing of value and is not supported in the stated purpose of the rule. Response: TDPRS feels that this language is appropriate since it addresses the development and enforcement of procedures for investigations. 2) One commenter recommended that "State" be added to this title to clarify that the section refers to the state office rather than regional offices of Adult Protective Services. Response: TDPRS agrees and has modified the title to read, "Functions of the State Office Division of Adult Protective Services." 3) One commenter recommended that this section be modified to read "monitor and evaluate investigations for quality assurance ..." Response: TDPRS agrees and the language has been amended. Comments concerning sec.710.51, Request for Review of Finding; Request for Appeal: 1) One commenter noted that this section does not include an appeal process for the alleged perpetrator. Response: TDPRS is aware of this concern and is working to establish a system which will afford community center employees another level of review when in disagreement with the TDPRS decision. 2) One commenter requested that the department amend its process for internal reconsideration of an investigation finding to allow for inclusion of mental health and mental retardation service experts from the Texas Department of MHMR. Response: TDPRS seeks guidance from the Texas Department of MHMR when appropriate. Ultimately, a decision as to whether an incident meets the criteria for abuse or neglect is based on the definitions found in sec.sec.710.44 and 710.45. 3) One commenter suggested that the department verify with field representatives that the request for review form adequately records the information on which the center has based its rejection of the initial finding or by which the department will consider an alternative conclusion. Response: TDPRS's Request for Review of Finding form has been designed to elicit the information needed to process a request for a review. 4) One commenter noted that the executive director is allowed 14 days to request a review of a finding, while the reporter, (alleged) victim, and legal guardian are allowed 30 days to request an appeal. The commenter recommended that for consistency, the time allowed for requesting a review or an appeal of the finding be the same. Response: TDPRS agrees and has amended sec.710.51(b) to allow 14 rather than 30 calendar days to request an appeal. Section 710.51(a) and (b) have been further amended to allow additional time for requesting a review or appeal beyond 14 calendar days for extenuating circumstances. 5) In sec.710.51(a)(1) and (2), one commenter recommended that the requirement for the executive director to send a copy of the investigative report when requesting a review of the finding is not necessary. Response: A request for review is to be completed within 14 calendar days after receipt of the request. When a copy of the investigative report accompanies the request for review, the review process can begin immediately. Otherwise, the reviewer has to wait for the regional TDPRS office where the case was worked to copy and mail the it to Austin which may take several days. 6) In sec.710.51(b), a commenter recommended that the language in this section be changed to state, "The reporter and the (alleged) victim, legal guardian, or parent (if the (alleged) victim is a child) may request an appeal of the finding of an investigation conducted by APS ..." Response: TDPRS agrees and has amended the language to reflect this. 7) In sec.710.51(b), a commenter requested that Advocacy, Incorporated be added to those individuals who may request an appeal of a finding as there may be instances when an individual who is legally competent but considered factually incompetent may be represented by Advocacy, Incorporated. Response: TDPRS agrees to add Advocacy, Incorporated, to those individuals who may request an appeal of a finding in instances when a person served is legally competent but considered factually incompetent and is represented by Advocacy, Incorporated. 8) In sec.710.51(b)(4), one commenter requested that the reporter and Advocacy, Incorporated, be added to those individuals who are notified of the appeal decision. Response: TDPRS agrees to add the reporter to those individuals who are notified of an appeal decision, and to add Advocacy, Incorporated, if Advocacy, Incorporated, is representing the (alleged) victim and TDPRS knows that Advocacy, Incorporated, is representing the (alleged) victim. Comments concerning sec.710.52, Confidentiality of Investigative Process and Report: 1) In sec.710.52(a), one commenter recommended that the cited references from the Human Resources Code be described in the text of the rule. Response: TDPRS avoids descriptions of statutory references in agency rules to avoid having to amend the rules following statutory changes. 2) In sec.710.52(c), several commenters requested that language be added that requires the executive director to notify the (alleged) victim and guardian of the outcome of an investigation. Response: Section 710.48(h)(2) directs the executive director to notify the (alleged) victim and guardian of the finding of an investigation. 3) In sec.710.52(c), one commenter expressed concern that the executive director is authorized to release a de-identified copy of an investigation to an alleged perpetrator, citing possible retaliatory action against witnesses as the reason. The commenter requested that release of such information should only occur when a perpetrator is initiating grievance proceedings. Response: The (alleged) perpetrator is legally entitled to a copy of the investigative report. 4) In sec.710.52(c), one commenter requested that language be added to clarify that the executive director may release a copy of the investigative report to Advocacy, Incorporated, if Advocacy, Incorporated, is representing the (alleged) victim. Response: The language has been amended to reflect this change. Comments concerning sec.710.55, Distribution: 1) One commenter noted that the Texas Department of Mental Health and Mental Retardation should be added to the distribution list of agencies receiving a copy of this subchapter. Response: TDPRS agrees and has made the change. 2) One commenter noted that the executive director should not be responsible for disseminating copies of TDPRS's rules to advocacy organizations. Response: TDPRS agrees. Advocacy organizations have been deleted from the list in this subsection. TDPRS will disseminate copies of its rules to advocacy organizations. In addition to changes made as a result of comment, in sec.710.48(b)(4), TDPRS has changed the acronym "TDPRS" to "TDMHMR." The repeals are adopted under the Human Resources Code, Title 2, Chapter 48, which provides the department with the right to investigate reports of abuse, exploitation, or neglect of an elderly or disabled person. The repeals implement sec.48.081(c) of the Human Resources Code, which gives TDPRS the authority to investigate in community mental health and mental retardation centers. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813762 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 12, 1998 Proposal publication date: May 8, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER B.Abuse, Neglect, and Exploitation of Persons Served by Community Mental Health and Mental Retardation Centers 40 TAC sec.sec.710.41-710.55 The new sections are adopted under the Human Resources Code, Title 2, Chapter 48, which provides the department with the right to investigate reports of abuse, exploitation, or neglect of an elderly or disabled person. The new sections implement sec.48.081(c) of the Human Resources Code, which gives TDPRS the authority to investigate in community mental health and mental retardation centers. sec.710.43. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: (1) Adult - A person 18 years of age or older, or a person under 18 years of age who is or has been married or who has had the disabilities of minority removed for general purposes. (2) Adult Protective Services (APS) investigator - An employee of the Texas Department of Protective and Regulatory Services with expertise and demonstrated competence in conducting investigations. (3) Agent - An individual who is not an employee of a community center or contractor, but who is working under the auspices of the community center or contractor, such as a consultant, volunteer, or student. (4) Allegation - A report by a person believing or having knowledge that a person served has been or is in a state of abuse, exploitation, or neglect as defined in this subchapter. (5) Chief executive officer (CEO) - The head of any organization or entity associated by contract in a working alliance with a community center to provide community-based services. (6) Child - A person under 18 years of age who is not and has not been married and who has not had the disabilities of minority removed for general purposes. (7) Clinical practice - Relates to issues of potentially or allegedly unsafe professional practice. These include acts or omissions of the licensed professional which result from a lack of competence in his/her profession, impaired status, or failure to provide adequate professional care to a person served. (8) Community center - A community MHMR center established under the Texas Health and Safety Code, Title 7, Chapter 534, Subchapter A. (9) Confirmed - Term used to describe an allegation which is supported by the preponderance of evidence. (10) Contractor - Any organization or entity associated by contract in a working alliance with a community center to provide services to a person served. (11) Department - The Texas Department of Protective and Regulatory Services. (12) Employee - Any person employed by a community center or contractor for a specific job position or to be part of a "pool" for specific job positions; expected to work on a continuous basis, seasonally, or to perform work of a transitory nature or foreseeable end and meet certain minimum performance and time-on-job expectations; and paid from a budgeted position in the salary schedule and through a payroll process. A person receiving payment as a "vocational trainee" in a properly authorized vocational training program is not considered an employee. (13) Executive director - The head of a community center or a staff member temporarily or permanently appointed to assume the designated responsibilities of the executive director. (14) Incitement - To spur to action or instigate into activity; implies responsibility for initiating the actions of another. (15) Inconclusive - Term used to describe an allegation leading to no conclusion or definite result due to lack of witnesses or other relevant evidence. (16) Mental health service provider - Pursuant to sec.81.001 of the Texas Civil Practices and Remedies Code, an individual, licensed or unlicensed, who performs or purports to perform mental health services, including a: (A) licensed social worker as defined by sec.50.001, Human Resources Code; (B) chemical dependency counselor as defined by sec.1, Chapter 635, Acts of the 72nd Legislature, Regular Session, 1991 (Article 4512o, Vernon's Texas Civil Statutes); (C) licensed professional counselor as defined by sec.2, Licensed Professional Counselor Act (Article 4512g, Vernon's Texas Civil Statutes); (D) licensed marriage and family therapist as defined by sec.2, Licensed Marriage and Family Therapist Act (Article 4512c-1. Vernon's Texas Civil Statutes); (E) member of the clergy; (F) physician who is "practicing medicine" as defined by sec.1.03, Medical Practice Act (Article 4495b, Vernon's Texas Civil Statutes); (G) psychologist offering "psychological services" as defined by sec.2, Psychologists' Certification and Licensing Act (Article 4512c. Vernon's Texas Civil Statutes); or (H) registered nurse or licensed vocational nurse as defined by law. (17) Non-serious physical injury - Any injury determined not to be serious by the appropriate medical personnel who examined the person served. Examples of non-serious physical injuries include, but are not limited to, the following: superficial laceration, contusion, or abrasion. (18) Perpetrator - The person who has committed an act of abuse, neglect, or exploitation. (19) Perpetrator unknown - Term used to describe instances in which abuse or neglect is evident but positive identification of the responsible person(s) cannot be made, and in which self-injury has been eliminated as the cause. (20) Person served - Any person registered or assigned in the Client Assignment and Registration (CARE) system or who is otherwise served by the center and is disabled as defined in Chapter 48, Human Resources Code. (21) Preponderance of evidence - The greater weight of evidence, or evidence which is more credible and convincing to the mind. (22) Prevention and Management of Aggressive Behavior (PMAB) - The Texas Department of Mental Health and Mental Retardation's proprietary risk management program which uses the least intrusive, most effective options to reduce the risk of injury for persons served and for staff from acts or potential acts of aggression. (23) Reporter - The person filing a report of alleged abuse, neglect, or exploitation. (24) Serious physical injury - Any injury determined to be serious by the appropriate medical personnel who examined the person served. Examples of serious physical injuries include, but are not limited to, the following: dislocation of any joint; internal injury; nonsuperficial contusion; concussion; second or third degree burn; or any laceration requiring sutures. (25) Sexual abuse - Any sexual activity involving an employee, agent, or contractor and a person served. Sexual activity includes but is not limited to: (A) kissing with sexual intent; (B) hugging with sexual intent; (C) stroking with sexual intent; (D) fondling with sexual intent; (E) oral sex or sexual intercourse; (F) request or suggestion or encouragement for the performance of sex; (G) sexual exploitation as defined in this section; and (H) sexual assault as defined in sec.22.011 of the Texas Penal Code. (26) Sexual exploitation - A coercive, manipulative, or otherwise exploitative pattern, practice, or scheme of conduct, which may include sexual contact, that can be reasonably construed as being for the purposes of sexual arousal or gratification or sexual abuse of any person. The term does not include obtaining information about a patient's sexual history within standard accepted practice. (27) Unconfirmed - Term used to describe an allegation in which a preponderance of evidence exists to prove that abuse, neglect, or exploitation did not occur. (28) Unfounded - Term used to describe an allegation that is spurious or patently without factual basis. (29) Victim - A person served who is reported to have been abused, neglected, or exploited. 710.46. Responsibilities of Community Centers. sec.710.46. Responsibilities of Community Centers. (a) Each community center shall require that its employees, agents, and contractors who suspect or have knowledge of abuse, neglect, or exploitation of a person served make a verbal report to the Texas Department of Protective and Regulatory Services (TDPRS) immediately, if possible, but in no case more than one hour after suspicion or after learning of the incident, by calling 1-800- 647-7418, unless jurisdiction to investigate rests with another investigative branch of TDPRS or with another state agency. (b) Each community center shall require its employees, contractors, and agents to appropriately preserve and protect any evidence related to an allegation in accordance with instructions from TDPRS. sec.710.47. Adult Protective Services (APS) Investigator. (a) APS investigator. An APS investigator will conduct all investigations of abuse, neglect, and exploitation, unless another investigative branch of the department or another state agency has responsibility for the investigation. (b) Training. APS investigators will receive appropriate training in issues related to the efficient and effective investigation of allegations of abuse, neglect, and exploitation. Investigators will be oriented to issues pertaining to individuals with disabilities and how to communicate effectively with them in the community. (c) Notifications. Upon receiving an allegation, the person receiving the intake or the APS investigator will: (1) immediately notify the executive director of the allegation without revealing the identity of the reporter. Pursuant to Chapter 81 of the Texas Civil Practices and Remedies Code, if the allegation involves sexual exploitation of a person served by a mental health services provider, the name of the reporter shall be released to the executive director; (2) immediately notify the executive director as to whether the allegation will be reported to a law enforcement agency; (3) immediately, if possible, but in no case more than one hour later, report allegations involving serious physical injury, sexual abuse, or death of an adult person served to the appropriate local or state law enforcement agency; and (4) immediately, if possible, but in no case more than one hour later, report all allegations of abuse or neglect of a child to the appropriate local or state law enforcement agency. (d) Responsibilities. (1) The APS investigator shall fully investigate allegations of abuse, neglect, or exploitation as follows. (A) Investigations shall be initiated within 24 hours of receipt of a report by the Texas Department of Protective and Regulatory Services (TDPRS). Initiation is defined as an interview with the alleged victim or an individual who has current knowledge of the safety and welfare of the alleged victim. (B) Investigations shall be conducted in accordance with the following priority system: (i) Priority I reports are those in which the alleged incident occurred seven calendar days or less prior to the date the report was received by TDPRS. Face- to-face contact with the alleged victim is required within 24 hours of receipt of the report by TDPRS. (ii) Priority II reports are those in which the alleged incident occurred more than seven but less than 90 calendar days prior to the date the report was received by TDPRS. Face-to- face contact with the alleged victim is required within two calendar days of receipt of the report by TDPRS. (iii) Priority III reports are those in which the alleged incident occurred 90 calendar days or more prior to the date of the report to TDPRS. Face-to-face contact with the alleged victim is required within five calendar days of receipt of the report by TDPRS. (C) Allegations by an anonymous reporter will be accepted and investigated following the same procedures that are used when the reporter's identity is known. (D) If the APS investigator determines that the allegation involves the clinical practice of a licensed professional, then the APS investigator shall refer the professional's action to the executive director for professional review, if the center provides one, and to the appropriate licensing authority. (E) The APS investigator will pursue an investigation if the allegation involves the clinical practice of a licensed professional other than a physician, dentist, registered nurse, or licensed vocational nurse, or if the allegation is against a licensed professional but does not involve clinical practice. (2) If at any point during the course of the investigation it becomes apparent (via written witness statements and other evidence gathered) that the allegation is spurious or patently without factual basis, the investigation may be closed as unfounded. The reason for this determination, based on specific evidence, shall be included in the report. (3) If there is not a preponderance of evidence to indicate that an allegation should or should not be confirmed, due to lack of witnesses or other evidence, a finding of inconclusive shall be made. (4) A designation of perpetrator unknown may be used: (A) at the time of intake to indicate that the identity of an alleged perpetrator is unknown; and (B) at the conclusion of an investigation to describe instances in which positive identification of the responsible person(s) cannot be made, and in which self-injury has been eliminated as the cause. sec.710.48. Completion of Investigation. (a) The adult protective services (APS) investigator shall complete investigations within established timeframes as follows: (1) Priority I and II investigations in residential programs shall be completed within 14 calendar days of receipt of the report by the Texas Department of Protective and Regulatory Services (TDPRS). If the 14th day falls on a weekend or holiday, the report shall be completed by the next business day. (2) Priority I and II investigations in non-residential programs shall be completed within 21 calendar days of receipt of the report by TDPRS. If the 21st day falls on a weekend or holiday, the report shall be completed by the next business day. (3) Priority III investigations in both residential and non-residential programs shall be completed within 21 calendar days of receipt of the report by TDPRS. If the 21st day falls on a weekend or holiday, the report shall be completed by the next business day. (b) Upon completion of an investigation, the APS investigator shall submit to the executive director, a copy of: (1) the investigative report, with any information that would reveal the identity of the reporter concealed, including: (A) a statement of the allegation(s); (B) a summary of the investigation; (C) an analysis of the evidence; (D) the investigator's finding that the allegation is confirmed, unconfirmed, inconclusive, or unfounded; (E) recommendations resulting from the investigation; (F) an opinion as to how the allegation(s) might be classified in accordance with Title 25, Part II, TAC, Chapter 404, Subchapter B, Exhibit B; (G) a determination as to how the incident should be classified in accordance with sec.261.001. of the Texas Family Code, if the incident involves a child; and (H) the name of the (alleged) perpetrator, if known; (2) photographs relevant to the investigation, including photographs depicting the existence of injuries, or the non-existence of injuries, when appropriate; (3) all witness statements and supporting documents; and (4) a TDMHMR "Client Abuse/Neglect Report" (AN-1-A), reflecting the finding of the investigation. (c) Pursuant to Chapter 81 of the Texas Civil Practices and Remedies Code, if the incident involves sexual exploitation of a person served by a mental health services provider, the name of the reporter shall not be concealed in the report provided to the executive director. (d) If additional time is required to complete the investigation, the APS investigator may request an extension by submitting a TDPRS Extension Request form to the regional APS program administrator. An extension from one to 14 days may be granted depending on the needs of the case. The executive director shall be notified of all extensions. (e) If the investigation reveals that a person served has been abused, neglected, or exploited in a manner that constitutes a criminal offense under any law, including sec.22.04, Penal Code, the APS investigator shall submit a copy of the investigation to the appropriate law enforcement agency. (f) If an allegation is confirmed and the perpetrator is a physician, dentist, registered nurse, or licensed vocational nurse, the APS investigator shall forward a copy of the completed investigative report to the State Office of Adult Protective Services. Such reports will then be forwarded to the licensing authority for the discipline under review, as required by law. (g) The investigator will notify the reporter in writing of the outcome of the investigation and the method of appealing the outcome of the investigation. (h) The executive director is responsible for notifying: (1) the (alleged) victim, guardian, or parent (if the (alleged) victim is a child), of the finding of the investigation and of the method of appealing the finding; (2) Advocacy, Incorporated, of the finding of the investigation and of the method of appealing the finding if the executive director is aware that Advocacy, Incorporated, is representing the (alleged) victim; and (3) the (alleged) perpetrator of the finding of the investigation. (i) Within 14 calendar days of receipt of the investigative report or the final finding, the executive director is responsible for forwarding a completed Client Abuse and Neglect Report (AN-1-A) form to the APS investigator. (j) Upon request, the APS investigator will attend and participate in a community center grievance hearing related to an investigation the APS investigator conducted. sec.710.49. Community Center Contractors. For purposes of reporting and investigating abuse, neglect, and exploitation by contractors, the procedures outlined in this subchapter shall be followed. (1) An allegation against a contractor or an employee or agent of a contractor shall be reported to the Texas Department of Protective and Regulatory Services (TDPRS) in accordance with sec.710.46 of this title (relating to Responsibilities of Community Centers). (2) Upon notification of an allegation, the adult protective services (APS) investigator shall immediately notify the contractor chief executive officer (CEO) and the executive director of the community center. If the contractor CEO is the alleged perpetrator, the APS investigator only notifies the executive director of the community center. (3) Upon completion of the investigation the APS investigator shall submit a copy of the investigative report and supporting documents to the contractor CEO and the executive director of the community center. If the contractor CEO is the alleged perpetrator, the APS investigator only submits a copy of the report to the executive director of the community center. sec.710.50. Functions of the State Office Division of Adult Protective Services. The functions of the State Office Division of Adult Protective Services related to community center investigations are to: (1) develop policy related to investigations in community centers; (2) monitor and evaluate investigations for quality assurance and compliance with adult protective services (APS) program standards; (3) provide consultation and technical assistance to APS regional staff; and (4) coordinate with the Texas Department of Protective and Regulatory Services' (TDPRS's) professional development division in the development of training curricula. sec.710.51.Request for Review of Finding; Request for Appeal. (a) If the executive director or contractor CEO believes the methodology used in conducting an investigation was flawed or disagrees with the finding of the investigation, the executive director or contractor CEO may request in writing a review of the case by filing a Texas Department of Protective and Regulatory Services (TDPRS) Request for Review of Finding form within 14 calendar days after receiving the report from TDPRS. TDPRS may accept a request for review after 14 calendar days for reasons determined by TDPRS to be appropriate, e.g., a grievance proceeding or due process hearing in which additional information crucial to the investigation is revealed. A request for review will not be accepted for review if it is postmarked more than 30 days from the date the report was received by the community center or contractor. (1) A request related to methodology is forwarded by the executive director or contractor CEO, along with a copy of the investigative report, to the regional adult protective services (APS) program administrator. A review will be completed within 14 calendar days. The regional APS program administrator will notify the executive director and the contractor CEO, if appropriate, in writing of the results of the review. (2) A request related to the finding of an investigation, or to a methodological concern that was unable to be resolved at the regional level, is forwarded by the executive director or contractor CEO, along with a copy of the investigative report, to the Director of Adult Protective Services, Texas Department of Protective and Regulatory Services, P.O. Box 149030, E-561, Austin, Texas, 78714-9030. The review will be completed within 14 calendar days. (3) If the contractor CEO is the alleged perpetrator, only the executive director of the community center may request a review of the finding. (b) The reporter and the (alleged) victim, legal guardian, or parent (if the alleged victim is a child) may request an appeal of the finding of an investigation conducted by APS within 14 calendar days of notification of the finding. Advocacy, Incorporated, may request an appeal of a finding in instances in which a person served who is legally competent but considered factually incompetent is represented by Advocacy, Incorporated. TDPRS may accept a request for appeal after 14 calendar days for reasons determined by TDPRS to be appropriate, e.g., difficulty accessing a copy of the investigative report. A request for appeal will not be accepted for review if it is postmarked more than 30 days from the date the person requesting the appeal was notified of the finding. An appeal may be requested in writing to the Director of Adult Protective Services, State Office, Mail Code E-561, P.O. Box 149030, Austin, Texas, 78714-9030, or by calling 1-888-778-4766. (1) The appeal shall be completed within 30 calendar days from the date of the request unless a review of the finding has been requested by the executive director or contractor chief executive officer (CEO). The appeal process will be postponed until the request for review has been completed, at which point it will be completed within 30 calendar days. (2) The appeal process will include an analysis of the investigative report and all supporting documents and records. (3) The reviewer makes a decision to sustain, alter, or reverse the original finding of the APS investigator based on the same criteria used by APS investigators to conduct investigations and reach conclusions, or to re-open the investigation. (4) Within 30 calendar days after the appeal process is completed, the reviewer shall document the appeal decision and notify in writing: (A) the reporter; (B) the (alleged) victim, guardian, or parent (if the (alleged) victim is a child); and (C) Advocacy, Incorporated, if TDPRS is aware that Advocacy, Incorporated, is representing the (alleged) victim. (5) A copy of the appeal decision shall be sent to the APS investigator to be filed with the original investigative report. (6) A copy of the appeal decision shall be sent to the executive director and/or the contractor CEO, as appropriate. (7) If the person who requested an appeal of the finding is not satisfied with the appeal decision, or wishes to file a complaint of a different nature, the person may contact the Ombudsman Office of the Texas Department of Protective and Regulatory Services by calling 1- 800-720-7777, or by writing to Ombudsman Office, Mail Code Y-946, P.O. Box 149030, Austin, Texas, 78714-9030. sec.710.52. Confidentiality of Investigative Process and Report. (a) The reports, records, and working papers used by or developed in the investigative process and the resulting final report regarding abuse, neglect, and exploitation are confidential and may be disclosed only as provided in sec.sec.40.005, 48.081, and 48.101 of the Human Resources Code, sec.261.201 of the Texas Family Code, and other rules of this agency in the Texas Administrative Code. (b) Pursuant to Chapter 81 of the Texas Civil Practices and Remedies Code, if the incident involves sexual exploitation of a person served by a mental health services provider, a copy of the investigative report and all supporting documents, in which the identity of the reporter has not been concealed, shall be released to the executive director. (c) Upon request, the executive director may release a copy of the investigative report, with any information that might reveal the identity of the reporter and other persons served concealed, to the: (1) (alleged) victim served, legal guardian, or parent (if the (alleged) victim is a child); (2) (alleged) perpetrator; and (3) Advocacy, Incorporated, if representing the (alleged) victim. sec.710.55. Distribution. (a) This subchapter shall be distributed to: (1) members of the Texas Board of Protective and Regulatory Services; (2) the Texas Department of Protective and Regulatory Services (TDPRS) executive, management, and program staff; (3) chairpersons of boards and executive directors of community centers; (4) interested advocacy organizations; (5) the Texas Board of Medical Examiners; (6) the Texas Board of Nurse Examiners; (7) the Texas Board of Licensed Vocational Nurse Examiners; and (8) the Texas Department of Mental Health and Mental Retardation. (b) The executive director of each community center shall be responsible for disseminating copies of this subchapter to: (1) appropriate staff; (2) agents; (3) contractors; and (4) any person served, employee, or other person desiring a copy. (c) The executive director of the community center shall be responsible for ensuring that copies of this subchapter are prominently displayed in center programs. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813763 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 12, 1998 Proposal publication date: May 8, 1998 For further information, please call: (512) 438-3765 CHAPTER 725.General Licensing Procedures SUBCHAPTER A.Definitions 40 TAC sec.725.1001 The Texas Department of Protective and Regulatory Services (TDPRS) adopts amendments to sec.sec.725.1001, 725.2006, 725.2036, 725.2046; and adopts new sec.sec.725.1808 and 725.1809, without changes to the proposed text as published in the July 10, 1998, issue of the Texas Register (23 TexReg 7185). The justification for the amendments to sec.sec.725.1001 and 725.2046 is to define primary caretaker and to clarify that the registered caregiver must be the primary caretaker in the home as stipulated in the Human Resources Code, sec.42.002(9). The justification for new sec.725.1808 is to require that the probation notice be posted in the facility or family home so that parents and others can view it. The justification for the amendment to sec.725.2006 and new sec.725.1809 is to show the correct address for submitting requests for appeals of a denied application and to establish that an applicant must wait a period of one year to reapply if three previous applications have been received by licensing staff and returned as incomplete within one year. The justification for the amendment to sec.725.2036 is to ensure that Licensing Division notices of inspection results are posted in the registered family home for parents to see. The sections will function by ensuring that parents are allowed to see notices of noncompliances and probation and for applicants to plan appropriately before caring for children. During the public comment period, TDPRS received comments from two providers. Both commenters were concerned about the language used in defining primary caretaker. They thought that the definition proposed could be interpreted to mean that the caretaker could never leave the home or have a substitute. The two commenters identified necessary absences such as a doctor's appointment or maternity care when one provider had her grandmother help out with the child care. When it was explained that this was not the interpretation, both commenters were satisfied. TDPRS is not revising the language of the rule because TDPRS considers the current language sufficiently clear for providers. Any questions raised can be interpreted by licensing staff during the application phase or monitoring phase of regulation. TDPRS also received comments from the Advisory Committee on Child Care Administrators and Facilities supporting the proposal. The amendment is adopted under the Human Resources Code, Title 2, Chapter 42, which authorizes the department to administer general child-placing and child care licensing programs. The amendment implements the Human Resources Code, sec.sec.42.001-42.077. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813764 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER S.Administrative Procedures 40 TAC sec.725.1808, sec.725.1809 The new sections are adopted under the Human Resources Code, Title 2, Chapter 42, which authorizes the department to administer general child-placing and child care licensing programs. The new sections implement the Human Resources Code, sec.sec.42.001-42.077. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813765 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER U.Day Care Licensing Procedures 40 TAC sec.sec.725.2006, 725.2036, 725.2046 The amendments are adopted under the Human Resources Code, Title 2, Chapter 42, which authorizes the department to administer general child-placing and child care licensing programs. The amendments implement the Human Resources Code, sec.sec.42.001-42.077. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813766 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 CHAPTER 732.Contracted Services SUBCHAPTER L.Contract Administration 40 TAC sec.sec.732.240, 732.242-732.252, 732.254-732.256 The Texas Department of Protective and Regulatory Services (TDPRS) adopts amendments to sec.sec.732.240, 732.242-732.252, and 732.254-732.256; and adopts the repeal of sec.732.241, in its Contracted Services chapter. The amendments to sec.sec.732.240 and 732.243 are adopted with changes to the proposed text as published in the July 10, 1998, issue of the Texas Register (23 TexReg 7189). The amendments to sec.sec.732.242, 732.244-732.252, and 732.254- 732.256, and the repeal of sec.732.241 are adopted without changes to the proposed text and will not be republished. The justification for the amendments and repeal is to create one set of cost principles and guidelines for both residential child care contractors and purchase-of-service contractors. The basis of the principles and guidelines is found in the federal circulars. The amendments and repeal will function by providing residential child care contractors with one set of rules for cost reporting and expenditures. Purchase- of-service contractors will no longer have differences between federal circulars and TDPRS's rules, unless the state specifically desires to be more restrictive than federal guidelines. No comments were received regarding adoption of the sections. In sec.732.240(i)(5), TDPRS has changed the word "completed" to "completely" for clarification. In sec.732.243, TDPRS has deleted the parenthesis after the word "costs" for clarification. The amendments are adopted under the Human Resources Code (HRC), Chapter 40, which describes the services authorized to be provided by the Texas Department of Protective and Regulatory Services; and authorizes the department to enter into agreements with federal, state, and other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC; and grants authority to contract to that Department. The amendments implement the HRC, Chapter 40, which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC and which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. sec.732.240. General Principles of Allowable and Unallowable Costs. (a) The Texas Department of Protective and Regulatory Services (TDPRS) reimburses its contractors only for costs (both direct and indirect) which are allowable, reasonable, necessary, and properly allocated to the specific contract. The cost guidelines, principles, and definitions for allowable and unallowable costs (both direct and indirect) for purposes of preparing budgets, for expenditure purposes, and for cost-reporting purposes are the same. Those guidelines are published in federal and state regulations. Contractors receiving Title IV-E funding are required to be in compliance with 45 Code of Federal Regulations (CFR) Part 74 and 48 CFR Part 31 regarding the use and expenditure of Title IV-E funds. Contractors receiving Title IV-B funding are required to be in compliance with 45 CFR Part 92 regarding the use and expenditure of Title IV- B funds. All purchased client services contractors (both for-profits and nonprofits) are required to be in compliance with Office of Management and Budget (OMB) Circular A-110 (Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations) and this section and sec.sec.732.242-732.256 of this title (relating to Contract Administration) regarding the guidelines for use and expenditure of funds received from TDPRS, which consist of federal and/or state revenues. If the contractor is a governmental entity, the contractor shall remain in compliance with OMB Circular A-87 (Cost Principles for State and Local Governments). If the contractor is either a for-profit entity or a nonprofit entity, the contractor is required to be in compliance with OMB Circular A-122 (Cost Principles for Nonprofit Organizations). In the event of any conflict or contradiction between or among the regulations referenced in this subsection, the regulations shall control in the following order of precedence: (1) federal regulations - for Title IV-E funding, 45 CFR Part 74 and 48 CFR Part 81; for Title IV-B funding, 45 CFR Part 92; (2) federal OMB circulars - OMB Circular A-110 and either OMB Circular A-87 or OMB Circular A-122, as applicable; (3) state regulations - sec.sec.732.240 of this title (relating to General Principles of Allowable and Unallowable Costs) and sec.sec.732.242-732.256 of this title (relating to Contract Administration); and (4) any other applicable departmental regulations. (b) Only those items that represent an actual cash outlay, an accrued expense paid within 90 days of incurrence, or the compensation for the use of buildings, other capital improvements, and equipment on hand through a use allowance or depreciation are allowable. The value of donated goods or services (in-kind) are not allowable (i.e., unallowable). However, depreciation or a use allowance on a donated building, donated capital improvements, or donated equipment subject to ownership requirements and/or donor-imposed conditions is allowable. Contractors shall not use revenues from TDPRS to finance activities other than those activities specifically allowable under their contract with TDPRS. Unallowable uses of contract revenues from TDPRS include, but are not limited to, interfund loans/transfers, interdepartmental loans/transfers, intercompany loans/transfers, and employee loans not considered salary advances. (c) Costs budgeted, expended, used, and/or reported by a contractor and/or paid by TDPRS must be consistent with generally accepted accounting principles (GAAP), which are those principles approved by the American Institute of Certified Public Accountants (AICPA). Internal Revenue Services (IRS) laws and regulations do not necessarily apply in the preparation of budgets, the expenditure and/or use of funds received from the department, and/or the reporting of costs to TDPRS. In cases where there are differences between TDPRS's rules, GAAP, IRS, or other authorities, TDPRS's rules take precedence. (d) The contractor's accounting system must include an accurate and consistent method for gathering statistical information that properly relates the costs incurred to the units of service rendered. (e) The contractor is responsible for designing and implementing fiscal policies and ensuring that financial data are collected, recorded, and analyzed as part of the delivery of service under a contract with TDPRS. (f) Costs incurred under less-than-arms-length (related-party) transactions are allowable only up to the cost to the related party (see OMB Circulars A-87 and A-122). However, the cost must not exceed the price of comparable services, equipment, facilities, or supplies that could be purchased or leased elsewhere. The purpose of this principle is twofold: to avoid the payment of a profit factor to the contractor through the related organization (whether related by common ownership or control), and to avoid payment of artificially-inflated costs which may be generated from less-than-arms-length bargaining. The related organization's costs include all reasonable costs, direct and indirect, incurred in the furnishing of services, equipment, facilities, and supplies to the contractor. The intent is to treat the costs incurred by the related organization as if they were incurred by the contractor itself. An exception is provided to the general rule applicable to related organizations and applies if the contractor demonstrates by convincing evidence to the satisfaction of TDPRS that certain criteria have been met. Those criteria are: (1) The related organization is a bona fide separate corporation and not merely an operating division of the contractor's organization. (2) A majority of the related organization's business activity of the type carried on with the contractor is transacted with other organizations not related to the contractor or the related organization by common ownership or control and there is an open, competitive market for the type of services, equipment, facilities, or supplies furnished by the related organization. In determining whether the business activities are of a similar type, it is important also to consider the scope of the business activity. The requirement that there be an open, competitive market is intended to assure that the item supplied has a readily discernible price that is established through arms-length bargaining by well-informed buyers and sellers. (3) The charge to the contractor is in line with the charge of such services, equipment, facilities, or supplies in the open, competitive market and no more than the charge made under comparable circumstances to others by the related organization for such services, equipment, facilities, or supplies. (g) In determining whether a contractor is related to a supplying organization, the tests of common ownership and control are to be supplied separately. Related to a contractor means that the contractor to a significant extent is associated or affiliated with, has control of, or is controlled by the organization furnishing the services, equipment, facilities, or supplies. Common ownership exists if an individual or individuals posses any ownership or equity in the contractor and the supplying organization. Control exists if an individual or an organization has the power, directly or indirectly, to significantly influence or direct the actions or policies of an organization or institution. If the elements of common ownership or control are not present in both organizations (i.e., the contractor and the supplying organization), then the organizations are deemed not to be related to each other. The existence of an immediate family relationship will create an irrebuttable presumption of relatedness through control or attribution of ownership or equity interests where the significance tests are met. The following persons are considered immediate family: husband and wife; natural parent, child, and sibling; adopted child and adoption parent; stepparent, stepchild, stepsister, and stepbrother; father-in-law, mother-in- law, sister-in- law, brother-in-law, son-in-law, and daughter-in-law; grandparent and grandchild; uncles and aunts by blood or marriage; nephews and nieces by blood or marriage; and first cousins by blood or marriage. (1) A determination as to whether an individual (or individuals) or organization possesses ownership or equity in the contractor and the supplying organization, so as to consider the organizations related by common ownership, will be made on the basis of the facts and circumstances in each case. This rule applies whether the contractor or supplying organization is a sole proprietorship, partnership, corporation, trust or estate, or any other form of business organization, proprietary or nonprofit. In the case of a nonprofit organization, ownership or equity interest will be determined by reference to the interest in the assets of the organization, for example, a reversionary interest provided for in the articles of incorporation of a nonprofit organization. (2) The term control includes any kind of control, whether or not it is legally enforceable and however it is exercisable or exercised. It is the reality of the control which is decisive, not its form or the mode of its exercise. The facts and circumstances in each case must be examined to ascertain whether legal or effective control exists. Since a determination made in a specific case represents a conclusion based on the entire body of facts and circumstances, such determination should not be used as a precedent in other cases unless the facts and circumstances are substantially the same. Organizations, whether proprietary or nonprofit, are considered to be related through control to their directors in common. (h) Disclosure of all less-than-arms-length (related-party) transactions is required for all costs budgeted, expended, used, and/or reported by the contractor, including related-party transactions occurring at any level in the contractor's organization. The contractor must make available, upon request, adequate documentation to support the costs incurred by the related party. Such documentation could include an identification of the related organization's total costs, the basis of allocation of direct and indirect costs to the contractor, and other business entities served. If a contractor fails to provide adequate documentation to substantiate the cost to the related organization, then the cost is unallowable. (i) Direct costing must be used whenever reasonably possible. Direct costing means that costs, direct or indirect, incurred for the benefit of, or directly attributable to, a specific business component must be directly charged to that particular business component. For direct costs as defined in OMB Circulars A- 122 and A-87, direct costing is required. For indirect costs as defined in OMB Circulars A-122 and A-87, it is necessary to allocate these costs either directly or as a pool of costs across those business components sharing in the benefits of those costs. If cost allocation is necessary, contractors must use reasonable methods of allocation and must be consistent in their use of allocation methods across all program areas and business entities in which the contractor has an interest (see OMB Circulars A-87 and A-122). (1) Each employee is required (see OMB Circulars A-122 and A-87) to have time sheets. Time sheets must be prepared at least monthly and must coincide with one or more pay periods. Time sheets must account for the total activity for which the employee is compensated and which is required to fulfill the employee's obligation to the contractor. If an employee performs only one function and only performs that one function for one contract/program area, then that employee's time sheet can include the minimum information: name, date, beginning time, ending time, total time worked, appropriate signature(s), and accounting for paid and unpaid leave time. (2) Direct care staff must be directly costed between program areas (business components) based upon their time sheets (not a time study). If a direct care employee performs more than one function, performs one function for more than one contract/program area, and/or performs more than one function for more than one contract/program area, the time sheets must account for those different functions and/or contracts/program areas. These time sheets should be the documentation for the percentages of salaries budgeted to the various contracts. In other words, if a counselor works on a contractor's nonresidential contract and for one or more of the contractor's residential contracts, the percentage of that counselor's salary in the nonresidential budget should be based upon the results of time sheets for a recent historical period prior to the submission of the budget. The actual amounts charged to the nonresidential contract for that counselor should be based upon the counselor's time sheets during the contract period, with a reconciliation to the contract's budget. If the actual counselor's time is less than that budgeted, the contractor is reimbursed based upon the actual time. If the actual counselor's time is more than that budgeted, the contractor is reimbursed based upon the budgeted amount. The counselor's time sheets for that contract period then become the basis for the estimates used for the next year's contract budget. (3) Any cost allocation method should be a reasonable reflection of the actual business operations. Allocation methods that do not reasonably reflect the actual business operations and resources expended toward each unique business entity are not acceptable. An indirect allocation method approved by some other department, program, or governmental entity is not automatically approved by TDPRS. The purpose of cost allocation of shared indirect costs is to ensure that those costs are properly and accurately recorded within each program area, so that each program receives its fair share of those shared indirect costs which benefit that program and so that each program's costs are properly identified (direct and indirect). There are three basic methods for allocating shared (pooled) indirect costs: units of service, cost-to-cost, and functional. (A) In order to use the units-of-service cost allocation method, each of your program areas would have to deliver the same type of services (i.e., equivalent services) and would have to be measured with the same units of service (i.e., equivalent units). If your program areas (business components) do not have equivalent units of equivalent services, you must use a cost-to-cost or functional allocation method for shared indirect costs that are not directly chargeable to a specific program area (business component). (B) Cost-to-cost allocation methods merely calculate a program's percentage of a specified cost basis and use that percentage to then calculate that program's share of indirect costs. Shared indirect costs are always allocated first to each program area, then any unallowable shared indirect costs are removed from (or separately reported for) each program area for purposes of contracting with TDPRS. In this manner, it is ensured that 100% (and only 100%) of the total shared indirect costs have been allocated across the various program areas. The specific cost bases for a cost-to-cost allocation methodology include: salaries; salaries, payroll taxes and employee benefits; salaries and contract labor; salaries, payroll taxes, employee benefits, and contract labor; all direct program costs; and all direct program costs minus building costs. These shared indirect costs must be allocated across all the program areas which benefit from these shared indirect costs. If there are some shared indirect costs that benefit only a portion of the corporation's program areas, then an allocation method must be used to properly allocate that subset of the total shared indirect costs to those program areas benefiting from those shared indirect costs. In such complex financial systems, these subsets of shared indirect costs become part of the basis for allocating the shared administration costs benefiting all program areas. For example, if a contractor has a subset of shared indirect costs that only benefits the contractor's residential programs, that subset could be allocated based upon units of service. When allocating on a cost-to-cost basis those shared indirect costs benefiting all program areas (business components) for the contractor, the cost basis for each of the contractor's residential programs would include the residential program's direct care costs and its allocated share of the subset of shared indirect costs. (C) Functional cost allocation for an administrative staff person can be based upon a time study. Time studies can only be used to allocate administrative time and cannot be used to allocate direct care time. In other words, if an administrative employee also performs direct care duties, that employee must have time sheets (not a time study) to document his/her direct care time. (i) The baseline for allocation using a time study can be calculated upon time sheets recording daily time/effort for an entire month. (ii) Daily time sheets are then completed for a randomly-selected period throughout the remainder of the fiscal year. That "randomly-selected period" could be a randomly-selected week each quarter, randomly-selected two days per month, or other time period which would result in time sheets representing at least 20 days per year, in addition to the baseline. (iii) A contractor can use the results of the baseline time study for allocating the employee's salary for the remainder of the year and make any necessary adjustments required from the results of the randomly-selected periods during the last month of the year or a contractor can allocate the employee's salary each month based upon the results of that month's time study. (iv) A contractor must have its time study methodology and procedures in writing. (D) Other shared indirect costs may be more accurately allocated based upon a functional methodology rather than a cost-to-cost allocation method. (i) Maintenance staff costs could be functionally allocated, based upon the percentage (or dollar amounts) of work orders performed for the various program areas. (ii) If one program pays its employees weekly and another program pays its employees monthly, payroll costs could be functionally allocated based upon each programþs pro rata share of the number of payroll checks issued. (4) Each cost allocation method will be reviewed on a case-by-case basis in order to ensure that the allocated costs fairly and reasonably represent the operations of the contractor. If in the course of an audit it is determined that the cost allocation method does not fairly and reasonably represent the operations of the contractor, then an adjustment to the allocation method will be made. (5) Cost allocation methods must be clearly and completely documented in the contractor's workpapers, with details as to how pooled costs are allocated to each segment (component) of the business entity, for both contracted and noncontracted programs. sec.732.243. Employee Compensation. (a) Employee compensation costs (or compensation for personal services) must be calculated in compliance with Office of Management and Budget (OMB) Circulars A- 87 and A-122. (b) A contractor must: (1) compensate employees according to policy, program, and procedures that effectively relate individual compensation to the person's contribution to performance of the contract work; result in internally consistent, equitable treatment of employees; and effectively relate compensation paid within the organization to that paid for similar services outside the organization. (2) review and approve salaries by position or function. (3) not provide retroactive salary increases or future increases unless the contract specifically allows for increases. (4) keep time sheets on part-time employees or employees who devote a portion of their time to the contract. (5) provide job descriptions when required by the Texas Department of Protective and Regulatory Services (TDPRS) and only hire or promote people who meet job qualifications. (c) A contractor must not bill and receive reimbursement from funding sources for more than 100% of an employee's total salary or work time. (d) Contractors substantially engaged in activities other than the services for which TDPRS is contracting must provide compensation for employees engaged in contract services that is comparable to compensation for other comparable contractor activities. The contractor also must provide compensation to employees that is considered reasonable and comparable to the compensation paid for similar work in the labor market in which the contractor competes for the kind of employees involved. (e) Overtime is allowable as a cost to TDPRS only under the following conditions: (1) When necessary to cope with emergencies, such as those resulting from accidents, natural disasters, or temporary, unavoidable situations. (2) When periodically paying overtime to current staff will cost the department less than hiring temporary or additional staff. (3) When services are required to meet client needs and no substitute direct service staff are available. (f) Overtime is reimbursable subject to allowability and budget limitations of the contract. (g) Merit raises or other additional compensation reimbursed by TDPRS and instituted by a contractor must meet the following requirements: (1) Incentive compensation must be reasonable. (2) Payment is made according to an agreement entered into in good faith between the contractor and its employees before the services are rendered or according to an established plan that the contractor follows. (h) A contractor must determine its responsibilities and comply with applicable state and federal laws and regulations to include the following: (1) Workers' compensation - questions may be addressed to a qualified local insurance agency, the State Board of Insurance, or the State Industrial Accident Board. (2) F.I.C.A. - questions may be addressed to IRS. (3) Federal unemployment taxes - questions may be addressed to IRS. (4) State unemployment taxes - questions may be addressed to the Texas Workforce Commission. (i) A contractor may be reimbursed for budget costs incurred by its employees (who are providing services under the contract) for travel including mileage, food, and lodging costs and travel-related expenses in a cost reimbursement contract. However, the budget for the cost reimbursement contract must follow the requirements in sec.732.239 of this title (relating to Budget Changes), sec.732.240 of this title (relating to General Principles of Allowable and Unallowable Costs), and sec.sec.732.242-732.256 of this title (relating to Contract Administration). (1) Certification of travel. The contractor must certify that travel expenses were incurred by staff while performing official contract business. The purpose for the trip, points of departure and arrival, and times of departure and arrival must be specified. (2) Mileage. Allowable reimbursement for mileage is computed on a per mile rate, not exceeding the current mileage reimbursement rate set by the Texas Legislature for state employee travel. For audit purposes, contractors must keep copies of travel forms that TDPRS approved in writing. Contractors may reimburse staff at rates in excess of those currently in effect for state employees if the contractor pays the difference. TDPRS will not pay for the difference in mileage rate. (3) Food and lodging. Costs for staff food may be reimbursed either on a per- diem rate or an actual cost basis, with the results of either method not exceeding the current per-diem rate set by the Texas Legislature for state employee travel. Costs for staff lodging must not exceed the per-night rate set by the Texas Legislature for state employee travel. Reimbursement must be substantiated by adequate documentation. (4) Other travel-related expenses. All other travel-related expenses, such as air fare and taxi fare, may be budgeted and are allowed on a cost-incurred basis if these costs are reasonable, necessary, and substantiated by adequate documentation. (5) Volunteer travel. Travel for volunteers may be paid, if appropriate. Travel to and from home is not included, but travel on agency business is. (6) Out-of-state travel. Out-of-state travel may be budgeted. The purpose and destination must be stated and the contract manager's previous approval is required for all contracts with the exception of residential child care contracts. The determination of allowability of out-of-state travel is based upon a comparison of total costs for similar or comparable travel purposes available within the state. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813760 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 40 TAC sec.732.241 The repeal is adopted under the Human Resources Code (HRC), Chapter 40, which describes the services authorized to be provided by the Texas Department of Protective and Regulatory Services; and authorizes the department to enter into agreements with federal, state, and other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC; and grants authority to contract to that Department. The repeal implements the HRC, Chapter 40, which authorizes the department to enter into agreements with federal, state, or other public or private agencies or individuals to accomplish the purposes of the programs authorized by the HRC and which authorizes the department to enter into contracts as necessary to perform any of its powers or duties. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813761 C. Ed Davis Deputy Director, Legal Services Texas Department of Protective and Regulatory Services Effective date: October 1, 1998 Proposal publication date: July 10, 1998 For further information, please call: (512) 438-3765 TITLE 43. TRANSPORTATION PART I. Texas Department of Transportation CHAPTER 17.Vehicle Titles and Registration SUBCHAPTER B.Motor Vehicle Registration 43 TAC sec.17.22 The Texas Department of Transportation adopts amendments to sec.17.22, concerning motor vehicle registration. Section 17.22 is adopted without changes to the proposed text as published in the May 15, 1998, issue of the Texas Register (23 TexReg 4894) and will not be republished. EXPLANATION OF ADOPTED AMENDMENTS House Bill 1532, 75th Texas Legislature, 1997, amended the Transportation Code by adding sec.502.185. This new section provides the procedure that the department or a county tax assessor-collector may, pursuant to the provisions of a contract entered into between the department and the county in accordance with Government Code, Chapter 791, refuse to register a vehicle owned by a person who owes the county money for a fine, fee, or tax that is past due. Once the fine, fee, or tax is paid, the registration may be completed. The amendments are in response to House Bill 1532 and the need to provide an additional enforcement tool for the collection of delinquent county fines, fees, or taxes. RESPONSE TO COMMENTS Written comments were received from the County Tax Assessor-Collectors of Liberty, Lamar, Bee, Washington, and Madison counties. One of the commenters was in favor of the amendments and the others did not indicate whether they were for or against the amendments. Many comments were in the form of questions about the procedural specifics of the department's implementation plan for House Bill 1532. These questions will be responded to by direct written communication between the department and the county tax assessor-collectors. The following are the department's responses to all comments received regarding the amendments. Comment: Two tax assessor-collectors commented that the rules require that the county contract with the department in order to refuse to register a vehicle owned by a person who owes the county money for a fine, fee, or tax that is past due. Response: A contract between the county and the department is required only if the county wishes to flag motor vehicle records. A county may carry out the provisions of this bill using its own internal system if it so chooses. Comment: Four tax assessor-collectors commented that the rules are burdensome because they require the vehicle identification number (VIN) and license plate number to be provided. Response: The department's automated systems are not designed to access motor vehicle records by legal owner name primarily because of duplication of names, nicknames, business/association/trust names, multiple owners and similar situations. Thus, the department cannot legally "match-up" a name supplied by the county to a specific vehicle owned by a person who owes a fine, fee, or tax to that county. The VIN and plate number must be provided in order to locate and flag the correct vehicle record. Comment: One tax assessor-collector suggested a direct-input system be provided that would allow the entry of limited data indicating the type of monies owed to the county. Response: The department's automated system is not designed for this type of data entry. To create such a system would require an extensive design and programming effort for which funding (several hundred thousand dollars) is not currently available. It would also cause considerable delay in the department's implementation of the provisions of this bill, as well as the need for increased workstations in the counties. Comment: One tax assessor-collector commented that the tape exchange aspect of the rules will not be time-efficient, and that processing time may cause erroneous denial of registration. Another commenter questioned whether the tape submissions will keep the information current. Response: At present, there is no other viable alternative to tape exchange in order to flag vehicle records. Since the flags will not cause a "hard stop" in the system, the county may still register a vehicle with a flag if they have satisfactory evidence that the fine, fee, or tax has been paid. Comment: One tax assessor-collector stated that the fiscal note is ambiguous, and requested that the minimum cost for data transfer be included in the rules. Another commented she did not think the commissioners of her county would approve payment of the fees. Another commenter asked how much it would cost to contract with the department. Response: Because there is no way to know how many people will avoid registration because they owe a fine, fee, or tax, or how often a county will submit a tape to the department, an estimate of the cost to the county cannot be determined. The fees required of the county for tape submission and flagging of records are authorized under 43 TAC sec.3.13 pursuant to Government Code, Chapter 552, and will be provided in the contract. Comment: One tax assessor-collector suggested that the cost to the county should be included in the fee to the taxpayer. Response: The statute allows the county to collect an additional fee to cover costs to pay the department to flag vehicle records. Comment: One commenter asked whether the county can refuse to register vehicle dealers who have not paid the vehicle inventory tax. Response: Transportation Code, Chapter 502.185, provides that registration may be refused if the assessor-collector or the department receives information that "the owner of the vehicle" owes the county money for a fine, fee, or tax that is past due. Questions as to the ownership of the vehicle should be directed to the appropriate county attorney. STATUTORY AUTHORITY The amendments are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically, Government Code, Chapter 791, which authorizes local governments to enter into contracts, and Transportation Code, Chapter 502.185, which authorizes the department or a county tax assessor-collector to refuse to register a vehicle owned by a person who owes the county money for a fine, fee, or tax that is past due. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813609 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 20, 1998 Proposal publication date: May 15, 1998 For further information, please call: (512) 463-8630 43 TAC sec.17.52 The Texas Department of Transportation adopts new sec.17.52, concerning the vehicle emissions enforcement system. Section 17.52 is adopted with changes to the proposed text as published in the June 12, 1998, issue of the Texas Register (23 TexReg 6187). EXPLANATION OF ADOPTION OF NEW SECTION Senate Bill 1856, 75th Legislature, 1997, added Transportation Code, sec.502.009, to include provisions for registration denial as required by 40 C.F.R. sec.51.361. In accordance with 40 C.F.R. sec.51.361, the Environmental Protection Agency (EPA) has determined that the state has not demonstrated that inspection sticker-based enforcement is more effective than registration-based enforcement in ensuring compliance with the Motor Vehicle Emissions Inspection And Maintenance (I/M) Program. Therefore, Senate Bill 1856, requires the department to implement a registration-based plan. If the EPA determines that the requirements for registration denial are no longer necessary and gives the Texas Natural Resources Conservation Commission (TNRCC), or a person the TNRCC commission designates, written notification that registration-based enforcement is not required for the state implementation plan, the department will terminate registration-based enforcement of the program. Currently, the Dallas, El Paso, Harris, and Tarrant County areas are federal nonattainment areas. Vehicles in these counties must pass an emissions test, and vehicles coming into those counties from surrounding counties are subject to an emissions test. A vehicle that fails the emissions test will not be eligible to be registered or re-registered until the vehicle passes the test. New sec.17.52 provides an efficient and effective enforcement system for compliance with vehicle emissions I/M programs regulated by federal and state laws and the provisions of the Texas air quality State Implementation Plan (SIP). New sec.17.52 defines general words and terms for the section. It provides criteria for the department and the county to deny vehicle registration for a vehicle registered in any county that is included in a vehicle emissions I/M program when the county or department is notified by the TNRCC or the Texas Department of Public Safety (DPS), after notifying the vehicle owner, that the registered owner of the vehicle has failed to comply with the vehicle emissions I/M program as required by Transportation Code, Chapter 548, Subchapter F, and Health and Safety Code, sec.382.037 and sec.382.0372. RESPONSE TO COMMENTS A public hearing was held on June 30, 1998 and no oral comments were received. However, written comments were received from the Liberty County Tax Assessor- Collector, the Texas Natural Resource Conservation Commission, and the Texas Automobile Dealers Association (TADA). The comments were neither in favor nor against the rules. Comment: The Liberty County Tax Assessor-Collector asked whether active testing would continue to apply to the four major counties with passive testing for other nonattainment areas or whether comprehensive active inspection sticker- based testing would be implemented in all non-attainment area counties. Response: The active and passive testing is required by the EPA. Comment: TADA suggested that a sticker be placed on the vehicle when a vehicle fails emissions testing. Once the vehicle has passed the emissions test, the sticker would be removed by the inspector. This could prevent an owner from failing to disclose the failed inspection when trading in vehicles or selling them. Response: This section only addresses "flagging" identified vehicle records when a vehicle has not passed inspection, and the exchange of this information among the three agencies. The legislation did not address a separate sticker program that would indicate that a vehicle failed inspection. Comment: The Liberty County Tax Assessor-Collector noted the uncertainty of impact on state government and loss of non-registration revenue mentioned in the proposed preamble, but added that the local governments would also be negatively impacted because they would lose a significant amount in optional add-on fees. The commenter estimated that for every $1,000,000 of lost state revenue, there would be a corresponding loss in excess of $200,000 to local governments (assuming a $10 add-on fee). Response: There is no way to estimate the number of owners who will avoid registration; therefore, additional costs to the county tax assessor-collector for administering this program cannot be estimated. These costs may include the loss of optional fees. Comment: TNRCC commented that it is unsure what impact registration denial enforcement would have on registration revenues. It stated that it knows of no evidence suggesting that motorists will avoid registering their vehicles because of the program and is confident that law enforcement measures will minimize circumvention of the requirements. Response: A study of the historical data from previous emissions programs shows that when these types of prerequisites are added to registration, there has been a decrease in registration revenue in the following years. Comment: TNRCC commented that it does not issue waivers as part of the Texas Motorist's Choice (TMC) Program. The commenter recommends, therefore, that the words allowing the motorist to show proof of waiver by the TNRCC be deleted from subsection (c)(6)(B). Response: The department agrees with this suggestion and has removed the words "or TNRCC." Comment: TADA suggested that subsection (c)(7) be revised to require DPS and TNRCC to provide the department with notifications on a daily basis instead of a weekly basis. Response: The department will work with TNRCC and DPS to maximize notification efficiency. The wording "on a weekly basis" has been removed. Comment: TNRCC also recommended deleting the language from subsection (c)(8) which requires the TNRCC to pay the department on a quarterly basis because a Memorandum of Understanding is currently under development between TNRCC, DPS, and the department to establish a mechanism through which the three agencies will cooperate concerning the costs associated with registration denial. Response: The language was changed to satisfy the specific requirement of Transportation Code, sec.502.009(d), by stating that DPS and TNRCC will enter into an agreement with the department. A change has been made to subsection (c) to incorporate the complete citation to Transportation Code, Chapter 548, Subchapter F. STATUTORY AUTHORITY The new section is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically, Transportation Code, sec.502.009, which authorizes the department to deny registration or re-registration for vehicles in nonattainment areas that do not meet the emissions standards. sec.17.52. Vehicle Emissions Enforcement System. (a) Purpose. Transportation Code, sec.502.009 requires the department to implement a system requiring verification that a vehicle complies with vehicle emissions inspection and maintenance (I/M) programs as required by the Health and Safety Code, sec.382.037 and sec.382.0372, and Transportation Code, Chapter 548, Subchapter F. This section prescribes the policies and procedures for a denial of registration enforcement system if a vehicle does not comply with the emissions standards set by federal and state laws and the provisions of the Texas air quality State Implementation Plan. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Department - The Texas Department of Transportation. (2) DPS - The Texas Department of Public Safety. (3) Nonattainment area - Any portion of an air quality control region where any pollutant exceeds the national ambient air quality standards for the pollutant as designated pursuant to the Federal Clean Air Act. (4) State Implementation Plan (SIP) - A document required by the United States Environmental Protection Agency that commits to the adoption and implementation of a vehicle emissions I/M program which meets all the requirements of the Environmental Protection Agency. (5) TNRCC - The Texas Natural Resource Conservation Commission. (6) Vehicle - A motor-driven or propelled vehicle required to be registered in the state except those vehicles exempted by the TNRCC. (7) Vehicle inspection report - A vehicle inspection form prescribed by the DPS that is printed by the vehicle exhaust gas analyzer immediately following an emissions test. (8) Waiver - A form and certificate that allows a vehicle to be considered in compliance with the vehicle emissions I/M program for a specified period of time after a vehicle fails an emissions test. (c) Conditions to vehicle registration denial. (1) The DPS, after notice to the vehicle owner, will notify the department if a motor vehicle owner fails to comply with the requirements of Transportation Code, Chapter 548, Subchapter F. (2) The TNRCC, after notice to the vehicle owner, will notify the department if a motor vehicle fails to comply with the requirements of Health and Safety Code, sec.382.037 and sec.382.0372 and Transportation Code, Chapter 548, Subchapter F. (3) The notice will include the vehicle identification number (VIN) and the registration plate number of the affected vehicle. (4) If the department receives a notice of emissions noncompliance from the DPS or TNRCC, the department will place a notation on the motor vehicle record that the motor vehicle has failed to comply with the vehicle emissions I/M program. (5) If the department receives a notice emissions compliance from the DPS or TNRCC, the department will remove the non-compliance notation from the motor vehicle record. (6) If a vehicle record contains a notation of failure to comply with the vehicle emissions I/M program, the tax assessor-collector will deny registration unless provided with: (A) proof of compliance with the vehicle emissions I/M program with a "passing" vehicle inspection report; or (B) proof of a waiver issued by the DPS that includes the vehicle identification number (VIN) and the registration plate number. (7) The DPS and TNRCC will provide the department with the notifications in a format approved by the department. (8) The DPS and TNRCC will enter into an agreement with TxDOT regarding the remittance to the department for costs associated with implementation of the emissions program. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813610 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 20, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 463-8630 CHAPTER 25.Traffic Operations SUBCHAPTER G.Specific Information Logo Sign Program 43 TAC sec.25.406, sec.25.409 The Texas Department of Transportation adopts amendments to sec.25.406 and sec.25.409, concerning the specific information logo sign program. Sections 25.406 is adopted with changes to the proposed text as published in the June 12, 1998, issue of the Texas Register (23 TexReg 6189). Section 25.409 is adopted without changes and will not be republished. EXPLANATION OF ADOPTED AMENDMENTS Senate Bill 370, sec.2.04, 75th Legislature, 1997, added Transportation Code, sec.391.098, requiring the Texas Transportation Commission to authorize the executive director to grant variances on a case-by-case basis, to the eligibility, location, or placement of specific information logo signs, major agricultural interest signs, and major shopping area guide signs. The department adopted rules to implement provisions of Senate Bill 370 which became effective on March 19, 1998. These rules allowed for variances to be requested for only major shopping area guide signs. During the public comment period, the department received several comments requesting that variances also be allowed for the logo sign program. The department also received comments that indicated the criteria under which a variance could be requested for major shopping area guide signs should be broadened. These amendments take the comments into consideration and specify which requests for variances the department will consider. However, at this time, the sections are not being amended to allow for variance in the major agricultural interest sign program because the program is too new to determine what variances may be needed. Section 25.406 is amended by adding subsection (d) which describes the conditions under which a person may request a variance from the information logo sign program for waiver of the requirements of eligibility, location, placement, and type of highway. The section authorizes the department to require additional documentation including, but not limited to, traffic studies, maps, traffic flow analysis, crash data and analysis, and a detailed site plan of the commercial establishment, and describes the conditions under which the executive director may grant or deny the variance. This new subsection requires the executive director to indicate the reason for granting or denying the requested variance in writing. The amendments do not allow a variance to be requested from certain eligibility requirements of the information logo sign program. A commercial establishment may not request a variance from the sec.25.406(a) eligibility provisions that it must: offer at least one primary motorist service (gas, food, lodging, or camping); have a driveway access to a frontage road, ramp, or intersecting crossroad (except that an exception may be asked for an intersecting crossroad if the roadway with driveway access Tees into the frontage road of the eligible highway); comply with all applicable laws concerning the provisions of public accommodations without regard to race, religion, color, sex or national origin; or post its hours of operation on or near the main entrance so that they are visible to the public during open and closed hours. The department is retaining these eligibility requirements to ensure that commercial establishments requesting a variance are still required to provide basic motorist services in a non-discriminatory fashion that will best serve the needs of the traveling public. In addition to the eligibility requirements noted above, commercial establishments may not request a variance from certain specific service requirements contained in sec.25.406(b). A commercial establishment requesting a variance for a "gas" logo sign must still meet the requirements contained in sec.25.406(b)(1) concerning the services and facilities that such an establishment must provide. A commercial establishment requesting a variance for a "food" logo sign must still meet the requirements contained in sec.25.406(b)(2)(A) requiring that the establishment provide a license or other evidence of compliance with public health or sanitation laws, or other applicable laws. Such an establishment must also still meet the requirements contained in sec.25.406(b)(2)(C)-(E) requiring that the establishment have seating for at least 16 people, a public restroom, and a public telephone. A commercial establishment requesting a "lodging" logo sign may not request a variance to the requirements contained in sec.25.406(b)(3) that the establishment have a license, at least 10 rooms, and a public telephone. A commercial establishment requesting a "camping" logo sign may not request a variance to the requirements contained in sec.25.406(b)(4) that the establishment have a commercial license, adequate parking accommodations, and modern sanitary facilities and drinking water. The department is not proposing permitting variances for these requirements for commercial establishments to ensure that all establishments noted by logo signs provide high-quality services to the traveling public. In addition to the above restrictions, a commercial entity may not request a variance from the requirement that the establishment be located on and the logo sign be erected on the state highway system. This restriction is necessary to ensure that the program is operated only on highways under the department's jurisdiction. The amendments to sec.25.409 will allow broader types of variances to be requested for eligibility, location, placement, and type of highway for major shopping area guide sign. Major shopping areas will not be able to request a variance from the eligibility requirement contained in sec.25.409(a)(5). This requires that these establishments must post their hours of operation on or near the main public entrance. In addition to the above restriction, a major shopping area may not request a variance from the requirement that the establishment be located on, and the sign be erected on, a portion of the state highway system. This restriction is necessary to ensure that the program is operated only on highways under the state's jurisdiction. RESPONSE TO COMMENTS A comment deadline of July 13, 1998 was published in the Texas Register. Written comments in favor of the rules were received from Cracker Barrel, Benbrook Economic Development Corporation, and one individual. A comment was also received from an aide in Representative Alexander's office, however, there was no indication whether Representative Alexander was in favor or against the rules. Comment: The aide from Representative Alexander's office requested signing for businesses which are located on roadways that Tee into a frontage road of an eligible highway. Response: Section 25.406(d)(A) has been revised to allow a request for a waiver from the requirement of an intersecting crossroad if the roadway with driveway access Tees into the frontage road of the eligible highway. Allowing this type of sign will notify the traveling motorist of development that is beyond the immediate vicinity of the intersection of the eligible highway and crossroad, but is still easily accessible or visible from that intersection. Section 25.406(d)(A) has also been reworded to clarify which requests are considered to be waivers of eligibility requirements. Section 25.406 (d)(2)(A) has also been revised to correct a reference to subsection (a)(5) and (6) which has been renumbered. STATUTORY AUTHORITY The amendments are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically, Transportation Code, sec.391.098, which requires the Texas Transportation Commission to authorize the executive director to grant variances on a case-by-case basis to the eligibility, location, and placement of major shopping area guide signs. sec.25.406. Commercial Establishment Eligibility. (a) General requirements for eligibility. To be eligible to have a business logo placed on a specific information logo sign, a commercial establishment must: (1) offer at least one primary motorist service; (2) be located with driveway access to the access road (frontage road), ramp, or intersecting crossroad; (3) be visible, or have on-premise signing visible, from the commercial establishment's driveway access or the exit ramp, access road, crossroad, or intersection; and (4) be located within the marketing inventory as stated in sec.25.402(b) of this title (relating to Information Logo Sign Program) but not farther than three miles from an interchange on an eligible highway, but if no service participating or willing to participate in the specific information logo sign program is located within three miles of an interchange, the department may approve commercial establishments of the same service: (A) if located not farther than six miles from the interchange; (B) nine miles from the interchange if no service participating or willing to participate is located six miles from the interchange; (C) 12 miles from the interchange if no service participating or willing to participate is located nine miles from the interchange; or (D) 15 miles from the interchange if no service participating or willing to participate is located 12 miles from the interchange; (5) comply with all applicable laws concerning the provisions of public accommodations without regard to race, religion, color, sex, or national origin; and (6) post its hours of operation on or near the main entrance so that they are visible to the public during open and closed hours. (b) Specific services eligibility. In addition to the general requirements for eligibility to have a business logo placed on a specific information logo sign, a commercial establishment must meet the requirements for at least one of the following primary motorist services. (1) Gas. To be eligible to have a business logo placed on a specific information logo sign carrying the legend "GAS," a commercial establishment must provide: (A) vehicle services, including fuel, oil, and water; (B) tire repair, if the establishment is not a self-service station; (C) restroom facilities and drinking water; (D) continuous operation for at least 12 hours per day, seven days a week; and (E) a telephone accessible to the public. (2) Food. To be eligible to have a business logo placed on a specific information logo sign carrying the legend "FOOD," a commercial establishment must provide: (A) a license or other evidence of compliance with public health or sanitation laws, if required by law; (B) continuous operation at least 12 hours a day to serve three meals a day; (C) seating capacity for at least 16 people; (D) public restrooms; and (E) a telephone accessible to the public. (3) Lodging. To be eligible to have a business logo placed on a specific information logo sign carrying the legend "LODGING," a commercial establishment must provide: (A) a license or other evidence of compliance with laws regulating facilities providing lodging, if required by law; (B) at least 10 rooms; and (C) a telephone accessible to the public. (4) Camping. To be eligible to have a business logo placed on a specific information logo sign carrying the legend "CAMPING," a commercial establishment must provide: (A) a license or other evidence of compliance with laws regulating camping facilities, if required by law; (B) adequate parking accommodations; and (C) modern sanitary facilities and drinking water. (c) Multiple services eligibility. If a commercial establishment offers more than one primary motorist service, it will be eligible to display a business logo for each of those services on the appropriate specific information logo sign, provided that: (1) minimum criteria for the service as described in sec.25.405 of this title (relating to Specifications for Information Logo Signs) are met; (2) the additional business logo(s) would not prevent participation by another eligible commercial establishment whose sole service would be displaced; and (3) a business logo space is available. (d) Variances. (1) A person may request a variance from the information logo sign program. Requests for variances will only be considered if the existing requirements preclude participation in the program. (2) A variance may be requested for a waiver of: (A) an eligibility requirement except for the requirements listed in subsections (a)(1), (2) (except that an exception may be asked for an intersecting crossroad if the roadway with driveway access Tees into the frontage road of the eligible highway and is easily accessible or visible from that intersection), (5), and (6), and (b)(1), (2)(A), (2)(C)-(E), and (3)-(4) of this section; (B) location of the establishment; (C) placement of the sign; or (D) highway, except the highway must be on the state highway system. (3) A person may submit a request for a variance to the department's local district engineer indicating: (A) which requirement of the program it does not meet; and (B) the variance requested. (4) The department may require additional documentation following generally accepted engineering standards, which shall include, but not be limited to: (A) traffic studies; (B) maps indicating ramps, major arterials, ingress and egress points, existing signs and distances; (C) traffic flow analysis including traffic counts to and from the commercial establishment or major shopping area; (D) crash data and analysis; and (E) detailed site plan of the commercial establishment or major shopping area, including but not limited to parking available, driveways, and location in reference to eligible highway or eligible urban highway. (5) The executive director may grant a variance if he or she determines it is feasible to place the sign at the requested location and the sign meets the requirements of the Texas MUTCD; and (A) the variance will substantially promote traffic safety; (B) the variance will substantially improve traffic flow; (C) an overpass, highway sign or other highway structure unduly obstructs the visibility of an existing commercial sign; or (D) the variance is necessary to substantially improve the efficiency and effectiveness of communicating information needed by people to safely and efficiently use the transportation system. (6) The executive director will indicate the reason for granting or denying a variance in writing. sec.25.409. Major Shopping Area Eligibility. (a) Eligibility criteria. To be eligible to have a major shopping area guide sign, the retail shopping mall must: (1) be located not farther than three miles from an interchange with an eligible urban highway; (2) consist of 30 acres or more of land; (3) include an enclosed gross building area of 1,000,000 square feet or more; (4) be located with driveway access to the eligible urban highway access road (frontage road), ramp, intersecting crossroad or city street; and (5) post its hours of operation on or near the main public entrance(s) so that they are visible to the public during open and closed hours. (b) Variances. (1) A person may request a variance from the requirements of the major shopping area guide sign program. A request for a variance will only be considered if the existing requirements preclude participation in the program. (2) A variance may be requested for wavier of the requirement of: (A) eligibility except for the requirement of subsection (a)(5); (B) location of the major shopping area; (C) placement of the sign; or (D) highway, except the highway must be on the state highway system. (3) A person may submit a request for a variance to the department's local district engineer indicating: (A) which requirement of the program it does not meet; and (B) the variance requested. (4) The department may require additional documentation following generally accepted engineering standards, which shall include, but not be limited to: (A) traffic studies; (B) maps indicating ramps, major arterials, ingress and egress points, existing signs and distances; (C) traffic flow analysis including traffic counts to and from the major shopping area; (D) crash data and analysis; (E) detailed site plan of the major shopping area, including but not limited to: (i) parking available; (ii) driveways; and (iii) location in reference to eligible urban highways. (5) The executive director may grant a variance if he or she determines it is feasible to place the sign at the location and the sign meets the requirements of the Texas MUTCD; and (A) the variance will substantially promote traffic safety; (B) the variance will substantially improve traffic flow; (C) an overpass, highway sign, or other highway structure unduly obstructs the visibility of an existing commercial sign; or (D) the variance is necessary to substantially improve the efficiency and effectiveness of communicating the information needed by people to safely and efficiently use the transportation system. (6) The executive director will indicate the reason for granting or denying a variance in writing. (7) A variance will not be granted if the executive director finds that: (A) a retail shopping mall is located on an intersecting crossroad or city street whose name can be easily identified with the retail shopping mall and has existing advance and exit guide signs; or (B) the retail shopping mall's parking is so insufficient that it causes undue congestion of the roadway system. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 26, 1998. TRD-9813611 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 15, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 463-8630 SUBCHAPTER I.Debarment of a Maintenance Contractor 43 TAC sec.sec.25.501-25.506 Texas Department of Transportation adopts the repeal of sec.sec.25.501-25.506, concerning debarment of a maintenance contractor. Sections 25.501-25.506 are adopted without changes to the proposed text as published in the July 3, 1998, issue of the Texas Register (23 TexReg 6942), and will not be republished. EXPLANATION OF ADOPTED REPEALS Sections 25.501-25.506 provide procedures for the debarment of state highway maintenance contractors. The current rules refer to a Safety and Maintenance Operations Division and delegate certain responsibilities to the Deputy Director, Field Operations. Due to recent department reorganizations, the maintenance duties of the former Safety and Maintenance Operations Division now reside in the new Maintenance Division, and the position of Deputy Director, Field Operations no longer exists. Accordingly, the existing rules adopted for repeal appear in Chapter 25, Traffic Operations, and the adopted new sections will more appropriately appear in Chapter 29, Maintenance. These sections are no longer necessary due to the simultaneous adoption of the reenacted subject matter in new sec.sec.29.21-29.26, concerning this same subject. COMMENTS No comments were received on the proposed repeals. STATUTORY AUTHORITY The repeals are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 31, 1998. TRD-9813613 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 15, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 463-8630 SUBCHAPTER L.Telecommunications Facilities 43 TAC sec.sec.25.801-25.806 The Texas Department of Transportation adopts new sec.sec.25.801-25.806, concerning telecommunications facilities in the right of way. Sections 25.801- 25.806 are adopted without changes to the proposed text as published in the June 12, 1998, issue of the Texas Register (23 TexReg 6191) and will not be republished. EXPLANATION OF ADOPTED NEW SECTIONS Senate Bill 370, sec.1.20, 75th Legislature, 1997, created new Subchapter E in Chapter 202, Transportation Code, to allow the department to enter into an agreement for the placement of private telecommunications facilities within the median of a divided state highway. The new subchapter also allows the department to enter into an agreement with a telecommunications provider to place lines within or otherwise use telecommunications facilities owned or installed by the state in or on the improved portion of a state highway. The new subchapter allows the department to solicit proposals from telecommunications providers for use of the state highway system using a competitive process. This agreement may also include compensation to the department in the form of cash or the shared use of facilities. The new subchapter requires the department to develop rules. New sec.25.801 describes the purpose of the new subchapter, including implementing Transportation Code, Chapter 202, Subchapter E. New sec.25.802 provides definitions for words and terms used in new Subchapter L. New sec.25.803 defines the conditions under which the department may enter into an agreement with a telecommunications provider for use of department facilities. The department may enter into such an agreement if the agreement is in the best interest of the department; is consistent with the department's primary objectives in key areas such as safety and operations; allows the department to maximize revenues; and advances the department's efforts to develop its own telecommunications program. New sec.25.803 also allows a telecommunications provider to either place its facilities within the median of a divided state highway or use telecommunications facilities owned or installed by the department in or on the improved portion of a state highway consistent with Transportation Code, Chapter 202, Subchapter E. New sec.25.803 allows for the telecommunications provider to offer consideration to the department in the form of payment, or in the shared use of telecommunications equipment. This provision is included to ensure that the department receives fair value for the use of its right of way and to maintain the department's flexibility in the development of a project with a private telecommunications provider. New sec.25.803 also includes a provision that confirms that a telecommunications provider still may place its facilities in the traditional utility corridor as authorized by state law and sec.sec.21.31-21.56 of this title (relating to Utility Accommodation). New sec.25.803 states that placement of telecommunications facilities on federal-aid highways is subject to approval from the Federal Highway Administration. The Federal Highway Administration is the department's federal funding partner on certain portions of the state highway system and the department believes that its acceptance of these installations is valuable. New sec.25.804 outlines the process by which the department will issue a request for proposals (RFP). This section describes what information, at a minimum, the department will include in each RFP issued under these new sections. This section also requires the department to issue an RFP in at least two general circulation newspapers, on the department's Internet web site, and in the Texas Register at least 45 days prior to the deadline for submission of a proposal to ensure that the RFP is widely circulated to all interested parties. New sec.25.805 defines what information must be included in each proposal submitted to the department. These items are required to allow the department to effectively evaluate each proposal. New sec.25.806 defines how the executive director, or his or her designee, will evaluate, negotiate, and award a contract under these new sections. Proposals will be evaluated based on consistency with the department's primary goals and purposes such as safety and operational efficiency; maximization of revenue; development of the department's telecommunication infrastructure; and any other benefit accrued to the state. The executive director, or his or her designee, may negotiate and seek counteroffers from telecommunications providers. Also, as provided for in Transportation Code, Chapter 202, Subchapter E, the executive director, or his or her designee, may reject all offers should they not meet the department's needs. The department will notify the selected provider in writing. New sec.25.806 also outlines the manner in which the contract will be executed. Contract execution is required within 90 days from award. This provision is to ensure that, once a contract is awarded, it is executed in a reasonable time frame. New sec.25.806 states that the agreement may also allow a telecommunications provider to have exclusive use of a portion of the department's median or other facilities. Exclusivity is allowed to make the offer of use of the department's median or facilities of maximum value. The new section also states that the department may require the telecommunications provider to be a wholesaler of telecommunications capacity. The provision is included to allow the department to have maximum flexibility on the manner in which any agreement for use of state right of way is structured. New sec.25.806 also states that the agreement will include provisions for termination and may include provisions requiring the removal of any improvements placed on state right of way at the provider's expense. This provision is to ensure that, should termination of the contract be deemed necessary, the provider will be responsible for removal of all telecommunications improvements installed on state right of way. New sec.25.806 requires the telecommunications provider to notify the department prior to entering department right of way to perform any installation, maintenance, or operation. It also requires the provider to conform to the requirements of the Texas Manual on Uniform Traffic Control Devices in all traffic control plans. This provision is included to ensure that all work performed on state right of way is accomplished in the safest and most efficient manner possible and with the least amount of impact on the traveling public. New sec.25.806 places responsibility for maintenance of any installation with the telecommunications provider to ensure that any telecommunications infrastructure placed on department right of way is adequately maintained. COMMENTS A public hearing was held on June 30, 1998, and no comments were received on the proposed new sections. STATUTORY AUTHORITY The new sections are adopted under Transportation Code, sec.2001.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically, Transportation Code, Chapter 202, Subchapter E which authorizes the department to carry out the provisions of those laws governing the placement of telecommunications facilities on department right of way. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 26, 1998. TRD-9813612 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 15, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 463-8630 CHAPTER 29.Maintenance SUBCHAPTER B.Debarment of Maintenance Contractors 43 TAC sec.sec.29.21-29.26 The Texas Department of Transportation adopts new sec.sec.29.21-29.26, concerning debarment of maintenance contractors. Sections 29.23, 29.24, and 29.26 are adopted with changes to the proposed text as published in the July 3, 1998, issue of the Texas Register (23 TexReg 6942). Sections 29.21, 29.22, and 29.25 are adopted without changes and will not be republished. EXPLANATION OF ADOPTED NEW SECTIONS Due to recent department reorganizations, the maintenance duties of the former Safety and Maintenance Operations Division now reside in the new Maintenance Division, and the position of Deputy Director, Field Operations no longer exists. Accordingly, the existing rules adopted for repeal appear in Chapter 25, Traffic Operations and the adopted new sections will more appropriately appear in Chapter 29, Maintenance. New sec.sec.29.21-29.26 have been rewritten to refer to the new Maintenance Division and to delegate responsibilities to the executive director or the director's designee not below the level of deputy or assistant executive director which allows for more administrative flexibility. The new sections also correct the name of the department and its commission. In sec.25.503, which is simultaneously being repealed, a maintenance contractor could be debarred for assigning any interest in a maintenance contract for any purpose, or subletting any work under that contract without express approval by the Texas Transportation Commission. To expedite approval of assignments and allow for more administrative flexibility, that provision has been revised in new sec.29.23(a)(2)(E) and (F) by providing that a maintenance contractor must have the express approval of the executive director, or his designee, to assign a contract, and must have the approval of the department to sublet any work under the contract. New sec.29.23 outlines the reasons the department follows and the circumstances the department considers in determining whether a maintenance contractor, a contractor's affiliate or successor should be debarred from bidding on, entering, and/or participating as a subcontractor under a maintenance contract. Section 29.23 is adopted with changes by deleting the proposed subparagraph (E) which allowed the department to debar a contractor if the contractor became insolvent, including bankruptcy. This provision is not necessary since insolvency becomes an issue only if the work is not performed, and in the case of bankruptcy, the court has jurisdiction over the contract. Throughout sec.sec.29.23, 29.24 and 29.26 the term "executive director or his designee" is used. These sections are adopted with changes by deleting any reference to the term "or his designee" as that phrase is redundant and unnecessary since the term has been previously defined in sec.29.22, Definitions. COMMENTS No comments were received on the proposed new sections. STATUTORY AUTHORITY The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation. sec.29.23. Debarment. (a) The executive director may debar a contractor, and/or a contractor's affiliate or successor, from bidding on, entering, and/or participating as a subcontractor under a maintenance contract, if that contractor: (1) fails to enter a maintenance contract duly awarded by the commission; (2) performs a maintenance contract in an unsatisfactory manner by: (A) failing to begin work within the specified time; (B) failing to perform the work with sufficient workmen, equipment and/or materials to ensure completion of the work within the specified time; (C) neglecting or refusing to remove materials or to perform anew work rejected by the department as being defective or not meeting specifications; (D) discontinuing prosecution of the work without the express approval of the department; (E) assigning any interest in a maintenance contract for any purpose without express approval by the executive director; (F) subletting any work under that contract without express approval by the department; or (G) failing for any other reason to perform the work in an acceptable and workmanlike manner; (3) is declared in default on a contract; or (4) commits an act or offense, or engages in conduct which is a basis for debarment of a contractor pursuant to sec.9.6 of this title (relating to Procedure for Debarment of a Contractor) or sec.9.8 of this title (relating to Supplemental Procedures for Suspension or Debarment of a Contractor). (b) The existence of a cause for debarment under this section does not necessarily require that the contractor be debarred; the seriousness of the contractor's acts or omissions and any mitigating circumstances should be considered in making any debarment decision. (c) Failure to perform, unsatisfactory performance, or default caused by acts beyond the control of the contractor shall not be considered as a basis for debarment. sec.29.24. Notice and Appeal. (a) Upon a determination that a contractor should be debarred, the department shall mail a notice of the proposed debarment to the last known address of the contractor by certified mail. (b) The notice shall clearly state: (1) the facts and circumstances underlying the proposed debarment; (2) the effective date and period of debarment; and (3) the right of the contractor to request an administrative hearing on the question of the proposed debarment.(c) A request for administrative hearing under this section must be made in writing to the executive director within 10 days of the receipt of the notice of proposed debarment. (d) An administrative hearing requested pursuant to this section shall be conducted in accordance with sec.sec.1.21-1.61 of this title (relating to Contested Case Procedure), and shall serve to abate the proposed debarment unless and until that debarment is affirmed by order of the commission. sec.29.26. Period of Debarment. (a) The period of a single debarment imposed under sec.29.23 of this title (relating to Debarment), shall be for a period commensurate with the seriousness of the cause, but shall not exceed 12 months duration. (b) The executive director may consider terminating the debarment or reducing the period, upon the contractor's application, supported by documentation, for reasons deemed appropriate by that official. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on August 26, 1998. TRD-9813614 Bob Jackson Acting General Counsel Texas Department of Transportation Effective date: September 15, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 463-8630