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 I. Office of the Governor CHAPTER 3.Criminal Justice Division The Office of the Governor adopts the repeal of the following sections under Chapter 3, Subchapter A sec.3.5. Subchapter B sec.3.125, sec.3.225, sec.3.325, sec.3.425, sec.3.525, sec.3.625, sec.3.660, sec.3.725, sec.3.925, sec.3.955, sec.3.1025. Subchapter C sec.3.4030, sec.3.4045, sec.3.4065, sec.3.4090, sec.3.4130, sec.3.7005 without changes as published in the August 7, 1998, issue of the Texas Register (23 TexReg 7947). Subchapter D remains unchanged. Subchapter A concerns Criminal Justice Division-General Powers. Subchapter B concerns Fund Specific Grant Policies. Subchapter C concerns General Eligibility Requirements. Subchapter D concerns Criminal Justice Division Advisory Boards. This Chapter clearly identifies, defines, and provides other information on important policies, community planning, application submission guidelines, budget information, grant administration guidelines, program monitoring and auditing, funding sources, advisory boards, governing directives, and other relevant statutes. No comments were received regarding adoption of the repeals. SUBCHAPTER A.Criminal Justice Division-General Powers 1.Applicability 1 TAC sec.3.5 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a)(11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814380 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 SUBCHAPTER B.Fund Specific Grant Policies 1.State Criminal Justice Planning Fund 1 TAC sec.3.125 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814381 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 2.Juvenile Justice and Delinquency Prevention Act Fund 1 TAC sec.3.225 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814382 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 3.Title V Delinquency Prevention 1 TAC sec.3.325 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814383 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 4.Safe and Drug Free Schools and Communities Act Fund 1 TAC sec.3.425 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814384 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 5.Victims of Crime Act Fund 1 TAC sec.3.525 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814385 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 6.Crime Stoppers Assistance Fund 1 TAC sec.3.625, sec.3.660 The repeals are authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these rules. 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 September 10, 1998. TRD-9814386 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 7.Texas Narcotics Control Program 1 TAC sec.3.725 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814387 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 8.Violence Against Women Act Fund 1 TAC sec.3.925, sec.3.955 The repeals are authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these rules. 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 September 10, 1998. TRD-9814388 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 9.Challenge Grants 1 TAC sec.3.1025 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814713 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 SUBCHAPTER C.General Grant Program Policies 3.Special Conditions and Required Documents 1 TAC sec.sec.3.4030, 3.4045, 3.4065, 3.4090, 3.4130 The repeals are authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these rules. 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 September 10, 1998. TRD-9814389 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 6.Program Monitoring and Audits 1 TAC sec.3.7005 The repeal is authorized under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are 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 September 10, 1998. TRD-9814390 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 CHAPTER 3.Criminal Justice Division The Office of the Governor adopts amendments to Chapter 3, Subchapter B sec.3.110, sec.3.115, sec.3.150, sec.3.160, sec.3.165, sec.3.180, sec.3.185, sec.3.210, sec.3.215, sec.3.240, sec.3.250, sec.3.260, sec.3.280, sec.3.285, sec.3.310, sec.3.315, sec.3.350, sec.3.380, sec.3.385, sec.3.405, sec.3.410, sec.3.420, sec.3.440, sec.3.450, sec.3.480, sec.3.485, sec.3.500, sec.3.505, sec.3.510, sec.3.515, sec.3.535, sec.3.540, sec.3.545, sec.3.550, sec.3.555, sec.3.560, sec.3.585, sec.3.615, sec.3.635, sec.3.640, sec.3.645, sec.3.685, sec.3.705, sec.3.710, sec.3.715, sec.3.740, sec.3.760, sec.3.770, sec.3.785, sec.3.910, sec.3.915, sec.3.935, sec.3.940, sec.3.945, sec.3.950, sec.3.960, sec.3.970, sec.3.980, sec.3.985, sec.3.1015, sec.3.1030, sec.3.1050, sec.3.1060, sec.3.1080, sec.3.1085. Chapter 3 Subchapter C sec.3.2000, sec.3.2005, sec.3.2010, sec.3.3045, sec.3.3050, sec.3.3055, sec.3.3060, sec.3.3065, sec.3.3070, sec.3.3075, sec.3.4000, sec.3.4015, sec.3.4025, sec.3.4055, sec.3.4070, sec.3.4075, sec.3.4080, sec.3.4095, sec.3.4100, sec.3.4105, sec.3.4115, sec.3.4120, sec.3.4125, sec.3.4135, sec.3.4140, sec.3.5000, sec.3.5005, sec.3.6000, sec.3.6010, sec.3.6015, sec.3.6020, sec.3.6025, sec.3.6030, sec.3.6040, sec.3.6045, sec.3.6050, sec.3.6055, sec.3.6060, sec.3.6065, sec.3.6070, sec.3.6075, sec.3.6080, sec.3.6090, sec.3.6095, sec.3.6100, sec.3.7000, sec.3.7010, sec.3.7015, sec.3.7020, sec.3.8000. The Office of the Governor adopts new Subchapter A sec.3.5, Subchapter B sec.3.190, sec.3.295, sec.3.395, sec.3.490, sec.3.495, sec.3.590, sec.3.696, sec.3.790, sec.3.990, sec.3.1100, sec.3.1105, sec.3.1110, sec.3.1115, sec.3.1120, sec.3.1130, sec.3.1135, sec.3.1140, sec.3.1165, sec.3.1180, sec.3.1185, Subchapter C sec.3.2020, sec.3.3066, sec.3.3067, sec.3.4145, sec.3.4150, sec.3.4155, sec.3.5004, sec.3.6105, sec.3.6110, sec.3.6115, sec.3.6120 without changes to the text as published in the August 7, 1998, issue of the Texas Register (23 TexReg 7947). Subchapter D remains unchanged. Subchapter A concerns Criminal Justice Division-General Powers. Subchapter B concerns Fund Specific Grant Policies. Subchapter C concerns General Eligibility Requirements. Subchapter D concerns Criminal Justice Division Advisory Boards. This Chapter clearly identifies, defines, and provides other information on important policies, community planning, application submission guidelines, budget information, grant administration guidelines, program monitoring and auditing, funding sources, advisory boards, governing directives, and other relevant statutes. No comments were received regarding adoption of the sections. SUBCHAPTER A.Criminal Justice Division-General Powers 1.Applicability 1 TAC sec.3.5 The section is adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by this section. 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 September 10, 1998. TRD-9814361 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 SUBCHAPTER B.Fund Specific Grant Policies 1.State Criminal Justice Planning Fund 1 TAC sec.sec.3.110, 3.115, 3.150, 3.160, 3.165, 3.180, 3.185, 3.190 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814362 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 2.Juvenile Justice and Delinquency Prevention Act Fund 1 TAC sec.sec.3.210, 3.215, 3.240, 3.250, 3.260, 3.280, 3.285, 3.295 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814363 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 3.Title V Delinquency Prevention 1 TAC sec.sec.3.310, 3.315, 3.350, 3.380, 3.385, 3.395 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814364 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 4.Safe and Drug-Free Schools and Communities Act Fund 1 TAC sec.sec.3.405, 3.410, 3.420, 3.440, 3.450, 3.480, 3.485, 3.490, 3.495 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814365 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 5.Victims of Crime Act Fund 1 TAC sec.sec.3.500, 3.505, 3.510, 3.515, 3.535, 3.540, 3.545, 3.550, 3.555, 3.560, 3.585, 3.590 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814366 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 6.Crime Stoppers Assistance Fund 1 TAC sec.sec.3.615, 3.635, 3.640, 3.645, 3.685, 3.696 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814367 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 7.Texas Narcotics Control Program 1 TAC sec.sec.3.705, 3.710, 3.715, 3.740, 3.760, 3.770, 3.785, 3.790 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814368 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 8.Violence Against Women Act Fund 1 TAC sec.sec.3.910, 3.915, 3.935, 3.940, 3.945, 3.950, 3.960, 3.970, 3.980, 3.985, 3.990 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814369 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 9.Challenge Grants 1 TAC sec.sec.3.1015, 3.1030, 3.1050, 3.1060, 3.1080, 3.1085 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814408 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 10.Residential Substance Abuse Treatment 1 TAC sec.sec.3.1100, 3.1105, 3.1110, 3.1115, 3.1120, 3.1130, 3.1135, 3.1140, 3.1165, 3.1180, 3.1185 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814379 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 SUBCHAPTER C.General Grant Program Policies 1.General Eligibility Requirements 1 TAC sec.3.2000 The section is adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by this section. 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 September 10, 1998. TRD-9814370 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 1 TAC sec.sec.3.2005, 3.2010, 3.2020 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814371 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 2.General Grant Budget Requirements 1 TAC sec.sec.3.3045, 3.3050, 3.3055, 3.3060, 3.3065-3.3067, 3.3070, 3.3075 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814372 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 3.Special Conditions and Required Documents 1 TAC sec.sec.3.4000, 3.4015, 3.4025, 3.4055, 3.4070, 3.4075, 3.4080, 3.4095 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814373 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 1 TAC sec.sec.3.4100, 3.4105, 3.4115, 3.4120, 3.4125, 3.4135, 3.4140, 3.4145, 3.4150, 3.4155 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814714 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 4.Award and Grant Acceptance 1 TAC sec.sec.3.5000, 3.5004, 3.5005 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814374 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 5.Administering Grants 1 TAC sec.sec.3.6000, 3.6010, 3.6015, 3.6020, 3.6025, 3.6030, 3.6040, 3.6045, 3.6050, 3.6055, 3.6060, 3.6065, 3.6070, 3.6075, 3.6080, 3.6090, 3.6095 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814375 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 1 TAC sec.sec.3.6100, 3.6105, 3.6110, 3.6115, 3.6120 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814376 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 6.Program Monitoring and Audits 1 TAC sec.sec.3.7000, 3.7010, 3.7015, 3.7020 The sections are adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by these sections. 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 September 10, 1998. TRD-9814377 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 7.Governing Directives 1 TAC sec.3.8000 The section is adopted under Texas Government Code, Title 7, sec.772.006 (a) (11) which provides the Office of the Governor, Criminal Justice Division the authority to promulgate rules consistent with the Code. No other statutes, articles or codes are affected by this section. 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 September 10, 1998. TRD-9814378 Pete Wassdorf Deputy General Counsel Office of the Governor Effective date: September 30, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 475-2594 PART IV. Office of the Secretary of State CHAPTER 95. Uniform Commercial Code The Office of the Secretary of State adopts the repeal of sec.sec.95.1.-95.5, concerning General Information and Correspondence, sec.sec.95.31-95.36, concerning Filing, sec.95.41, concerning Information Requests, sec.95.51, concerning Standard Forms, and sec.sec.95.61-95.62, concerning Rejection, without changes to the proposed text as published in the August 7, 1998, issue of the Texas Register (23 TexReg 7879) and will not be republished. The purpose of the repeals is to conform to national model administrative rules promulgated by the International Association of Corporation Administrators. No comments were received regarding the repeal of the old rules. SUBCHAPTER A. General Information and Correspondence 1 TAC sec.sec.95.1-95.5 The repealed sections provide current filing policies and procedures for the Uniform Commercial Code Section. The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 16, 1998. TRD-9814738 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER B. Filing 1 TAC sec.sec.95.31-95.36 The repealed sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 16, 1998. TRD-9814739 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER C. Information Requests 1 TAC sec.95.41 The repealed section is adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. This agency hereby certifies that the adoption has been reviewedby 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 September 16, 1998. TRD-9814740 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER D. Standard Forms 1 TAC sec.95.51 The repealed section is adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 16, 1998. TRD-9814741 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER E. Rejection 1 TAC sec.95.61, sec.95.62 The repealed sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 16, 1998. TRD-9814742 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 CHAPTER 95. Uniform Commercial Code The Office of the Secretary of State adopts new sections sec.sec.95.100-95.117 General Provisions, sec.sec.95.400-95.414 UCC Information Management System, sec.sec.95.440-95.450 EDI Documents, sec.sec.95.500-95.520 Filing and Data Entry Procedures, sec.sec.95.601-95.605 Search Requests and Reports, sec.sec.95.700- 95.706 Other Notices of Liens, with changes and new sections sec.sec.95.200- 95.207 Information Required for Indexing, sec.sec.95.300-95.304 Acceptance and Refusal of Documents, and sec.sec.95.800-95.803 Rulemaking Procedure, without changes to the proposed text as published in the August 7, 1998, issue of the Texas Register (23 TexReg 7879). The purpose of the new sections is to conform to national model administrative rules promulgated by the International Association of Corporation Administrators. The new sections provide current filing policies and procedures for the Uniform Commercial Code Section. No comments were received regarding adoption of the new rules. SUBCHAPTER A. General Provisions 1 TAC sec.sec.95.100-95.117 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.100. Policy Statement. (a) The administration of the UCC has an important impact on the economy and upon the rights of the public, in this state and in the United States. The volume of international, interstate and multistate transactions pursuant to the UCC requires that the administration of the UCC be conducted in a manner that promotes both local and multi-jurisdictional commerce by striving for uniformity in policies and procedures among the various states. (b) The policy of the filing office is that the interpretation and implementation of the filing office's duties and responsibilities shall be expressed in a written set of administrative rules, which the public shall have a voice in creating. Such rules have the following purposes: (1) to simplify and improve the administration of the UCC by promoting uniform UCC filing procedures in this state and in the nation, (2) to simplify the public's ability to discover and understand the UCC filing procedures of the various states by establishing a uniform framework for describing the procedures, (3) to increase public access to information, (4) to increase public participation in the formulation of administrative policy and procedures, and (5) to increase public accountability of the filing officer. sec.95.101. Definitions. Words and terms shall have the meanings provided in this rule, unless the context requires otherwise. Words and terms not defined in this rule which are defined in the UCC shall have the respective meanings accorded such words and terms in the UCC, except as the context otherwise clearly requires. (1) "Filing office" and "filing officer" mean Texas Secretary of State. (2) "Remitter" means a person who tenders a UCC document to the filing officer for filing, whether the person is a filer or an agent of a filer responsible for tendering the document for filing. "Remitter" does not include a person responsible merely for the delivery of the document to the filing office, such as the postal service or a courier service but does include a service provider who acts as a filer's representative in the filing process. (3) "UCC" means the Uniform Commercial Code as adopted in this state and in effect from time to time. (4) "UCC document" means an original financing statement, a statement of amendment of a financing statement, a statement of assignment of interest in collateral, a statement of release of interest in collateral, a continuation statement, or a termination statement. The word "document" in the term "UCC document" shall not be deemed to refer exclusively to paper or paper-based writings, it being understood that UCC documents may be expressed or transmitted electronically or through media other than tangible writings. (Note: this definition is used for the purpose of these rules only. The use of the term "UCC document" in these rules has no relation to the definition of the term "document" in UCC section 9-105(f), as it has been adopted in this state.) (5) "Original financing statement" means a UCC document containing the information required to be in a financing statement pursuant to Subchapter B of this chapter and that, when filed, provides the information to establish the initial record of the existence of a financing statement in the filing officer's UCC information management system. (6) "Financing statement" means an original financing statement and all UCC documents that relate to the original financing statement. (7) "Secured party of record" means a secured party shown on the filing officer's information management system as active with respect to a financing statement. (8) "Identification of the original financing statement" means the unique identifying information (including, at a minimum, a filing number and date of filing) assigned to an original financing statement by the filing officer for the purpose of identifying the financing statement and UCC documents relating to the financing statement in the filing officer's information management system. The filing number is the last two year digits followed by sequential number beginning with 000001 for each calendar year. The filing number bears no relation to the time of filing and is not an indicator of priority. sec.95.102. Singular and Plural Forms. Singular nouns shall include the plural form, and plural nouns shall include the singular form, unless the context requires otherwise. sec.95.103. Place to File. (a) The Office of the Secretary of State is the office for filing UCC documents relating to all types of collateral except the following. Financing statements concerning the following classes of goods are to be filed with the county clerk: (1) consumer goods used or bought for use primarily for personal, family, or household purposes subject to section 9-109, Texas Business and Commerce Code; (2) fixtures when they become so related to particular real estate that an interest in them arises under the real estate law of the state in which the real estate is situated subject to section 9-313, Texas Business and Commerce Code; (3) timber specified in the UCC as, "Timber to be cut. " subject to section 9- 203, Texas Business and Commerce Code; or (4) minerals includes an interest in minerals or the like (including oil and gas) before extraction and which attaches thereto as extracted, or which attaches to an account resulting from the sale thereof at the wellhead or minehead subject to subsection 4 of section 9-103, Texas Business and Commerce Code. (b) The proper place to file in order to perfect a security interest in consumer goods is with the county clerk of the debtor's residence. If the debtor is not a resident of this state, then the filing should be made in the county where the goods are kept. sec.95.104. Filing Office Identification. (a) Street address. The street addresses of the filing office are as follows. (1) General street address: Secretary of State, Uniform Commercial Code, 1019 Brazos, Suite 505, Austin, TX 78701. (2) Courier street address: Secretary of State, Uniform Commercial Code, 1019 Brazos, Room B-13, Austin, TX 78701. (b) Mailing address. The mailing address of the filing office is Secretary of State, Uniform Commercial Code, PO Box 13193, Austin, TX 78711-3193. (c) Telephone numbers. The telephone numbers of the filing office are as follows. (1) General office number: 512-475-2700. (2) Lien search requests: 512-475-2705. (3) Financing statement filing information: 512-475-2703. (4) Financing statement change filing information: 512-475-2704. (d) Telefacsimile (fax) numbers. The filing office maintains the following numbers for the purpose of telefacsimile (fax) transmissions. (1) 512-463-1423 for transmission of filings. (2) 512-475-2812 for transmission of search requests. (3) 512-475-2848 for communications other than filings and search requests. (e) On-line information service. The filing officer offers on-line information services at 512-475-2740. (f) Telephone device for the deaf (TDD). The filing office offers TDD service at 800-735-2989. sec.95.105. Office Hours. (a) In person. The filing office is open to the public between the hours of 8:00 AM and 5:00 PM CST, Monday through Friday, except for state holidays. (b) Telephone. The filing office receives telephone calls between the hours of 8:00 AM and 5:00 PM CST, Monday through Friday, except for state holidays. (c) Telefacsimile (fax) transmissions. The filing office receives transmissions by telefacsimile 24 hours per day, 365 days per year, except for scheduled maintenance and unscheduled interruptions of service. (d) Electronic filing transmissions. The filing office is open for electronic filing transmissions between the hours of 7:00 AM and 7:00 PM CST, Monday through Friday, except for state holidays. sec.95.106. UCC Document Delivery. UCC documents may be tendered for filing at the filing office as follows. (1) Personal delivery, at the street address stated in sec.95.104(a)(1) of this title (relating to Filing Office Identification). The file time for a UCC document delivered by this method is when delivery of the UCC document is accepted by the filing office (even though the UCC document may not yet have been accepted for filing and subsequently may be rejected). (2) Courier delivery, at the street address stated in sec.95.104(a)(2) of this title. The file time for a UCC document delivered by this method is the 8:00 AM CST on a day the filing office is open to the public (even though the UCC document may not yet have been accepted for filing and may be subsequently rejected). (3) Postal service delivery, to the street address stated in sec.95.104(a)(1) of this title or the mailing address stated in sec.95.104(b) of this title. The file time for a UCC document delivered by this method is t he 8:00 AM CST on a day the filing office is open to the public (even though the UCC document may not yet have been accepted for filing and may be subsequently rejected). (4) Telefacsimile (fax) delivery, to the telephone number stated in sec.95.104(d)(1)-(3) of this title. The file time for a UCC document delivered by this method is, notwithstanding the time of delivery, at the earlier of the time the UCC document is first examined by a filing officer for processing even though the telefacsimile device may indicate that the UCC document was received at an earlier time. Filing fees must be paid by credit card. (5) Electronic data interchange (EDI). UCC documents may be transmitted electronically using the ANSI X12 154 transmission standard as described in sec.sec.95.440 et seq. of this title (relating to EDI Documents). The file time for a UCC document delivered by this method is the time that the filing office's EDI system analyzes the relevant transmission and determines that all the required elements of the transmission have been received in a required format and are machine-readable. sec.95.107. Search Request Delivery. UCC search requests may be delivered to the filing office as follows. Requirements concerning search requests are set forth in sec.95.601 of this title (relating to Search Requests). (1) Personal delivery, at the street address stated in sec.95.104(a)(1) of this title (relating to Filing Office Identification). (2) Courier delivery, at the street address stated in sec.95.104(a)(2) of this title. (3) Postal service delivery, to the street address stated in sec.95.104(a)(1) of this title or the mailing address stated in sec.95.104(b) of this title. (4) Telephone requests, to the telephone number stated in sec.95.104(c)(2) of this title. (5) Telefacsimile (fax) delivery, to the telephone numbers stated in sec.95.104(d)(1)-(2) to this title. (6) Electronic data interchange (EDI). UCC search requests may be transmitted electronically as described in sec.95.440 of this title (relating to Definitions). (7) On-line information service. UCC search requests may be entered on-line as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). To obtain on-line access contact filing office. (8) Original financing statement. UCC search requests upon a debtor named on an original financing statement may be made by an appropriate indication on the face of the original financing statement form if the form is entitled to be filed with the standard form fee and the relevant search fee is also tendered with the original financing statement. sec.95.108. Requirements to Qualify for Standard Form Fee. Forms for UCC documents that conform to the requirements of this rule shall be accompanied by the standard form fee. Other UCC documents shall be accompanied by the nonstandard form fee. (1) PEB/IACA forms approved. A form approved for the relevant UCC document by the Permanent Editorial Board of the National Conference of Commissioners on Uniform State Laws and the American Law Institute or by the International Association of Corporation Administrators qualifies for filing with the standard form fee. (2) Secretary of State-approved. A form for the relevant UCC document approved by the Office of the Secretary of State qualifies for filing with the standard form fee. Copies of all such forms then approved shall be distributed with these rules when they are distributed by the filing office and the filing office shall cause copies of such forms to be made available to prospective filers and remitters upon request. (A) Specifications pertaining to the prescribed forms or a list of approved printers and form suppliers may be obtained by writing to the Office of the Secretary of State, Uniform Commercial Code Section, PO Box 13193, Austin, TX 78711-3193. (B) Prior permission to print prescribed forms must be obtained in writing from the Agency. A printer must submit five complete sets of each type of form to the Agency for examination. Within 30 days of receipt of such forms, the Agency will transmit to the printer written notification of the results of the examination. Such notification will grant permission to print forms or express the reasons for refusal to grant permission. (C) Where a printer produces forms with a name other than that of the approved printer in the bottom right corner, the printer must notify the Agency in writing of such name(s) and include a sample form for each name(s). If these entities sell forms, the printer must inform the Agency that the entity is a supplier and give the supplier's business address and telephone number for inclusion on the Agency supplier list. (D) The Agency will notify approved printers of any revisions which must be made to the prescribed forms. Printers must submit five revised forms of each type to the Agency for examination. Within 30 days of receipt of the revised forms, the Agency will transmit written notification of the results of the examination. The notification will grant permission to print forms or express the reasons for refusal to grant permission. (E) The Agency may suspend permission to print forms at any time for failure to comply with this section or failure to maintain compliance with form specifications. (3) Nonstandard form. When labels or any other medium are affixed to areas other than the return address or collateral description on the face of a standard form or additional pages are attached to the prescribed form or when any other form is used, the form will be subject to the nonstandard form filing fee. (4) Electronic filings. A UCC document transmitted electronically pursuant to the ANSI X12 154 standard and the procedures set forth in sec.sec.95.440 et seq. of this title (relating to EDI Documents) qualifies for filing with the standard form fee. sec.95.109. Standard Form - UCC Search. A form that meets the requirements regarding dimensions and location of information on the search form approved by the Office of the Secretary of State qualifies for the standard UCC search fee. Other UCC search requests shall be accompanied by the nonstandard form UCC search fee. sec.95.110. Forms Suppliers. (a) The current suppliers of UCC forms identified in sec.95.108(1) of this title (relating to Requirements to Qualify for Standard Form Fee) or that meet the requirements of sec.95.108(2) of this title are available upon request from the Secretary of State. The mailing address is stated in sec.95.104(b) of this title (relating to Filing Office Identification) and the telephone number is stated in sec.95.104(c)(2) of this title. (b) Updated lists. The filing office will make updated lists of forms suppliers available to prospective filers and remitters upon request. sec.95.111. Filing Fees. (a) Standard form filing fee. The fee for filing a UCC document delivered in a standard form and for each additional name (excluding electronically transmitted UCC documents) presented for filing with a standard form is pursuant to sec.9.403(e), Texas Business and Commerce Code. (b) Nonstandard form filing fee. The fee for filing a UCC document delivered in a form other than the standard form and for each additional name (excluding electronically transmitted UCC documents) presented for filing with a form other than the standard form is pursuant to sec.9.403(e), Texas Business and Commerce Code. (c) UCC search fee. The fee for a UCC search request delivered in a standard form or a form other than the standard form is pursuant to sec.9.407(b), Texas Business and Commerce Code. (d) UCC search - copies. The fee for UCC search copies (or page equivalent for electronically transmitted search responses) is pursuant to sec.9.407(b), Texas Business and Commerce Code. (e) Self-service pages. The fee for uncertified copies of records is pursuant to sec.552.261, Texas Government Code and sec.71.8, Texas Administrative Code. (f) Special fees for fax filings. (1) Standard form filing fee. The fee for filing a UCC document delivered in a standard form and for each additional name (excluding electronically transmitted UCC documents) presented for filing with a standard form is pursuant to sec.9.403(e), Texas Business and Commerce Code. The fee for expedite handling is pursuant to sec.405.032, Texas Government Code and the fee per acknowledgment page is pursuant to sec.405.031, Texas Government Code. (2) Nonstandard form filing fee. The fee for filing a UCC document delivered in a form other than the standard form and for each additional name (excluding electronically transmitted UCC documents) presented for filing with a form other than the standard form is pursuant to sec.9.403(e), Texas Business and Commerce Code. The fee for expedite handling is pursuant to sec.405.032, Texas Government Code and the fee per acknowledgment page is pursuant to sec.405.031, Texas Government Code. (g) Special fees for fax UCC searches. (1) Standard form filing fee. The fee for a UCC request delivered in a standard form is pursuant to sec.9.407(b), Texas Business and Commerce Code. The fee for the fax service is pursuant to sec.405.032, Texas Government Code and sec.71.8, Texas Administrative Code. (2) Nonstandard form filing fee. The fee for a UCC request delivered in a form other than the standard form is pursuant to sec.9.407(b), Texas Business and Commerce Code. The fee for the fax service is pursuant to sec.405.032, Texas Government Code and sec.71.8, Texas Administrative Code. sec.95.112. Expedited Services. The following information, instructions, and fees are applicable to requests for expedited service. (1) Expedited filing. Documents presented in person or fax are treated as an expedite filing and subject to an expedite handling fee pursuant to sec.405.032, Texas Government Code and sec.71.8, Texas Administrative Code. (2) Special fees for fax filings - per page copies. (A) The fee for regular service delivered in a turnaround time of five to seven working days for a standard form is pursuant to sec.9.407, Texas Business and Commerce Code. Charges for copies that accompany this regular service are pursuant to sec.9.407, Texas Business and Commerce Code. The fee for regular service delivered in a turnaround time of five to seven working days for a nonstandard form is pursuant to sec.9.407, Texas Business and Commerce Code. Charges for copies that accompany this regular service is pursuant to sec.9.407, Texas Business and Commerce Code. (B) The fee for expedite service delivered in a turnaround time of one working day for a standard form is pursuant to sec.9.407, Texas Business and Commerce Code. Charges for copies that accompany this expedite service is pursuant to sec.9.407, Texas Business and Commerce Code and an expedite handling fee is pursuant to sec.405.032, Texas Government Code. The fee for expedite service delivered in a turnaround time of one working day for a nonstandard form is pursuant to sec.9.407, Texas Business and Commerce Code. Charges for copies that accompany this regular service is pursuant to sec.9.407, Texas Business and Commerce Code and an expedite handling fee pursuant to sec.405.032, Texas Government Code. A completed expedite search request may either be mailed, faxed, or picked up in person. (3) How to request expedited service. (A) Expedited filing. Documents presented in person and fax are treated as expedite filing and subject to an expedite handling fee described in subsection (1) of this subchapter. (B) Responding to UCC search request. Documents may be requested by mail, telephone, fax, SDA, and in person. sec.95.113. Methods of Payment. Filing fees and fees for public records services may be paid by the following methods. (1) Cash. The filing officer discourages cash payment unless made in person to the cashier at the filing office. (2) Checks. Checks made payable or endorsed to the filing office, including checks in an amount to be filled in by a filing officer but not to exceed a particular amount, will be accepted for payment if they are cashier's checks or certified checks drawn on a bank acceptable to the filing office or if the drawer is acceptable to the filing office. All checks must be drawn on a U.S. bank. The identity of acceptable banks will be made available to prospective filers and remitters upon request. (3) Electronic funds transfer. The filing office will accept payment via electronic funds transfer under National Automated Clearing House Association ("NACHA") rules from remitters who have entered into appropriate NACHA-approved arrangements for such transfers and who authorize the relevant transfer pursuant to such arrangements and rules. (4) Debit cards. The filing office accepts payment by debit cards issued by approved debit card issuers. A current list of approved debit card issuers is available from the filing office. Remitters shall provide the filing officer with the card number, the expiration date of the card, the name of the approved card issuer, the name of the person or entity to whom the card was issued and the billing address for the card. Payment will not be deemed tendered until the issuer or its agent has confirmed to the filing office that payment will be forthcoming. (5) Credit cards. The filing office accepts payment by the following credit cards issued by approved credit card issuers: MasterCard, Visa, and Discover. A current list of approved credit card issuers is available from the filing office. Remitters shall provide the filing officer with the card number, the expiration date of the card, the name of the approved card issuer, the name of the person or entity to whom the card was issued and the billing address for the card. Payment will not be deemed tendered until the issuer or its agent has confirmed to the filing office that payment will be forthcoming. sec.95.114. Overpayment and Underpayment Policies. (a) Overpayment. The filing officer shall refund the amount of an overpayment exceeding $1.00 to the remitter pursuant to sec.405.034, Texas Government Code. The filing officer shall refund an overpayment of $1.00 or less upon the written request of the remitter. (b) Underpayment. Upon receipt of a document with an insufficient fee, the filing officer shall do the following: The document shall be returned to the remitter as provided in sec.95.304 of this title (relating to Procedure Upon Refusal). A refund of a partial payment may be included with the document or delivered under separate cover. sec.95.115. Public Records Services. Public records services are provided on a non-discriminatory basis to any member of the public on the terms described in these rules. The following methods are available for obtaining copies of UCC documents and copies of data from the UCC information management system. (1) Individually identified documents. Copies of individually identified UCC documents are available in the following forms: Copies provided on paper. (2) Bulk copies of documents. Bulk copies of UCC documents are available in the following forms: Paper, microfilm, TIF files and EDI documents. (3) Data from the information management system. A list of available data elements from the UCC information management system, and the file layout of the data elements, is available from the filing officer upon request. Data from the information management system is available as follows. (A) Full extract. A bulk data extract of information from the UCC information management system is available on a biannually and yearly basis. (B) Update extracts. Updates of information from the UCC information management system are available on a daily basis. (C) Format. Extracts from the UCC information management system are available in the following formats: Magnetic tape (9 track, 6250 bpi) and 8mm tape. (4) Direct on-line services. On-line services make UCC data available on a subscription basis. A description of subscription services is available from the filing officer. sec.95.116. Fees for Public Records Services. Fees for public records services are established as follows. (1) Paper copies of individual documents. (A) Regular delivery method. The fee for UCC search copies is pursuant to sec.9.407(b), Texas Business and Commerce Code (or page equivalent for electronically transmitted search responses). (B) Fax delivery. The fee for a fax service is pursuant to sec.405.032, Texas Government Code and sec.71.8, Texas Administrative Code. (2) Bulk copies of documents. (A) Paper. The fee for bulk copies of UCC documents is pursuant to sec.9.407(b), Texas Business and Commerce Code (or page equivalent for electronically transmitted search responses), sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (B) Microfilm. The fee for microfilm of UCC documents is pursuant to sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (C) TIF files. The fee for TIF files of UCC documents is pursuant to sec.9.407(b), Texas Business and Commerce Code (or page equivalent for electronically transmitted search responses), sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (D) EDI documents. The fee for electronically transmitted UCC documents is pursuant to sec.9.407(b), Texas Business and Commerce Code (or page equivalent for electronically transmitted search responses), sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (3) Data from the information management system. (A) Full extract. The fee for a bulk data extract is pursuant to sec.405.018 and sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (B) Update extracts. The fee for an update extract is pursuant to sec.405.018 and sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (C) Format. Extracts from the UCC information management system are available in formats pursuant to sec.405.018 and sec.405.031(c)-(d), Texas Government Code, sec.552.261, Texas Government Code, and sec.71.8, Texas Administrative Code. (4) Third party on-line services. The fee for a UCC search by debtor name or financing statement number is pursuant to sec.405.018, Texas Government Code and sec.71.8, Texas Administrative Code. The fee for a UCC search by secured party name is pursuant to sec.405.018, Texas Government Code and sec.71.8, Texas Administrative Code. Users are required to post a minimum deposit with the secretary of state's office to establish an account for Direct Access in accordance with sec.405.018, Texas Government Code and sec.71.8, Texas Administrative Code. sec.95.117. New Practices and Technologies. The filing officer is authorized to adopt practices and procedures to accomplish receipt, processing, maintenance, retrieval and transmission of, and remote access to, Article 9 filing data by means of electronic, voice, optical and/or other technologies, and, without limiting the foregoing, to maintain and operate, in addition to or in lieu of a paper-based system, a non-paper-based Article 9 filing system utilizing any of such technologies. In developing and utilizing technologies and practices, the filing officer shall, to the greatest extent feasible, take into account compatibility and consistency with, and whenever possible be uniform with, technologies, practices, policies and regulations adopted in connection with Article 9 filing systems in other states. 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 September 9, 1998. TRD-9814244 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER B. Information Required for Indexing 1 TAC sec.sec.95.200-95.207 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 9, 1998. TRD-9814245 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER C. Acceptance and Refusal of Documents 1 TAC sec.sec.95.300-95.304 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 9, 1998. TRD-9814246 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER D. UCC Information Management System 1 TAC sec.sec.95.400-95.414 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.400. Policy Statement. The filing officer uses an information management system to store, index, and retrieve information relating to UCC documents. The information management system includes an index of the names of debtors with an active status. The rules in this subchapter describe the UCC information management system. sec.95.401. Primary Data Elements. The primary data elements used in the UCC information management system are the following. (1) Identification numbers. (A) Each original financing statement is identified by unique information assigned by the filing officer described in sec.95.101(8) of this title (relating to Definitions). Identification of the original financing statement is stamped on tangible UCC documents or otherwise permanently associated with the record maintained for UCC documents in the UCC information management system. A record is created in the information management system for each original financing statement and all information comprising such record is maintained in such system. Such record is identified by the same information assigned to the original financing statement. (B) A UCC document other than an original financing statement is identified by unique information assigned by the filing officer. In the information management system, records of all UCC documents other than original financing statements are linked to the record of the original financing statement to which the UCC documents relate. (2) Type of document. The type of UCC document from which data is transferred is identified in the information management system from information supplied by the remitter. (3) Filing date and filing time. The filing date and filing time of UCC documents are stored in the information management system. Calculation of the lapse date of an original financing statement is based upon the filing date. (4) Identification of parties. The names and addresses of debtors and secured parties are transferred from UCC documents to the UCC information management system using one or more data entry or transmittal techniques. (5) Status of parties. In the information management system, a record is created for each debtor and secured party for each financing statement. Each record of each debtor and secured party has a status of active or inactive as described in sec.sec.95.406 et seq. of this title (relating of UCC Information Management System). (6) Status of financing statement. In the information management system, each financing statement has a status of active, lapsed, terminated, or revoked. (7) Page count. The total number of pages in a UCC document is maintained in the information management system. sec.95.402. Names of Debtors Who are Individuals. For the purpose of this rule, "individual" means a human being, or a decedent in the case of a debtor that is such decedent's estate. This rule applies to the name of a debtor, a secured party, or an assignee on a UCC document who is an individual. (1) Individual name fields. The names of individuals are stored in files that include only the names of individuals, and not the names of entities. Separate data entry fields are established for first (given), middle (given), last names (surnames or family names), and suffix (given) of individuals. The filing officer assumes no responsibility for the accurate designation of the components of a name but will accurately enter the data in accordance with the filer's designations. (2) Truncation - individual names. Personal name fields in the UCC database are fixed in length. Although filers should continue to provide full names on their UCC documents, a name that exceeds the fixed length is entered as presented to the filing officer, up to the maximum length of the data entry field. The length of data entry name fields are as follows. (A) First name: 25 characters. (B) Middle name: 25 characters. (C) Last name: 35 characters. (D) Suffix: 10 characters. sec.95.403. Names of Debtors Who are Entities. For the purpose of this rule, "entity" means a legal person who is not an individual under sec.95.402 of this title (relating to Names of Debtors Who are Individuals), except the estate of a decedent. This rule applies to the name of an entity who is a secured party, or an assignee on a UCC document. (1) Single field. The names of entities are stored in files that includes only the names of entities and not the names of individuals. A single field is used to store an entity name. (2) Truncation - entity names. The business name field in the UCC database is fixed in length. The maximum length is 60 characters. Although filers should continue to provide full names on their UCC documents, a name that exceeds the fixed length is entered as presented to the filing officer, up to the maximum length of the data entry field. sec.95.404. Estates. Although they are entities, estates are treated as if the decedent were the debtor under sec.95.402 of this title (relating to Names of Debtors Who are Individuals). sec.95.405. Trusts. Trusts are treated as entities. If the trust is named in its organic document(s), its full legal name, as set forth in such document(s), is used. If the trust is not so named, the name of the settlor is used followed by the word "Trustee" along with such information provided by the filer to distinguish the debtor trust from other trusts having the same settlor. sec.95.406. Original Financing Statement. Upon the filing of an original financing statement the status of the parties and the status of the financing statement shall be as follows. (1) Status of secured party. The status of a secured party named on the document shall be active, except that if the document names a total assignee, a secured party/assignor shall not have an active status as a secured party and a secured party/total assignee shall have active status as a secured party. (2) Status of debtor. The status of a debtor named on the document shall be active. (3) Status of financing statement. The status of the financing statement shall be active. A lapse date shall be calculated, five years from the file date, unless otherwise required by statute. sec.95.407. Statement of Amendment of a Financing Statement. Status of secured party and debtor. A statement of amendment shall affect the status of its debtor(s) and secured party(ies) as follows: (1) Collateral amendment or address change. A statement of amendment that amends only the collateral description or one or more party's(ies) address has no effect upon the status, active or inactive, of any debtor or secured party. If a statement of amendment is authorized by less than all of the active secured parties (or, in the case of an amendment that adds collateral, less than all of the active debtors), the statement affects only the interests of each authorizing secured party (or debtor). (2) Debtor name change. A statement of amendment that changes a debtor's name has no effect on the status, active or inactive, of any debtor or secured party, except that the related original financing statement and all UCC documents that include an identification of such original financing statement shall be cross- indexed in the UCC information management system so that a search under either the debtor's old name or the debtor's new name will reveal such original financing statement and such related UCC documents. Such a statement of amendment affects only the rights of its authorizing secured party(ies). (3) Secured party name change. A statement of amendment that changes the name of a secured party has no effect on the status, active or inactive, of any debtor and has no effect on the status of any secured party unless the secured party whose name is being changed has authorized the statement of amendment, in which case the old name of the secured party is deleted from the UCC information management system and is replaced with the new name. (4) Addition of a debtor. A statement of amendment that adds a new debtor name has no effect upon the status of any party to the amendment or the related original financing statement, except the new debtor name shall be added as a new active debtor on the financing statement. The addition shall affect only the rights of the secured party(ies) authorizing the statement of amendment. (5) Addition of a secured party. A statement of amendment that adds a new secured party shall not affect the status of any party, except that the new secured party name shall be added as a new active secured party on the financing statement. (6) Deletion of a debtor. A statement of amendment that deletes a debtor shall have no effect on the status, active or inactive, of any party to the financing statement. (7) Deletion of a secured party. A statement of amendment that deletes a secured party shall have no effect on the status, active or inactive, of any party to the financing statement, unless it is authorized by the secured party being deleted, in which case such secured party is rendered inactive if such secured party is not the last active secured party of record. The status of the last active secured party can not be inactivated. sec.95.408. Statement of Assignment of Interest in Collateral. (a) Designation as full or partial assignment. A statement of assignment should designate whether the assignment of a secured party's interest in all collateral under the financing statement is a full or partial assignment of that interest. The designation shall apply to all secured parties named on the statement of assignment. If no designation is made, the statement of assignment will be treated as a partial assignment. (b) Full assignment - status of secured parties. Upon filing a statement of full assignment, the status of a secured party of record named on the statement of assignment as an authorizing assignor shall be inactive. The status of an assignee shall be that of an active secured party. (c) Partial assignment - status of secured parties. Upon filing a statement of partial assignment, the status of a secured party of record named on the statement of assignment as an authorizing assignor shall continue to be active. The status of the assignee shall also be that of an active secured party. (d) Status of other secured parties. The filing of a statement of assignment shall have no effect upon the status of a secured party not named on the statement of assignment as an authorizing assignor. (e) Status of debtor. The filing of a statement of assignment shall have no effect upon the status of a debtor. (f) Status of financing statement. A statement of assignment shall have no effect upon the status (active, lapsed, terminated, or revoked) of the financing statement. sec.95.409. Continuation Statement. (a) Continuation of lapse date. Upon the timely filing of a continuation statement by any secured party(ies) of record, the lapse date of the financing statement shall be continued for the period authorized by the UCC only with respect to such secured party(ies). (b) Status of secured party. The filing of a continuation statement shall have no effect upon the status, active or inactive, of a secured party. (c) Status of debtor. The filing of a continuation statement shall have no effect upon the status of a debtor. (d) Status of financing statement. Upon the filing of a continuation statement, the status of the financing statement remains active. sec.95.410. Termination Statement. (a) Status of secured party. Upon filing a termination statement, the status of each secured party named on the termination statement as an authorizing secured party shall be inactive. The filing of a termination shall have no effect upon the status of a secured party that is not named as an authorizing secured party on the termination statement. (b) Status of debtor. The filing of a termination statement shall have no effect upon the status of a debtor. (c) Status of financing statement. A financing statement shall have the status of terminated upon the filing of a termination statement that, together with all previously filed termination statements, name all active secured parties of record. sec.95.411. Procedure Upon Lapse Date. On the date upon which a financing statement would lapse in the absence of the timely filing of a continuation statement, the information management system performs or is caused to perform the following operations. (1) Status of secured party. The status of each secured party remains active if any then-active secured party has filed a timely continuation statement. (2) Status of debtor. The status of a debtor remains active, if any then-active secured party has filed a timely continuation statement. The status of a debtor is inactive in the absence of a timely filing of a continuation statement by any then-active secured party. (3) Status of financing statement. The status of a financing statement shall be continued where required by statute and for the period of time required by statute if a continuation statement has been timely filed by a then-active secured party. The status of a financing statement shall be lapsed in the absence of the timely filing of a continuation by any then-active secured party. sec.95.412. Statement of Release of Collateral. The filing officer maintains no record of the designation of a statement of release of collateral as a full or partial release of collateral. (1) Status of secured party. The filing of a statement of release of collateral shall have no effect upon the status of a secured party on the financing statement. (2) Status of debtor. The filing of a statement of release of collateral shall have no effect on the status of a financing statement. sec.95.413. System Security. (a) Physical Security. The computer system resides on the third floor of the James Earl Rudder Building. There are two doors that allow entry into the computer room. These two doors are secured with combination cipher locks. A third entry is located by the service elevator. This entry requires a key to open the elevator doors. Cipher lock and key access is limited to selected personnel. (b) Limitations on Electronic Access. The interal on-line system and the external, Direct Access system has several layers of access security passwords. Menus are controlled by the user department supervisors. Internal and external access is customized to fit functional needs. (c) Procedures to control modification to the system. All of the software programs reside in a production environment, which is inaccessible to application developers. System's manager and operation's manager control access to these areas and these areas can only be accessed by developers in a read only mode. When system changes are requested, the following steps are taken: (1) The developer transfers the production program(s) to a development environment. (2) The change is then made and tested in the development environment, which is a functional image of the production environment. (3) Once the change is complete and approved to be moved to production, the developer completes a CCL (Change Control Log). (4) The CCL is approved and initialed by the Application Support Manager. (5) The Application Support Manager transfers the CCL's to the Operations Manager. (6) Operations reviews the CCL's and then submits approved CCL's to Systems. (7) Systems reviews the CCL's and copies the approved changes to production. (8) The CCL's are then returned to the Application Support Manager to be filed for historical purposes. sec.95.414. Database Security. (a) The UCC database files reside on magnetic storage devices within an automated computer environment under a multi-level security. Access is restricted to production and batch processors. Application developers access to production files is controlled by request from the appropriate Application Support Manager (ASM). (b) Backup Procedure. The UCC database is backed up incrementally on a nightly basis. The UCC database is backed up in total on a weekly basis. All backups are removed to off-site storage the day after they have been run. Off-site storage is rotated on a daily basis where the newest tapes are taken off site and tapes that are over one week old are returned back to the office for reuse. 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 September 9, 1998. TRD-9814247 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER E. EDI Documents 1 TAC sec.sec.95.440-95.450 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.440. Definitions. For the purpose of rules relating to the electronic data interchange of documents, terms shall have the meaning provided in this rule, unless the context otherwise requires. (1) "EDI" means the electronic data interchange of UCC documents, UCC search requests and related responses. (2) "EDI document" means a UCC document transmitted from a remitter to the filing officer by EDI techniques authorized under this rule. sec.95.441. EDI Authorized. (a) A remitter may be authorized for EDI upon the written authorization of the filing officer. The filing officer shall authorize a remitter to engage in EDI if: (1) the remitter holds an account for the billing of fees by the filing officer, (2) the remitter has entered into a trading partner agreement, in form and substance satisfactory to the filing officer, with the filing office, and (3) the filing officer determines, after appropriate testing of transmissions in accordance with the filing officer's specifications, that the remitter is capable of transmitting EDI documents in a manner that permits the filing officer to receive, index, and retrieve the EDI documents. (b) The filing officer may suspend or revoke the authorization when, in the filing officer's sole discretion, it is determined that a remitter's transmissions are incompatible with the filing officer's EDI system. A request to be authorized to transmit EDI documents shall be addressed to the filing officer at the address identified in sec.95.104(a)(1) of this title (relating to Filing Office Identification). Upon receipt of a request for authorization, the filing officer shall provide the remitter with necessary information on the record layout of the transmission, including record length, format, network address for transmission, and other necessary specifications. sec.95.442. ANSI Standard Adopted. ANSI X12 transaction set 154, as adopted by the American National Standards Institute and in effect from time to time, is adopted in this state as the format for electronic transmission of UCC documents, although the filing officer shall, periodically and at the request of an authorized EDI remitter, identify which versions and releases of ANSI X12 154 are then in use by and acceptable to the filing office. sec.95.443. Standard Form and Applicable Fee. Notwithstanding the provisions of sec.95.108 of this title (relating to Requirements to Qualify for Standard Form Fee), an EDI document qualifies for the standard fee set forth in sec.95.111 of this title (relating to Filing Fees). sec.95.444. Implementation Guide. The filing office publishes an implementation guide that prescribes in further detail the use of ANSI X12 154 in the UCC filing system. The guide is available upon request made in writing to the filing office at its mailing address set forth in sec.95.104(a)(1) of this title (relating to Filing Office Identification). (1) The guide identifies the version(s) or release(s) of ANSI X12 154 currently in use by the filing office. (2) The guide identifies the types of UCC documents and related responses that can currently be transmitted through EDI. (3) The guide prescribes the manner of transmission of all information contained in a UCC document and any other information required for the filing office to fulfill its responsibilities under the UCC and these rules, including identification of UCC documents, information necessary to collect fees, identification of debtors and secured parties, description of collateral and the authentication of UCC documents. (4) The guide may be amended from time to time. Notice of amendments will be provided to each remitter authorized to transmit EDI documents to the filing office not less than 30 days prior to the effectiveness of the relevant amendment(s). sec.95.445. Authentication. (a) A segment of an EDI document is designated for transmission of the symbol adopted by the relevant debtor(s) or secured party(ies) with intent to authenticate the relevant UCC document pursuant to Section 1-201(39) of the UCC and as required by Section 9-402(1) of the UCC. (b) The transmission of such a symbol on behalf of a debtor shall constitute a representation of the remitter and the relevant secured party(ies) that the relevant secured party(ies) has(ve) a writing signed by such debtor by which such debtor adopts the contents of the relevant segment as such symbol with the intent to authenticate the EDI document. The transmission of such a symbol on behalf of a secured party shall constitute a representation of the remitter that the remitter has a writing signed by such secured party by which such secured party adopts the contents of the relevant segment as such symbol with intent to authenticate the relevant EDI document. sec.95.446. Document Types. An EDI document shall be identified as to type by the transmission of the appropriate identifier required in the implementation guide referred to in sec.95.444 of this title (relating to Implementation Guide). The filing officer, in responding to a request for a paper copy of an EDI document, shall print the full text of the relevant one of the following statements corresponding to the type of EDI document requested. (1) For an original financing statement: "Financing Statement - This financing statement is presented to the filing officer for filing pursuant to the Uniform Commercial Code." (2) For a statement of amendment financing statement: "Amendment - The financing statement bearing the file number shown on this document is hereby amended as follows:" (3) For a statement of assignment of an interest in collateral: "Assignment - The secured party certifies that the assignee named in this document has been assigned some or all of the secured party's rights under the financing statement bearing the file number transmitted in this document." (4) For a continuation statement: "Continuation - The original financing statement bearing the file number shown on this document is still effective." (5) For a termination statement: "Termination - The secured party certifies that a security interest is no longer claimed by it under the financing statement bearing the file number shown on this document." sec.95.447. Identification of Secured Party. When an EDI document requires the name of a secured party, the name of a secured party of record, or the address of a secured party, the remitter shall transmit to the filing officer a secured party identification number assigned by the filing officer if such a number is assigned. The filing officer, in responding to a request for a paper copy of an EDI document, shall print the full name and address of the secured party corresponding to the identification number. A list of secured parties identified by the filing officer pursuant to this rule is available from the filing officer at the mailing address stated in sec.95.104(b) of this title (relating to Filing Office Identification). sec.95.448. Refusal of EDI Document. A record transmitted to the filing officer that is not machine-readable or does not contain the information required by the implementation guide referred to in sec.95.444 of this title (relating to Implementation Guide) in an acceptable format shall be refused. The filing officer shall provide regularly scheduled (not less frequently than daily) electronic notices to the relevant remitter containing identification of EDI documents refused and appropriate error codes or explanations for the refusal when possible. However, records that cannot be read because they are garbled or are in improperly structured data packets, or which are received from persons not authorized for EDI by the filing office will not receive a refusal response. Readable transmissions from authorized transmitters will generate electronic confirmation of acceptance or rejection. sec.95.449. Acceptance and Archives. Upon acceptance of an EDI document for filing, a report shall automatically be generated which shall contain all of the information related to the document including all information transmitted by the remitter for inclusion in the document as prescribed by the implementation guide referred to in sec.95.444 of this title (relating to Implementation Guide). The information contained in the report shall promptly be rendered and stored in an archival medium. The filing officer shall provide regularly scheduled (not less frequently than daily) electronic notices to remitters of accepted EDI documents to confirm such acceptance and the creation of such archive. sec.95.450. EDI UCC Search Requests. (a) UCC search requests may be submitted electronically by persons authorized to submit EDI documents in the manner set forth in the implementation guide referred to in sec.95.444 of this title (relating to Implementation Guide). Unless otherwise specified in said implementation guide, accepted requests will generate searches conducted under the same search criteria applicable to search requests not submitted electronically. (b) Electronic search requests may be submitted only by persons who are authorized to transmit EDI documents pursuant to sec.95.441 of this title (relating to EDI Authorized) and who have entered into arrangements acceptable to the filing officer for the payment of search and copy fees. (c) Responses to electronic search requests will be made available electronically as soon as practicable, in a manner to be specified in the implementation guide referred to in sec.95.444 of this title (relating to Implementation Guide). Such responses may, for a time, be limited to a search report with copies of reported documents being made available by non-electronic means. Until such time as electronic responses are available in any form, responses to electronic search requests will be generated and transmitted in the same manner and by the same means as responses to non-electronic search requests. 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 September 9, 1998. TRD-9814248 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER F. Filing and Data Entry Procedures 1 TAC sec.sec.95.500-95.520 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.500. Policy Statement. This subchapter contains rules describing the filing procedures of the filing officer upon and after receipt of a UCC document. It is the policy of the filing officer to file promptly a document that conforms to these rules. Except as provided in these rules, data are transferred from UCC documents to the information management system exactly as the data are set forth in the document. Personnel who create reports in response to search requests type search criteria exactly as set forth on the search request. No effort is made to detect or correct errors of any kind. sec.95.501. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) For the purpose of this subchapter, "individual" means a human being, or a decedent in the case of a debtor that is such decedent's estate. (2) For the purpose of this subchapter, "entity" means a legal person who is not an individual under sec.95.402 of this title (relating to Names of Debtors Who are Individuals). sec.95.502. Document Indexing and Other Procedures before Archiving. (a) Date and time stamp. The date and time of receipt are noted on the document (or otherwise permanently associated with the record maintained for a UCC document in the UCC information management system) at the earliest possible time. (b) Cash management. Transactions necessary to payment of the filing fee are performed. (c) Document review. The filing office determines whether a ground exists to refuse the document under sec.95.302 of this title (relating to Grounds for Refusal of UCC Document). (1) File stamp. If there is no ground for refusal of the document, the document is deemed filed and a unique identification number and the filing date is applied to the document or permanently associated with the record of the document maintained in the UCC information management system. The sequence of the identification number is not an indication of the order in which the document was received. (2) Correspondence. If there is a ground for refusal of the document, notification of refusal to accept the document is prepared as provided in sec.95.304 of this title (relating to Procedure Upon Refusal). (d) Data entry. Data entry and indexing functions are performed as described in this subchapter and in Subchapter G of this chapter. (e) Acknowledgment copy and other correspondence. If the filing is made in person or by means of an EDI transmission, confirmation of the filing is given to the remitter by delivering to the remitter an acknowledgment copy of the filed document provided by the remitter or transmitted to the remitter by EDI transmission by transmitting an identification known to the remitter of the UCC document filed as well as the unique identification number assigned to the document by the filing office and the date of filing. Acknowledgment copies of filings made by means other than personal delivery or EDI transmission are sent to the secured party (or the first secured party if there are more than one) named on the UCC document or to the remitter if the remitter so requests by regular mail or by overnight courier if the remitter provides a prepaid waybill or access to the remitter's account with the courier. sec.95.503. Filing Date. The filing date of a UCC document is the date the UCC document is received with the proper filing fee if the filing office is open to the public on that date or, if the filing office is not so open on that date, the filing date is the next date the filing office is so open, except that, in each case, UCC documents excluding electronically transmitted documents received after 5:00 PM CST shall be deemed received on the following day. The filing officer may perform any duty relating to the document on the filing date or on a date after filing date. sec.95.504. Filing Time. The filing time of a UCC document is determined as provided in sec.95.106 of this title (relating to UCC Document Delivery). sec.95.505. Lapse Date and Time. A lapse date is calculated for each original financing statement (unless the debtor is designated as a transmitting utility). The lapse date is the same date of the same month as the filing date in the fifth year after the filing date or relevant subsequent fifth anniversary thereof if timely continuation statement is filed. The lapse takes effect at midnight at the end of the lapse date. sec.95.506. Errors of the Filing Officer. The filing office may correct the errors of filing officer personnel in the UCC information management system at any time. If the correction is made after the filing officer has issued a certification date that includes the filing date of a corrected document, the filing officer shall proceed as follows. An entry shall be made upon the record of the financing statement in the UCC information management system stating the date of the correction and explaining the nature of the corrective action taken. The notation shall be preserved for so long as the record is preserved in the UCC information management system. sec.95.507. Data Entry of Names - Designated Fields. Whenever a filing designates whether a name is a name of an individual or an entity and, if an individual, also designates the first, middle, last names, and suffix, the following rules apply. (1) Entity names. Entity names are entered into the UCC information management system exactly as set forth in the UCC document, even if it appears that multiple names are set forth in the document or if it appears that the name of an individual has been included in the field designated for an entity name. (2) Individual names. On a form that designates separate fields for first, middle, last names, and suffix the filing officer enters the names into the first, middle, last name, and suffix fields in the UCC information management system exactly as set forth on the form. (3) Designated fields encouraged. The filing office encourages the use of forms that designate separate fields for individual and entity names and separate fields for first, middle, last names, and suffix. Such forms diminish the possibility of filing office error and help assure filers' expectations are met. However, filers should be aware that the inclusion of names in an incorrect field or failures to transmit names accurately to the filing office may cause filings to be ineffective. All documents submitted through EDI will be required to use designated name fields. sec.95.508. Data Entry of Names - No Designated Fields. Whenever a filing fails to designate whether a name is a name of an individual or an entity and, if an individual also designates the first, middle, last names, and suffix, the following rules shall apply. (1) Identification of entities. When not set forth in a field designated for individual names, a name is treated as an entity name if it contains words or abbreviations that indicate entity status such as the following and similar words or abbreviations in foreign languages: association, church, college, company, co., corp., corporation, inc., limited, ltd., club, foundation, fund, L.L.C., limited liability company, institute, society, union, syndicate, GmBH, S.A. de C.V., limited partnership, L.P., limited liability partnership, L.L.P., trust, business trust, co-op, cooperative and other designations established by statutes to indicate a statutory entity. In cases where entity or individual status is not designated by the filer and is not clear, the filing officer will use their own judgment. (2) Identification of individuals. A name is entered as the name of an individual and not the name of an entity when the name is followed by a title substantially similar to one of the following titles, or the equivalent of one of the following titles in a foreign language: proprietor, sole proprietor, proprietorship, sole proprietorship, partner, general partner, president, vice president, secretary, M.D., O.D., D.D.S., attorney at law, Esq., accountant, CPA. In such cases, the title is not entered. (3) DBA, AKA, FKA. Entity names are entered as separate debtors and names when separated by words or abbreviations such as "doing business as," "also known as," "formerly known as," "DBA," "AKA," or "FKA," "a division of," or "a subsidiary of." Such words and abbreviations are not entered. Additional filing fees for the additional debtor name(s) may be required. (4) Individual and entity names on a single line. Where it is apparent that the name of an individual and the name of an entity are stated on a single line and not in a designated individual name field, the name of the individual and the name of the entity shall be entered as two separate debtors, one as an individual and one as an entity. Additional filing fees for the additional debtor name(s) may be required. (5) Individual names. In the absence of designated separate fields for first, middle, last names, and suffix, the following data entry rules apply. (A) Freestanding initials. An initial in the first position of the name is treated as a first name. An initial in the second position of the name is treated as a middle name. (B) Combined initials and names. An initial and a name to which the initial apparently corresponds is entered into one name field only (e.g., "D. (David)" in the name "John D. (David) Rockefeller" is entered as "John" (first name); "D. (David)" (middle name); "Rockefeller" (last name)). (C) Multiple individual names on a single line. Two personal names contained in a single line are entered as two, separate debtors (e.g., the debtor name "John and Mary Smith" is entered as two debtors: John Smith, and Mary Smith). (D) One word names. A one word name is entered as a last name (e.g. "Cher" is treated as a last name). (E) Nicknames. A name in parentheses or quotes will be considered a nickname and shall be entered as a separate debtor. Additional filing fees for the additional debtor name(s) may be required. sec.95.509. Verification of Data Entry. The filing officer uses the following procedures to verify the accuracy of data entry tasks. (1) Double key entry is employed for data entered in the individual and entity fields. (2) Visual inspection of data entry changes is employed for data in the following fields. (A) Document identification fields. (B) Document type fields. (C) Individual and entity fields. (D) Address fields. sec.95.510. Original Financing Statement. A new record is opened in the UCC information management system for each original financing statement. (1) The name and address of each debtor named on the financing statement is entered into the record of the financing statement. (2) The name and address of each secured party named on the financing statement is entered into the record of the financing statement. sec.95.511. Statement of Amendment of a Financing Statement. (a) A record is created for the statement of amendment, linked to the record of the original financing statement by entry of identification of the original financing statement. (b) The names and addresses of additional debtors and secured parties are entered into the UCC information management system. sec.95.512. Statement of Assignment of Interest in Collateral. (a) A record is created for the statement of assignment, linked to the record of the original financing statement by entry of identification of the original financing statement. (b) Appropriate adjustments are made to the status of secured parties on the record of the financing statement. (See sec.95.408 of this title (relating to Statement of Assignment of Interest in Collateral)). (c) Absence of full/partial designation. A statement of assignment of interest in collateral shall be treated as a statement of partial assignment if the form fails to contain a designation whether the assignment is a full or partial assignment of a secured party's rights under the financing statement. sec.95.513. Continuation Statement. (a) A record is created for the continuation statement, linked to the record of the original financing statement by entry of identification of the original financing statement. (b) No adjustments are made to the status of secured party on the record of the financing statement. (See sec.95.409 of this title (relating to Continuation Statement)). sec.95.514. Statement of Release of Collateral. (a) A record is created for the statement of release, to the record of the original financing statement by entry of identification of the original financing statement. (b) No adjustments are made to the status of secured parties on the record of the financing statement. (See sec.95.412 of this title (relating to Statement of Release of Collateral)). sec.95.515. Termination Statement. Appropriate adjustments are made to the status of secured parties on the record of the financing statement. (See sec.95.410 of this title (relating to Termination Statement)). sec.95.516. Master Filings. (a) The filing officer may accept for filing a single UCC document for the purpose of assigning or amending more than one financing statement. Master amendments may accomplish one or both of the following purposes: amendment to change secured party name; amendment to change secured party address. (b) A master filing shall consist of a written document describing the requested assignment or amendment on a form approved by the filing office, and a machine readable file furnished by the remitter and created to the filing officer's specifications containing appropriate indexing information. A copy of master filing specifications is available from the filing officer upon request made in writing to the filing office at its mailing address set forth in sec.95.104(b) of this title (relating to Filing Office Identification). Acceptance of a master filing is conditioned upon the determination of the filing officer in the filing officer's sole discretion. sec.95.517. Archives - General. Active filings are available by search of the debtor name or by request under a specific file number. Inactive records are available upon request by a specific file number only. (1) Paper UCC documents. (A) Storage. Documents are stored in expanding file pockets in sequential number in file boxes. (B) Retention. Documents are stored on site for six months after receipt. Documents are transported to State Archives for a period of two years six months prior to destruction. (2) Reductions. (A) Storage. Paper documents are reduced to either microfilm or computer media after indexing. (B) Retention. Microfilm and digital images are retained indefinitely. (3) Database storage. The UCC Information Management system is backed up to magnetic tape every business day. sec.95.518. Archives - Data Retention. Data in the UCC information management system relating to financing statements that have lapsed or have been terminated are retained for at least twelve months from the date of lapse or termination. Such data will be maintained in the system for twelve months from the date of lapse or termination. Documents are purged from the UCC Information Management system and reduced to microfiche at least every six months and will thereafter be maintained in archives. sec.95.519. Archival Searches. Terminated or lapsed filings may only be searched by file number. Computer record data for purged documents may be retrieved from microfiche of purged records. sec.95.520. Notice of Bankruptcy. The filing officer takes no action upon receipt of a notification, formal or informal, of a bankruptcy proceeding involving a debtor named in the UCC information management system. Accordingly, filings will lapse in the information management system as scheduled unless properly continued. 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 September 9, 1998. TRD-9814249 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER G. Search Requests and Reports 1 TAC sec.sec.95.601-95.605 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.601. Search Requests. Search requests shall contain the following information. (1) Name searched. A search request should set forth the full legal name of a debtor or the name variant desired to be searched. The full name of an individual shall consist of a first, middle, and last name, followed by any suffix that may apply to the name. The full name of an entity shall consist of the name of the corporate body as stated on the articles of incorporation or other organic documents in the state or country of organization or the name variant desired to be searched. A search request will be processed using the name in the exact form it is submitted. (2) Requesting party. The name and address of the person to whom the search report is to be sent. (3) Fee. The minimum search fee as described in sec.95.111(c) of this title (relating to Filing Fees) should be enclosed. sec.95.602. Optional Information. A UCC search request may contain any of the following information. (1) A request that copies of documents referred to in the report be included with the report. The request may limit the copies requested by limiting them to the city of the debtor, the date of filing or the identity of the secured party(ies) of record on the financing statements located by the related search. (2) A request that the search of a debtor name be limited to debtors in a particular city. A report created by the filing officer in response to such a request shall contain the following statement: "A search limited to a particular city may not reveal all filings against the debtor searched and the searcher bears the risk of relying on such a search." (3) Instructions on the mode of delivery requested, if other than by ordinary mail, will be honored if the requested mode is made available by the filing office. sec.95.603. Rules Applied to Search Requests. Search results are created by applying standardized search logic to the name presented to the filing officer by the person requesting the search. Human judgment does not play a role in determining the results of the search. The following, and only the following rules are applied to conduct searches. (1) There is no limit to the number of matches that may be returned in response to the search criteria. (2) No distinction is made between upper and lower case letters. (3) Punctuation marks are disregarded. (4) Words and abbreviations that indicate the existence or nature of an entity are disregarded (e.g., company, limited, incorporated, corporation, limited partnership, limited liability company or abbreviations of the foregoing). (5) The word "the" at the beginning of the search criteria is disregarded. (6) After taking the preceding rules into account to modify the name of the debtor requested to be searched and to modify the names of debtors contained in active financing statements in the UCC information management system, the search will reveal only names of active debtors that, as modified, exactly match the name requested, as modified. sec.95.604. Search Responses. Reports created in response to a search request shall include the following. (1) Filing officer. Identification of the filing officer and the certification of the filing officer required by the UCC. (2) Report date. The date the report was generated. (3) Name searched. Identification of the name searched. (4) Certification date. The certification date applicable to the report; i.e., the date through the search is effective to reveal all relevant UCC documents filed on or prior to that date. (5) Identification of original financing statements. Identification of each active original financing statement filed on or prior to the certification date corresponding to the search criteria, by name of debtor, by identification number, and by file date and file time. (6) History of financing statement. For each original financing statement on the report, a listing of UCC documents filed by the filing officer on or prior to the certification date that include identification of the original financing statement, with the identification number, and file date and time of the documents. (7) Copies. Copies of all UCC documents revealed by the search and requested by the searcher. (8) Certificates. A report created by the filing officer in response to a request shall contain the following statement: "My acceptance for filing and custody of these documents in no way confirms, denies, or implies validity, legal effect, or enforceability of the attached documents." sec.95.605. Supplemental Responses. (a) In addition to the report described in sec.95.604 of this title (relating to Search Responses), the filing office may send a report of supplemental responses, clearly labeled as supplemental, identifying the names of debtors and identification of original financing statements for which a debtor name is similar to the name requested to be searched. Upon receipt of supplemental search responses requestor may submit a follow-up request for specific supplemental filings. (b) The filing office publishes a search methodology guide that prescribes in further detail the use of the supplemental search logic in the UCC filing system. The guide is available upon request made in writing to the filing office at its mailing address set forth in sec.95.104(b) of this title (relating to Filing Officer Identification). 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 September 9, 1998. TRD-9814250 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER H. Other Notices of Liens 1 TAC sec.sec.95.700-95.706 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government Code. sec.95.700. Policy Statement. The purpose of rules in this subchapter is to describe records of liens maintained by the filing office created pursuant to statutes other than the UCC that are treated by the filing officer in a manner substantially similar to UCC documents and are included on request with the reports described in sec.95.604 and sec.95.605 of this title (relating to Search Responses and Supplemental Responses). sec.95.701. Notice of Federal Tax Lien. (a) Filing. Notices of federal liens such as federal tax liens, environmental, and pension will be accepted for filing as defined in Chapter 14, Texas Property Code. Notices of federal liens are filed and indexed within the UCC filing system. Notices of federal liens such as notices of discharge, release, and refiling are filed as though they were financing statement changes and must include identification of the original file number (as defined in sec.95.101(8) of this title (relating to Definitions)). A separate notice or certificate form is submitted for each federal lien. A change to a federal lien shall be refused if the document's identification of the original lien does not correspond to the identification number and filing date of a federal lien then active in the UCC information management system. (1) Where to file. Notices of liens, certificates, and other notices affecting federal tax liens or other federal liens are filed with the filing office pursuant to Chapter 14.002, Texas Property Code. (2) Fee. The required fee for filing and indexing each notice of lien or certificate or notice affecting is pursuant to Chapter 14.005, Texas Property Code. (3) Duration. The notice is effective until a certificate of release, nonattachment, discharge, or subordination is filed with the filing office pursuant to Chapter 14.004, Texas Property Code. (b) Mechanics of search. Search requests and reports are conducted pursuant to Chapter 14.004, Texas Property Code and as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to Chapter 14.004, Texas Property Code and as described in sec.sec.95.111-95.112 of this title (relating to General Provisions). sec.95.702. Notice of Utility Security Instrument. (a) Filing. Utility security instruments and notices of name change, merger or consolidation will be accepted for filing as defined in Chapter 35, Texas Business and Commerce Code. Utility security instruments are filed and indexed within the UCC filing system. Notices of name change, merger or consolidation are filed as though they were financing statement changes and must include identification of the original file number (as defined in sec.95.101(8) of this title (relating to Definitions)). A separate notice is submitted for each utility security instrument. A change to a utility security instrument shall be refused if the document's identification of the original filing does not correspond to the identification number and file date of a utility security instrument then active in the UCC information management system. (1) Where to file. Utility security instruments, instruments supplementary or amendatory thereto, or a statement of name change, merger, or consolidation are filed with the filing office pursuant to Chapter 35, Texas Business and Commerce Code. (2) Fee. The required fee for filing and indexing each notice of lien or certificate or notice affecting is pursuant to Chapter 35.05, Texas Business and Commerce Code. (3) Duration. The notice is effective until the interest granted as security is released by the filing of a termination statement signed by the secured party, and no renewal, refiling, or continuation statement shall be required to continue such effectiveness pursuant to Chapter 35.03, Texas Business and Commerce Code. (b) Mechanics of search. Search requests and reports are conducted pursuant to Chapter 35.06, Texas Business and Commerce Code and as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to Chapter 35.06, Texas Business and Commerce Code and as described in sec.sec.95.111-95.112 of this title (relating to General Provisions). sec.95.703. Notice of Restitution Lien. (a) Filing. Restitution liens will be accepted for filing as defined in Article 42.22, Texas Code of Criminal Procedure. Restitution liens are filed and indexed within the UCC filing system. A separate affidavit is submitted for each restitution lien. (1) Where to file. Restitution liens are filed with the filing office pursuant to Article 42.22, Sec. 7, Texas Code of Criminal Procedure. (2) Fee. The required fee for filing and indexing each notice of lien or certificate or notice affecting is pursuant to Article 42.22, Sec.7, Texas Code of Criminal Procedure. (3) Duration. The lien expires on the 10th anniversary of the date the lien was filed or on the date the defendant satisfies the judgment creating the lien, whichever occurs first pursuant to Article 42.22, Sec. 12, Texas Code of Criminal Procedure. The lien may be refiled before the date the lien expires and will expire on the 10th anniversary of the date the lien was refiled or that the defendant satisfies the judgment creating the lien, whichever occurs first. (b) Mechanics of search. Search requests and reports are conducted as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to sec.sec.95.111-95.112 of this title (relating to General Provisions). sec.95.704. Notice of Agricultural Chemical and Seed Liens. (a) Filing. Agricultural chemical and seed liens will be accepted for filing as defined in Chapter 128, Texas Agricultural Code. Agricultural chemical and seed liens are filed and indexed within the UCC filing system. A separate notice of claim of lien is submitted for each agricultural chemical and seed lien. (1) Where to file. Agricultural chemical and seed liens are filed with the filing office pursuant to Chapter 128.016, Texas Agriculture Code. (2) Fee. The required fee for filing and indexing each notice of claim of lien is pursuant to Chapter 128.016, Texas Agriculture Code. (3) Duration. The notice of claim of lien is effective until the lien is satisfied pursuant to Chapter 128.011, Texas Agriculture Code. The lien may be terminated pursuant to Chapter 128.038, Texas Agriculture Code. (b) Mechanics of search. Search requests and reports are conducted as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to Chapter 128.031, Texas Agriculture Code and sec.sec.95.111-95.112 of this title (relating to General Provisions). sec.95.705. Notice of Liens for Animal Feed. (a) Filing. Animal feed liens will be accepted for filing as defined in Chapter 188, Texas Agricultural Code. Animal feed liens are filed and indexed within the UCC filing system. A separate notice of claim of lien is submitted for each animal feed lien. (1) Where to file. Animal feed liens are filed with the filing office pursuant to Chapter 188.016, Texas Agriculture Code. (2) Fee. The required fee for filing and indexing each notice of claim of lien is pursuant to Chapter 188.016, Texas Agriculture Code. (3) Duration. The notice of claim of lien is effective until the lien is satisfied pursuant to Chapter 188.011, Texas Agriculture Code. The lien may be terminated pursuant to Chapter 188.038, Texas Agriculture Code. (b) Mechanics of search. Search requests and reports are conducted as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to Chapter 188.031, Texas Agriculture Code and sec.sec.95.111-95.112 of this title (relating to General Provisions). sec.95.706. Notice of Judicial Finding of Fact. (a) Filing. Notice of judicial finding of fact documents will be accepted for filing as defined in Subchapter J, Sections 51.901-51.905, Texas Government Code. Judicial finding of fact documents are filed and indexed within the UCC filing system. A separate affidavit is submitted for each judicial finding of fact. (1) Where to file. Judicial findings of fact are filed with the filing office pursuant to Section 51.905, Texas Government Code. (2) Fee. The required fee for filing and indexing each notice of lien or certificate or notice affecting is pursuant to Section 51.905, Texas Government Code. (b) Mechanics of search. Search requests and reports are conducted as described in sec.sec.95.601-95.605 of this title (relating to Search Requests and Reports). (c) Fee for search. The required fee for information from the filing office is pursuant to sec.sec.95.111-95.112 of this title (relating to General Provisions). 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 September 9, 1998. TRD-9814251 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 SUBCHAPTER I. Rulemaking Procedure 1 TAC sec.sec.95.800-95.803 The new sections are adopted under sec.sec.9.401-9.412 Texas Business and Commerce Code, sec.sec.35.01-35.09 Texas Business and Commerce Code, sec.sec.14.001-14.007 Texas Property Code, sec.sec.128, Texas Agriculture Code, sec.sec.188, Texas Agriculture Code, sec.sec.42.21 Texas Code of Criminal Procedure, and sec.sec.51.901-51.905 Texas Government Code which provides the Secretary of State with the authority to adopt rules necessary to administer subchapter D of Chapter 9, Texas Business and Commerce Code, subchapter A of Chapter 35, Miscellaneous, chapter 14, Uniform Federal Lien Registration Act, subtitle H of Title 5, Texas Agriculture Code, subtitle E of Title 6, Texas Agriculture Code, and subchapter J of Chapter 51, Texas Government 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 September 9, 1998. TRD-9814252 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 6, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-5701 TITLE 4. AGRICULTURE PART I. Texas Department of Agriculture CHAPTER 5.Fuel Quality 4 TAC sec.sec.5.1-5.5 The Texas Department of Agriculture (the department) adopts new sec.sec.5.1-5.5 concerning automotive fuel quality rating and monitoring, as published in the July 31, 1998, issue of the Texas Register (23 TexReg 7681). Section 5.4 is adopted with changes. Sections 5.1-5.3 and 5.5 are adopted without changes and will not be republished. The new sections are adopted to implement an automotive fuel quality monitoring program authorized under Article 8614, Vernon's Texas Civil Statutes (1997) as amended by Senate Bill 665, 75th Legislature, 1997, and to ensure the proper labeling of gasoline. Section 5.4 has been changed to clarify that records requested by the department are required to be submitted to the department. New sec.5.1 defines terms used in these regulations. New sec.5.2 specifies an expiration provision for Chapter 5. New sec.5.3 requires the automotive fuel rating of gasoline to be the same or higher than the automotive fuel rating posted on the dispenser and certified by the distributor or supplier. Also, sec.5.3 establishes testing methods, standards and specifications utilized in the determination of the automotive fuel rating. New sec.5.4 provides for submission of records to the department. New sec.5.5 establishes equipment requirements for distributors, suppliers and dealers of gasoline to aid the department in the inspection and investigation of automotive fuel ratings. No public comments were received on the proposal. The new sections are adopted under Article 8614, Vernon's Texas Civil Statutes (1997), as amended by Senate Bill 665, 75th Legislature, 1997 which provides the Texas Department of Agriculture with the authority to adopt rules to regulate the distributors, suppliers and dealers who sell motor fuel within the state. sec.5.4.Records. In addition to the right of inspection any records or other documents required to be maintained under Article 8614, Vernon's Texas Civil Statutes (1997) shall be submitted to the department upon request. 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 September 9, 1998. TRD-9814310 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: September 29, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-7541 TITLE 19. EDUCATION PART II. Texas Education Agency CHAPTER 92.Interagency Coordination SUBCHAPTER AA.Memoranda of Understanding 19 TAC sec.92.1001 The Texas Education Agency (TEA) adopts new sec.92.1001, concerning memorandum of understanding for coordinated services to children and youth, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (23 TexReg 7691). Section 92.1001 provides for a memorandum of understanding (MOU) among various state agencies, including the TEA, to establish a system of community resource coordination groups. The intent of the MOU is to ensure coordination between agencies to serve children and youth. New 19 TAC sec.92.1001 adopts by reference the MOU adopted by the Texas Department of Protective and Regulatory Services in 40 TAC sec.736.701. The State Board of Education adopted 19 TAC sec.75.196, Memorandum of Understanding for Multiproblem Children and Youth, in April 1989. Section 75.196 was effective May 3, 1989, and repealed during the 1995-96 sunset review of board rules. New 19 TAC sec.92.1001 adopts the MOU by rule as required under the Family Code, sec.264.003, as added by Acts 1995, 74th Texas Legislature. The MOU provides a definition of children and youth with multi-agency needs and addresses the areas of financial and statutory responsibilities of each agency, interagency cost-sharing, elimination of duplicative services, interagency dispute resolution, and composition of the local level groups designated to facilitate coordination. No comments were received on the proposed new section. The new section is adopted under the Family Code, sec.264.003, as added by Acts 1995, 74th Texas Legislature, Chapter 20, sec.1, which authorizes the adoption by rule of a joint memorandum of understanding with various agencies to implement a system of local level interagency staffing groups to coordinate services for multiproblem children and youth. 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 September 14, 1998. TRD-9814491 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: October 5, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS PART XI. Board of Nurse Examiners CHAPTER 221.Advanced Practice Nurses 22 TAC sec.221.7 The Board of Nurse Examiners adopts amendments to sec.221.7 concerning Advanced Practice Nurses (APN), New Graduates without changes as published in the August 7, 1998, issue of the Texas Register (23 TexReg 8014). Therefore, the text will not be republished. The amendment is adopted to require APNs to re-educate if they have not passed the certification examination within two years of graduation or within three attempts. This amendment will cause the APN graduates to meet the same requirements for graduates of professional nursing programs who fail the initial licensure examination. The adopted amendment will allow those applicants that have been unsuccessful to reapply for APN authorization after successfully completing an accredited advanced practice nurse program of study. There were no comments received. The amendments are proposed under the Nursing Practice Act, (Texas Civil Statutes, Article 4514), sec.1, which provides the Board of Nurse Examiners with the authority and power to make and enforce all rules and regulations necessary for the performance of its duties and conducting of proceedings before it and Article 4514, sec.8, which provides the Board of Nurse Examiners the authority and power to adopt rules for approval of a registered nurse to practice as an advanced practice nurse. There are no other rules, codes, or statutes that will be affected by this proposal. 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 September 9, 1998. TRD-9814241 Katherine A. Thomas, MN, RN Executive Director Board of Nurse Examiners Effective date: September 29, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 305-6811 PART XIV. Texas Optometry Board CHAPTER 277.Practice and Procedure 22 TAC sec.277.1 The Texas Optometry Board adopts an amendment to sec.277.1, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (23 TexReg 7692) and will not be republished. Section 277.1 is required in order to clarify language regarding the complaint form required under the Texas Optometry Act, Texas Civil Statutes, Article 4552 sec.4.06. No comments were received. The amended section is adopted under the provisions of Texas Civil Statutes, Article 4552, sec.4.06 and sec.2.14. The Texas Optometry Board interprets sec.4.06 as authorizing it to interpret the manner in which complaints are filed with the Board. The Board interprets sec.2.14 as authorizing the Board to adopt substantive and procedural rules for the regulation of the profession of optometry. No other code, statute or article is affected by this proposed 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 September 11, 1998. TRD-9814445 Lois Ewald Executive Director Texas Optometry Board Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 305-8502 PART XV. Texas State Board of Pharmacy CHAPTER 283.Licensing Requirements for Pharmacists 22 TAC sec.283.6 The Texas State Board of Pharmacy adopts an amendment to sec.283.6, concerning preceptor training requirements, without changes to the proposed text as published in the July 3, 1998, Texas Register (23 TexReg 6824). The amendment changes the number of hours of preceptor training from six hours to three hours every three years to more closely match the number of required hours with the number of hours offered by CE providers. No comments were received on the amendments as proposed. This amendment is adopted under the Texas Pharmacy Act (Article 4542a-1, Texas Civil Statutes): sec.4 which specifies that the purpose of the Act is to protect the public through the effective control and regulation of the practice of pharmacy; sec.16(a) which gives the Board the authority to adopt rules for the proper administration and enforcement of the Act; sec.17(a)(3) which gives the Board the authority to establish requirements for practical training, including internship; sec.21(f) which requires an applicant for licensure by examination to obtain practical experience under conditions determined by the Board; and sec.21(g) which requires the Board to establish standards for internship and qualifications for preceptors. The statutes affected by this rule: Texas Civil Statutes, Article 4542a-1. 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 September 14, 1998. TRD-9814470 Gay Dodson, R.Ph. Executive Director/Secretary Texas State Board of Pharmacy Effective date: October 4, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 305-8028 22 TAC sec.283.9 The Texas State Board of Pharmacy adopts amendments to sec.283.9, concerning Fee Requirements for Licensure by Examination and Reciprocity, without change to the proposed text as published in the July 3, 1998 issue of the Texas Register (23 TexReg 6825) and will not be republished. This amendment outlines a new administrative fee required from an applicant to cover the cost of administering the Texas Pharmacy Jurisprudence examination. As background, the Texas Board has entered into an agreement with the National Association of Boards of Pharmacy (NABP) for the administration of the new MultiState Pharmacy Jurisprudence Examination (MPJE), beginning in November 1998. The MPJE, which replaces our current paper and pencil Texas Jurisprudence Examination, will be developed by NABP and administered by the Cogent Testing Network in a computer-based format. No comments were received on the proposed text. The amendments are adopted under the Texas Pharmacy Act (Article 4542a-1, Texas Civil Statutes), sec.39, which specifies that the board shall establish reasonable and necessary fees so that the fees, in the aggregate, produce sufficient revenue to cover the cost of administering 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 September 14, 1998. TRD-9814471 Gay Dodson, R.Ph. Executive Director/Secretary Texas State Board of Pharmacy Effective date: October 4, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 305-8028 CHAPTER 295.Pharmacists 22 TAC sec.295.15 The Texas State Board of Pharmacy adopts new sec.295.15, concerning the administration of immunizations or vaccinations by a pharmacist under written protocol of a physician, with changes to the text published in the July 3, 1998, Texas Register (23 TexReg 6826). The new adopted section implements Senate Bill 786, as enacted by the 75th Texas Legislature and sets minimum standards: for pharmacist training; supervision by physicians issuing written protocols; the special provisions for administration of immunizations or vaccinations; drug availability, storage, transportation, and custody; notification of appropriate physicians; record keeping; and confidentiality for pharmacists engaged in the administration of immunizations and vaccinations under written protocol. One comment was received from the Texas Nurses Association (TNA) making the following suggestions. (1) TNA suggests sec.295.15(e)(3) and (5) be changed to limit the phrase "reasonably available" in health care facilities and other settings. TNA noted that in health care facilities, including nursing homes and hospitals, "reasonably available" should include those times when a licensed healthcare provider on staff, who is authorized to administer medication, is available to administer the immunization within 24 hours. They also noted that in other settings, the term "reasonably available" should include times when a licensed healthcare provider, who is authorized to administer medication, is on-site and available to administer the immunization or vaccine without inconveniencing the patient or client. The Board disagrees with these comments since it is clear in the Texas Pharmacy Act that a pharmacist may administer immunizations and vaccinations in nursing homes and hospitals, locations where licensed healthcare providers are virtually always available. If the nursing home, hospital, or management for other settings wishes to limit such administration to licensed nurses, nurses should be tasked to administer the immunizations at the time of need. The Board feels that a delay in the administration of the immunization should not be necessary and that the language as proposed is reasonable to make immunizations and vaccinations more readily available to the public and to patients at high risk. (2) TNA suggests the training requirements of sec.295.15(c)(1) should include six to eight hours of intensive experience in the actual administration of immunizations and vaccines in a supervised setting such as a public health clinic, immunization clinic, or the like. The Board believes current rule language adequately addresses the experiential training requirements for pharmacists since it requires hands-on training, meets current Center for Disease Control training guidelines, and requires evaluation and testing with a passing score. (3) TNA suggests changes to the training requirements of sec.395.15(c)(1)(C) to clarify that physiology and patient assessment are included in the training. The Board concurs with this suggestion and modifies clauses (vii) and (viii) accordingly. This new rule is adopted under the Texas Pharmacy Act (Article 4542a-1, Texas Civil Statutes): Section 4 which specifies that the purpose of the Act is to protect the public through the effective control and regulation of the practice of pharmacy; sec.16(a) which gives the Board the authority to adopt rules for the proper administration and enforcement of the Act; and sec.17(a)(5), (y), (z), and (aa) which gives the Board the authority to regulate and establish minimum education, continuing education, and supervision standards for pharmacists who administer immunizations or vaccinations. The statutes affected by this rule: Texas Civil Statutes, Article 4542a-1. sec.295.15.Administration of Immunizations or Vaccinations by a Pharmacist under Written Protocol of a Physician. (a) Purpose. The purpose of this section is to provide standards for pharmacists engaged in the administration of immunizations or vaccinations as authorized in sec.sec.17(a), (y), (z), and (aa) of the Act. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) ACPE The American Council on Pharmaceutical Education. (2) Act The Texas Pharmacy Act, Texas Civil Statutes, Article 4542a-1, as amended. (3) Administer The direct application of a prescription drug by injection, inhalation, ingestion, or any other means to the body of a patient by: (A) a practitioner, an authorized agent under his supervision, or other person authorized by law; or (B) the patient at the direction of a practitioner. (4) Antibody A protein in the blood that is produced in response to stimulation by a specific antigen. Antibodies help destroy the antigen that produced them. Antibodies against an antigen usually equate to immunity to that antigen. (5) Antigen A substance "recognized" by the body as being foreign; it results in the production of specific antibodies directed against it. (6) Board The Texas State Board of Pharmacy. (7) Confidential record Any health-related record that contains information that identifies an individual and that is maintained by a pharmacy or pharmacist such as a patient medication record, prescription drug order, or medication order. (8) Data communication device An electronic device that receives electronic information from one source and transmits or routes it to another (e.g., bridge, router, switch, or gateway). (9) Immunization The act of inducing antibody formation, thus leading to immunity. (10) Medical Practice Act The Texas Medical Practice Act, Texas Civil Statutes, Article 4495b, as amended. (11) Vaccination Administration of any antigen in order to induce immunity; is not synonymous with immunization since vaccination does not imply success. (12) Vaccine A specially prepared antigen, which upon administration to a person will result in immunity. (13) Written Protocol A physician's order, standing medical order, standing delegation order, or other order or protocol as defined by rule of the Texas State Board of Medical Examiners under the Medical Practice Act. (A) A written protocol must contain, at a minimum, the following: (i) a statement identifying the individual physician authorized to prescribe drugs and responsible for the delegation of administration of immunizations or vaccinations; (ii) a statement identifying the individual pharmacist authorized to administer immunizations or vaccinations as delegated by the physician; (iii) a statement identifying the location(s) (i.e., address) at which the pharmacist may administer immunizations or vaccinations; (iv) a statement identifying the immunizations or vaccinations that may be administered by the pharmacist; (v) a statement identifying the activities the pharmacist shall follow in the course of administering immunizations or vaccinations, including procedures to follow in the case of reactions following administration; and (vi) a statement that describes the content of, and the appropriate mechanisms for the pharmacist to report the administration of immunizations or vaccinations to the physician issuing the written protocol within the time frames specified in this section. (B) A standard protocol may be used or the physician may develop an immunization or vaccination protocol for the individual patient. If a standard protocol is used, the physician shall record what deviations, if any, from the standard protocol are ordered for the patient. (c) Pharmacist certification requirements. Pharmacist who enter into a written protocol with a physician to administer immunizations or vaccinations shall: (1) be certified to administer immunizations and vaccinations by the completion of a course provided by an ACPE approved provider which: (A) requires documentation by the pharmacist of current certification in the American Heart Association's Basic Cardiac Life Support for Health-Care Providers or its equivalent; (B) is an evidence-based course which: (i) includes study material; (ii) includes hands-on training in techniques for administering immunizations or vaccines; and (iii) requires testing with a passing score; and (C) meets current Center for Disease Control training guidelines and provides a minimum of 20 hours of instruction and experiential training in the following content areas: (i) standards for pediatric, adolescent, and adult immunization practices; (ii) basic immunology and vaccine protection; (iii) vaccine-preventable diseases; (iv) recommended immunization schedules (pediatric/adolescent/adult); (v) vaccine storage and management; (vi) informed consent; (vii) physiology and techniques for vaccine administration; (viii) pre and post-vaccine assessment and counseling; (ix) immunization record management; and (x) adverse events: (I) identification and appropriate response; and (II) documentation and reporting; and (2) maintain documentation of: (A) completion of the initial course specified in paragraph (1) of this subsection; (B) 3 hours of continuing education every 2 years beginning January 1, 2001, which are designed to maintain competency in the disease states, drugs, and administration of immunizations or vaccinations; and (C) current certification in the American Heart Association's Basic Cardiac Life Support for Health-Care Providers or its equivalent. (d) Supervision. Pharmacists involved in the administration of immunizations or vaccinations shall be under the supervision of a physician. Physician supervision shall be considered adequate if the delegating physician: (1) is responsible for the formulation or approval of the physician's order, standing medical order, standing delegation order, or other order or protocol and periodically reviews the order or protocol and the services provided to a patient under the order or protocol; (2) has established a physician-patient relationship with each patient under 14 years of age and referred the patient to the pharmacist; (3) is geographically located so as to be easily accessible to the pharmacist administering the immunization or vaccination; (4) receives, as appropriate, a periodic status report on the patient, including any problem or complication encountered; and (5) is available through direct telecommunication for consultation, assistance, and direction. (e) Special Provisions. Pharmacists involved in the administration of immunizations or vaccinations under their license to practice pharmacy shall meet the following restrictions and requirements. (1) Pharmacists may only administer immunizations or vaccinations pursuant to a written protocol from a physician authorizing the administration. (2) Pharmacists may administer immunizations or vaccinations to a patient under 14 years of age only upon a referral from a physician who has an established physician-patient relationship with each patient. (3) Pharmacists may administer immunizations or vaccinations under written protocol of a physician within a pharmacy or at any other location specifically identified in the written protocol. Such other location may not include where the patient resides, except for a licensed nursing home or hospital. (4) The authority of a pharmacist to administer immunizations or vaccinations may not be delegated. (5) Pharmacists may administer immunizations and vaccinations only when a licensed health-care provider authorized to administer the medication is not reasonably available to administer the medication. For the purpose of this section, "reasonably available" means those times when the licensed health-care provider is immediately available to administer the immunization or vaccine and is specifically tasked to do so. (6) Under the provisions of the National Vaccine Injury Compensation Program (NVICP), the health-care provider under whose authority a covered vaccine is administered (i.e., the physician issuing the written protocol) must maintain certain information in the patient's permanent record. In order for the physician to comply with the provisions of the NVICP, the pharmacist shall provide the physician with the information specified in subsection (g) of this section. (7) The pharmacist shall comply with all other state and federal requirements regarding immunizations or vaccinations. (f) Drugs. (1) Drugs administered by a pharmacist under the provisions of this section shall be in the legal possession of: (A) a pharmacy, which shall be the pharmacy responsible for drug accountability, including the maintenance of records of administration of the immunization or vaccination; or (B) a physician who shall be responsible for drug accountability, including the maintenance of records of administration of the immunization or vaccination. (2) Drugs shall be transported and stored at the proper temperatures indicated for each drug. (3) Pharmacists while actively engaged in the administration of immunizations or vaccinations under written protocol, may have in their custody and control the drugs for immunization or vaccination that are identified in the written protocol and any other dangerous drugs listed in the written protocol to treat adverse reactions. (4) After administering immunizations or vaccinations at a location other than a pharmacy, the pharmacist shall return all unused prescription medications to the pharmacy or physician responsible for the drugs. (g) Notifications. (1) A pharmacist engaged in the administration of immunizations or vaccinations shall provide notification of the administration to: (A) the physician who issued the written protocol within 24 hours of administering the immunization or vaccination; and (B) the primary care physician of the patient, as provided by the patient or patient's agent, within 14 days of administering the immunization or vaccination. (2) The notifications required in paragraph 1 of this subsection shall include the: (A) name and address of the patient; (B) age of the patient if under 14 years of age; (C) name of the patient's primary care physician as provided by the patient or patient's agent; (D) name, manufacturer, and lot number of the vaccine administered; (E) amount administered; (F) date the vaccine was administered; (G) site of the immunization or vaccination (e.g., right arm, left leg, right upper arm); (H) route of administration of the immunization or vaccination (e.g., intramuscular, subcutaneous, by mouth); and (I) name, address, and title of the person administering the immunization or vaccination. (h) Records. (1) Maintenance of records. (A) Every record, including notifications, required to be made under this section shall be kept by the pharmacist administering the immunization or vaccination and by the pharmacy when in legal possession of the drugs administered. Such records shall be available for at least two years from the date of such record, for inspecting and copying by the board or its representative and to other authorized local, state, or federal law enforcement or regulatory agencies. (B) Records, including notifications, may be maintained in an alternative data retention system, such as a data processing system or direct imaging system provided: (i) the records maintained in the alternative system contain all of the information required on the manual record; and (ii) the data processing system is capable of producing a hard copy of the record upon request of the board, its representative, or other authorized local, state, or federal law enforcement or regulatory agencies. (2) Records of administration under written protocol. (A) Records of administration shall be maintained by the pharmacist administering immunizations or vaccinations. Such records shall include: (i) all of the administration record requirements of subparagraph (B) of this paragraph; and (ii) include the name and address of the pharmacy or physician in legal possession of the immunization or vaccination administered. (B) A pharmacy, when responsible for drug accountability, shall maintain a record of administration of immunizations or vaccinations by a pharmacist. The records shall be kept and maintained by patient name. This record shall include: (i) a copy of the written protocol under which the immunization or vaccination was administered and any patient-specific deviations from the protocol; (ii) name and address of the patient; (iii) age of the patient if under 14 years of age; (iv) name of the patient's primary care physician as provided by the patient or patient's agent; (v) name, manufacturer, and lot number of the vaccine administered; (vi) amount administered; (vii) date the vaccine was administered; (viii) site of the immunization or vaccination (e.g., right arm, left leg, right upper arm); (ix) route of administration of the immunization or vaccination (e.g., intramuscular, subcutaneous, by mouth); and (xi) name, address, and title of the person administering the immunization or vaccination. (3) Written protocol. (A) A copy of the written protocol and any patient-specific deviations from the protocol shall be maintained in accordance with paragraph 2 of this subsection. (B) A standard protocol may be used or the attending physician may develop an immunization/vaccination protocol for the individual patient. If a standard protocol is used, the physician shall record what deviations, if any, from the standard protocol are ordered for the patient. The pharmacy that is in possession of the vaccines administered shall maintain a copy of any deviations from the standard protocol ordered by the physician. (C) Written protocols, including standard protocols, any patient-specific deviations from a standard protocol, and any individual patient protocol, shall be reviewed by the physician and pharmacist at least annually and revised if necessary. Such review shall be documented in the records of the pharmacy that is in possession of the vaccines administered. (i) Confidentiality. (1) A pharmacist shall provide adequate security to prevent indiscriminate or unauthorized access to confidential records. If confidential health information is not transmitted directly between a pharmacy and a physician, but is transmitted through a data communication device, the confidential health information may not be accessed or maintained by the operator of the data communication device unless specifically authorized to obtain confidential information by this subsection. (2) Confidential records are privileged and may be released only to: (A) the patient or the patient's agent; (B) practitioners and other pharmacists when, in the pharmacist's professional judgment, such release is necessary to protect the patient's health and well- being; (C) other persons, the board, or other state or federal agencies authorized by law to receive such information; (D) a law enforcement agency engaged in investigation of suspected violations of the Controlled Substances Act or the Dangerous Drug Act; (E) a person employed by any state agency which licenses a practitioner as defined in the Act if such person is engaged in the performance of the person's official duties; or (F) an insurance carrier or other third party payer authorized by a patient to receive such information. (3) This section shall not affect or alter the provisions relating to the confidentiality of the physician-patient communication as specified in the Medical Practice Act, sec.5.08. 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 September 14, 1998. TRD-9814469 Gay Dodson, R.Ph. Executive Director/Secretary Texas State Board of Pharmacy Effective date: October 4, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 305-8028 TITLE 25. HEALTH SERVICES PART I. Texas Department of Health CHAPTER 97. Communicable Diseases SUBCHAPTER A. Control of Communicable Diseases 25 TAC sec.97.12, sec.97.13 The Texas Department of Health (department) adopts amendments to sec.97.12 and sec.97.13 concerning persons with certain communicable diseases at the time of death and mandatory testing of persons suspected of exposing certain other persons to reportable diseases, and workers' compensation issues relevant to postexposure management of emergency responders. Sections 97.12 and 97.13 are adopted without changes to the proposed text as published in the May 29, 1998, issue of the Texas Register (23 TexReg 5570), and therefore the sections will not be republished. The amendment to sec.97.12 adopts clarification that hospital administrators and clinical administrators are also responsible for affixing or causing to be affixed the toe tag. The amendment to sec.97.13 adopts modification of the "correctional officer" definition to include those employed by private and public entities other than counties and the Texas Department of Criminal Justice. The change will allow a larger group of correctional workers to obtain testing of the source where there is an occupational exposure to a communicable disease under procedures described in the rule and Health and Safety Code sec.81.050. No comments were received on the proposal during the comment period. The amendments are adopted under the Texas Health and Safety Code, sec.81.004 which allows the board to adopt rules necessary for the effective administration of Chapter 81 (Communicable Disease), sec.81.050 which requires the board to prescribe by rule the criteria that constitute exposure to reportable disease for purposes of notifying first responders, and sec.12.001, which provides the Texas Board of Health (board) with the authority to adopt rules for the performance of every duty imposed by law on the board, the department, and the commissioner of health. 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 September 11, 1998. TRD-9814451 Susan K. Steeg General Counsel Texas Department of Health Effective date: October 1, 1998 Proposal publication date: May 29, 1998 For further information, please call: (512) 458-7236 PART II. Texas Department of Mental Health and Mental Retardation CHAPTER 412.Local Authority Responsibilities SUBCHAPTER H.Standards and Quality Assurance for Mental Retardation Community Services and Supports 25 TAC sec.sec.412.353, 412.355-412.357, 412.359, 412.370, 412.371 The Texas Department of Mental Health and Mental Retardation (department) adopts amendments to sec.sec.412.353, 412.355-412.357, 412.359,412.370, and 412.371 of Chapter 412, Subchapter H, concerning standards and quality assurance for mental retardation services and supports, with changes to the text as published in the July 3, 1998, Texas Register (23 TexReg 6838). Amendments to sec.sec.412.356, 412.357 and 412.359 are adopted without changes to the proposed text and will not be republished. The amendments adopt by reference as Exhibits A-G the books Personal Outcome Measures and Outcome Measures for Early Childhood Intervention Services from The Council on Quality and Leadership in Supports for People with Disabilities (The Council) and five related forms. The Personal Outcome Measures will replace The Council's 1993 book, Outcome Based Performance Measures, that currently is adopted by reference as Exhibit A. Outcome Measures for Early Childhood Intervention Services will be used by the assessment and external validation teams when determined appropriate for interviews of children as part of the Quality Assurance and Improvement System (QAIS). The amendments also will replace references in the sections to the Outcome Based Performance Measures with references to the Personal Outcome Measures and the Outcome Measures for Early Childhood Intervention A definition of Outcome Measures for Early Childhood Intervention Services is added in sec.412.353. The department will use the Personal Outcome Measures and the Outcome Measures for Early Childhood Intervention Services in place of the Outcome Based Performance Measures as the basis for QAIS. The Personal Outcome Measures are a revision of the Outcome Based Performance Measures and reflect the most up-to- date information collected by The Council regarding programs throughout the country for persons with disabilities, including mental retardation. The QAIS Guidance Team, a group composed of representatives from local mental retardation authorities (MRAs), private providers, and Central Office program staff, evaluated the Personal Outcome Measures and the Outcome Measures for Early Childhood Intervention Services. The team recommended the two documents as the most suitable for use by local MRAs and designated providers in the assessment of the quality, efficiency, and effectiveness of their organizations and the services and supports they provide to consumers either directly or by contracting with providers. In sec.412.353, an extra "and" inadvertently was inserted into the proposed definition of Outcome Measures for Early Childhood Intervention Services; it has been deleted. Subparagraph (B) of the definition of the Personal Outcome Measures is revised to reference the role of a legally authorized representative in prioritizing the outcomes for a consumer. Grammatical corrections have been made to the definitions of "tardive dyskinesia" and "tuberculosis," with the substitution of "that" for "which." In sec.412.355, the word "state" is inserted before "fiscal year" to clarify that local authorities and designated providers are to conduct a self-assessment and develop an improvement plan during each state fiscal year. In sec.412.370, the copyright date of The Council's Personal Outcome Measures is corrected from 1998 to 1997, and the 1998 date is eliminated as superfluous following the title to the document in subsection (c). The date also is deleted in sec.412.371 for the same reason. In Exhibits C and D under the heading "attainment," the phrase "People choose personal goals" has been revised to read "People realize personal goals" consistent with the outcomes as published by The Council. Also, instruction sheets titled "Instructions For Completing Inter-Rater Reliability During EV" inadvertently were included with Exhibits C and F. The instructions are unrelated to the two forms and are deleted. A public hearing was not held. Written comments were received from the following members of the public: the parent/guardian of a state school resident, Garland; and the Parent Association for the Retarded of Texas (PART). Two commenters noted that using The Council's Personal Outcome Measures and the Outcome Measures for Early Childhood Intervention Services as the basis for QAIS means that anyone who reads or has to implement this policy has to purchase a copy of both copyrighted documents at a cost of approximately $70. The commenters stated that the department should not create programs that include such costs to persons or groups, and recommended that the department either obtain the permission of The Council to use the two documents or forego using them. The department agrees that $70 for copies of both documents could be a significant expense to those consumers, family members, guardians, and other interested persons who wish to purchase copies as part of their review of QAIS and this subchapter. The only persons, however, who must have at least one copy of each document are local MRAs and designated providers who are required by this subchapter and their contract with the department to conduct a QAIS self- assessment. The implementation of QAIS in 1996 represented a significant departure from previous department policy regarding the evaluation of quality in community-based services and supports for individuals with mental retardation. Among the significant differences is the use of The Council's nationally- recognized, copyrighted system of outcome-based performance measures rather than creating an independent set of outcomes/standards. The broad-based guidance team that spent 18 months studying the issue in 1994-95 determined that The Council's outcome measures met its criteria for an outcome-based quality assurance and improvement system. The department has had a contract with The Council since the inception of QAIS in 1996 that grants the department the right to use the outcome measures. Two commenters requested that "mental retardation" or "mentally retarded" be used instead of "developmental delay," "developmentally disabled," or "disabilities" in portions of the sections which describe The Council and its copyrighted products. The department responds that "mental retardation" is used in this subchapter to reference individuals who receive mental retardation services through the department or its contractors. The department further explains that The Council evaluates services and supports for persons with a wide range of disabilities including mental retardation, and that the use of terminology employed by The Council when addressing its copyrighted products is appropriate. The two commenters recommended that the developmental level rather than the chronological age of a consumer being interviewed for QAIS should determine whether the interviewer uses the Personal Outcome Measures or the Outcome Measures for Early Childhood Intervention Services. The department responds that the Outcome Measures for Early Childhood Intervention Services are age specific and using developmental level as the determining factor is neither appropriate nor consistent with the intentions of The Council. The decision of which set of outcome measures to use will be left to the discretion of the interviewer following guidelines established by The Council. The two commenters requested that "legally authorized representative" be defined and that the phrase "consumer and LAR" should be revised as "consumer and/or LAR" throughout the sections. The department responds that the term already is defined in the subchapter. It was not included in the proposed amendments because the definition was neither revised nor renumbered with the addition of a new definition. In the definition of "Personal Outcome Measures," the two commenters requested that "and/or legally authorized representative" be inserted after "people with disabilities" in subparagraph (B) so that the sentence reads "focusing on those priority outcomes that people with disabilities and/or legally authorized representatives indicate are most important to them." The department has revised the language to read "focusing on those priority outcomes that people with disabilities (or an LAR on behalf of a person with a disability) indicate are most important to them." The commenters objected to the use in subparagraph (C) of the phrase "consumers with different disabilities," suggesting that the phrase sounded too much like an advertisement for The Council's products and services. The department responds that the definition is a succinct and accurate description of The Council's products and services, and is appropriate for a rule which describes a department quality assurance and improvement initiative based on those products and services. The two commenters requested that the term "planning team" be replaced with "interdisciplinary team" and that the statutory definition of IDT be used. The commenters also requested that "planning team" be changed to "IDT" throughout the policy. The department responds that "planning team" is a general term which accurately conveys the diversity of how consumers and their personal support networks (including LARs, family members, and friends) in different service settings approach the development of a service and support plan. The team, at the discretion of the consumer (or the LAR, if any) can be considered interdisciplinary, person-directed, person-centered, or futures-planning. The definition reflects the reality that the consumer (with the LAR, if any) can and should be in control of determining the types of services and supports that are needed and appropriate. The two commenters recommended that subparagraph (A) of the definition be revised to specify that family members and friends may serve on the team only with the consent of the consumer and/or LAR. The department responds that the definition already specifies that the members of the team are chosen by the consumer or the consumer's LAR, if any. The amendments are adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority; sec.534.057 which requires the department to adopt rules relating to the provision of respite care; and sec.534.058 which requires the department to establish standards of care for services provided by local authorities and their subcontractors. sec.412.353.Definitions. The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise: (1)-(14) (No change.) (15) Outcome Measures for Early Childhood Intervention Service -- The Council's copyrighted system of quality improvement and measurement for all types of service and support program models to families of children with developmental delays and/or disabilities. Within QAIS, these outcomes are used instead of the Personal Outcome Measures as considered appropriate by the assessment team or external validation team when the individual being interviewed is a child. (16) Personal Outcome Measures -- The Council's copyrighted system of quality improvement and measurement that emphasizes responsiveness on the part of service organizations to the individual needs of that organization's consumers rather than traditional compliance with established standards. The system: (A) focuses on outcomes for consumers and the organizational processes that contribute to those outcomes; (B) is concise, focusing on those priority outcomes that people with disabilities (or an LAR on behalf of a person with a disability) indicate are most important to them; and (C) can be used with all services and programs -- residential, vocational, social, or residential -- and for consumers with different disabilities. (17) Planning team -- The consumer, the LAR, if any, and those persons chosen by the consumer and LAR, if any, who assess the consumer's treatment, training, and service/support plan needs and make recommendations to the local MRA or designated provider for services which will enable the consumer to meet desired personal outcomes. Team members typically could include: (A) family members or other persons who are actively involved in the life of the consumer; (B) persons who are professionally qualified, certified, or both, in various professions with special training and experience in the diagnosis, management, needs, and treatment of consumers; (C) persons who are directly involved in the delivery of mental retardation services to the consumer; and (D) member(s) of the local MRA's public responsibility committee (PRC), if requested by the consumer with the ability to provide legally adequate consent or the LAR, if any, or the PRC in instances when the consumer does not have either the ability to provide legally adequate consent or an LAR. (18) Polypharmacy -- Simultaneous use by a consumer of more than one psychoactive medication from the same medication class, except for those periods of overlapping use when a consumer is changing from one drug to another. (19) Provider -- (A) Any organization or entity which contracts with a local MRA to provide mental retardation services and supports; or (B) that part of a local MRA directly providing mental retardation services and supports. (20) Psychoactive medication -- Any medication which is prescribed for the primary intent of improving cognition, affective state, and/or behavior. (21) Quality Assurance and Improvement System (QAIS) -- The framework by which local MRAs and designated providers measure the quality, efficiency, and effectiveness of their organizations and the services and supports they provide to consumers either directly or by contracting with providers. It is an outcome- oriented system that concentrates on measuring desired results and the processes used to obtain those results, as defined by the consumer. The system is based on The Council's Personal Outcome Measures and, when the individual being interview is a child, the Outcome Measures for Early Childhood Intervention Services. The system involves three stages: (A) self-assessment; (B) quality improvement plan; and (C) external validation. (22) Respite services -- Services which assist both consumers and their families during times of crisis or other specific events. Designed to be of short duration, the services may vary from one day to a maximum of 30 consecutive calendar days per episode. Respite services may be provided either in the consumer's home or in a residence operated or contracted for by the local MRA. (23) Restraint -- The use of physical force or a mechanical device to involuntarily restrict the free movement of the whole or a portion of a consumer's body to control physical activity. (24) Services and supports -- Programs and assistance for consumers with mental retardation that may include a determination of mental retardation, planning team recommendations, education, special training, supervision, care, treatment, rehabilitation, residential care, and counseling, but does not include those services or programs that have been explicitly delegated by law to other state agencies. (25) Tardive dyskinesia -- A possible side effect of psychoactive medication characterized by involuntary and abnormal movements that are purposeless and stereotypical. (26) The Council -- The Council on Quality and Leadership in Supports for People with Disabilities, formerly The Accreditation Council, is a diversified quality enhancement organization with an international focus in the field of human services which: develops standards of quality; develops and disseminates materials; provides training, consultation, and technical assistance; and operates an accreditation program for organizations which serve people with disabilities. (27) Tuberculosis -- A disease spread through airborne particles containing tubercle bacilli that become established in the lungs and may spread throughout the body. sec.412.355.Self-assessment by Local MRAs and Designated Providers. (a) During every state fiscal year, each local MRA and designated provider will conduct a self-assessment with the subsequent development of a quality improvement plan as described in sec.412.358 of this title (relating to Quality Improvement Plan). These will be completed within 30 days following the anniversary date of the initial self-assessment and submitted to the department's Office of Quality Management. The self-assessment is based on The Council's Personal Outcome Measures and, as appropriate, the Outcome Measures for Early Childhood Intervention Services, which are adopted by reference as Exhibits A and B, respectively, in sec.412.370 of this title (relating to Exhibits). It is designed to evaluate two aspects of quality, which are: (1) outcomes of services that contribute to the quality of life (outcome measures for people); and (2) the organizational structure and processes that support quality services and supports (outcome measures for organizations). (b)-(f) (No change.) sec.412.370.Exhibits. (a) Documents adopted by reference in this subchapter include: (1) Exhibit A -- The Council's type-name="italic">Personal Outcome Measures (1997); (2) Exhibit B -- type-name="italic">Outcome Measures for Early Childhood Intervention Services (1995); (3) Exhibit C -- Outcomes for People Results Worksheet; (4) Exhibit D -- Outcomes for People Scoring Grid; and (5) Exhibit E -- Outcomes for Organizations Result Worksheet. (6) Exhibit F -- Outcomes For Families and Children Results Worksheet; and (7) Exhibit G -- Outcomes for Families and Children Scoring Grid. (b) The QAIS Implementation Manual is referenced in this subchapter as Exhibit H. (c) Copies of the Personal Outcome Measures and the Outcome Measures for Early Childhood Intervention Services listed in subsection (a)(1) and (2) of this section may be obtained by contacting The Council, 100 West Road, Suite 406, Towson, Maryland 21204. All other documents listed in subsections (a) and (b) of this section may be obtained by contacting the Office of Policy Development, Texas Department of Mental Health and Mental Retardation, P.O. Box, 12668, Austin, Texas 78711-2668. sec.412.371.Training. (a) Training and other learning opportunities for all stakeholders of the local MRA or designated provider and for the members of the external validation teams are based on The Council's Personal Outcome Measures, Outcome Measures for Early Childhood Intervention Services, and other service quality improvement concepts. (b)-(c) (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 September 8, 1998. TRD-9814153 Charles Cooper Chairman Texas Department of Mental Health and Mental Retardation Effective date: October 1, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 206-4516 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 21.Trade Practices SUBCHAPTER B.Insurance Advertising, Certain Trade Practices and Solicitation 28 TAC sec.21.114 The Texas Department of Insurance adopts a clarifying and conforming amendment to sec.21.114, concerning rules pertaining specifically to life insurance advertising, with changes to the proposal as published in the March 13, 1998 issue of the Texas Register (23 TexReg 2715). The adoption does not include the proposed amendment to sec.21.102 that was part of the published proposal, for reasons set out in this notice. The adopted amendment is necessary for clarification and conformity with provisions and requirements of Chapter 21, Subchapter N, relating to life insurance illustrations, adoption of which is published elsewhere in this issue of the Texas Register as sec.sec.21.2201-21.2214. The adopted amendment results in a more clear life insurance advertising rule which contains provisions for illustration of dividends that is consistent with the requirements for life illustrations generally set out in Subchapter N. The amendment to sec.21.114 provides that if dividends are illustrated, the illustration must conform to the requirements of Chapter 21, Subchapter N, relating to life insurance illustrations. Two comments questioned whether any benefit would result from including illustration supporting software in the definition of an "advertisement" in sec.21.102(1)(B). Each comment contained statements suggesting the amendment not be adopted, and one directly stated there is no need for the change. That same comment also indicated that if the proposed amendment were read literally, the actual binary codes in the software would have to comply with the advertising regulation. The department has reviewed and evaluated the proposed amendment in light of these comments, and has withdrawn the proposed amendment as a result. The department did not intend the provision to be read to require the binary code of software program itself to comply with the advertising regulation. The purpose of the amendment was to help assure sufficient oversight review by an insurer of tools utilized by agents in the development, depiction and use of illustrations to assure compliance with Chapter 21, Subchapter N, relating to life insurance illustrations. Since the department believes that clarifying and elucidatory changes to the life insurance illustration sections that result from comments received during the comment period and during the hearing will address department concerns, the proposed amendment to sec.21.102(1)(B) is withdrawn. One comment recommended elimination of the amendment to sec.21.114(6)(B), on the bases that an illustration is not an advertisement in the customary meaning of that word, and that the very specific illustration rules for life insurance would preempt the more general advertising rules. The department disagrees in part with the comments, and for that reason retains the amendment to sec.21.114(6)(B) in the adoption. The department considers the amendment necessary and the most appropriate method of providing notice in its regulatory framework that if dividends are illustrated, the illustration must conform to the provisions of Chapter 21, Subchapter N. Prior to adoption of Chapter 21, Subchapter N, (relating to Life Insurance Illustrations) elsewhere in this issue of the Texas Register as sec.sec.21.2201-21.2214, provisions in sec.21.114(6) specifically addressed advertising including dividends. Subparagraph (B) specifically set out minimum standards for dividends which were intended to be illustrated. Some provisions previously set out in that subparagraph have been deleted and replaced with an express cross reference to those provisions of the illustration rules for life insurance policies which specifically address dividends. For these reasons, no change is made to the amendment as proposed and published. Comments generally against the proposed amendment to sec.21.102(1)(B) were received from Northwestern Mutual Life Insurance Company and the Principal Financial Group. Comments generally against the proposed amendment to sec.21.114(6)(B) were received from Northwestern Mutual Life Insurance Company. The amendment is adopted pursuant to the Insurance Code, Article 21.21, sec.13. Article 21.21, sec.13, provides that the department is authorized to promulgate and enforce reasonable rules and regulations and order such provision as is necessary in the accomplishment of the purposes of Article 21.21, relating to unfair competition and unfair practices. sec.21.114.Rules Pertaining Specifically to Life Insurance Advertising (1)-(5) (No change.) (6) Dividends. (A) (No change.) (B) An advertisement may not state or imply that the payment or amount of dividends is guaranteed. If dividends are illustrated, the illustration must conform to the requirements of Subchapter N of Chapter 21 of this title, relating to life insurance illustrations. (C)-(D) (No change.) (7)-(9) (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 September 9, 1998. TRD-9814328 Lynda H. Nesenholtz General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 29, 1998 Proposal publication date: March 13, 1998 For further information, please call: (512) 463-6327 SUBCHAPTER N.Life Insurance Illustrations 28 TAC sec.sec.21.2201-21.2214 The Texas Department of Insurance adopts new subchapter N, sec.sec.21.2201- 21.2214, concerning life insurance illustrations, with changes to the proposed text as published in the March 13, 1998, issue of the Texas Register (23 Tex.Reg. 2716). This new subchapter is necessary to protect prospective insureds and insurers from the deception, abuse and unfair trade practices that have accompanied the proliferation of illustrations in the life insurance marketplace in recent years. This subchapter, as adopted, differs in some respects from the proposed published version based on further study generated by comments received. Specific changes and reasoned justification for the subchapter and agency responses to comments are addressed in Section 4, Summary of Comments and Agency Response. This new subchapter shall apply to policies sold on or after July 1, 2000. Section 21.2201 sets out the purpose of the subchapter; sec.21.2202 states the statutory authority upon which the new sections are based; sec.21.2203 sets out the applicability and scope of the subchapter and identifies those contracts that are exempt from the subchapter; sec.21.2204 contains definitions of essential terms used in the proposed sections; sec.21.2205 provides for the identification and notice to the commissioner of life insurance policies which are to be marketed with or without an illustration and the circumstances requiring delivery of illustrations or quotations to policy owners; sec.21.2206 establishes general rules and prohibitions, including disclosure, format and prohibitions that apply to all illustrations; sec.21.2207 provides for standards for basic illustrations (Basic); sec.21.2208 sets out standards for supplemental illustrations (Supplemental); sec.21.2209 provides for the delivery of the basic illustration and for certain records to be obtained and retained by insurers; sec.21.2210 requires an annual report and certain notice concerning illustrations to be delivered to policyholders; sec.21.2211 requires the appointment of an illustration actuary and an annual certification to be made to the department by the insurer's illustration actuary; sec.21.2212 provides for penalties for violation of the sections; sec.21.2213 contains a separability clause; and sec.21.2214 establishes an effective date. With several notable exceptions, the proposed new subchapter is based upon and incorporates nearly all of the Life Insurance Illustrations Model Regulation (Model) adopted by the National Association of Insurance Commissioners (NAIC) on December 6, 1995. Since publication of this proposed new subchapter on March 13, 1998, the department has received approximately 70 written and oral comments from insurers, agents, consumer groups and the Office of Public Insurance Counsel (OPIC). Most insurer and agent commenters urged the adoption of the NAIC Model without deviation and were critical of the changes made, arguing generally that they were unnecessary, would cause consumer confusion and increase costs. The changes most frequently objected to were: the substance and placement of disclosures; the prohibition against increases in the scale of non-guaranteed interest; the requirement that guaranteed values be shown in a Supplemental illustration and the omission of the consumer acknowledgment and signature requirement. OPIC and Consumers Union (CU) oppose the adoption of the subchapter primarily on the basis that it permits the projection of current values into the future, a practice they believe to be inherently misleading to consumers and one which they contend can not be disclaimed. Despite their overall objection, these two groups do support the changes made to the Model. A summary of these and other comments and the department's response follow on a section by section basis, unless otherwise indicated. For clarity of analysis, the discussion of subsections within a section may not follow strict numerical order. sec.21.2204 Definitions Basic Illustration One commenter pointed out that the definition of illustration omits the NAIC Model language "used in the sale of a life insurance policy" and thus the reach of the regulation could extend beyond the sales scenario. Agency Response: The department agrees. The omission was inadvertent. The omitted language has been added to the definition of illustration which now reads: "Illustration - a presentation or depiction used in the solicitation or sale of a life insurance policy that includes. . . ." Illustration The Model defined illustration as "a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is" either a Basic, Supplemental, or In-force illustration. The qualifying language that an illustration only could be either a basic, supplemental or In- force illustration was intentionally deleted from the proposed rule to eliminate the possibility that an illustration which did not comply with the requirements for those types of illustrations could escape regulation altogether. One insurer strongly supported this change, observing that it "closes a gaping hole in the definition of illustration." Two other insurers opposed the change arguing that it either makes the definition too broad or may create a loophole. Agency Response: The department disagrees that this change either extends the definition beyond the intended scope of the Model or creates a loophole. This change instead closes a serious gap found in the Model that might significantly diminish the department's ability to enforce the subchapter. sec.21.2206(1)(T) Disclaimer Placement The proposed subchapter requires a disclaimer to be set out in the narrative summary of a basic illustration and in close conjunction to any depiction of non-guaranteed elements which would include the ledger pages of either a Basic or Supplemental illustration or both. A number of commenters argued that the Model requires a disclaimer to be set out only in the narrative summary of a Basic illustration and that to require disclaimers anywhere else would be unnecessary. In support of this position, several commenters pointed out that a Supplemental illustration is required to make explicit reference to a Basic illustration for important information which includes the disclaimer. Many also noted that staff's "departure" from the Model in this regard would lengthen illustrations, increase programming costs and cause consumer misunderstanding. One commenter suggested that the phrase "in close conjunction to" implies that a disclaimer is required on every page and that given the length of the disclaimer and dearth of available space, the disclaimer might be reduced to very small type face and thus be less readable. Agency Response: The department disagrees that the proposal departs from or is inconsistent with the Model regarding the placement of disclaimers. Contrary to the assertions of several commenters, the Model requires a disclaimer not only in the narrative summary (sec.7(B)(5)), but also requires that a disclaimer accompany "any illustration of non-guaranteed elements" in a Basic illustration (sec.7(A)(12)). This disclaimer or "statement," as it is called in the Model, also is required for a Supplemental illustration: "A supplemental illustration may be provided so long as. . . it contains the same statement required of a Basic illustration that non-guaranteed elements are not guaranteed. . . ." (sec.8(A)(3)).1 Nor does the staff proposal necessarily depart from the Model regarding disclaimer placement or repetition within an illustration. While exposure draft versions of the proposal required that a disclaimer appear on every page showing non-guaranteed values, the published version struck this requirement, substituting the language "conspicuously and in close conjunction to any depiction of non-guaranteed elements." This language was drawn directly from current TDI advertising rules. Section 21.103, Required Form and Content of Advertisements provides in part: "All information required to be disclosed by these sections will be set out conspicuously and in close conjunction with the statements to which the information relates. . . ." Since non-guaranteed elements might appear at several different places within a Basic or Supplemental illustration, the Texas proposal, consistent with current advertising rules, could require, depending on the length of the illustration, multiple disclaimers. The department believes that this same result is required by the Model. Unlike "close and conspicuous," which is an established legal standard in the law of deception, the word "accompany" used in the Model lacks a fixed legal meaning. Nonetheless, it can be reasonably interpreted as an equivalent requirement. The ordinary dictionary meaning of the word is "to be with" or "to go with" and implies equal status. Adding further support to this interpretation is the fact that the Model requires that the disclaimer accompany "any illustration of non- guaranteed elements." The choice of the words "any illustration" is inconsistent with an interpretation that a single disclaimer is sufficient regardless of the length of the illustration or the number of places that non-guaranteed values might be illustrated. If the drafters had intended this result they could have simply required that a "Basic or Supplemental illustration be accompanied by a disclaimer." The department therefore disagrees with the position taken by several commenters that the current proposal differs from the Model regarding the placement of disclaimers. What the department's proposal does is simply to clarify what the Model already requires. For this reason the department also rejects the arguments that implementation of the Texas proposal will either increase costs or the length of illustrations over and above that which would occur if the Model's exact language were adopted in this regard. Apart from the Model, there are also compelling legal reasons to require proximity: the law of deception as incorporated into the Insurance Code, Article 21.21 et seq., the Texas Business and Commerce Code, sec.17.42 et seq., the department's advertising regulations and case law strongly suggest this standard. The fundamental legal difficulty posed by the projection of future policy values based on current assumptions is that without adequate disclaimer many prospective insureds will view the illustration as a representation of future policy performance, rather than as a device whose avowed purpose is to merely show how a particular policy works. Since it is a near actuarial certainty that what is shown will not in fact occur, (actual results will be worse or better than shown)2 an illustration, standing alone, has the tendency or capacity to deceive. Therefore, to avoid being deceptive, an illustration based on non-guaranteed assumptions must be effectively disclaimed; it must lose its character as a claim of future policy performance. The department is not convinced by OPIC's and Consumers Union's legal analysis that an illustration based on non-guaranteed values is inherently deceptive, and therefore can never be effectively disclaimed. Nor can the department accept the argument put forward by several industry commenters that a single disclaimer placed within the narrative summary of a Basic illustration is effective3, and therefore legally sufficient, regardless of the length of the Basic illustration or the fact that it may be accompanied by an even longer Supplemental illustration. For the above stated reasons, the department retains the proximity standard as published. sec.21.2206(1)(T) Disclaimer Substance Generally The published proposal combines elements found in the Model's narrative and ledger disclaimers into one unified disclaimer statement. In addition to that which is required by the Model, the proposal calls for identification of non- guaranteed values; the assumptions upon which non-guaranteed values are based and the factors which will affect future policy performance. Most industry groups expressed discomfort or opposition to these changes, particularly as they relate to the disclosure of assumptions and the factors which would affect future policy performance. Several commenters expressed the generalized opinion that any departure from the Model would increase costs, lengthen illustrations and cause consumer confusion. OPIC and Consumers Union supported these changes. Substance - Identification of Non-Guaranteed Values One commenter expressly objected to this provision, reasoning that labeling non- guaranteed values and benefits in the column title and footnotes sufficiently identifies those elements which are non-guaranteed. Agency Response: The Model at Section 7(A)(12) does not expressly provide that the non-guaranteed values which form the subject matter of the required disclaimer be identified or located. This omission was probably inadvertent and the requirement can be implied from the language used. Further, most illustrations that the department has reviewed clearly connect the disclaimer with those values which are not guaranteed, e.g. "The values shown in current and assumed columns are not guaranteed, so if. . . ." The proposal simply makes explicit that which is implicitly required by the Model. Given the fact that most companies currently make this important connection, the department does not believe that either the cost or length of illustrations would be significantly affected by this change in language. Obviously, if the non-guaranteed values are appropriately identified in the column headings, the proposed disclaimer does not require further identification. Substance - Disclosure of Assumptions Numerous insurers objected to the disclosure of the assumptions upon which non- guaranteed values are based. Several commented that this particular requirement would result in the disclosure of proprietary pricing and dividend calculation assumptions and would be of little help, if not confusing, to consumers. Some commenters complained that the requirement was insufficiently precise and questioned whether the department actually intended to require disclosure of pricing assumptions and other proprietary information. Others observed that disclosure of the assumptions, in addition to being confusing to consumers, would increase the length and costs of illustrations. Two commenters indicated that it was unfair for the department to cite the unpublished opinion in Casteel v. Crown Life in support of its position on this change. Agency Response: It was not the intention of staff in calling for "identification of the assumptions upon which the non-guaranteed values are based" to require disclosure of confidential pricing or any other proprietary information. What is called for is simply the disclosure of what must occur in order for the non-guaranteed values shown to be achievable. To the extent the proposed language could be misinterpreted to require disclosure of proprietary information, the language has been amended to make clear that what is required to be disclosed are the assumptions underlying the illustration, to wit: "identify the assumptions upon which the illustration is based." The Model, in its narrative summary, Section 7(B)(5), imposes a similar disclosure requirement albeit in actuarial language that in the opinion of the department is unintelligible to the average reader: "This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than shown." Because the operative words "currently illustrated non-guaranteed elements" are of uncertain or unknown meaning to the intended audience, insurance buyers, the department believes that the disclaimer fails to communicate effectively what precisely it is that is unlikely to remain unchanged for the years shown. The "what" here is of material importance to a proper understanding on the part of the prospective insured that the illustration is not in fact a claim of future policy performance. The Model's standard for the ledger disclaimer, Section 7(A)(12), is equally opaque; it requires only a statement indicating that: "the assumptions on which they (non-guaranteed values) are based are subject to change by the insurer." The department's required disclaimer supplies the omitted information necessary to make the statement understandable. Under the department's formulation, acceptable disclaimer language for a universal life policy might read: "The values shown in the current and mid-point columns are not guaranteed and assume that our current scale for interest credited, cost of insurance and expense charges will remain unchanged for the years shown. This is not likely to occur and actual results may be more or less favorable. Future credits for interest and deductions for mortality and expenses can vary at the company's discretion depending upon factors such as death claims, investment earnings and overhead costs." The disclaimer is legally effective because it explains precisely why the illustration should not be taken to be a claim of future policy performance. Several commenters complained that staff unfairly relied upon the unpublished Texas Third Court of Appeals opinion in Casteel v. Crown Life, a vanishing premium case. While staff did make reference to the Crown Life case in some of the materials distributed in connection with various exposure drafts, the reference was to the trial court's charge to the jury, not to the unpublished appellate opinion. In defining for the jury the meaning of "false, misleading, unfair or deceptive act or practice," the court incorporated a number of the department's rules, including, significantly, sec.21.114(6) (c) regarding an illustration which shows dividends being used to pay policy costs. The cited rule provides that an illustration can not state or imply that future dividends may be sufficient to pay future policy costs unless "it clearly and precisely explains. . . the conditions required for that to occur." In other words, the rule requires disclosure of the assumptions underlying the illustration. The purpose of the citation to Crown Life was to underscore the point that some of the department's current rules require disclosure of the assumptions and that this concept was simply carried forward in the illustration rule. Substance - Disclosure of Factors Which Will Affect Future Policy Performance. In addition to identifying the assumptions underlying the illustration of non- guaranteed values, the staff proposal calls for disclosure that these assumptions can change at the discretion of the insurer and requires identification of the factors which will affect future policy performance. A number of insurers expressed concern with the formulation of the requirement and suggested that the language be made conditional, to wit: "identify generally the factors which may affect future policy performance, such as. . ." They grounded their concern on the observation that one or more factors identified might not ultimately affect future policy performance or that a relevant factor might be omitted, giving rise to potential liability for misrepresentation in either case. Still other commenters questioned the utility or benefit of identifying performance factors, arguing that such disclosure would not improve consumer understanding, and might very well detract from it. One large insurer, while agreeing that consumers should be told that non-guaranteed elements may be changed by the insurer, nonetheless articulated the view that weighing the factors affecting future policy performance was a "varying and complex process" and might not be understood by a person within the segment of the public to which the illustration is directed. Finally, several insurers and agents expressed the opinion that the proposal would increase not only the length of illustrations, but compliance costs. Agency Response: The department agrees that the disclaimer regarding the factors affecting future policy performance should be made conditional for the reasons advanced by those commenters who objected to it on that basis and has amended the proposal accordingly. The department rejects the assertion made by some commenters that disclosing the factors which may affect future policy performance would not improve consumer understanding or worse, would detract from it. On the contrary, the department believes that the requirement is essential to a full understanding that what is presented is not to be understood as a claim or representation of future policy performance. Equally important, given the fact that the life products which are subject to this regulation are to one degree or another sensitive to swings in the financial markets, requiring disclosure of the factors which may affect future policy performance not only materially strengthens the disclaimer but significantly advances one of the stated goals of the Model which is to enhance consumer understanding. The proposed section must be viewed within the context of what is actually occurring in the life insurance marketplace today. Although life insurance continues to be marketed as a device to provide security to a surviving spouse and family in the event of the premature death of the insured, increasingly life insurance products also are being sold as a vehicle by which to achieve a financial goal. The investment and financial planning objectives are many and varied, but typically include providing for a supplemental retirement income, accumulation of cash to pay for future expenses or acquisitions, a college education or vacation home, for example, or the planned elimination of premium payments at a future date in order to increase future discretionary income. In this context the illustration is an essential sales tool, since communicating how these financial goals could be achieved would be impossible without it. Illustrations that are used for this purpose are commonly referred to as "concept illustrations." Although concept illustrations serve a useful and necessary purpose, they have spawned much litigation in recent years. Due to sharp decreases in market interest rates, many concepts illustrated in the 1980's and early 1990's simply did not materialize as shown. While the steady decline in interest rates was unquestionably a mediate cause to the subsequent explosion in litigation over illustrations, in many cases a more immediate or producing cause was the fact that the illustrations failed to effectively communicate that the concepts presented were dependent on non- guaranteed values which were subject or sensitive to market volatility and other adverse changes in company experience such as mortality and expenses. The insured, in order to properly evaluate any particular concept illustration, must be made aware of the connection between these factors and the risk of non- performance. To suggest, as some commenters have, that it would be unhelpful, meaningless or confusing to disclose to consumers the connection between future policy performance and the factors which could adversely affect that performance defies common sense. That the Model does not insist on this Basic disclosure is equally unpersuasive. The department believes that in order for an illustration to lose its character as a representation of future policy performance and therefore not be considered deceptive, the disclaimer must effectively communicate volatility, and in order to accomplish this objective it must identify the factors which may affect future policy performance. sec.21.2206(1)(N) and (P) Guaranteed Values in Supplemental [sup]4 a Supplemental illustration to present policy costs and benefits based exclusively on non-guaranteed values so long as the Supplemental makes reference to the Basic illustration "for guaranteed elements and other important information." The proposed section as published departs from the Model in this regard and requires a Supplemental illustration also to depict values based on guaranteed elements. In support of this change staff felt that the omission of guaranteed values was inconsistent with current formulations of the law of deception as incorporated into the Insurance Code, Article 21.21 et seq., the Business and Commerce Code, sec.17.42 et seq., the department's advertising rules and Texas case law. Specifically, staff believed that given the length of many Supplemental illustrations it had reviewed (one was over 45 pages), the guaranteed values could easily be rendered obscure despite the Model's requirement that the Supplemental must make reference to the Basic regarding guaranteed values. Of equal concern was the fact that if guaranteed values were not shown in the Supplemental, the Supplemental would wholly fail to communicate volatility, which as discussed above, is essential to effective disclaimer. This problem is further compounded by the fact that most concepts are shown in the Supplemental illustration rather than the Basic.5 In those instances, showing volatility in the Basic is not helpful, because the Basic does not reflect the concept which motivates the decision to purchase. Thus, in those cases, volatility is effectively not shown at all. Of the numerous comments received on this section, only two expressed support for the change from the Model, CU and OPIC. In their opinion it was important to show guaranteed values in the Supplemental because their inclusion demonstrated a worst case scenario thus demonstrating volatility of the non-guaranteed elements. Several commenters, while expressing conditional agreement that some changes were needed either to ensure that volatility was shown or that guaranteed values not be rendered obscure, nonetheless believed staff's solution to be unduly burdensome and expensive, and suggested several alternative solutions. Among the alternatives put forth, several suggested that in order to prevent obscuring guaranteed values, the Basic should precede the Supplemental. Another offered that volatility could be effectively shown without reducing "all" the non- guaranteed elements and suggested demonstrating volatility solely on the basis of a reduced interest or dividend scale since credited interest probably contributes more to volatility than other elements. Yet another suggested that exemptions be made for illustrations based on concepts involving split-dollar and other employee benefit plans, since employer involvement minimizes consumer risk and such illustrations are already lengthy and complex. Adding guaranteed values, it was argued, would not only magnify this existing problem, but might be difficult if not impossible to successfully implement. Those commenters expressing opposition to requiring the inclusion of guaranteed values argued that the change: was not necessary to bring the Model in conformity with state law because it neither renders guaranteeds obscure nor fails to provide for volatility; would duplicate that which is required in the Basic and therefore is redundant and unnecessary; was not needed if the Basic shows a concept; would increase the length and complexity of illustrations to such a degree that any perceived advantage would be lost to the reader; would require major reprogramming of existing software and the marginal benefits gained would not outweigh the costs; and would render Supplemental illustrations which demonstrate a concept useless because the concept would rapidly consume the guaranteed values or could not be shown at all since some concepts will not work under a guaranteed-only scenario. Several commenters expressed the opinion that the adoption of the Model would not conflict with existing rules, because under normal rules of statutory construction, the specific preempts the general and thus adoption of the Model would effectively repeal the department's advertising rules to the extent they conflict with the Model. Two commenters were of the opinion that other states which have adopted the Model have found no conflict with their advertising rules requiring equal prominence or prohibiting obscuring guaranteeds, and that therefore staff's legal analysis is flawed. One insurer observed that the department's "current advertising regulations add nothing to an illustration's compliance, fairness or accuracy that is not accomplished more thoroughly and specifically and rigorously" by the Model and recommended that the department's existing rules be modified so as not to apply to an illustration meeting the requirements of the Model. After giving careful consideration to numerous written comments received on this section, staff proposed certain modifications which it believed would afford greater flexibility, reduce costs, facilitate industry compliance and provide a transition period while still maintaining an adequate level of disclosure regarding volatility. It distributed those changes just prior to the hearing in a handout entitled "Proposed Concept Illustration Amendment." Several participants at the hearing commented on the modification and the Commissioner extended by 30 days the time for written comments on the subchapter, including modifications made to the requirement of illustrating guaranteed values in the Supplemental. Staff was persuaded that while some insurers currently have the computer and software capacity and staff resources to incorporate guaranteeds into a Supplemental illustration by the effective date of the rule, many do not and therefore some transitional period was necessary prior to full implementation of this section. Some insurers indicated that although they could not demonstrate volatility by reducing all elements to a guaranteed level, they did have the current ability to reduce either the dividend or credited interest rate scale to effect this purpose. Still others, because of "year 2000" (Y2K) problems, antiquated hardware or software platforms or other reasons indicated that they had no near-term ability to demonstrate volatility in a personalized illustration, but could do so on a hypothetical basis using a form illustration or table. Recognizing the diversity of the industry's computer capabilities, the modified section essentially suspends the requirement that volatility can only be shown by calculating values based on the guaranteed and mid-point scales and permits the use of alternative scales or a hypothetical illustration to demonstrate volatility until January 1, 2001, unless these alternative scales or the hypothetical are extended or made permanent by order of the Commissioner. The alternative scales include: the dividend component of the illustrated scale reduced by 50%, or the dividend and/or credited interest component of the illustrated scale reduced by 50% of the interest component of the illustrated scale in excess of policy guarantees. Staff was also persuaded that to require guaranteed values in every Supplemental illustration, regardless of whether their inclusion was necessary to avoid obscuring the guaranteed values depicted in the Basic or to show volatility, was overly broad and therefore the requirement needed to be reformulated to target those situations where the absence of guaranteed values in the Supplemental could be misleading or deceptive. For example, in the case of a "plain vanilla" illustration where both the Basic and Supplemental simply show cash value and the death benefit at different durations, there is no compelling legal need to show guaranteeds in the Supplemental, unless of course the Supplemental, because of its length or other factors, overwhelms or obscures the Basic. In that case the illustration would violate existing advertising rules. Also, if the Basic illustration depicted a concept, volatility would be shown in the numeric summary and again, unless the Supplemental obscured the Basic, there is no compelling legal reason to require that the Supplemental repeat the guaranteed or mid-point values. But in those cases where the Supplemental shows a concept and the Basic does not, requiring the Supplemental to show guaranteed or mid-point values would not repeat the guaranteed and midpoint values shown in the Basic. Those values would be significantly different in the Supplemental because they are directly affected by the particular concept being illustrated. The fact that the Basic shows volatility in this case is not really relevant since volatility is not shown with respect to the concept that is being illustrated in the Supplemental. And since it is the concept which is being marketed and which supports the decision to purchase, omission of volatility in this case is misleading and or deceptive. Therefore, the modified proposal eliminates the requirement that guaranteeds always be shown in a Supplemental illustration, and instead adopts a more targeted approach which is triggered by the illustration of a concept. Essentially, the modified version requires volatility to be shown in the Supplemental only if a concept is being depicted there and it is not shown in the Basic. A concept is defined as the use of non-guaranteed policy values to pay premium or policy expenses (suspension or reduction of premium) or to generate distributions to the policyholder (cash flows). Because staff was sensitive to comments regarding the length of illustrations, volatility can be shown on a one page summary called an "extended numeric summary." Although similar to the Model's numeric summary, the extended numeric summary requires some additional disclosure regarding suspension of premium and termination of cash flow. Finally, staff was persuaded to exempt entirely from this subsection those lengthy and often complex illustrations involving split-dollar and other employer benefit plans, because given employer involvement and presumed sophistication, there was little likelihood of consumer harm. That which was exempted was defined as "an illustration for a proposed policy under which an employer pays all or part of the premium or shares part of the benefits, such as a split dollar plan, or an illustration of executive bonuses or deferred compensation. The department received a total of eight oral and written comments on the proposed modification regarding guaranteed values in Supplemental illustrations. Two insurers strongly supported the modification; one insurer expressed conditional support pending further review; another insurer expressed support but for the expiration of the optional scales; one illustration software vendor expressed approval; one industry organization expressed the view that the modification was preferable to the original proposal, but withheld outright endorsement; and two insurers expressed strong opposition to the reworked requirement. Those that opposed the modification indicated generally that it was not an improvement over the Model; that it would increase costs and be confusing to the applicant; and that it would duplicate that which was presented in the Basic illustration and therefore is unnecessary. One opponent suggested that "improved disclosure could be accomplished by simply requiring that the Basic illustration precede any supplemental illustration" arguing that "such a change introduces no new definitions or exemptions, is a slight deviation from the Model and may be the most effective means of insuring that consumers see guaranteed values." Agency Response: The department disagrees that the section as reformulated requires duplication of the values shown in the Basic and therefore is unnecessary. As previously indicated, one of the major reasons behind the modification was to avoid unnecessary duplication of guaranteed or mid-point values. While the proposed section does not require repetition of guaranteed values in the Supplemental, existing advertising rules might require such repetition under certain circumstances. This might be the case, if for example, a Basic illustration is so overwhelmed by the accompanying Supplemental that the guaranteed values or volatility are rendered obscure. In this regard, several commenters urged repeal or modification of these rules essentially arguing that since the Model does not require showing guaranteed values in a Supplemental illustration, any rule which requires this result, regardless of the circumstances or merit of its application, is inconsistent with the Model. In other words, even in those cases where the failure to include guaranteed values in the Supplemental would render the illustration misleading or deceptive under current formulations of the law6, the Model's presumed mechanical standard of 'no guaranteeds in the Supplemental' should prevail. The department is unwilling to entertain this recommendation. It is not convinced that the drafters, by adopting the Model, intended to repeal well established concepts regarding deceptive trade practices which are found in the statute, case and administrative law of Texas and the several states. Nor would the department, assuming that it had authority to repeal rules which simply reflect the current state of Texas case law, consider doing so since no convincing case has been made for this change which would inevitably provide less protection for Texas consumers. The department finds nothing in the minutes or other records of the NAIC regarding adoption of the Model which would support the assertion that the drafters intended for the Model to supercede former promulgations by the NAIC regarding the advertising of life insurance. On the contrary, the Life Disclosure Working Group Report on Review of NAIC Models found no conflict with earlier advertising model regulations.7 Additionally, the prohibition found in Section 6B of the Model which proscribes using "non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead" lends further support to the proposition that the Model drafters did not intend to repeal existing advertising regulations. The department, therefore, interprets the proposed subchapter so that it is in harmony with its existing advertising regulations, to wit: under the subchapter it is not necessary to display guaranteed values in a Supplemental, unless, under the particular circumstances, their presence is otherwise required by another appropriate rule. Several commenters suggested that by modifying the Model to require the Basic illustration to precede the Supplemental, the department's concerns regarding the obscuring of guaranteed values would be satisfied since as one commenter put it, this may be "the most effective means of insuring that consumers see guaranteed values." While this recommendation might be effective when what is shown in the Basic is repeated in the Supplemental, it is not a solution to the problem, previously described, wherein a Supplemental illustration shows a concept and the Basic does not. The fact that the Basic precedes the Supplemental does nothing to remedy the fact that volatility is not shown for the concept illustrated in the Supplemental. The department also disagrees with the position put forward by several commenters that consumers somehow will be confused or not helped by requiring illustrations to show how a concept can be adversely affected by a reduced scale. The department finds that it would be very useful indeed to demonstrate to a prospect, for example, the fact that if the current credited interest rate falls to the guaranteed rate, there may be no supplemental retirement income, or if the rate falls to the midpoint, the income stream may be foreshortened. What better way to communicate the fact that the illustration should not be considered or relied upon as a representation or claim of future policy performance than to show how the policy might perform under reduced assumptions. While it is understandable from a marketing perspective why it might be undesirable to show the potential for adverse performance, it is clear that past marketing abuses, particularly the use of concept illustrations which failed to convey downside risk, engendered the Model and this adoption. Had the risk of under or non-performance been clearly communicated to prospective insureds in concept illustrations as required by this proposed subsection, the current crop of class action suits which have targeted many insurers might very well have been prevented or at least diminished. A number of commenters argued that the proposal would greatly lengthen illustrations and that it would be difficult to show guaranteed values on the same page with non-guaranteed values, especially when loans and withdrawals were being illustrated. While most of these comments were directed to the pre- amendment version of the subsection, several also made this point with respect to the "Proposed Concept Amendment." The department does not believe that the reformulated proposal will significantly lengthen illustrations, especially if the extended numeric summary option is chosen. That option should add only one page per Supplemental illustration. If an insurer chooses, it can use the ledger format which would increase the length beyond one page, but that option remains exclusively with the insurer and is not a requirement of the rule. Several commenters expressed disappointment that the alternative scales are set to expire at a future date and urged that these options be made permanent. In support of their position they cited increased and recurring software costs; the fact that guaranteed values were not necessary to adequately show volatility; and that some concepts simply could not be illustrated because guaranteed values would not be sufficient to support the concept. The department acknowledges that complying with this subsection will force insurers to incur programming and actuarial testing costs above those already required for compliance with the Model. The extent of those costs will vary among insurers depending upon the sophistication of each insurer's present or near-term computing capabilities, and the nature of the products and concepts illustrated. Estimates of startup-costs based upon the original published version of this subsection obtained from eight insurers of varying size ranged from a low of $17,000 to a high of $794,000, with a median cost of $41,187. Since the modified version of this section provides much greater flexibility and only requires alternative scales when a concept is illustrated, these costs should be significantly reduced. The department is also persuaded by the argument put forth by a number of commenters that a long lead time for implementation of this subsection will have a positive impact on software programming costs and ease the demand for already scarce resources currently committed to resolving the Y2K problem. For these reasons the department has extended the date for full compliance with this subsection from January 1, 2000, until January 1, 2001. This long lead time will also afford the department an opportunity to carefully study and review the merits of making the alternative scales permanent. During this period, the department plans to work closely with insurers, agents, computer programmers and others to test the argument that permanently providing alternatives to showing guaranteed values will greatly reduce programming costs. The Department also recognizes that requiring guaranteed values has a disparate impact on those insurers who offer participating policies, since the absence of dividends effectively precludes the illustration of most concepts on a guaranteed basis. On the other hand, the Department must carefully evaluate whether on a legal basis it is advisable or even permissible to abandon the long standing requirement that guaranteed values be afforded equal prominence in illustrations. While the Department is committed to carefully evaluating every reasonable proposal which will reduce either the cost or length of illustrations, it is resolute in its legal opinion that in order to avoid deception, concept illustrations must effectively communicate volatility. The Department believes that to the extent that this departure from the Model increases short term costs, those costs will be more than offset by the savings in litigation costs that will inevitably be incurred by the industry if volatility is not shown at all. sec.21.2206(1)(I)-(M), (O), (Q)-(S) and (U)-(V) Supplemental - Other In the proposal, Staff applied the Model's formatting requirements for a Basic illustration found in Section 7(A) to all illustrations, including a Supplemental. Staff found it peculiar, and perhaps a drafting oversight on the part of the Model's authors, to require a Basic illustration to conform to certain elementary formatting requirements while exempting a Supplemental from these same requirements altogether. In addition to basic formatting standards, the proposal requires appropriate description of the assumed payment on which the illustrated values are based and prohibits the illustration of non-guaranteed elements based on a scale more favorable than the illustrated scale. The department received very few written comments on this section. Of the five that did comment, all were opposed to this departure from the Model. In support of their opposition, four commenters argued, without specifying any particular subsection, that this departure would burden the consumer with extra paper and text which will "foster confusion, not understanding;" will be expensive to implement "because no illustration programming exists which could comply;" and would require "wholesale restructuring of Supplemental illustration formats without providing any useful information." One comment specifically objected to sec.21.2206 (1) (M) which among other things requires that "the assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay (defined as out-of-pocket payment) or contract premium, as applicable." According to this comment, moving this requirement to a Supplemental, where a suspension or reduction of premium concept is illustrated using surrenders of additions or policy loans, will either create a misnomer or will force an "additional column of undefined numbers." The proposal would create a misnomer in this situation because, it is argued, the column which is required to be labeled as "premium outlay" would include funds from either loans or surrender of additions which do not in fact represent out-of-pocket payments. To avoid this result, another column showing premium outlay would be required in addition to a "total outlay" column, and the existence of this extra column would stretch "the practical contents of illustrations beyond their limits" inasmuch as significant space is already occupied in showing the use of loans or additions. The argument continues that since a Supplemental under the Model's formulation permits simply showing total outlay, and because it is total outlay that a policyholder must pay, the change is unnecessary, impractical and will lengthen illustrations. Agency Response: The Department agrees that the practical effect of sec.21.2206 (1) (M) will be to force an extra column whenever loans or additions are used in illustrating a suspension or reduced premium concept in a Supplemental illustration. The department also acknowledges that either illustration length or costs or both could increase in this specific situation. The Department notes, however, that the Model would yield this same result if this particular concept were illustrated in a Basic. The department desires to preserve the flexibility provided by the Model in this regard and believes that sec.21.2206 (1) (M) could increase costs and/or the length of these particular concept illustrations. The core question raised by this comment is whether it is legally necessary to carve out premium outlay or contract premium from total outlay in a Supplemental illustration. Stated another way, would it be misleading or deceptive to lump them together with funds derived from loans and withdrawals. Although the department has some reservations, it believes that since premium outlay and/or contract premium would be fully shown in the Basic, permitting a total outlay column in a Supplemental which reflects total policyholder costs would not be misleading and should therefore be permitted. Therefore, the adoption includes a change which moves this requirement to sec.21.2207. Consistent with this change, the extended numeric summary found at sec.21.2206(1)(M) is also modified to permit the use of total outlay. The department also has determined that sec.21.2206 (1) (K), which requires that the "assumed dates of payment receipt and benefit pay-out within a policy year shall be clearly identified," is inconsistent with the extended numeric summary format permitted for concept illustrations, and therefore this section is likewise returned to sec.21.2207 regarding formatting for Basic illustrations. The department, however, rejects the argument that the remaining formatting requirements will confuse consumers and therefore are an unnecessary departure from the Model. The comments make no persuasive arguments that consumers will be confused by telling them that what is being illustrated is life insurance; or by revealing which values are not guaranteed; or by identifying an element by its policy name; or disclosing surrender charges when accumulation values are shown; or warning a prospect that premium is always required even though the illustration shows suspension of premium, or for that matter, placing a sequential number on each page. Rather, this information is essential to avoid deception and make illustrations less confusing and more understandable. Further, the department's current rules already either expressly or impliedly require most of these formatting standards.8 For example, sec.21.114 (4) requires that an invitation to contract advertisement "shall clearly and conspicuously disclose any charges or penalties such as administrative fees, surrender charges, and termination fees contained in an annuity or life insurance policy on withdrawals made during early contract or policy years." In other words, cash surrender values must be shown. Similarly, sec.21.104 (d) mandates that all advertisements, other than institutional, "shall explicitly and conspicuously disclose that the product concerned is . . . " life insurance. Labeling a Supplemental illustration a "Life Insurance Illustration" is consistent with, if not required by, this existing rule. Failure to indicate or otherwise identify that the values shown in a Supplemental are not guaranteed is an omission of a material fact necessary to make that which is shown not deceptive or misleading and violates a number of the department's existing regulations, including sec.sec.21.103 (a) and (d) and 21.105 (c). Failure to identify the account or accumulation and surrender values, if shown, by the names given these elements by the policy, could, depending on the words chosen to describe these elements, be deceptive, and therefore this requirement simply makes specific that which is otherwise required by sec.21.103(d). Finally, given the substantial recent litigation surrounding the "vanishing premium" concept, the department finds it puzzling that the drafters of the Model would require disclaimer of a paid up policy in a Basic, which is unlikely to show a suspension of premium concept, while not requiring the same disclaimer in the Supplemental which is a far more likely venue for the presentation of this scenario. Section 21.114 (6) already requires the substance of this disclaimer for participating policies, and the current proposal simply extends this existing requirement to encompass universal life insurance policies. Given the nature of these formatting requirements, the department also finds unpersuasive the argument that their application will lengthen or otherwise make Supplemental illustrations unwieldy. Other than for the disclaimer regarding paid-up policies, these formatting rules should have only a de minimus effect on illustration length. The department also remains unconvinced that implementation of these changes would be expensive or that "no programming exists which could comply." Over the years the department has reviewed hundreds of illustrations which routinely incorporate these formatting styles. sec.21.2206(1)(W) Policy Loans Shown on A Guaranteed Basis Because the Model is silent on this point, insurers questioned what interest rate could be used when illustrating the effect of loans on policy values on a guaranteed basis if the contract did not specify a maximum loan interest rate. In the Model's interpretative QUESTIONS ON LIFE ILLUSTRATIONS MODEL REGULATION the Model's drafters in Q7.5 made clear that what was required to be shown in this situation was the "maximum rate of interest that could be charged under state and federal law." The Insurance Code, Article 3.44C requires that a maximum rate of not more than 15% be stated in the policy, even if the loan interest rate is otherwise tied to an outside index. Thus, to make explicit what was implicitly required by the Model in light of state law, staff added this subsection which requires that "if" policy loans are illustrated on a guaranteed basis, interest charged must be calculated at the highest numeric rate permitted under the terms of the contract." Five insurer commenters, perhaps unaware of the Insurance Code, Article 3.44C, opposed the adoption of this subsection on the basis that it failed to address the problems associated with policies which have no maximum numerical loan rates and which instead rely on outside indexes. They argued that insurers with these contract provisions would be precluded from knowing the highest numerical rate permitted under the terms of the contract. A number of insurers took issue with this subsection, claiming it was a departure from the Model, while still others urged, in essence, that the Model not be adopted in this regard because illustrating the effect of loans on this basis would cause values to be consumed quickly and, in the words of one commenter, thereby "effectively rendering the illustration of guaranteeds useless." Several commenters suggested revisions to this subsection which they argued would present a more realistic and useful picture to consumers. These suggestions included using the maximum spread between the loan rate charges and the rate credited on funds supporting the loan, or using the current loan interest rate as of the illustration date with a footnote disclosing the maximum rate. Several insurers indicated that if this subsection was adopted it would require programming changes which would adversely affect their ability to meet the proposed effective date of September 1, 1998, and called for extensions of one duration or another. Finally, several insurers and one association commented that the proposal, by requiring a specific numeric rate, would produce, in effect, a worse than "worst case " scenario for those contracts that defined the guaranteed maximum loan interest rate to be the lower of (1) the maximum numerical interest rate specified or (2) a constant addition to the current crediting rate. Since the illustration in this situation is by definition on a guaranteed basis, the current crediting rate will in effect equal the guaranteed crediting rate and thus the maximum numerical rate will never in fact be reached. Agency Response: The department, for the reasons previously stated, disagrees that the proposed subsection departs from the Model or that it fails to properly address the problem of indexed loan interest rates. The department also disagrees with the premise that by requiring the maximum contract loan rate, illustrations on a guaranteed basis are effectively rendered "useless." Illustrations on a guaranteed basis are intended to reflect the "worst case scenario," in that they reflect only those values that an insurer is contractually obligated to deliver. Permitting anything other than the maximum loan rate would be inconsistent with showing values on a guaranteed basis. The fact that a particular concept may not work on a guaranteed basis, rather than rendering the illustration "useless," imparts important information to the prospect, to wit: the illustration should not be considered or relied upon as a representation of future policy performance, but rather as a device simply to show how the policy works given different assumptions. The department agrees that insurers may need more time to implement necessary program changes. For this reason, and the reasons outlined in the discussion at sec.21.2214, the department has extended the compliance date to July 1, 2000. The department also agrees that the effect of the current proposal on contracts which define the maximum guaranteed loan interest rate in terms of a guaranteed spread based on the current interest crediting rate would be to produce a distorted worst case scenario. Therefore, the department has amended the proposal to permit the illustration of this product feature. sec.21.2206(2) General Requirements/Prohibitions Illustrated Scale. (2)(E) One agent commenter urged that the prohibition against depicting policy performance on a scale more favorable to the policyowner than that produced by the illustrated scale would prevent him from showing clients interested in purchasing insurance for business or estate planning purposes different "what if" outcomes using higher than current credited interest rates. While the commenter agreed that this prohibition "was understandable for ordinary consumers, sophisticated consumers should have the opportunity to see how the policy might perform at rates greater than current." He urged that a change be made to the Model and the current proposal which would permit values greater than current to be permitted in Supplemental illustrations provided that there is "bold disclosure at the top of the page." Agency Response: The department disagrees. The suggestion would require the department to carve out an exception for "sophisticated consumers." Aside from the difficulty of determining which standard to apply to whom, the department believes that all consumers are entitled to the protection afforded by the Model. Life insurance illustrations pose two fundamental problems for regulators: One, as discussed earlier, is the fact that unless adequately disclaimed, the numbers shown can be taken as a claim of future policy performance; the other involves the integrity of the numbers themselves. Some insurers, to gain an unfair competitive advantage, built into their current scale unrealistic assumptions regarding future experience which included: improvements in mortality experience, decreases in administrative costs and the consumer price index, and increases in investment return and lapse rates. To protect all consumers from illustrations based on unsupportable assumptions, the drafters of the Model developed a number of actuarial standards or tests that an insurer's current scale must pass before it can be illustrated. The Texas rule adopts these actuarial standards9 without modification. While the tests themselves are too actuarially complex to be detailed here, they basically restrict or "discipline" the assumptions underlying policy pricing. Non-guaranteed elements must be supported by actual, recent and verifiable experience and can not be lapse supported. If an insurer's current scale does not pass these tests, it can not be illustrated, and what instead must be shown are non-guaranteed values as reduced by these tests. If, for example, an insurer is currently crediting 7.5% on a universal life insurance policy, but the tests require a crediting rate of 7%, then the illustration must be based on this reduced rate. The department, therefore, makes no change in the adoption to exempt any particular group of consumers. Stale Illustrations (2)(G). The subsection prohibits the use of a particular illustration if there has been a change in the currently payable scale or the age of the proposed insured since the illustration date. Although commenters universally agreed that the use of a stale illustration to misrepresent policy values should be prohibited, they identified a number of practical problems with the section. Several commenters indicated that this addition to the Model would increase the risk of inadvertent violations because of a lack of knowledge about an insured's birth date, and that clients or their financial advisors sometimes inadvertently give an inaccurate age. Several others indicated that the use of an older illustration could be reasonable and legitimate where, for example, backdating is used to save age in the insurance application or when showing an older application prepared at the time of sale is used to show growth in policy values. Several questioned the need for the proposal since if a stale illustration was used to misrepresent policy values, this conduct already would be actionable under the insurance code or the department's rules. Agency Response: The department agrees that the proposal could increase the risk of inadvertent violations and is persuaded further that there can be legitimate uses for stale illustrations. For this reason, the subsection is deleted in the adoption The department will instead rely on the Insurance Code, Article 21.21, and its advertising regulations to prosecute misuse of stale illustrations. Insurer Accountability for Third-Party Illustration Software (2) (L) This section requires an agent to receive the approval of his or her insurer before using software and illustrations developed by third party vendors. Currently, insurers are required by sec.21.122 (d) to "maintain a system of control over the content, form, and method of dissemination of all advertisements concerning its policies." This system of control also mandates that an insurer require its agents to submit any proposed advertisements to the insurer's home office for the insurer's prior written approval. This approval can not be delegated nor can an insurer escape legal liability for advertisements prepared by third parties. The proposed section simply extends the logic of the department's current advertising rules to cover the software that generates the illustration. The department received only one comment on this section. Without citing a specific reason other than to state that the proposal "clearly requires approval of third party materials which could be or considered to be or contain illustrations," the comment opposed the section. Agency Response: The department disagrees and remains convinced of the merit of this proposal. It is consistent with current advertising rules, and is necessary given the fact an insurer's illustration actuary must certify that illustrations used conform to the illustrated scale. The Model does not contemplate this important responsibility being delegated to third party software vendors. Further, home office control would be eroded if not rendered meaningless, if the insurer was required to approve the format of illustrations, but excused from the function of testing their output for conformity with the actuarial standards imposed by the rule.10 sec.21.2206(3) Prohibition Against Increase in Non-Guaranteed Interest Rate This section departs from the Model in that it prohibits, at any illustrated duration, an increase in the non-guaranteed interest rate unless there is a corresponding increase in the guaranteed interest rate. The proposal reflects the long-held position of the department that only guaranteed values can be shown in a life and/or annuity contract. Values based on non-guaranteed interest rates have never been permitted to be shown in life and annuity contracts, nor have values based on persistency or other bonuses been permitted to be shown, unless they are guaranteed. The reason for this prohibition stems from the department's position that current interest rates, especially persistency or other bonuses, are simply a form of excess interest which can be easily manipulated or not declared and therefore, inclusion of these interest rate/bonuses in the contract form "encourages misrepresentation" within the meaning of the Insurance Code, Article 3.42 (i)(2) and such contracts are routinely denied approval. Since non- guaranteed bonuses can not appear in the contract, any illustration or other advertisement of them would violate the Insurance Code, Article 21.21 sec.4 (8) which prohibits as a rebate or inducement the offering to give anything of value which is not "specified in the contract." The department received seventeen comments on this subsection and all of them were opposed to this change from the Model. A number of commenters quarreled with staff's legal analysis, arguing that since excess interest is provided in the contract, and a bonus is in fact excess interest, its illustration does not violate the Insurance Code, Article 21.21 sec.4 (8). Others in this same vein argued that the Insurance Code, Article 21.21 sec.4 (8) (b) (i) specifically exempts bonuses as long as they are fair and equitable to all policyholders and in the best interests of the company. A significant number of commenters pointed out that the practice of increasing the credited interest rate (as opposed to a lump sum persistency bonus) was not only widespread, but appropriate, and that to prohibit this benefit would discriminate against and be unfair to Texas policyholders. In support of this position commenters pointed out the common practice by insurers of amortizing initial policy costs (acquisition and others) over early policy years which is reflected in the development of dividend or crediting scales. Once these costs are fully recovered, the savings should be passed along to the policyholders in the form of higher dividends or decreased spreads in the credited interest rate. This practice also was said to reduce the risk to insurers that initial costs will never be recovered due to adverse lapse experience, and assures that persistent policyholders do not end up paying an undue proportion of the issue expenses of those who lapse in the early years. The point was also made that this practice tends to improve a company's persistency rates and therefore favorably affects mortality, expense and investment results. Several commenters noted that an increase in either the dividend scale or credited interest rate in later durations due to the recovery of expenses did not fall into the same category as persistency bonuses or retrospective bonuses which these commenters agreed were either ill-advised or harmful and should be prohibited. The American Academy of Actuaries pointed out that this practice is "significantly different from the type of persistency bonus where a large lump sum becomes available at a certain duration, representing a reward for policyholders who reach that duration while shortchanging those who terminated one day earlier. Instead, cash value growth is smooth and continuous, with the values growing somewhat faster after the initial expense amortization period." The Academy also argued that the Model's self-support and lapse support tests would preclude the illustration of persistency bonuses that unfairly discriminate in favor of the long term policyholder. A number of commenters observed that these same tests would reduce the risk of unsupportable credited rate or dividend increases. They argued that because of these tests, the company must be able to demonstrate that the illustrated pattern of dividends or credited interest rates can be paid assuming future experience is consistent with recent historical experience. They also pointed out that the illustration actuary is prohibited by the Model and the Texas proposal from certifying a scale that assumes an increase in the investment earnings rate, or improvements in any other of the experience factors. In response to Staff's concern regarding the possible illusionary nature of these bonuses, several commenters remarked that the likelihood of whether these bonuses would actually be paid was no greater or less than for any other non- guaranteed element and that therefore to prohibit these increases which would otherwise be permitted under the Model (assuming they passed the actuarial tests), is inconsistent with permitting the illustration of non-guaranteed elements. These same commenters also pointed out that some level of protection against abuse in this area is built into the Model and the Texas proposal, in that insurers through their illustration actuaries, must report to the department any reductions of non-guaranteed values for reasons other than experience (manipulation in the pricing margins). Finally, several commenters expressed the opinion that requiring a corresponding increase in guaranteed crediting rates would not protect the policyholder, could result in higher premiums, and in the words of one commenter, "is certain to complicate the product development process." It was argued that this requirement would only protect the policyholder in the unlikely event that the current crediting rates fell to the level of the guarantees or when the insurer otherwise intended to reduce or eliminate the increased rate. Several commenters also pointed out that since the subsection did not prohibit reduction in expense or mortality costs, these policy elements could easily be manipulated in order to obtain a result equal to an increase in credited interest or dividends, thus effectively evading the prohibition altogether. The proposal would prove costly, because by requiring an increase in the guaranteed rate insurers would be subjected to a significant deficiency reserve requirement and the higher costs of holding these reserves would be passed on to the policyholders, together with increased costs due to the added complexity of both reserve and non-forfeiture value calculations. Agency Response: The department is persuaded that the practice of increasing the credited interest rate or the dividend amount after initial expenses have been fully amortized is a common industry practice and does not constitute the type of bonus which is discriminatory or unfair to lapsing policy holders. The department is less sanguine than many of the commenters and the authors of the Model that the requirement that insurers report to the department any reductions in non-guaranteed values for reasons other than experience will prove effective in policing insurers, who absent adverse experience, renege on their commitment to pay the values illustrated by subsequently manipulating pricing spreads. Nonetheless, after careful reflection based upon the comments received, the department is uncertain that its current policy is any more effective in protecting insureds from this kind of manipulation than provisions required by the Model. Because the department believes that interest or dividend increases based on a reduction of expenses or profits are not discriminatory or otherwise unfair to lapsing policyholders, and that the current subsection is likely to increase insurer costs and is of marginal utility in preventing manipulation of pricing spreads, this section is revised in the adoption to permit the illustration of these kinds of "bonuses." Concurrently with the adoption of this rule, the department will permit, subject to certain limitations11, the inclusion of this particular product feature into life insurance contracts.12 sec.21.2207(1) Narrative Summary The published draft makes explicit the order of the various parts of a Basic illustration which were implied13 by the Model, to wit: Narrative Summary, Numeric Summary and finally, the Tabular Detail. Although no one expressly objected to this clarification, one commenter indicated that the language used would preclude a cover page. Agency Response: The department has no objection to the use of a cover page and has modified the section to permit its use. sec.21.2207(2) Numeric Summary The Model, Section 7 D, requires that an applicant or policyowner sign a statement on the numeric summary page certifying that the signatory has received a copy of the Basic illustration, understands that "any non-guaranteed elements illustrated are subject to change and could be either higher or lower, " and that the agent "has told me they (non-guaranteed elements) are not guaranteed." Likewise, the agent or other authorized producer must certify that the illustration has been presented to the applicant, that he has "explained that any non-guaranteed elements illustrated are subject to change," and has "made no statements that are inconsistent with the illustration." Staff deleted the certification requirement because it felt that it was inappropriate as a matter of public policy for the State of Texas to force each consumer, regardless of his or her actual sophistication, knowledge, literacy or ability to understand the English language, to certify that he or she "perceives and comprehends the nature and significance of" (understands) that an undefined actuarial term of art (elements) if non-guaranteed are subject to change, could be higher or lower and that the agent has stated that the non-guaranteed elements are not guaranteed. At best this requirement is unfair because it could, in subsequent litigation, be used as an admission even though it may not be true. At worst, the requirement could amount to a waiver of rights under the Texas Deceptive Trade Practices Act. Nor did staff believe it was appropriate as a matter of public policy to permit agents to certify that they have said nothing during the sales process which was inconsistent with the illustration when staff knows, based on enforcement experience, that a small minority of agents may do and say whatever is necessary to obscure or otherwise minimize the effectiveness of the disclaimers and the guaranteed values. In staff's view, the Model's certification requirement could be used to unfairly favor one party to a life insurance transaction, the insurers and their agents, over the other party, the consumer-insured. Since it is entirely reasonable to assume that in the event of litigation this certification could be used against the consumer-insured, the Model, in effect, forces the department to take sides in private litigation regardless of the relative merits of the parties. Staff believes that this result is inconsistent with the promotion and protection of the public interest. Although staff deleted the requirement, it nonetheless did not prohibit an insurer from utilizing the Model's certification language if, in light of its own appraisal of state law, it chooses to do so. The department received a total of 33 written comments on this subsection, more than on any other. Fifteen came from agents who universally opposed the deletion of this requirement. Most advanced no specific reason other than they supported the Model. One agent argued that it was "pointless to improve illustration accuracy if there is no guarantee that the consumer actually saw and understood the illustration prior to sale." Another expressed the opinion that after the sale he did not "want people saying that they did not receive nor understand the illustration." OPIC supported the deletion. OPIC argued that "consumers may feel compelled to sign even if they don't understand" and also reasoned that regardless of whether the certification could constitute an illegal waiver, "policyholders may perceive that by signing it they have waived their rights." One insurer supported staff's decision to neither require nor prohibit a policyowner applicant's signature remarking that "many applicants may be uncomfortable signing a statement saying that they understand everything the agent has told them," adding, that "even if they think they understand, they might still not." This same insurer also questioned how requiring such a statement could ever benefit the applicant. One insurer opposed the deletion on the basis that the option to choose forced upon it a sort of Hobson's choice: "If our companies do not require signatures in Texas, but do everywhere else, we will be criticized by some for adopting lower standards in Texas. If we require signatures in Texas, others will criticize us for 'overreaching' or seeking an 'illegal waiver'." On a similar note, another insurer observed that since Staff has argued that the statement might constitute an illegal waiver, its option to choose the Model's signature requirement was seriously limited. At the hearing, another insurer supported the certification requirement because of its "sentinel effect," explaining that if the agent and the applicant are required to sign the statement the "agent is more likely to explain it" thus reinforcing previous disclaimers. Similarly, one insurer testified that the certification would "heighten the chances" that the consumer would understand the nature of non-guaranteed values. One insurer made the observation that consumer certification confirms "that the agent has engaged in proper sales practices and that the applicant understands what he or she has signed." Closely related to this point were other comments which suggested that the certification "places the responsibility on the consumer to understand the product and illustration," avoids "confusion as to what the agent relates to the applicant," provides "verification that the agent did not represent all elements to be guaranteed," is necessary "to demonstrate compliance with the rule," and forecloses subsequent "he said, she said" swearing matches in court. Several insurers indicated that regardless of whether an applicant or insured acknowledges understanding, some acknowledgment is necessary to ensure that the purchaser received a full, fair and compliant illustration. In response to questioning at the hearing from the Commissioner as to whether all insureds or applicants would actually read the certification language prior to signing, one insurer indicated that its only interest was in establishing that the individual actually received the illustration: "We would be fine if the signature line just said that I've received this illustration." Several agents responded to this question by indicating that either some, many or most consumers would not read the statement prior to signing. One insurer challenged staff's legal analysis that the certification requirement might constitute an illegal waiver, citing Prudential Insurance Co. of America v. Jefferson Associates, 896 S.W.2d 156 (Tex. 1995) which held that an "as is" clause in a commercial real estate contract did not amount to a waiver, but rather was an "acknowledgment of fact" and that by analogy, the deleted certification requirement fell into this same category. Several alternatives to the subsection were proposed. One insurer suggested that the word "understand" be deleted from the Model's certification. Another offered that the certification requirement be retained with the proviso that an insurer could not use the same as a "defense to a claim made by the insured." As so modified, the certification would serve the purpose of requiring the insured "to pause and think" before entering into the contract, but would not otherwise compromise his rights. Agency Response: The department agrees and disagrees in part. The department is not persuaded that the Model's signature requirement is effective in confirming that the agent has engaged in proper sales practices or that the applicant perceives and comprehends the nature and significance of what he has signed. While this may be true in some cases, perhaps even a majority, it will not be true in others. Some unknown number of consumers, because of their particular circumstances, the nature or complexity of the product or because of agent misconduct during the sales process, will not understand that either the illustration of non-guaranteed values should not be taken as a claim of future policy performance, or the risk of volatility, or both. Some consumers, as established at the hearing on the rule, will not read the certification prior to signing. Others might understand that the illustrated values could go up or down, but not fully comprehend the effect such "fluctuations might have on other policy costs or values, or the proposed funding of policy premiums."14 In other cases, hopefully very few, it simply will amount to a falsehood when an agent certifies that he has made no statements inconsistent with the illustration. No legitimate purpose is served in requiring certification by all when it is known that in some cases the certification will be untrue. Several written and oral comments indicate an intent to use the certification as a shield against future litigation. The department finds troubling comments suggesting that the purpose or effect of the deleted section is to shift "the responsibility on the consumer to understand the product and illustration," or to avoid confusion as to what the agent said or to verify that the agent did not misrepresent the product. In light of the number of class action lawsuits which have been generated by sales illustrations it is understandable why some insurers would support certification as a way to deter litigation or defeat liability, but their reliance on what a certification establishes would probably be misplaced. The department believes the most effective deterrents to litigation are intelligible, accurate illustrations and agent integrity. Whether or not a particular court would find the certification a waiver or an admission by a party is unknown. Nonetheless, there appears be a temptation on the part of some insurers to use it for these purposes and probably for impeachment purposes as well. While it is one thing for an insurer on its own initiative to require this kind of acknowledgement, it is quite another for the State of Texas by rule to require an insurer to obtain the certification. The State's blessing might very well determine whether the Model's certification is successfully used to defeat liability. Because it could be used for these purposes and under circumstances where what is certified is not true, the department believes that concepts of fundamental fairness prohibit it from imposing this requirement. The department also is not persuaded that a workable solution to this problem would be to require the certification, but prohibit insurers from using it in the event of litigation. Whether the certification is useful as a "sentinel" or "pause and think device," is debatable, but adding a notice to the effect that this "certification can not be used against you in a court of law" is counterproductive to this purpose, would certainly disrupt the sales process, and might possibly encourage litigation. Further, even if the department found merit in this suggestion, it simply does not have the authority to alter or amend the Texas Rules of Civil Evidence. The department is, however, persuaded by those comments suggesting that some form of acknowledgment is needed to verify that a compliant illustration has been received since both the Model and the published proposal require delivery of a Basic illustration. For this reason the adoption includes a new subsection to sec.21.207(2) which requires a signed acknowledgment of receipt. By making this modification, the department has not foreclosed use of the Model language by insurers who choose to do so. However, the department emphasizes that it strongly favors the use of the simple acknowledgment now provided by this subsection. sec.21.2209(a)(4) Policy Delivery/Records Retention At least six commenters noted that the rule as written would require companies to furnish a Basic illustration at the time of policy delivery, even though the Model only requires the delivery of a Basic illustration in this situation if the policy is issued other than as applied for, or if no illustration was used in the sales process. Agency Response: The department agrees. This result was not intended by staff and occurred when the Model's numbering and paragraph sequencing was amended to conform to the Secretary of State's formatting requirements. The adoption restores the original meaning of the Model. sec.21.2214 Effective Date A number of insurers expressed concern that if Staff's proposed changes to the Model were adopted, they would need additional time to make necessary software and other modifications in order to comply. Agency Response: The department agrees. The subchapter will apply to policies sold on or after July 1, 2000. Suggested Additions or Amendments One agent remarked that under both the Model and Staff's proposed rule, illustrations could be so lengthy as to make them unusable for many consumers. This problem occurs most frequently, according to this commenter, when multiple scenarios involving, for example, changes in premium or death benefits are shown. The commenter proposes exempting illustrations used in the sales process from the regulation, and require a compliant illustration only for the policy that is actually issued. Agency Response: The department is sympathetic to the concerns expressed by agents that the Model and the Texas version can, especially when multiple scenarios are present, result in lengthy illustrations. The solution, however, is not to exempt illustrations from the sales process, but to look at ways to present the same information in an abbreviated format. Because the Model and the proposed Texas rule require that a Supplemental illustration show the same premium outlay as shown in the Basic, multiple sets of illustrations must be produced in order to show different scenarios based on either death benefit or premium amount. During the long implementation period provided by the current rule, the department with the assistance of insurers and agents, intends to explore ways in which illustration length can be reduced while still maintaining the integrity of the Model and this rule. For example, instead of separate sets of multiple illustrations, one narrative summary and multiple numeric summaries might prove workable. The department plans to study this and other options during this period. Because of the number of subsections, the complexity of the issues raised and the fact that the proposal is based on the Model, it is difficult to categorize the comments as either "for" or "against" adoption of the rule. For example, OPIC and CU opposed adoption because the rule permits the projection of non- guaranteed elements, but nonetheless support changes made by Staff to the Model. One agent opposed the Model and the rule on the basis that they restrict the projection of non-guaranteed values, but otherwise supports the proposed rule. These commenters are listed as "Conditionally Oppose." Most commenters support the proposed rule, save and except for where it departs from the Model. These comments will be grouped under the listing: "Conditionally Support." Finally, those that support the modification to the requirement that guaranteed values be shown in a Supplemental illustration will be identified as: "Support Concept Amendment." Conditionally Oppose: Consumer's Union, Office of Public Insurance Counsel, Woodard Insurance. Conditionally Support: Abreu and Brookman Financial; Aldriedge Insurance Agency; Cambridge Benefit Corporation; Capital Plan Inc.; Carter Financial Management; Chapman Schewe; Clingman, Hairston; Johnson & Associates; Darleen Martin Financial Services; David J. Kerr & Associates; David Nelson III; Don Custer; Edmund Etlinger; First Financial Resources; Franklin & Associates; Fred Carpenter & Associates; Frie Financial Group, Inc.; Impelman & Skinner; J. Fraley Company; Jack Kissane; James Burghard; Janet Stevens; Johnson Financial Group; Management Compensation Group; Michael Schultz; Richard Hollis; Robert Cowan; Ronald Schutz; Texas Association of Life Underwriters; The Finley Agency; Today's Financial; WMA Securities, Inc.; Wade Graham; Wealth Management Advisors; Allstate Life Insurance Company; American General Independent Producer Division; American National Insurance Company; David Huff; First Colony Life Insurance Company; General American Life Insurance Company; Great West Life & Annuity Insurance Company; Kansas City Life Insurance Company; Life Insurance Company of Virginia; Lutheran Brotherhood; Manulife Financial; Metropolitan Life Insurance Company; Minnesota Mutual Life Insurance Company; New York Life Insurance Company; Northwestern Mutual Life Insurance Company; Pacific Life Insurance Company; Primerica Financial Services; Principal Financial Group; Reliastar Life Insurance Company; SAFECO Life Insurance Company; Southland Life Insurance Company; Southwestern Life Insurance Company; State Farm Insurance Company; Sun Life Assurance Company of Canada; Texas Association of Life and Health Insurers; Teachers Insurance & Annuity Association; The Equitable Life Assurance Society; The Prudential Insurance Company of America; The Reliable Life Insurance Company; Transamerica Occidental Life Insurance Company; Woodmen of the World; American Academy of Actuaries; and the American Council of Life Insurance. Support Concept Amendment: American National Insurance Company; FIPSCO; General American Life Insurance Company (supports, provided options are made permanent); Principal Financial Group; Texas Association of Life and Health Insurers ("a more acceptable alternative" to requiring guaranteed values in the Supplemental, but prefers Model's formulation); Oppose Concept Amendment: American General Independent Producer Division; Northwestern Mutual Life Insurance Company [sup]1 Some might argue that the phrase "same statement" could just as plausibly refer to the statement on the numeric summary page which calls for consumers to acknowledge that they have received the basic illustration and "understand" that the non-guaranteed elements are subject to change rather than the "statement" or disclaimer which is required to accompany "any illustration of non-guaranteed elements." While it is conceded that the Model is textually ambiguous on this point, early drafts of what is now Section 8(A)(3) make clear that what was intended is the disclaimer found in Section 7(B)(5). See, e.g., Life Insurance Sales Illustration Model Regulation (Draft 3-13-95). [sup]2 "Since a sales illustration is simply an extension of the current scale of non-guaranteed elements into the future assuming current assumptions hold to that point, actual non-guaranteed elements will almost certainly vary from those illustrated." ACTUARIAL STANDARDS BOARD, ACTUARIAL STANDARD OF PRACTICE NO 24. Compliance with the NAIC Life Insurance Illustrations Model Regulation 3 (1995). [sup]3 In determining whether a particular disclaimer is effectively communicated the courts, the Federal Trade Commission and the department's own rules consider a number of different factors: the length of the advertisement (considering the illustration as a whole, is the message of the disclaimer overwhelmed or rendered obscure); clarity (understandability of the language used when evaluated in light of the intended audience); unavoidably (is the disclaimer unavoidable by consumers acting reasonably, it being understood that reasonable consumers do not read the entirety of an advertisement or are directed away from the importance of the qualifying phrase by acts or statements of the seller); proximity and placement (the effectiveness of disclosures are improved by proximity to the representation qualified); and repetition (the repetition of the disclaimer in connection with the claim that triggers it enhances the likelihood of consumers noticing and comprehending the disclaimer). For a general discussion of the current state of the law of disclaimer, see 63 FED. REG. 87 "FTC Interpretation of Rules & Guides for Electronic Media." Texas courts in construing Business and Commerce Code sec.17.46(a) are to the extent possible to be guided by interpretations given by the Federal Trade Commission and federal courts to Section 5(a)(1) of the Federal Trade Commission Act. Section 17.46 of the Deceptive Trade Practices Act is incorporated into the Texas Insurance Code at article 21.21(7). [sup]4 The department, for the reasons stated infra, is not persuaded that the Model was intended to repeal existing deceptive trade practices concepts regarding prominence or proximity, but a number of commenters are convinced otherwise. [sup]5 Earlier drafts of the Model used "supplemental illustration" and "concept illustration" interchangeably. 6 Essentially these commenters challenge one of the cardinal principals of false advertising law, to wit: that when evaluating a transaction or advertisement for deceptiveness, in this case an illustration, the entire advertisement must be considered as a whole rather than any discrete part. D. BRAGG , P. MAXWELL & J. LONGLEY, TEXAS CONSUMER LITIGATION 76 (1978). It is the overall or general impression that must be considered in determining whether a particular act or practice has the tendency or capacity to deceive. This concept is incorporated into the department's advertising rules at sec.21.103 which provides in part: Whether an advertisement has a capacity or tendency to mislead or deceive is determined by the commissioner . . . from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed. It is from this first principal that many of the rules of the department have devolved including disclaimer, proximity, prominence and others. Section 21.4 (2) (any omission to state a material fact necessary to make the statements made (considered in the light of the circumstances under which they are made) not misleading); (emphasis supplied); Section 21.103 (b) ("the format and content of an advertisement of a policy must be sufficiently complete and clear to avoid. . . the capacity or tendency to mislead or deceive"); Section 21.103 (c) ("all information required to be disclosed by these sections will be set out conspicuously and in close conjunction with the statements to which the information relates or with appropriate captions of such prominence that the required information is not minimized, rendered obscure or presented in ambiguous fashion . . . ."); Section 21.103 (d) (no advertisement may be used which because of . . . . illustrations. . . or information omitted therefrom. . . . has the capacity or tendency to mislead. . . .") [sup]7 "The working group discussed possible conflicts with the rule governing the advertising of life insurance and did not see any direct conflict that needed to be resolved in the model regulation." 1996 NAIC PROC. 3rd Qtr. 596. The drafters did indicate that the disclosures required in the Universal Life Insurance Model Regulation could be replaced with those required in the Model for a Basic illustration. LIFE INSURANCE ILLUSTRATIONS MODEL REGULATION, Drafting Note at Section 7. [sup]8 The department can find no express or implied requirement that pages must be sequentially numbered. However, such a requirement is necessary to protect both the department and the insurer when questions regarding the completeness of an illustration are raised during an investigation or enforcement proceeding. [sup]9 They include the disciplined current scale, and the lapse-supported and self-supporting tests. [sup]10 In response to comments to companion amendments to 28 TAC sec.21.102, the department withdrew 'software supporting' illustrations from the definition of 'advertisement.' Several commenters pointed out that, if read literally, the binary codes in the software generating illustrations would have to comply with various formatting requirements found in the advertising rules. In light of this change, the proposed subchapter was modified so as to accomplish this same result, but without imposing formatting requirements on software, a result which obviously the department never intended. [sup]11 The increase or reduction must be provided for in the contract; it must be applied prospectively and can not be applied retroactively; once activated it must be applied in all future years and can not be increased; it must be funded from either a reduction in expenses or profits (not out of surplus). Additionally, there is no requirement that these amounts must be reserved. [sup]12 In light of these significant changes to current department policy, the department wants to make clear that it will carefully monitor the required annual actuarial certifications for disclosure that a company has reduced its currently payable scale for business issued within the previous five years for reasons other than experience factors underlying the disciplined current scale. Upon finding that this reduction has occurred in a particular case, the department will take appropriate disciplinary action unless convinced that the reduction was made in order to preserve solvency o r for other acceptable reasons. Specifically with regard to "bonuses," if the department finds that these contractual bonuses are subsequently not honored for reasons other than adverse experience, it will presume that the company as of the illustration date had no present intent to honor them and that the illustration therefore was deceptive per se. [sup]13 Section 7 C provides that "following the narrative summary, a basic illustration shall include a numeric summary." It could be argued that the Model permits a sequence consisting of the tabular detail, narrative summary and numeric summary. This was not the intent of the Model drafters. The tabular detail is to follow the numeric summary. See, QUESTIONS & ANSWERS LIFE ILLUSTRATIONS MODEL REGULATION, Q 7.1 (NAIC, 03-19-97). [sup]14 One of the reasons cited by the New Jersey Department of Insurance for their deletion of the word "understand" from the certification. 30 N.J.R 2496 (July 6, 1998). This subchapter is adopted pursuant to the Insurance Code, Articles 21.21 sec.13 and Article 1.03A. Article 21.21 sec.13 authorizes the commissioner to promulgate reasonable rules and regulations as are necessary to accomplish the purposes of Article 21.21 in the regulation of trade practices in the business of insurance by defining, or providing for the determination of all practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance as authorized by statute. sec.21.2201.Purpose. The purpose of this Subchapter is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The Subchapter provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this Subchapter are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed. sec.21.2202.Authority. This Subchapter is issued based upon the authority granted the commissioner under the Insurance Code, Article 21.21 sec.13 and Article 1.03A. sec.21.2203.Applicability and Scope. This Subchapter applies to all group and individual life insurance policies and certificates except: (1) variable life insurance; (2) individual and group annuity contracts; (3) credit life insurance; or (4) life insurance policies with no illustrated death benefits on any individual exceeding $10,000. sec.21.2204.Definitions. For the purposes of this Subchapter, the terms in this section shall have the meanings placed opposite them unless the explicit wording of a section or portion of a section shall otherwise direct. (1) Actuarial Standards Board -- the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. (2) Concept Illustration -- the use of non-guaranteed policy values to pay premiums or policy expenses (suspension or reduction of premiums) or to generate distributions to the policyholder or owner (cash flows). (3) Contract premium -- the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration. (4) Currently payable scale -- a scale of non-guaranteed elements in effect for a policy form as of the illustration date or declared to become effective within 95 days of the illustration date. (5) Disciplined current scale -- a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards: (A) are consistent with all provisions of this regulation; (B) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred; (C) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and (D) do not permit assumed expenses to be less than minimum assumed expenses. (6) Generic name -- a short title descriptive of the policy being illustrated such as "whole life," "term life" or "flexible premium adjustable life." (7) Guaranteed elements -- the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue. (8) Illustrated scale -- a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of: (A) the disciplined current scale; or (B) the currently payable scale. (9) Illustration -- a presentation or depiction used in the solicitation or sale of a life insurance policy that includes non-guaranteed elements of a policy of life insurance over a period of years and includes but is not limited to the three types defined in subparagraphs (A) through (C) of this paragraph. (A) Basic illustration -- an illustration that shows both guaranteed and non- guaranteed elements. (B) Supplemental illustration -- an illustration furnished in addition to a basic illustration that meets the applicable requirements of this Subchapter, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration. (C) In-force illustration -- an illustration furnished at any time after the policy that it depicts has been in force for one year or more. (10) Illustration actuary -- an actuary meeting the requirements of sec.21.2211(c) who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board. (11) Illustration date -- the date on which the illustration was prepared. (12) Insurer -- a life insurance company as defined by the Insurance Code, Article 3.01 sec.(1); a fraternal benefit society as defined by the Insurance Code, Article 10.01 sec.sec.(a) and (b); a Mutual Life Insurance Company as defined by the Insurance Code, Article 11.01; or a Stipulated Premium Insurance Company as defined by the Insurance Code, Article 22.01. (13) Lapse-supported illustration -- an illustration of a policy form failing the test of self-supporting as defined in this Subchapter, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter. (14) Minimum assumed expenses -- the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from: (A) fully allocated expenses; (B) marginal expenses; and (C) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the commissioner. Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used. (15) Non-guaranteed elements -- the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue. (16) Non-term group life -- a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where: (A) every plan of coverage was selected by the employer or other group representative; (B) some portion of the premium is paid by the group or through payroll deduction; and (C) group underwriting or simplified underwriting is used. (17) Participating life insurance policy -- a life insurance policy which provides for possible policyholder dividends. (18) Policy owner -- the owner named in the policy or the certificate holder in the case of a group policy. (19) Premium outlay -- the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket. (20) Self-supporting illustration -- an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or- later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election. (21) Universal life insurance policy -- a life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other separate accounts) and mortality and expense charges are made to the policy. A universal life policy may provide for other credits and charges, such as charges for the cost of benefits provided by rider. sec.21.2205.Policies to Be Illustrated. (a) Commissioner notification. Each insurer marketing policies to which this Subchapter is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this Subchapter, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this Subchapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner. (b) Prohibition. If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited. (c) When delivery of illustration is required. If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this Subchapter is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered. (d) When delivery of quotation is required. Potential enrollees of non-term group life subject to this Subchapter shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this Subchapter, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it. sec.21.2206.General Rules and Prohibitions. An illustration other than an in force illustration shall conform to the requirements set out in paragraphs (1) through (3) of this section. (1) Disclosure and format. An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this Subchapter, be clearly labeled "life insurance illustration" and contain the basic information set out in subparagraphs (A) through (T) of this paragraph, as follows: (A) name of insurer; (B) name and business address of producer or insurer's authorized representative, if any; (C) name, age and sex of proposed insured, except where a composite illustration is permitted under this Subchapter; (D) underwriting or rating classification upon which the illustration is based; (E) generic name of policy, the company product name, if different, and form number; (F) initial death benefit; (G) dividend option election or application of non-guaranteed elements, if applicable; and (H) illustration date. (I) The illustration shall be prominently labeled "Life Insurance Illustration." (J) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled "page 4 of 7 pages"). If a Supplemental illustration is used, it may be numbered either sequentially with or separately from the basic illustration. (K) If the age of the proposed insured is shown as a component of a tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force. (L) If the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed. (M) An illustration may show a concept in either a basic or supplemental illustration or both, subject to the following: (i) A concept may be shown in a basic illustration provided an extended numeric summary is used; or (ii) If a basic illustration does not show a concept, the concept may be shown in an extended numeric summary appended to a basic illustration. (iii) If a concept is not illustrated in a basic illustration pursuant to clauses (i) or (ii) of this subparagraph, it can only be shown in: (I) a single supplemental illustration which calculates values based upon both the illustrated and one of the alternative scales set out in clause (iv) of this subparagraph; or (II) a single supplemental illustration which calculates values based upon the illustrated scale, provided an extended numeric summary is attached which calculates values based upon both the illustrated and one of the alternative scales set out in clause (iv) of this subparagraph; or (III) two supplemental illustrations, one which calculates values based on the illustrated scale, and the other which calculates values based upon one of the alternative scales set out in clause (iv) of this subparagraph; or (IV) a disclosure document explaining in narrative form: (-a-) that the depiction of policy values to pay premiums does not mean that policy premium requirements are canceled, forgiven or waived, that the operation of any plan to use policy values to pay premium is contingent upon non- guaranteed factors remaining unchanged, which may or may not occur; and/or (-b-) that the use of policy cash flows for other purposes is contingent upon the non-guaranteed factors remaining unchanged, which may or may not occur; and (-c-) such disclosure documents shall include a brief description of the non- guaranteed factors impacting the use of policy values to pay premiums or to generate cash flows and a hypothetical example for issue age 50 showing the impact of reduction in the current non-guaranteed factors of 25% and 50% on the concept. (iv) Alternative scales include: (I) mid-point and guaranteed scales; or (II) the dividend component of the illustrated scale reduced by 50%; or (III) the dividend and/or credited interest component of the illustrated scale reduced by 50% of the interest component of the illustrated scale in excess of policy guarantees. (v) For purposes of this section, an extended numeric summary is the numeric summary set out in sec.21.2207(3) of this title (relating to Standards for Basic Illustrations) which also, under the assumptions shown, identifies items and events as set out in subclauses (I) through (III) of this clause, as follows: (I) Suspension of Premium: the first policy year for which out-of-pocket premium is no longer required, and/or the number of policy years for which out-of-pocket premium is no longer required, and/or the number of policy years for which out- of-pocket premium is required. (II) Cash Flow: the first policy year when cash flow ceases, and/or the number of policy years for which cash flow occurs. (III) The assumed payments on which the illustrated benefits and values are based may be identified as premium outlay or contract premium, as applicable, or total outlay. (vi) After January 1, 2001, a concept may not be presented using the option set out in clause (iii)(IV), of this subparagraph, nor may any alternative scale be used other than the mid-point and guaranteed scales unless the option set out in clause (iii)(IV), of this subparagraph and/or the alternative scales set out in clause (iv)(II) and (III), of this subparagraph are extended by Order of the Commissioner. (vii) An illustration for a proposed policy under which an employer pays all or part of the premium or shares part of the benefits, such as a split dollar plan, or an illustration of executive bonuses or deferred compensation, is exempt from the requirements of this subsection. (N) The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender. (O) The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable. (P) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form. (Q) A disclaimer shall be set out conspicuously and in close conjunction to any depiction of non-guaranteed elements over a period of years and shall: (i) identify those benefits and values which are not guaranteed; (ii) identify the assumptions upon which the illustration is based; (iii) disclose that the assumptions are not likely to continue unchanged for the years shown and that the assumptions are subject to change by the insurer; (iv) state that actual results may be more or less favorable; and (v) identify generally the factors which may affect future policy performance, such as death claims, investment earnings and overhead costs or make reference to the narrative which identifies these factors. (R) If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up. (S) If the applicant plans to use dividends or policy values, guaranteed or non- guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values. (T) If policy loans are illustrated on a guaranteed basis, interest charged must be calculated in accordance with provisions of clause (i) or (ii) of this subparagraph, as follows: (i) at the highest numerical rate permitted under the terms of the contract; or (ii) to the extent that the loan interest rate is guaranteed in the contract as a specific constant addition to the actual interest crediting rate used in the determination of guaranteed cash values, the interest charged may be determined by applying that constant addition to the guaranteed minimum interest rate. (2) Prohibited conduct. When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives or agents shall not: (A) represent the policy as anything other than a life insurance policy; (B) use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead; (C) state or imply that the payment or amount of non-guaranteed elements is guaranteed; (D) use an illustration that does not comply with the requirements of this Subchapter; (E) use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated; (F) provide an applicant with an incomplete illustration; (G) represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact; (H) use the term "vanish" or "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums; (I) except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported;" (J) use an illustration that is not "self-supporting;" (K) use an illustration or the software supporting it unless the illustration and the supporting software have been approved by the insurer in accordance or consistent with sec.21.122 of this title (relating to System of Control and Home Office Approval of Advertising Material Naming an Insurer); or (L) use an illustration on a policy not identified by the insurer as one to be marketed with an illustration. (3) Interest rate for non-guaranteed elements; persistency bonuses. The interest rate used to determine the illustrated non-guaranteed elements shall not be greater than the lesser of the earned interest rate underlying the disciplined current scale or the interest rate for the currently payable scale. No illustration shall depict a persistency bonus, a specified additional amount or specified reduction in mortality costs or expenses in a specified policy year, after the first policy year, unless such bonus, additional amount or reduction is an express obligation of the insurer in the contract or policy and meets the lapse-support and self-supporting tests as required by this subchapter. sec.21.2207.Standards for Basic Illustrations. In addition to those matters set out in sec.21.2206 of this title (relating to General Rules and Prohibitions), the standards set out in paragraphs (1) through (4) of this subsection shall apply to a basic illustration. (1) Format. A basic illustration shall conform with the following requirements: (A) the assumed dates of payment receipt and benefit pay out within a policy year shall be clearly identified; (B) the assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay; (C) guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed; (D) the guaranteed elements, if any, shall be shown before corresponding non- guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements"). (2) Narrative summary. Excluding a cover page, a basic illustration shall begin with a narrative summary which shall include: (A) a brief description of the policy being illustrated, including a statement that it is a life insurance policy; (B) a brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code; (C) a brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy; (D) identification and a brief definition of column headings and key terms used in the illustration; and (E) A statement which: (i) identifies those benefits and values which are not guaranteed; (ii) identifies the assumptions upon which the illustration is based; (iii) discloses that the assumptions are not likely to continue unchanged for the years shown and that the assumptions are subject to change by the insurer; (iv) discloses that actual results may be more or less favorable; and (v) identifies generally the factors which may affect future policy performance, such as death claims, investment earnings and overhead costs. (3) Numeric summary. Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. (A) For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years five, 10 and 20 and at age 70, if applicable. For multiple life policies the summary shall show policy years five, 10, 20 and 30. The summaries required in this subparagraph shall be presented on the three bases set out in clauses (i) through (iii) of this subparagraph, as follows: (i) policy guarantees; (ii) insurer's illustrated scale; and (iii) insurer's illustrated scale used but with the non-guaranteed elements reduced as set out in subclauses (I) through (III) as follows: (I) dividends at 50% of the dividends contained in the illustrated scale used; (II) non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and (III) all non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used. (B) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three bases set out in subparagraph (A) of this paragraph. (C) A statement substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or other owner in the case of illustration provided at the time of delivery, and the insurance producer or other authorized representative or agent: "A copy of this illustration has been provided to the applicant/policy owner." (4) Tabular detail. Life insurance policy illustrations shall include, as applicable, the tabular detail set out in subparagraphs (A) through (C) of this paragraph. (A) A basic illustration shall include the following for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change: (i) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable; (ii) The corresponding guaranteed death benefit, as provided in the policy; and (iii) The corresponding guaranteed value available upon surrender, as provided in the policy. (B) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium. (C) Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any non-guaranteed elements are shown, they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non- guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column. sec.21.2208.Standards for Supplemental Illustrations. A supplemental illustration may be provided so long as it meets all standards set out in paragraphs (1) through (4) of this section, as follows: (1) it is appended to, accompanied by or preceded by a basic illustration that complies with this Subchapter; (2) the non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration; (3) it conforms to sec.21.2206 of this title (relating to General Rules and Prohibitions); and (4) for a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration. sec.21.2209.Delivery of Illustration and Record Retention. (a) Illustration delivery provisions. An illustration or revised illustration shall be delivered by the insurer as set out in paragraphs (1) through (4) of this subsection. (1) Basic illustration delivery. If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration signed in accordance with this rule shall be submitted to the insurer at the time of policy application. A copy also shall be provided to the applicant. (2) Revised illustration delivery. If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this subchapter, shall be labeled "Revised Illustration" and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner. (3) Certification required where no illustration is used. If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application. (4) Illustration to be provided with policy. If the policy is issued under facts and circumstances described in paragraph (3) of this subsection, a basic illustration conforming to the policy as issued shall be sent with the policy. A copy shall be provided to the insurer and the policy owner. (b) Records retention. A copy of the basic illustration and a revised basic illustration, if any, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three years after the policy is no longer in force. A copy need not be retained if no policy is issued. sec.21.2210.Annual Report; Notice to Policy Owners. (a) Annual report provision. If an illustration is used in the sale of a life insurance policy after the effective date of this Subchapter, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain, at a minimum, the applicable information set out in paragraphs (1) through (3) of this subsection. (1) Universal life policies. For universal life policies, the report shall include: (A) the beginning and end date of the current report period; (B) the policy value at the end of the previous report period and at the end of the current report period; (C) the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders); (D) the current death benefit at the end of the current report period on each life covered by the policy; (E) the net cash surrender value of the policy as of the end of the current report period; (F) the amount of outstanding loans, if any, as of the end of the current report period; and (G) for fixed premium policies, if, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or (H) for flexible premium policies, if, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report. (2) Other life insurance policies. For all other policies, the report shall include, as applicable: (A) current death benefit; (B) annual contract premium; (C) current cash surrender value; (D) current dividend; (E) application of current dividend; and (F) amount of outstanding loan. (3) Life insurance policies without nonforfeiture values. For life insurance policies that do not build nonforfeiture values, insurers shall only be required to provide an annual report with respect to these policies for those years when a change has been made to non-guaranteed policy elements by the insurer. (b) Required policy owner notice. If the annual report does not include an in- force illustration, it shall contain the following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling (insurer's phone number), writing to (insurer's name) at (insurer's address) or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in-force illustration. (c) In-force illustration to be provided at policy owner request. Upon the request of the policy owner, the insurer shall furnish an in-force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of sec.21.2206(1) and sec.21.2206(2)(A) - (L) of this title (relating to General Rules and Prohibitions); and sec.21.2207(4) of this title (relating to Standards for Basic Illustrations). No signature or other acknowledgment of receipt of this illustration shall be required. (d) Notice of change to non-guaranteed elements. If an adverse change in non- guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed. sec.21.2211.Annual Certification. (a) Insurer to appoint illustration actuary. The board of directors of each insurer shall appoint one or more illustration actuaries. (b) Actuary certification. The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this Subchapter. (c) Illustration actuary qualifications and disclosures. The illustration actuary shall: (1) be a member in good standing of the American Academy of Actuaries; (2) be familiar with the standard of practice regarding life insurance policy illustrations; (3) not have been found by the commissioner, following appropriate notice and hearing to have: (A) violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary; (B) been found guilty of fraudulent or dishonest practices; (C) demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or (D) resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards; (4) not fail to notify the commissioner of any action taken by a commissioner of another state similar to that under paragraph (3) of this subsection; (5) disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If non-guaranteed elements illustrated for new policies are not consistent with those illustrated for similar in-force policies, this must be disclosed in the annual certification. If non-guaranteed elements illustrated for both new and in-force policies are not consistent with the non-guaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and (6) disclose in the annual certification the method used to allocate overhead expenses for all illustrations: (A) fully allocated expenses; (B) marginal expenses; or (C) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the commissioner. (d) Certification filing requirements. The illustration actuary shall file a certification with the commissioner prior to use of any illustration for a new policy form, and annually for all current policy forms for which illustrations are used. (e) Notice of error. If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly. (f) Notice of inability to certify. If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify. (g) Annual certification. A responsible officer of the insurer, other than the illustration actuary, shall certify annually: (1) that the illustration formats meet the requirements of this Subchapter and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and (2) that the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in subsection (c)(6) of this section. (h) Due date of certifications. The annual certifications shall be provided to the commissioner each year by a date determined by the insurer. (i) Notice of change in illustration actuary. If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change. sec.21.2212.Penalties. Any violation of this subsection shall constitute a misrepresentation of the terms of an issued and unissued policy in violation of the Insurance Code, Article 21.21 sec.4 (1) and (2), and to be a misrepresentation of the terms, benefits, and advantages of a policy within the meaning of the Insurance Code, Article 21.20. Violations of this subsection shall subject the insurer and agent to the penalties provided in the Insurance Code, Article 21.21 and other applicable provisions of the Insurance Code. sec.21.2213.Separability, Conflict with and Effect on Other Regulations. (a) Separability. If any provision of this Subchapter or its application to any person or circumstance is for any reason held to be invalid by any court of law, the remainder of the subchapter and its application to other persons or circumstances shall not be affected. (b) Conflict with or effect on other rules. This subchapter is not intended to conflict with or supersede and is to be interpreted when possible as not to conflict with Chapter 21, subchapters A and B of this title. sec.21.2214.Effective Date. This subchapter shall apply to all policies sold on or after July 1, 2000. 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 September 9, 1998. TRD-9814329 Lynda H. Nesenholtz General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 29, 1998 Proposal publication date: March 13, 1998 For further information, please call: (512) 463-6327 TITLE 34. PUBLIC FINANCE PART I. Comptroller of Public Accounts CHAPTER 3.Tax Administration SUBCHAPTER V.Franchise Tax 34 TAC sec.3.544 The Comptroller of Public Accounts adopts an amendment to sec.3.544, concerning reports and payments, without changes to the proposed text as published in the June 12, 1998, issue of the Texas Register (23 TexReg 6144). The subsection concerning consolidated reporting has been revised in accordance with Senate Bill 861, 75th Legislature, 1997. Provisions related to the filing of amended reports as a result of an audit by the Internal Revenue Service or other competent authority, or as a result of the filing of an amended IRS return or other return, including penalties, if applicable, have been revised in accordance with Senate Bill 861, 75th Legislature, 1997. The subsection concerning the signature requirement for the public information report has been revised in accordance with Senate Bill 861, 75th Legislature, 1997. A new subsection has been added to address an exception to the statute of limitations for a franchise tax liability that is affected by an Internal Revenue Service audit, in accordance with Senate Bill 862, 75th Legislature, 1997. No comments were received regarding adoption of the amendment. This amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.sec.111.206, 171.203(d), and 171.212. 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 September 10, 1998. TRD-9814349 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: September 30, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 463-4062 TITLE 37. PUBLIC SAFETY AND CORRECTIONS PART I. Texas Department of Public Safety CHAPTER 18.Driver Education SUBCHAPTER C.Department Approved Driver Education Courses 37 TAC sec.18.31 The Texas Department of Public Safety adopts an amendment to sec.18.31, concerning Department Approved Driver Education Courses, without changes to the proposed text as published in the July 3, 1998, issue of the Texas Register (23 TexReg 6941). The justification for this section will be a reduction in the cost of the Parent-Taught Driver Education Course by not having to purchase unnecessary textbooks. Subsection (a) is amended to correct reference to statute due to the recodification of Texas Civil Statutes to Texas Transportation Code. Subsection (b) is amended to include an exemption to the requirement of a textbook. No comments were received regarding adoption of the amendment The amendment is adopted pursuant to Texas Transportation Code, sec.521.205 which provides the department by rule shall provide for approval of a driver education course conducted by the parent or legal guardian of a person who is required to complete a driver education course to obtain a Class C 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 September 8, 1998. TRD-9814195 Dudley M. Thomas Director Texas Department of Public Safety Effective date: September 28, 1998 Proposal publication date: July 3, 1998 For further information, please call: (512) 424-2890 PART VI. Texas Deparment of Criminal Justice CHAPTER 157.State Jail Felony Facilities 37 TAC sec.157.4 The Texas Department of Criminal Justice adopts an amendment to sec.157.4, concerning the Designation of Regions with changes to the proposed text as published in the August 7, 1998, issue of the Texas Register (23 TexReg 8029). Under the Texas Government Code, sec.507.003 and sec.507.004, as added by Acts of the 73rd Legislature, 1993, the Texas Board of Criminal Justice is required to designate regions in the state for the purpose of providing regional state jail felony facilities and to adopt and enforce a regional allocation policy for the purpose of allocating the number of facilities and beds to each region. After several years of experience it has been determined that the data used to devise the existing regions was not suitably predictive of the number of people coming from each region. This adoption is necessary based on new data received, in order to better serve the areas with a more appropriate allocation of facilities. Adoption of the amendment enables a more appropriate allocation of facilities to areas that are to be served. Two internal comments were received regarding adoption of the amendment, to the effect that the word "municipalities" should be "counties," and the lists of counties should be alphabetized. The proposal was changed to reflect these comments. The amendment is adopted under the Government Code, sec.492.013, which grants general rulemaking authority; and Government Code, sec.507.003 and sec.507.004, which provides the Department with the authority to designate regions for allocation of admission to the State Jail Division. sec.157.4. Designation of Regions. (a) By law the board may not designate a region that subdivides a geographical area served by a community supervision and corrections department. The board may designate a region that contains only one judicial district if that district serves a municipality with a population of 400,000 or more. The board considers the following factors to be of significance in ensuring that community supervision and corrections departments are served as efficiently as possible: (1) the number and size of counties being served by the community supervision and corrections departments; (2) geographic distances between counties; (3) the need for state jail felony facility capacity as determined by the anticipated number of defendants who will be required by a judge to serve a term of confinement in a state jail. (b) Based on these factors and any other factors deemed relevant by the board, the board designates a total of nine regions in the state for the purpose of providing regional state jail felony facilities. The following tables list the nine regions and the counties to be served in each region. Figure: 37 TAC sec.157.4(b) 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 September 14, 1998. TRD-9814495 Carl Reynolds General Counsel Texas Department of Criminal Justice Effective date: October 4, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 463-9593 CHAPTER 163.Community Justice Assistance Division Standards 37 TAC sec.163.39, sec.163.40 The Texas Department of Criminal Justice - Community Justice Assistance Division adopts an amendment to sec.163.39, concerning Residential Services and new sec.163.40, concerning Substance Abuse Treatment Standards. New sec.163.40 is adopted with changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (23 TexReg 7738). Section 163.39 is adopted without changes and therefore will not be republished. The Substance Abuse Treatment Standards for the Community Justice Assistance Division (CJAD) of the Texas Department of Criminal Justice (TDCJ) have been developed, pursuant to the Government Code, sec.509.003(a)(5), to provide standards for the operation of programs and facilities administered or funded by TDCJ-CJAD. The purpose of the Substance Abuse Program Standards is to establish clear, concise, and uniform principles which will be used as a means to measure performance for all substance abuse treatment programs that are administered or funded by TDCJ-CJAD. This will be accomplished by providing minimum standards to ensure consistent and auditable operational procedures for the continuum of services. In the programs administered or funded by TDCJ-CJAD, the goals are to: 1. provide guidelines for quality substance abuse programming throughout the continuum of care; 2. provide comprehensive, quality substance abuse treatment services; 3. provide guidelines for evaluating programs and cost-effectiveness of substance abuse programs; and 4. promote coordination in the delivery of substance abuse services among the community supervision and corrections departments in the state as well as with the divisions of the TDCJ and the agencies it funds. The objectives of the Substance Abuse Standards are to: 1. develop uniform minimum operational standards for substance abuse programs in the areas of Facility Management, Treatment Process, Offender Management, Program Services, and the Physical Plant; 2. establish a set of terms, definitions, and credentials for staff; 3. develop standards that will provide a framework for measurable outcomes of substance abuse programs; and 4. improve communication between service providers, divisions, and departments involving substance abuse services for criminal offenders. The amendment and new section will promote consistent, effective, and cost efficient programs of high quality for offenders who are under community supervision (probation). Two groups responded to the proposed changes in TDCJ-CJAD Standards: the Osteopathic Medical Association and the Texas Commission on Alcohol and Drug Abuse. The following committee of employees from the Texas Department of Criminal Justice reviewed the responses to the proposed changes: Todd Jermstad, Betty Jean Gonzales, Kirk Long, Bryan Wilson, Karen Caruth, and Steven Henderson. After the TDCJ committee reviewed and consulted with staff from the Texas Commission on Alcohol and Drug Abuse (TCADA) regarding the agency's recommendations, TCADA revised its comments and submitted a second list of comments and recommendations, which are addressed as follows. A. The Osteopathic Medical Association (OMA) has responded to the proposed new sec.163.40. Substance Abuse Treatment Standards, by recommending an addition to subsection (a) Definitions, under the definition of (15) Qualified Credentialed Counselor. The OMA has recommended the addition of another profession under the category of Qualified Credentialed Counselor; viz., licensed Osteopath (DO). After consulting with staff from the Texas Commission on Alcohol and Drug Abuse, who developed the definition for the Qualified Credentialed Counselor, staff from TDCJ made a decision to accept the suggested change. Consequently, it is being proposed that sec.163.40 (a)(15)(E) be amended to read as follows: licensed physician (MD) or licensed osteopath (DO); The change is being accepted because the professions of licensed physician and licensed osteopath have education, training and responsibilities that are similar B. The Texas Commission on Alcohol and Drug Abuse (TCADA) has responded to the proposed new sec.163.40 Substance Abuse Treatment Standards with nine recommended changes. 1. TCADA has responded to sec.160.40(a) Definitions by recommending a change to the definition for paragraph (5) Counselor Intern. TCADA has recommended modifying the definition to read as follows: A person pursuing a course of training in chemical dependency counseling at a regionally accredited institution of higher education or a registered clinical training institution who has been designated as a counselor intern by the institution. The activities of a counselor intern shall be performed under the direct supervision of a qualified credentialed counselor in accordance with rules adopted by the Texas Commission on Alcohol and Drug Abuse. TCADA has recommended these changes because the proposed definition could result in unqualified individuals calling themselves "counselor interns" and practicing illegally. TDCJ is accepting the modification of the definition for Counselor Intern in order to clarify the meaning of the term and to ensure that the definition does not cause confusion about who can be allowed legally to be called a counselor intern. 2. TCADA has responded to sec.160.40(a) Definitions by recommending a change to the definition for paragraph (12) Facility/Program. TCADA has recommended modifying the definition by creating separate definitions for "facility" and "program." TCADA has commented that the proposed definition can cause confusion by equating the terms. TDCJ is accepting the comment by TCADA that the proposed definition could cause confusion. Therefore, TDCJ is modifying the proposed definition as follows: (12) Facility - The physical location of the treatment program operated by, for, or with funding from the TDCJ-CJAD. Some locations may be locked facilities for in- patient treatment; other programs may be offered at locations as outpatient treatment. 3. TCADA has responded to sec.160.40(a) Definitions by recommending a change to the definition for paragraph (18) Treatment. TCADA has recommended modifying the definition as follows: A planned, structured and organized program designed to initiate and promote a person's chemical-free status or to maintain the person free of illegal drugs. It includes, but is not limited to, the application of planned procedures to identify and change patterns of behavior related to or resulting from chemical dependency that are maladaptive, destructive, or injurious to health, or to restore appropriate levels of physical, psychological, or social functioning lost due to chemical dependency. TCADA has recommended this change because the definition in the proposed Standard could cause some readers to equate the term "treatment" with "counseling." Because treatment includes a range of activities that includes components other than counseling, TCADA recommends the modification TDCJ is accepting the recommendation by accepting the definition that TCADA has submitted. 4. TCADA has responded to sec.160.40(c) Personnel and Staff Development/Accreditation by recommending a change to the term, "counselor intern" that is used in the Standard. TCADA has recommended modifying the definition by substituting the phrase "non- credentialed staff" in place of "counselor intern." The Standard would then read as follows: Programs that are not clinical training institutions as defined by the Texas Commission on Alcohol and Drug Abuse must inform all non-credentialed staff of this fact. TCADA has recommended this change because the technical, legal definition of "counselor intern" as established by TCADA does not include persons working outside a clinical training institute. TDCJ acknowledges the comment from TCADA that the proposed Standard could cause confusion about the term "counselor interns," and therefore accepts the proposed change. 5. TCADA has responded to sec.160.40(f)(5) Assessment Procedures by recommending a change in the Standard to eliminate the phrase "or qualified evaluator." TCADA has recommended a modification in the Standard to read as follows: assessments completed by a Qualified Credentialed Counselor (QCC), or if the assessor is not a QCC, then the documentation must be reviewed and signed by a QCC. TCADA has recommended this change because, by its Rules and Standards, only a qualified credentialed counselor can perform the task of conducting or reviewing/signing assessments. TDCJ is accepting this modification because the Texas Code of Criminal Procedure, Article 42.12, Section 9(h) and Section (13)(a)(2) provides for evaluations that are separate from assessments. Therefore, the phrase "or qualified evaluator" is not needed in this Standard. 6. TCADA has responded to sec.160.40(t) Relapse/Residential Treatment by recommending the addition of two phrases to the Standard. TCADA has recommended that the proposed Standard read as follows: There shall be an appropriate number of direct care staff to provide all required program services, maintain a therapeutic environment that enhances treatment, and ensure the safety and security of the offenders, according to the design of the facility and with the approval of the funding source. The direct care staff-to-client ratio shall be at least 1:16 during the hours clients are awake. TCADA has recommended this change from a concern that a minimum direct care staffing level needs to be established in residential services to have a positive effect on treatment as well as client safety. In addition, TCADA recommends a clarification that duties of the direct care staff include treatment-related areas other than safety and security. TDCJ is not accepting the recommendation for a specific client-to-staff ratio for the Standard. While it is agreed that appropriate staffing levels are necessary to provide all required program services and to provide an environment that is conducive to treatment, there are community corrections facilities whose designs do not necessarily require a specific offender-to staff ratio in order to promote an appropriate treatment environment that is safe and secure for the offenders. It is TDCJ-CJAD's position that direct care staffing levels are issues to be determined by contract or through the grant approval process. Therefore, TDCJ will only modify this Standard to include the phrases "to provide all required program services" and "to provide an environment conducive to treatment" so the proposed Standard will read as follows: There shall be direct care staff alert and on site during all hours of operation. There shall be an appropriate number of direct care staff to provide all required program services, maintain an environment that is conducive to treatment, and ensure the safety and security of the offenders, according to the design of the facility and with the approval of the funding source. 7. TCADA has responded to sec.160.40(u), Primary Care/Modified Therapeutic Community Treatment by recommending the elimination of this Standard and using the Standard for Relapse/Intensive Residential Treatment. TCADA recommends the use of the counselor caseload Standard (sec.160.40 (t)(2)) that reads as follows: The program shall provide adequate staff for close supervision and individualized treatment with counselor caseloads not to exceed ten offenders. TCADA has recommended this change from a concern that the caseload size of 20 clients per counselor and the required number of hours of services per week in sec.160.40(u) will not allow counselors to provide adequate treatment to client- offenders. TDCJ is not accepting this recommendation for a change in the caseload size or the number of hours of service. An error was made in the proposed Standard because an essential phrase was not included when the Standards were typed. TDCJ is recommending a change for the Standard to require only one hour of individual counseling per month for each offender, which is the current practice in TDCJ facilities. The nature of the Therapeutic Community modality allows larger caseloads for the number of service hours that are required, and the number of hours of individual counseling are not as great in the Therapeutic Community modality. Therefore, proposed sec.160.40(u)(7) should read as follows: (7) The facility shall deliver not less than 20 hours of structured activities per week for each offender, including: (A) ten hours of chemical dependency counseling, with no less than one hour of individual counseling per month; . . . 8. Regarding sec.160.40(u)(3), TCADA repeats its concern about direct care staff that it raised in recommendation (7). TDCJ reiterates its position that while an environment conducive to treatment is necessary, the number of direct care staff in a residential facility is an issue that should be determined by contract or through the grant approval process in accordance with the design of each facility. Therefore, TDCJ will only modify sec.160.40 (u)(3) as follows: There shall be direct care staff alert and on site during all hours of operation. There shall be an appropriate number of direct care staff to provide all required program services, maintain an environment that is conducive to treatment, and ensure the safety and security of the offenders, according to the design of the facility and with the approval of the funding source. 9. TCADA has responded to proposed sec.160.40(y)(4), Residential Physical Plant Requirements by recommending the addition of a phrase to the Standard. TCADA recommends the addition of the phrase "to provide a therapeutic environment" to the Standard so it will read as follows: (4) An adequate amount of floor space must be provided per resident in the facility's sleeping area to provide a therapeutic environment and to meet the safety and security requirements of the facility. TCADA has recommended this change in order to help ensure that there will be enough square footage sufficient to provide a therapeutic environment that enhances client dignity. TDCJ is not accepting this recommendation for a change in this Standard because there are adequate provisions in current Standards (sec.163.39(c)(1)) to provide programming space that is sufficient to the missions of the facilities it funds. Sleeping areas do not need to be included in a Standard for the provision of a therapeutic environment since this is an issue that is subject to review in the contract and in the grant approval process. In the time since TDCJ-CJAD replied to responses to the proposed changes in TDCJ-CJAD Standards sec.163.39 and sec.163.40, the Tarrant County Community Supervision and Corrections Department submitted an additional response. That response and TDCJ-CJAD's reply is listed as follows. The Tarrant County Community Supervision and Corrections Department (CSCD) has responded to the proposed Substance Abuse Treatment Standards sec.163.40(u)(2) by recommending two changes: First, it proposed that staff in addition to a counselor be used in calculating caseloads for treatment. Second, it proposes an automatic exemption from the Standard if funds are not available to employ sufficient staff. The Tarrant County CSCD has recommended these modifications of the proposed standard because the CSCD believes that its current staffing pattern of one counselor and one community supervision officer for every 30-35 offenders provides effective treatment for its population. Therefore, it is proposing the following wording for Standard sec.163.40(u)(2): The program shall provide adequate staff for close supervision and treatment with staff average caseloads not to exceed 20 offenders. This Standard shall not be in effect if funds are not available to employ sufficient staff. TDCJ is not accepting this proposed modification of the caseload size in the proposed sec.163.40(u)(2). The modification proposed by the Tarrant County CSCD does not delineate which members of the staff are to be used in the calculation of caseloads. Therefore, any member of the facility staff, regardless of credentials, training, or education, could be used in the calculation. It is the intent of these proposed standards to ensure that qualified credential professionals are providing treatment to the offenders in substance abuse programs. This proposed modification does not maintain that goal. In addition, the provision of an exemption relating to funding for sufficient staff would be very difficult to define or regulate equitably because wages vary between regions in the state. Funding that would be sufficient to employ sufficient staff in one region would not necessarily be sufficient to employ sufficient staff in another region. The amendment and new section are adopted under the Government Code, sec.509.003(a)(5), to provide standards for the operation of programs and facilities administered or funded by TDCJ-CJAD. sec.163.40. Substance Abuse Treatment Standards. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Admission - The administrative process and procedure performed to accept an offender into a treatment program or facility. (2) Chemical Dependency Counselor - A qualified credentialed counselor or counselor intern working under direct supervision. (3) Continuum of Care - A system which provides for the uninterrupted provision of essential services to offenders entering, exiting, and within the system. (4) Counseling - Face-to-face interactions between offenders and counselors to help offenders identify, understand, and resolve their personal issues and problems related to their substance abuse or chemical dependency. Counseling may take place in groups or in individual meetings. (5) Counselor Intern - A person pursuing a course of training in chemical dependency counseling at a regionally accredited institution of higher education or a registered clinical training institution who has been designated as a counselor intern by the institution. The activities of a counselor intern shall be performed under the direct supervision of a qualified credentialed counselor in accordance with rules adopted by the Texas Commission on Alcohol and Drug Abuse. (6) Detoxification - Chemical dependency treatment designed to systematically reduce the amount of alcohol and other toxic chemicals in an offender's body, manage withdrawal symptoms, and encourage the offender to continue ongoing treatment for chemical dependency. (7) Direct Care Staff - The staff responsible for providing treatment, care, supervision, or other offender services that involve a significant amount of direct contact. (Clerical support staff are not considered direct care staff.) (8) Discharge - The time when an offender leaves a program or facility and will no longer be receiving chemical dependency treatment from that program or facility. (9) Discharge Summary - A recapitulation of the offender's progress and participation while in either primary, residential, or outpatient treatment. (10) Education - Educational instruction; a planned, structured presentation of information which is related to substance abuse or chemical dependency. (11) Emergency - A situation requiring immediate attention and action to treat or prevent physical, emotional, or mental threat, harm, injury, or illness. (12) Facility - The physical location of the treatment program operated by, for, or with funding from the TDCJ-CJAD. Some locations may be locked facilities for in-patient treatment; other programs may be offered at locations as out-patient treatment. (13) Grievance - A formal complaint limited to matters affecting the complaining offender personally and limited to matters for which the facility/program has the authority to remedy through the grievance process. (14) Primary Counselor - An individual working directly with and being responsible for the treatment of the offender. (15) Qualified Credentialed Counselor (QCC) - A licensed chemical dependency counselor (LCDC) or one of the following professionals: (A) licensed professional counselor (LPC); (B) licensed master social worker (LMSW); (C) licensed marriage and family therapist (LMFT); (D) licensed psychologist; (E) licensed physician (MD) or licensed osteopath (DO); (F) certified addictions registered nurse (CARN); (G) licensed psychological associate; and (H) advance practice nurse recognized by the Board of Nurse Examiners as a clinical nurse specialist or nurse practitioner with specialty in psyche-mental health (APN-P/MH). (16) Senior Counselor/Unit Manager/Unit Supervisor - A supervisory staff member who directs, monitors, and oversees the work performance of subordinate staff members. (17) Special Needs Populations - Offenders who have significant problems in the areas of mental health, diminished intellectual capacity, or medical needs. (18) Treatment - A planned, structured and organized program designed to initiate and promote a person's chemical-free status or to maintain the person free of illegal drugs. It includes, but is not limited to, the application of planned procedures to identify and change patterns of behavior related to or resulting from chemical dependency that are maladaptive, destructive, or injurious to health, or to restore appropriate levels of physical, psychological, or social functioning lost due to chemical dependency. (19) Use of Force - Graduated levels of use of physical strength or weapons necessary to gain physical compliance and control of an offender whose actions otherwise pose a danger to self or others. (b) Compliance. Compliance with TDCJ-CJAD substance abuse treatment standards is required of all programs that provide substance abuse treatment and are funded or managed by TDCJ-CJAD. Programs providing only substance abuse education are not subject to these standards. (c) Personnel and Staff Development/Accreditation. The employer shall ensure that employees acquire any credentials, licensing, certifications, or continuing education required to perform their duties. Personnel files for employees shall be maintained to display copies of required documents. Programs that are not clinical training institutions as defined by the Texas Commission on Alcohol and Drug Abuse must inform all non-credentialed staff of this fact. (d) Admissions. There shall be documentation of specific admission criteria and procedures. Offenders are eligible for substance abuse treatment programs: (1) if the offender's needs are met by the treatment services provided by the program; (2) if a court orders the offender into the program and the subsequent assessment indicates the need for treatment services; or (3) if the program allows readmissions and the offender meets the admission criteria. For offenders who are placed in treatment programs who do not meet admission criteria, a mechanism or procedure shall be developed for offender removal. A review and justification explaining the reason(s) the offender does not meet admission criteria shall be required. (e) Intake. There shall be written policies and procedures establishing an intake process for offenders entering a substance abuse treatment program. (f) Assessment Procedures. Acceptable and recognized assessment tools (tests and measurements) shall be used in all substance abuse treatment programs. Assessment policies and procedures shall require the use of approved clinical measurements and screening tests. Assessment procedures shall include the following: (1) identification of strengths, abilities, needs and preferences of the offenders served; (2) indication of desired outcomes and expectations of offenders served; (3) summarization and evaluation of each offender to develop individual treatment plans. (4) specified time-frames for initial and on-going assessments; (5) assessments completed by a Qualified Credentialed Counselor (QCC), or if the assessor is not a QCC, then the documentation must be reviewed and signed by a QCC. (g) Assessments. The assessment shall include: (1) a summary of the offender's alcohol or drug abuse history including substances used, date of last use, date of first use, patterns and consequences of use, types of and responses to previous treatment and periods of sobriety; (2) family information, including substance use and abuse by family members and supportive or dysfunctional relationships; (3) vocational and employment status, including skills or trades learned, work record and current vocational plans; (4) health information, including medical conditions that present a problem or that might interfere with treatment; (5) emotional or behavioral problems, including a history of psychiatric treatment; and (6) a diagnostic summary signed and dated by the chemical dependency counselor, followed by a Licensed Chemical Dependency Counselor (LCDC) or Qualified Credentialed Counselor (QCC). (h) Orientation. Each program shall establish written policies and procedures for the orientation process. Orientation shall be provided at the onset of treatment and in accordance with the level of treatment to be provided. The orientation shall relay information necessary for offenders to be successful in treatment. (i) Offender Rights. The offender's basic rights shall be respected and protected, free from abuse, neglect and exploitation. Each provider shall have written policy and procedure to ensure protection of the offender's rights according to federal and state guidelines. (j) Release Of Information. There shall be written policies and procedures for protecting and releasing offender information that conforms to federal and state confidentiality laws. The staff shall follow written policies and procedures for responding to oral and written requests for offender-identifying information. (k) Offender Records. There shall be written policies and procedures regarding the content of offender records. Case records shall include, at a minimum, the following information: (1) initial intake information form; (2) referral documentation; (3) case information from referral source, if applicable; (4) release of information forms; (5) relevant medical information; (6) case history and assessment; (7) individual treatment plan; (8) evaluation and progress reports; (9) discharge summary; and (10) court order placement of offender into the program, if applicable. (l) Offender Records Review Policy. There shall be written policy and procedures to govern the access of offenders to their own substance abuse treatment records in accordance with Texas Health and Safety Code, sec.611.0045. This access does not apply to criminal justice records. Restrictions to access to treatment records shall be specified and explained to offenders upon request. Exceptions must involve the potential for harm to the offender or others. (m) Treatment Planning and Review. Individual Treatment Plans will be developed in accordance with TDCJ-CJAD Standard sec.163.35(c)(5) of this title (relating to Supervision) on the Case Supervision or Treatment Plan, or through a similar process approved by the CSCD. Substance abuse treatment shall remain focused on the offender's success or lack of progress, and shall be reviewed at timely intervals at a minimum of once each month or when major changes occur (e.g., change in phase) and shall ensure: (1) that the primary counselor meets with the offender as needed to review the treatment plan, evaluating goal progress and revisions; and (2) that all revised treatment plans be signed and dated by the counselor and the offender. (n) Treatment Progress Notes. There shall be written policies and procedures to require all programs to record and maintain progress notes on all offender case records, to document counseling sessions, and to summarize significant events that occur throughout the treatment process. Progress notes shall be documented at a minimum of once per week. (o) Changes In Treatment Levels. Each treatment program shall develop written criteria for an offender to advance or regress from a level of treatment. An offender must meet the criteria for a change in the level of treatment before such a change or a discharge is implemented. (p) Discharges From Treatment. Discharge from a program shall be based on the following criteria: (1) the offender has made sufficient progress towards meeting the objectives of the supervision plan and program requirements; (2) the offender has satisfied a sentence of confinement; (3) the offender has satisfied a period of placement as a condition of community supervision; (4) the offender has demonstrated non-compliance with the program criteria or court order; (5) the offender manifests a medical problem that prohibits participation or completion of the program requirements; (6) the offender displays symptoms of a psychological disorder that prohibits participation or completion of the program requirements; or (7) the offender is identified as inappropriate or ineligible for participation in the program as defined by facility eligibility criteria, statute, or standard. (q) Discharge Summary. A discharge summary shall be prepared by the primary counselor for each offender leaving any substance abuse program. The discharge summary shall provide a summation of: (1) clinical problems at the onset of treatment and original diagnosis; (2) the problems or needs, strengths or weaknesses identified on the master treatment plan; (3) the goals and objectives established; (4) the course of treatment; (5) the outcomes achieved; and (6) a continuum of care plan/aftercare treatment plan. (r) General Program Services Provisions. Specific services shall be required of all substance abuse treatment programs. Written policy and procedures shall ensure the following: (1) All substance abuse services shall be delivered according to a written treatment plan. (2) All programs shall employ a Qualified Credentialed Counselor as the Program Director, Clinical Director, Senior Counselor, or the counselor in a similar supervisory position. (3) The program shall include culturally diverse curriculum applicable to the population served. This shall be accomplished through demonstrated, appropriate counseling and instructional materials. (4) Members of the offender treatment team shall demonstrate effective communications and coordination, as evidenced in staffing, treatment planning and case-management documentation. (5) There shall be written policies and procedures regarding the delivery and administration of prescription and nonprescription medication which provide for: (A) conformity with state regulations; (B) documentation of the administration of medications, medication errors, and drug reactions. (6) Chemical dependency education shall follow a course outline that identifies lecture topics and major points to be discussed. (7) The program shall provide education about the health risks of tobacco products and nicotine addiction. (8) The program shall provide HIV education based on the Model Workplace Guidelines for Direct Service Providers developed by the Texas Department of Health. (9) Offenders shall have access to HIV counseling and testing services directly or through referral. (A) HIV services shall be voluntary, anonymous, and not limited by ability to pay. (B) Counseling shall be based on the model protocol developed by the Texas Department of Health. (C) In all TDCJ-CJAD funded facilities, testing, as well as pre- and post-test counseling, is to be provided by the medical department or contracted medical provider. In all facilities, service shall be provided either directly or through referral. (10) The program shall make testing, as well as information, for tuberculosis and sexually transmitted diseases available to all offenders, unless the program has access to test results obtained during the past year. (A) Services may be made available directly or through referral. (B) If an offender tests positive for tuberculosis or a sexually transmitted disease, the program shall refer the offender to an appropriate health care provider and take appropriate steps to protect offenders and staff. (C) A community corrections facility shall report to the local health department the release of an offender who is receiving treatment for tuberculosis. (11) The program shall: (A) refer pregnant offenders who are not receiving prenatal care to an appropriate health care provider and monitor follow-through; and (B) refer offenders to ancillary services necessary to meet treatment goals. (s) Detoxification. Written policies and procedures shall ensure the following. (1) All offenders admitted to Detoxification programs shall need detoxification. (2) Every offender shall have a completed medical history and physical. (A) Residential offenders shall have a completed physical and medical history and a physical within 24 hours of admission. If the facility cannot meet this deadline because of exceptional circumstances, the circumstances shall be documented in the offender record. Until an offender's medical history and physical is complete, staff shall observe offenders closely (no less than every 15 minutes) and monitor vital signs (no less than once each hour). (B) Outpatient offenders shall have the medical history and physical completed before admission. (3) The program shall provide continuous supervision for offenders. (A) In residential programs, direct care staff shall be awake and on site 24 hours a day. (i) During day and evening hours, at least two awake staff shall be on duty for the first 12 offenders, with one more person on duty for each additional one to 16 offenders. (ii) At night, at least one awake staff member shall be on duty for the first 12 offenders, with one more person on duty for each additional one to 16 offenders. (B) In outpatient programs, direct care staff shall be awake and on site whenever an offender is on site. Offenders shall have access to on-call staff 24 hours a day. (4) If the program accepts offenders with acute detoxification symptoms or a history of acute detoxification symptoms, the program shall have: (A) a licensed vocational nurse or registered nurse on duty during all hours of operation; (B) a physician on-call 24 hours a day. (5) Level of observation shall be based on medical recommendations and program design, or not less than that described in paragraph (2) (A) of this subsection. (6) A physician shall approve all medical policies, procedures, guidelines, tools, and forms, which shall include: (A) screening instruments (including a medical risk assessment) and procedures; (B) treatment protocol or standing orders for each chemical the program is prepared to address in detoxification; and (C) emergency procedures. (7) The clinical supervisor shall be a physician, physician assistant, advanced practice nurse, or registered nurse. (8) The program shall: (A) ensure continuous access to emergency medical care; (B) provide offenders access to mental health evaluation and linkage with mental health services when indicated; (C) use written procedures to encourage offenders to seek appropriate treatment after detoxification. (9) Direct care staff shall complete detoxification training provided by a physician, physician assistant, advanced practice nurse, or registered nurse that includes instruction in the following areas: (A) signs of withdrawal; (B) pregnancy-related complications (if the program admits females of child- bearing age); (C) observation and monitoring procedures; (D) appropriate intervention; and (E) complications requiring transfer. (10) Staff shall assist each offender in developing an individualized post- detoxification plan that includes appropriate referrals. (t) Relapse/Intensive Residential Treatment. Written policies and procedures shall ensure the following. (1) All offenders admitted to relapse intensive residential treatment shall be medically stable, and able to participate in treatment. (2) The program shall provide adequate staff for close supervision and individualized treatment with counselor caseloads not to exceed ten (10) offenders. (3) There shall be direct care staff alert and on site during all hours of operation. There shall be an appropriate number of direct care staff to provide all required program services, maintain an environment that is conducive to treatment, and ensure the safety and security of the offenders, according to the design of the facility and with the approval of the funding sources. (4) Counselors shall complete a comprehensive offender assessment within three working days of admission. (5) An individualized treatment plan shall be completed for all offenders within five working days of admission. (6) The facility shall deliver not less than 20 hours of structured activities per week for each offender, including: (A) ten (10) hours of chemical dependency counseling, with no less than one hour of individual counseling; (B) seven hours additional education, counseling, life skills, or rehabilitation activities; and (C) three hours of structured social or recreational activities. (7) Counseling and education schedules shall be submitted to the funding entity for approval. (8) Each offender shall have an opportunity to participate in physical recreation at least weekly. (9) Program staff shall offer chemical dependency education or services to identified significant others. (10) The program shall provide each offender with opportunities to apply knowledge and practice skills in a structured, supportive environment. (11) If the program utilizes a Modified Therapeutic Community modality of treatment it shall include the following as minimal components: (A) a Structure Board; (B) encounter, counseling and family groups; (C) utilization of a three phase process. (Offenders shall transition from Phase 1, to Phase 2, to Phase 3, by meeting objectives and program goals); (D) graduated treatment sanctions for incidents of non-compliance in coordination with the Transitional Treatment Team; and (E) other peer-support groups. (u) Primary Care/Modified Therapeutic Community Treatment. Written policies and procedures shall ensure the following. (1) All offenders admitted to modified therapeutic community treatment shall be medically stable, and able to participate in treatment. (2) The program shall provide adequate staff for close supervision and individualized treatment with counselor caseloads not to exceed 20 offenders. (3) There shall be direct care staff alert and on site during all hours of operation. There shall be an appropriate number of direct care staff to provide all required program services, maintain an environment that is conducive to treatment, and ensure the safety and security of the offenders, according to the design of the facility and with the approval of the funding source. (4) Counselors shall complete a comprehensive offender assessment within five working days of admission for all offenders admitted to a therapeutic community program. (5) An individualized treatment plan shall be completed for all offenders within seven working days of admission. (6) Length of stay shall be offender-driven based upon: (A) the offender's successful completion of treatment goals; (B) medical and psychological appropriateness for the program; (C) the offender's compliance with the programs rules and regulations. (7) The facility shall deliver not less than 20 hours of structured activities per week for each offender, including: (A) ten (10) hours of chemical dependency counseling, with no less than one hour of individual counseling per month; (B) seven hours additional education, counseling, life skills, or rehabilitation activities; and (C) three hours of structured social or recreational activities. (8) Counseling and education schedules shall be submitted to the funding entity for approval. (9) Each offender shall have an opportunity to participate in physical recreation at least four hours per week. (10) Program staff shall offer chemical dependency education or services to identified significant others. (11) The program shall provide each offender with opportunities to apply knowledge and proactive skills in a structured, supportive environment. (12) All Therapeutic Communities shall have the following as minimal components: (A) a Structure Board; (B) encounter, counseling, and family groups; (C) Utilization of a three phase process. (Offenders shall transition from Phase 1, to Phase 2, to Phase 3, by meeting objectives and program goals); (D) graduated treatment sanctions for incidents of non-compliance in coordination with the Transitional Treatment Team; and (E) other peer-support groups. (v) Community Residential Treatment. Written policies and procedures shall ensure the following. (1) All offenders admitted to intensive residential treatment shall be medically stable, able to function with limited supervision and support, and be able to participate in work release or community service/restitution programs. (2) The program shall have adequate staff to meet treatment needs within the context of the program description, with counselor caseloads not to exceed 16 offenders. (3) There shall be direct care staff alert and on site during all hours of operation. There shall be an appropriate number of direct care staff to provide for the safety and security of the offenders, according to the design of the facility and with the approval of the funding. (4) Counselors shall complete a comprehensive offender assessment and treatment plan within five working days of admission for all offenders. (5) The facility shall deliver no less than ten hours of structured activities per week for each offender, including at least five hours of chemical dependency counseling. (6) Counseling and education schedules shall be submitted to the funding entity for approval. (7) The program design and application shall include increasing levels of responsibility for offenders and frequent opportunities for offenders to apply knowledge and practice skills in structured and unstructured settings. (8) If the program utilizes a Modified Therapeutic Community modality of treatment, it shall include the following components: (A) a Structure Board; (B) encounter, counseling and family groups; (C) utilization of a three phase process. (Offenders shall transition from Phase 1, to Phase 2, to Phase 3, by meeting objectives and program goals); (D) graduated treatment sanctions for incidents of non-compliance in coordination with the Transitional Treatment Team; (E) other peer-support groups; (F) counselor caseloads not to exceed 20 offenders per counselor; and (G) programming of no less than four hours of chemical dependency counseling and four hours of structured activities per week. (w) Outpatient Treatment. Written policies and procedures shall ensure the following. (1) All offenders admitted to outpatient programs shall be medically stable, and have appropriate support systems in the community to live independently with minimal structure. (2) The program shall have adequate staff to provide offenders support and guidance to ensure effective service delivery, safety, and security. Staffing patterns shall be submitted to the funding entity. (3) The program shall set limits on counselor caseload size to ensure effective, individualized treatment and rehabilitation. Criteria used to set the caseload size shall be documented and approved by the funding entity. (4) Didactic groups shall not exceed 30 offenders in a group. (5) Therapeutic groups shall not exceed 16 offenders in a group. (6) For offenders in supportive outpatient programs, counselors shall complete a comprehensive offender assessment within 30 calendar days of admission for all offenders. (7) For offenders in intensive outpatient programs, counselors shall complete a comprehensive offender assessment within ten calendar days of admission for all offenders. (8) Intensive outpatient programs shall deliver no less than ten hours of structured activities per week for each offender, including at least five hours of chemical dependency counseling. (9) Supportive outpatient programs shall deliver no less than two hours of structured activities per week for each offender, including at least one hour of chemical dependency counseling. (10) Counseling and education schedules shall be submitted to the funding entity for approval. (11) The program design and application shall include increasing levels of responsibility for offenders and frequent opportunities for offenders to apply knowledge and practice skills in structured and unstructured settings. (x) Special Populations. Written policies and procedures shall ensure the following. (1) Programs that address the special mental health, intellectual capacity, or medical needs of offenders must provide appropriate treatment either by program staff or through contracted services. (2) Admission to a special needs program must be based on a documented mental health, intellectual capacity, or medical need. (3) When the assessment process indicates that the offender has coexisting disabilities/disorders, the Treatment Plan shall specifically address those issues that might impact treatment, recovery, relapse, and or recidivism. (4) Personnel shall be available who are qualified in the treatment of coexisting disabilities/disorders. (5) Within 96 hours of admission to a special needs residential program, offenders shall be administered a medical and psychological evaluation. (6) Within ten days of admission to a residential program for special needs offenders, the program administrator or designee shall contact the Texas Council on Offenders with Mental Impairments (TCOMI) regarding the offender's status and plans for a continuum of care after discharge, regardless of whether or not the discharge is for successful completion of the program. (7) Residential facilities providing services for special needs populations shall have procedures to provide access to health care services, including medical, dental, and mental health services, under the control of a designated health authority. When this authority is other than a physician, final medical judgments must rest with a single designated responsible physician licensed by the state. (A) Services/treatment shall be directed toward maximizing the functioning and reducing the symptoms of offenders. (B) There shall be written policies and procedures regarding the delivery and administration of prescription and nonprescription medication which provide for: (i) conformity with state regulations; (ii) documentation of the rationale for use and goals of service/treatment consistent with the individual plan of treatment; (iii) documentation of the administration of medications, medication errors, and drug reactions; (iv) procedures to follow in case of emergencies. (8) There shall be procedures for documenting the offender has been informed of medication management procedures. (9) Offenders shall be actively involved in decisions related to their medications. (10) Programs for special needs offenders must follow the same staffing for treatment levels as the levels for other offenders, except all residential programs shall maintain caseloads of no greater than 16 offenders for each counselor. (11) Programs operating in residential facilities shall ensure that offenders will have no less than ten days of appropriate medication for use after discharge. (y) Residential Physical Plant Requirements. Facilities (Physical Plants) providing substance abuse treatment to offenders shall have written policies and procedures to ensure the following. (1) The physical plant shall be located either within a mile of public transportation or other means of available transportation. (2) There must be documentation indicating that ventilation conforms with the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) Standard 62 and ASHRAE Standard 55 requiring 20 CFM per person minimum outside air and ventilation for each occupant or facility sleeping quarters. The facility/sleeping quarters must also meet Smoke Management Standards 92A, 92B and 204M established by the National Fire Prevention Association (NFPA). Consultation with trade associations specializing in the area of ventilation can provide alternative methods of mechanical ventilation if windows are absent or not operable. Documentation for meeting proper ventilation requirements can be obtained through a local public health agency, an engineering consultant, or a trade association such as the American Society of Heating, Refrigeration and Air-Conditioning Engineer, Inc. (3) There must be documentation that all sleeping quarters have lighting of at least 20 foot-candles in reading and grooming areas. Sleeping quarters shall be safe and provide the resident with adequate lighting which is conducive to reading and grooming. (4) An adequate amount of floor space must be provided per resident in the facility(ies) sleeping area to meet the safety and security requirements of the facility. (5) In the sleeping area, each resident must be provided at a minimum: a bed, mattress and pillow; supply of bed linen; and closet/locker space for the storage of personal items. (6) Private counseling space with adequate furniture must be provided in the facility. (7) Space and furnishings for activities such as group meetings and visits shall be provided in the facility. (8) At a minimum, the facility shall have one operable toilet for every eight residents or increment thereof as approved by funding entity. Urinals may be substituted for up to one-half of the toilets in male-populated facilities. (9) At a minimum, the facility shall have one operable wash basin with temperature controlled hot and cold running water for every eight residents, or as approved by the funding agency. (10) At a minimum, the facility shall have one operable shower or bathing facility with temperature controlled hot and cold running water for every twelve residents or as approved by funding entity. The water shall be thermostatically controlled to temperatures ranging from 100 to 108 degrees Fahrenheit to ensure the safety of residents. (11) The facility shall have the ability to handle the laundry needs on a daily basis for all residents. (12) Facilities of more than 200 residents shall be subdivided into units of not more than 60 residents, each of which are staffed with the number and variety of personnel required to provide the program services and custodial supervision needed based on contractual requirements. Units with 50 or fewer residents shall be permitted to conduct manageable, scaled programs based on decisions by facility management and contractual requirements. (13) Resident population shall not exceed the rated space of the facility. The original facility plan shall be examined to determine its rated bed capacity. If remodeled since original construction, the latest blueprints or plans for each resident housing shall be used. (14) When males and females are housed in the same facility, there shall be separate sleeping quarters with adequate supervision. (15) There shall be identifiable exits in each housing area and other high density areas to permit the prompt evacuation of residents and staff under emergency conditions as approved by the local or state fire inspector/Marshall having jurisdiction. (16) Where applicable, there shall be a separate day room (leisure time space) for each housing unit, and an outside recreation area shall be provided. (17) There shall be a visiting room or area for contact visitation which is adequate to meet the needs and size of the facility. (18) Space must be provided for administrative, custodial, professional, and clerical staff. (19) Preventative maintenance of the physical plant which provides for emergency repairs or replacements in life threatening situations shall be documented and conducted on a timely and routine basis. (20) There shall be documentation by a qualified source that the interior finishing material in resident living areas, exit areas, and places of public assembly are in accordance with applicable local ordinances or state laws as certified by the local or state fire inspector/marshall having jurisdiction. (21) Exits in the facility must be in compliance with either state or local fire safety authorities. (z) Special Physical Plant Provisions. There shall be written policy and procedures to ensure access for handicapped residents in a manner which provides for their safety and security. In accordance with the Americans with Disabilities Act (ADA), areas of the facility which are accessible to the public shall be also accessible to handicapped staff and visitors. 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 September 14, 1998. TRD-9814494 Carl Reynolds General Counsel Texas Department of Criminal Justice Effective date: October 4, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-9693 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 3.Income Assistance Services SUBCHAPTER G.Resources 40 TAC sec.3.704 The Texas Department of Human Services (DHS) adopts amendments to sec.3.704 and sec.3.902 in its Income Assistance Services chapter. The amendments are adopted without changes to the proposed text as published in the August 7, 1998, issue of the Texas Register (23 TexReg 8031) and will not be republished. The justification for the amendments is to comply with an agency initiative and the Program Simplification Workgroup relating to simplification of the lump sum payments policies in the Temporary Assistance for Needy Families (TANF) program, and to add policy to TANF as a result of increased national and statewide interest in the establishment of a new concept known as Individual Development Accounts (IDAs). The amendments will function by allowing the private sector an opportunity to participate in welfare reform through IDAs, and where feasible (and without being more restrictive), TANF policies will be made compatible with the current Food Stamp policies. No comments were received 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 September 8, 1998. TRD-9814173 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER I.Income 40 TAC sec.3.902 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 September 8, 1998. TRD-9814174 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: August 7, 1998 For further information, please call: (512) 438-3765 CHAPTER 11.Food Distribution and Processing SUBCHAPTER A.Food Distribution Program 40 TAC sec.11.105 The Texas Department of Human Services (DHS) adopts amendments to sec.11.105 and sec.11.6009, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (24 TexReg 7746). The United States Department of Agriculture has mandated the reduction in the time frames for submitting an audit in accordance with the requirements of the Single Audit Act, as amended, from 13 months to nine months from the end of the contractor's fiscal year. The revised time frame is effective for contractor fiscal years beginning on or after July 1, 1998. The justification for the amendments is to reduce the number of advance notifications to contractors reminding them of audits due from three advance notices to two. The amendments are necessary to accommodate the mandated reduction in the time frame for submitting an audit as contained in the Single Audit Act, as amended. The amendments will function by enhancing program accountability by enabling DHS to expedite the collection and resolution of audits required under the Single Audit Act, as amended. No comments were received regarding adoption of the amendments. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814313 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER B.The Texas Commodity Assistance Program (TEXCAP) 40 TAC sec.11.6009 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814314 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 CHAPTER 12.Special Nutrition Programs The Texas Department of Human Services (DHS) adopts amendments to sec.sec.12.24, 12.121, 12.209, 12.309, and 12.409, without changes to the proposed text as published in the July 31, 1998, issue of the Texas Register (24 TexReg 7749). The United States Department of Agriculture has mandated the reduction in the time frames for submitting an audit in accordance with the requirements of the Single Audit Act, as amended, from 13 months to nine months from the end of the contractor's fiscal year. The revised time frame is effective for contractor fiscal years beginning on or after July 1, 1998. The justification for the amendments is to reduce the number of advance notifications to contractors reminding them of audits due from three advance notices to two. The amendments are necessary to accommodate the mandated reduction in the time frame for submitting an audit as contained in the Single Audit Act, as amended. The amendments will function by enhancing program accountability by enabling DHS to expedite the collection and resolution of audits required under the Single Audit Act, as amended. No comments were received regarding adoption of the amendments. SUBCHAPTER A.Child and Adult Care Food Program 40 TAC sec.12.24 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814315 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER B.Summer Food Service Program 40 TAC sec.12.121 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814316 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER C.Special Milk Program 40 TAC sec.12.209 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814317 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER D.School Breakfast Program 40 TAC sec.12.309 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814318 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 SUBCHAPTER E.National School Lunch Program 40 TAC sec.12.409 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendment implements sec.sec.22.001-22.030 and sec.sec.33.001-33.024 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 September 9, 1998. TRD-9814319 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: October 1, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 438-3765 CHAPTER 92.Personal Care Facilities SUBCHAPTER C.Standards for Licensure 40 TAC sec.92.51, sec.92.53 The Texas Department of Human Services (DHS) adopts new sec.sec.92.51 and 92.53 with changes to the proposed text as published in the June 12, 1998, issue of the Texas Register (23 TexReg 6158). The new sections were erroneously proposed under Subchapter B, Application Procedures, and are being correctly adopted under Subchapter C, Standards for Licensure. Justification for the new sections is to protect the public and residents of Alzheimer's personal care facilities through the establishment of an Alzheimer's certification process, which will ensure that personal care facilities which advertise Alzheimer care are, in fact, delivering care above and beyond that provided by a regular personal care facility. Selecting a facility will be easier for consumers because of the requirement for a disclosure statement which provides information on all aspects of the operation of the facility. The quality of care provided to residents of Alzheimer's personal care facilities will be enhanced through requirements for staff training regarding Alzheimer's disease and related disorders, an extensive activities program, an activities director, an outdoor recreation area, and special security measures. The new sections will function by implementing House Bill 2510, passed by the 75th Legislature. The rules establish an Alzheimer certification process which is mandatory for any personal care facility which advertises, markets, or otherwise promotes that it provides specialized care for persons with Alzheimer's disease or related disorders. The department received comments from three individuals representing personal care providers. A summary of the comments and the department's responses follow. Comment: I have numerous concerns as to the contents of the DHS's form for the disclosure statement. As background, Texas law provides that a facility may not make specific misrepresentations regarding the services it offers and may not make express warranties for services which it does not provide, but a facility has always been allowed to choose whether it makes certain specific representations or warranties as to any of its services. In contrast, the proposed disclosure statement would force a facility to make specific representations regarding its services. No other industry in the State of Texas is so regulated in this regard. Such a required disclosure is particularly onerous due to the potential for misunderstanding of the responses and the potential for penalties of treble damages under the Deceptive Trade Practices Act for misrepresentations. Response: The department does not concur. The department is not asking facilities to make misrepresentations about services they offer or make express warranties for services they cannot provide. The purpose of the disclosure statement is to provide information to consumers so they can better compare facilities and make more informed choices when placing a family member in an Alzheimer's personal care facility. A precedent for such a disclosure statement has been set with the Alzheimer's nursing facility disclosure statement, and the department feels secure in our ability to require a similar statement for Alzheimer's personal care facilities. Comment: The disclosure statement demands specific responses that--as with any dynamic situation--will be obsolete as soon as it is written. The proposed statement does not allow for flexibility and response to a changing environment. As structured, the statement requires specificity as to services which may or may not be offered in any given time period. For example, a facility could diligently seek to provide barber/beautician services, but the provider of these services could quit frequently and, for whatever reason, be difficult to replace. Such a situation would invalidate the statement; and, under the proposed rules, require an updated application (sec.92.51(c)(2)). (Actually the statement is obsolete the minute the barber quits or does not show up for appointments on any given day.) This same analysis applies to the statements about structured activities, scheduled programs, the person who assists with/administers medications, special provisions for aging in place, the staff person who gives the training, how much on-going training is given, the volunteer groups involved with the facility, etc. Response: The commenter is correct that the statement requires an update when conditions change; however, the department sees this as a boon to consumers and not an unreasonable requirement for providers. The statement is general enough in nature that changes should not occur on a frequent basis. Comment: Parts of the disclosure statement are confusing, vague, and ambiguous, and the quality of the response will depend on the reader's interpretation of the question. In addition, any word in the rules and the disclosure statement that can be misconstrued or conveys different connotations to different people just creates confusion and should be avoided (for example, "normal staffing patterns" and "special services"). The form does not effectively provide for explanation or equivocation as to the matters requested. Especially problematic are the questions regarding staffing, and the requirements of an activity director and activities program, as well as staff training. For example, the request for a "normal" staffing pattern. This requires an unequivocal response without consideration for resident population, census, or acuity levels. An addendum does not solve the problem, because it only provides opportunity to explain a specific response. Although I understand the intent that the disclosures help to inform the public, I think that it will not effectively accomplish this goal. I suggest a different methodology altogether of creating a brochure that informs potential residents in a general fashion of the basic law, and of the differences between assisted living care and nursing home care. It could go further and suggest basic areas of discussion with the facility, e.g., typical staffing. But, as previously stated, I think that to require a facility to unequivocally respond to these questions-even with the opportunity for an "addendum"-only creates problems for residential care facilities without any corresponding benefit to a consumer. In my experience, the Rental or Admission Agreements of personal care facilities deal effectively with many of the issues addressed in the disclosure statement in that they typically disclose that the facilities are not nursing homes, plainly state the physical eligibility requirements for the residents, and clearly explain the services which are provided under the agreement. Response: The department agrees that the disclosure statement does not provide for explanation because of the checklist design. The department expects that facilities will take the time to explain the contents of the disclosure statement and elaborate on their facilities' services. The design is intended to make it easier for the public to compare facilities and the services offered. The commenter's suggestion of a brochure would result in another marketing tool, in which each facility put its best foot forward, making it difficult for consumers to readily distinguish one facility's services from another. Comment: The proposed statement does not allow for flexibility and response to the needs of different residents. For example, the statement requires specificity as to "behaviors/conditions that could prohibit admission." Depending on your interpretation of that disclosure, any of the listed conditions could, within the realm of possibility, prohibit a resident's admission; likewise, in certain situations, a facility might admit a resident who had all of the problems/conditions listed. Further, it will be impossible for a facility to anticipate all of the possible problems which should be listed under "other." Also problematic is the potential that a resident would rely on the disclosure as representing that certain types of (other) residents would not be admitted. I want to emphasize that some of the questions/statements, as currently worded, cannot be answered so as to avoid a potential litigation problem for a facility. The first statement requiring the listing of behaviors/conditions that could prohibit admission is an example. Under the Fair Housing Amendments Act of 1988 ("FHAA"), a residential care facility is prohibited from discrimination in the sale or rental of "dwellings" on the basis of a disability (and all of the listed behaviors/conditions could be considered a disability). In contrast, under the rules, a facility cannot admit a resident who is unable to evacuate appropriately (under 40 TAC sec.90.4). A facility increases its risks of litigation no matter how it answers this question. If a facility checks any or all of these conditions, it may appear to violate the FHAA. If it states none of the conditions could prohibit admission, it appears to violate the regulations. Any answer is problematic. If the facility is sued for either alleged violation, the statement is a problem, because it is ambiguous and will be used against the facility. Having to explain such a document in litigation dramatically increases the costs of litigation. What is ridiculous about this situation is this question fails to inform a potential resident of the law in either situation. It does not clearly or accurately apprise the public of the law or the facility's application of the law. In fact, no response could effectively describe any facility's application of the law, because it is so fact specific. As a solution, I would urge the department NOT to require a Disclosure Statement. Nonetheless, if the Department decides to require one, then-at a minimum-delete the above question. The problem would be partially eliminated if the Department would simply affirmatively state that a resident can not be discriminated against because of a disability, but that any condition or behavior that makes it impossible for a resident to evacuate a facility in the appropriate amount of time will prohibit the resident's admission to the facility. In fact, I urge the Department to redraft and clarify the Form Disclosure Statement as a whole. Response: The department concurs with the commenter's concern about the statement asking the behaviors that would prohibit admission, and in response to comment, the department is changing the portions of the disclosure statement regarding behavior or conditions which would prohibit admission or require discharge. In their places, the department will require facilities to list the services offered by the facility. Although the focus of the areas will be different, the information provided to the consumer will be similar. Comment: From a litigation perspective, I have additional concerns about requiring disclosure statements. I further anticipate that plaintiffs' attorneys will attempt to use the disclosure statements to create the appearance of a "standard of care" or professional standard in the personal care industry. As the rules state, the statements are available to anyone who requests one of the facility. If I had a lawsuit against a personal care facility and I wanted to create a "standard" in the industry for staffing, I would go to as many facilities as possible and obtain a disclosure statement. Remember, "normal" staffing patterns are reflected in the statements. If staffing numbers are similar in many facilities (which I warrant they are), then I would argue the statements reflect a standard for the industry; and, if the facility in question did not have similar staffing, then it fell below the standard of the industry. Likewise, it could be argued that, if the facility in question did not meet the "standard," then it is negligent. That is the way evidence is created, and a disclosure statement will simply provide another vehicle for doing so. This is a defense attorney's nightmare, because the disclosure statement invites comparisons between facilities which may be inherently different and which may not adequately explain the basis for their responses, such as acuity of residents, resident population, and availability of appropriate staff for hiring. Response: The department does not concur. The disclosure statement does not establish an industry standard. As stated by the commenter, facilities are inherently different due to variations in physical plants (age of building, design, electronic systems) and numbers and needs of residents. Such variations would make it difficult to set a single standard of care. In addition, no standards exist for the treatment of residents with Alzheimer's disease. Comment: I question the validity of any form disclosure statement that is not published in the Texas Register. The Administrative Procedure Act provides that, a state agency must give at least 30 days' notice of its intention to adopt a new rule. The notice must include the text of the proposed rule, as well as a brief explanation of the rule. Also, prior to rule adoption, the agency must allow an official comment period during which all interested persons are given an opportunity to submit data, views, or arguments, orally or in writing. It would seem that, if the proposed rule does not give actual notice of critical provisions of the rule the contents of the disclosure statement that it would be procedurally invalid under the act. Therefore, it would seem to me that the public is entitled to notice of the contents of the disclosure statement along with the notice of the rule requiring such a disclosure. It is also frightening to me that, because the disclosure can be rewritten, it is subject to becoming even more onerous. Response: The department does not concur. Departmental forms are not published in the Texas Register unless required by law. However, in response to comment, the department has amended sec.92.51(c)(2) to include the categories covered by the disclosure statement, so that providers and the general public will be informed about the information contained in a disclosure statement. Comment: The Disclosure Statement which accompanies the new standards creates, in my opinion, multiple issues for providers. Marketing tours would need to be approached as a formal legal event. The casual tour of one of our buildings on a Saturday evening for a family who is interested in having their loved one become a resident would most likely not be recommended by our attorney. This would be prohibited because the 20-year-old part - time staff member would not understand that some simple comment regarding one of the questions on the Disclosure Statement could be taken as the basis of a law suit. Even though that staff member is an excellent employee who loves and provides quality care to our residents, she is not prepared to represent our company in explaining a legal document. The Disclosure Statement is a legal document. Yet, we are to "Provide copies or explain the Disclosure Statement to anyone who requests information about your facility." It does not limit the providing of copies and explanation to certain hours of the day. We are required by rules and regulations to provide the Disclosure Statement on demand, 24 hours a day. Please consider removing the requirement for Disclosure Statements completely. If not removed, put some limits on when they can be demanded and explained. It is unfair for the Alzheimer's facility to be required to have a legal staff on duty seven days a week, 24 hours a day. This document will put all providers on the defensive and that is not the intent of the legislation or the rules and regulations. Response: The department does not concur. The rules do not require the distribution of the Disclosure Statement on demand, 24 hours a day. The Disclosure Statement must be distributed to individuals seeking information about the facility's services, and the facility is in control of when they meet with individuals to discuss their services Comment: The proposed standard requires that the facility be licensed as a Type B. I would submit that the Life Safety Code allows Small Type A facilities to keep "impractical" residents if the building is protected throughout by an approved supervised automatic sprinkler system complying with NFPA 13D provided all habitable areas and closets are sprinklered. For that reason, I think that small Type A facilities should be allowed to be certified under this standard in addition to Type B's. There is no reason to require a higher standard than is required by the Life Safety Code. Response: The Life Safety Code (NFPA101) does not mention "small Type A" facilities, and therefore, does not "allow small Type A facilities to keep 'impractical' residents if the building is protected throughout by an approved supervised automatic sprinkler system." The Life Safety Code requires all small facilities housing "impractical" residents to be sprinklered (NFPA 101 21- 2.3.5.2). The standards do not require a higher standard than the Life Safety Code. The standards do recognize that facilities housing Alzheimer's residents must meet the level of fire safety required for "impractical" residents. Comment: Delayed egress locks are a significant hazard in a secured Alzheimer's environment. The proposed standards need to clearly prohibit delayed egress locks for exit doors on secured units. Otherwise, battles will have to be fought constantly with local jurisdictions over this issue. Response: Delayed egress locks, as defined by NFPA 101 5-2.1.6, are allowed in any facility meeting the requirements of NFPA 101, Section 12, which is required for licensure as a large Type B facility. Locks are allowed, not required, by the standards. Comment: The requirement for a manual fire pull to be located within 5'0" of each exit door will create a significant hazard. If a resident pulls the fire alarm in an effort to leave the building, all exit doors will immediately be unlocked creating a serious hazard for all residents. I suggest that the manual fire pulls be located further away from the exit doors to help reduce this hazard. Response: The manual pull within 5'0" of the exit door is a safeguard added when the delayed egress bar requirement of 5-2.1.6. was removed. This trade-off was approved by the Health Care Financing Administration for Alzheimer's standards in nursing facilities and those standards were followed for the personal care standards. Comment: My contractor has not been able to find a waterproof magnetic lock as required by the proposed rules. Response: Waterproof magnetic locks are installed throughout the state on gates of enclosed exterior spaces provided for nursing facilities' locked units. Comment: If the back yard is big enough to qualify as a refuge area, I don't think the magnetic lock should be required. Response: The personal care rules do not include "area of refuge" language. Comment: When power goes out, not only is the front door magnetic lock open and not secure, so will the back yard be unsecured. At least 2 people will be needed to watch/stand by the doors, rather than watch residents. Response: Each facility will be responsible for developing plans for such emergencies. Nursing facilities address the problem through generators to provide emergency power to locking devices on their locked units. In addition, the department made editorial changes in sec.92.51 and sec.92.53. The new sections are adopted under the Health and Safety Code, Chapter 247, which authorizes the department to license personal care facilities, and Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs. The new sections implement the Health and Safety Code, sec.sec.247.001-247.066, and the Human Resources Code, sec.sec.22.001-22.030. sec.92.51. Licensure of Facilities for Persons with Alzheimer's Disease. (a) Any facility which advertises, markets, or otherwise promotes that the facility or a distinct part of the facility provides specialized care for persons with Alzheimer's disease or related disorders must be certified under this subchapter. Use of advertising terms such as "medication reminders or assistance," "meal and activity reminders," "escort service," or "short-term memory loss, confusion, or forgetfulness" will not trigger a requirement for certification as an Alzheimer's facility. (b) The facility must be licensed as a Type B facility. (c) Application for certification must be made on forms prescribed by the Texas Department of Human Services (DHS) and must include: (1) an annual fee of $100; and (2) a disclosure statement, using DHS's form, describing the nature of its care or treatment of residents with Alzheimer's disease and related disorders, which includes the pre-admission process, the admission process, discharge and transfer, planning and implementation of care, change in condition issues, staff training on dementia care, the physical environment, and staffing. The disclosure statement must be updated and submitted to DHS as needed to reflect changes in special services for residents with Alzheimer's disease or related disorders. (d) The facility must not exceed the maximum number of residents specified on the certificate. (e) A certificate must be posted in a prominent location for public view. (f) A certificate is valid for one year from the effective date of approval by DHS. (g) A certificate will be cancelled upon change of ownership and if DHS finds that the certified unit or facility is not in compliance with applicable laws and rules. A facility must remove a cancelled certificate from display and advertising, and the certificate must be surrendered to DHS upon request. sec.92.53. Standards for Certified Alzheimer's Personal Care Facilities. (a) Manager qualifications and training. (1) The manager of the certified Alzheimer facility or the supervisor of the certified Alzheimer unit must be 21 years of age, and have: (A) a college degree in psychology, social work, counseling, gerontology, nursing or a related field, with documented course work in dementia care; or (B) one year of work experience with persons with dementia. (2) The manager or supervisor must complete six hours of annual continuing education regarding dementia care. (b) Staff training. (1) All staff members must receive four hours of dementia-specific orientation prior to assuming any job responsibilities. Training must cover, at a minimum, the following topics: (A) basic information about the causes, progression, and management of Alzheimer's disease; (B) managing dysfunctional behavior; and (C) identifying and alleviating safety risks to residents with Alzheimer's disease. (2) Direct care staff must receive 16 hours of on-the-job supervision and training within the first 16 hours of employment following orientation. Training must cover: (A) providing assistance with the activities of daily living; (B) emergency and evacuation procedures specific to the dementia population; and (C) managing dysfunctional behavior. (3) Direct care staff must annually complete 12 hours of inservice education regarding Alzheimer's disease. Suggested topics include: (A) assessing resident capabilities and developing and implementing service plans; (B) promoting resident dignity, independence, individuality, privacy and choice; (C) planning and facilitating activities appropriate for the dementia resident; (D) communicating with families and other persons interested in the resident; (E) resident rights and principles of self-determination; (F) care of elderly persons with physical, cognitive, behavioral and social disabilities; (G) medical and social needs of the resident; (H) common psychotropics and side effects; and (I) local community resources. (c) Staffing. A facility must employ sufficient staff to provide services for and meet the needs of its Alzheimer's residents. In large facilities or units with 17 or more residents, two staff members must be immediately available when residents are present. (d) Pre-admission. The facility must establish procedures, such as an application process, interviews, and home visits, to ensure that prospective residents are appropriate and their needs can be met. (1) Prior to admitting a resident, facility staff must discuss and explain the disclosure statement with the family or responsible party. (2) The facility must give the required Texas Department of Human Services (DHS) disclosure statement to any individual seeking information about the facility's care or treatment of residents with Alzheimer's disease or a related disorder. (e) Assessment. The facility must make a comprehensive assessment of each resident within 14 days of admission and annually. The assessment must include at least the following information: (1) medical conditions and medical history; (2) physical and mental functional status; (3) social history, including, but not limited to, the resident's customary routines, behaviors, preferences, and needs; (4) nutritional status, including weight, and nutritional requirements; (5) mental and psychosocial status; and (6) activities potential. (f) Service plan. Facility staff, with input from the family, if available, must develop an individualized service plan for each resident, based upon the resident assessment, within 14 days of admission. The service plan must address the individual needs, preferences, and strengths of the resident. The service plan must be designed to help the resident maintain the highest possible level of physical, cognitive, and social functioning. (g) Activities. A facility must encourage socialization, cognitive awareness, self-expression, and physical activity in a planned and structured activities program. Activities must be individualized, based upon the resident assessment, and appropriate for each resident's abilities. (1) The activity program must contain a balanced mixture of activities addressing cognitive, recreational, and activity of daily living (ADL) needs. (A) Cognitive activities include, but are not limited to, arts, crafts, story telling, poetry readings, writing, music, reading, discussion, reminiscences, and reviews of current events. (B) Recreational activities include all socially interactive activities, such as board games and cards, and physical exercise. Care of pets is encouraged. (C) Self-care ADLs include grooming, bathing, dressing, oral care, and eating. Occupational ADLs include cleaning, dusting, cooking, gardening, and yard work. Residents must be allowed to perform self-care ADLs as long as they are able to promote independence and self worth. (2) Residents must be encouraged, but never forced, to participate in activities. Residents who choose not to participate in a large group activity must be offered at least one small group or one-on-one activity per day. (3) Facilities must have an employee responsible for leading activities. (A) Facilities with 16 or fewer residents must designate an employee to plan, supply, implement, and record activities. (B) Facilities with 17 or more residents must employ, at a minimum, an activity director for 20 hours weekly. The activity director must be a qualified professional who: (i) is a qualified therapeutic recreation specialist or an activities professional who is eligible for certification as a therapeutic recreation specialist, therapeutic recreation assistant, or an activities professional by a recognized accrediting body, such as the National Council for Therapeutic Recreation Certification or the National Certification Council for Activity Professionals; or (ii) has two years of experience in a social or recreational program within the last five years, one year of which was full-time in an activities program in a health care setting; or (iii) has completed an activity director training course approved by the National Association for Activity Professionals or the National Therapeutic Recreation Society. (4) The activity director or designee must review each resident's medical and social history, preferences, and dislikes, in determining appropriate activities for the resident. Activities must be tailored to the residents' unique requirements and skills. (5) The activities program must provide opportunities for group and individual settings. On weekdays, each resident must be offered at least one cognitive activity, two recreational activities and three ADL activities each day. The cognitive and recreational activities (structured activities) must be at least 30 minutes in duration, with a minimum of six and a half hours of structured activity for the entire week. At least an hour and a half of structured activities must be provided during the weekend and must include at least one cognitive activity and one physical activity. (6) The activity director or designee must create a monthly activities schedule. Structured activities should occur at the same time and place each week to ensure a consistent routine within the facility. (7) The activity director or designee must annually attend at least six hours of continuing education regarding Alzheimer's disease or related disorders. (8) Special equipment and supplies necessary to accommodate persons with a physical disability or other persons with special needs must be provided as appropriate. (h) Physical plant. Alzheimer's units, if segregated from other parts of the Type "B" facility with approved security devices, must meet the following requirements within the Alzheimer's unit. (1) Resident living area(s) must be in compliance with sec.92.62(l)(3) of this title (relating to General Requirements). (2) Resident dining area(s) must be in compliance with sec.92.62(l)(4) of this title (relating to General Requirements). (3) Resident toilet and bathing facilities must be in compliance with sec.92.62(l)(2) of this title (relating to General Requirements). (4) A monitoring station must be provided within the Alzheimer's unit with a writing surface such as a desk or counter, chair, task illumination, telephone or intercom, and lockable storage for resident records. (5) Access to at least two approved exits remote from each other must be provided in order to meet the Life Safety Code requirements. (6) In large facilities, cross corridor control doors, if used for the security of the residents, must be similar to smoke doors, which are each 34 inches in width and swing in opposite directions. A latch or other fastening device on a door must be provided with a knob, handle, panic bar, or other simple type of releasing device. (7) An outdoor area of at least 800 square feet must be provided in at least one contiguous space. This area must be connected to, be a part of, be controlled by, and be directly accessible from the facility. (A) Such areas must have walls or fencing that do not allow climbing or present a hazard and meet the following requirements. These minimum dimensions do not apply to additional fencing erected along property lines or building setback lines for privacy or to meet requirements of local building authorities. (i) Minimum distance of the enclosure fence from the building is 8 feet if the fence is parallel to the building and there are no window openings; (ii) Minimum distance of the enclosure fence (parallel with building walls) from bedroom windows is 20 feet if the fencing is solid and 15 feet from bedroom windows if the fencing is open; or (iii) For unusual or unique site conditions, areas of enclosure may have alternate configurations with DHS approval. (B) Access to at least two approved exits remote from each other must be provided from the enclosed area in order to meet the Life Safety Code requirements. (C) If the enclosed area involves a required exit from the building, the following additional requirements must be met: (i) A minimum of two gates must be remotely located from each other if only one exit is enclosed. If two or more exits are enclosed by the fencing and entry access can be made at each door, a minimum of one gate is required. (ii) The gate(s) must be located to provide a continuous path of travel from the building exit to a public way, including walkways of concrete, asphalt, or other approved materials. (iii) If gate(s) are locked, the gate nearest the exit from the building must be locked with an electronic lock that operates the same as electronic locks on control doors and/or exit doors and is in compliance with the National Electrical Code for exterior exposure. Additional gates may also have electronic locks or may have keyed locks provided staff carry the keys. (8) Locking devices may be used on the control doors provided the following criteria are met. (A) The building must have an approved sprinkler system and an approved fire alarm system to meet the licensing standards. (B) The locking device must be electronic and must be released when the following occurs: (i) activation of the fire alarm or sprinkler system; (ii) power failure to the facility; or (iii) activation of a switch or button located at the monitoring station and at the main staff station. (C) A key pad or buttons may be located at the control doors for routine use by staff. (9) Locking devices may be used on the exit doors provided: (A) the locking arrangements meet sec.5-2.1.6 of the Life Safety Code; or (B) the following criteria are met: (i) The building must have an approved sprinkler system and an approved fire alarm system to meet the licensing standards. (ii) The locking device must be electro-magnetic; that is, no type of throw-bolt is to be used. (iii) The device must release when the following occurs: (I) activation of the fire alarm or sprinkler system; (II) power failure to the facility; or (III) activation of a switch or button located at the monitoring station and at the main staff station. (iv) A key pad or buttons may be located at the control doors for routine use by staff. (v) A manual fire alarm pull must be located within five feet of each exit door with a sign stating, "Pull to release door in an emergency." (vi) Staff must be trained in the methods of releasing the door device. 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 September 9, 1998. TRD-9814320 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: November 1, 1998 Proposal publication date: June 12, 1998 For further information, please call: (512) 438-3765 PART XX. Texas Workforce Commission CHAPTER 813.Food Stamp Employment and Training The Texas Workforce Commission (Commission) adopts the repeal of sec.sec.813.1 and 813.2 and adopts new sec.sec.813.1, 813.2, 813.11-813.14, 813.21-813.23, 813.31-813.33, and 813.41-813.43 relating to the Food Stamp Employment and Training (E&T) Program. Sections 813.1, 813.11-813.14, 813.21, 813.23, 813.31- 813.33, 813.41-813.43 are adopted without changes and will not be republished. Sections 813.2 and 813.22 are adopted with changes to the proposed text as published in the July 31, 1998, issue of Texas Register (23 TexReg 7756), which volume was published as 24. Adoption of these new rules governing the E&T Program is justified to ensure that the E&T Program is in compliance with the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and the Balanced Budget Act of 1997. Subchapter A sets out the General Provisions. Section 813.1 states the purpose and sec.813.2 sets out the definitions and terms used in this chapter. Subchapter B sets out the provisions for Expenditure of Funds. Section 813.11 states who is to be served; sec.813.12 states what funds are designated for able-bodied adults without dependents (ABAWDs); sec.813.13 details the reimbursement basis; and sec.813.14 provides information regarding the other E&T Program funds. Subchapter C sets out the Allowable Activities. Section 813.21 sets out the allowable activities for ABAWDs; sec.813.22 sets out the activities for all E&T mandatory work registrants; and sec.813.23 sets out the reimbursement rates. Subchapter D sets out the Support Services for Participants. Section 813.31 is the general provision on support services; sec.813.32 discusses child care services; and sec.813.33 discusses the transportation assistance. Subchapter E sets out Complaints and Appeals. Section 813.41 addresses appeals of decisions made on food stamp applications and benefits; sec.813.42 addresses appeals of E&T Program decisions; and sec.813.43 addresses discrimination complaints. The Food Stamp Act of 1977 requires able-bodied adults between the ages of 16- 59, referred by the food stamp office, to register for work and take part in an E&T Program. Failure to comply with these requirements may result in disqualification from the receipt of Food Stamp benefits. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires ABAWDs to work or participate in specific activities in order to receive Food Stamp benefits. Failure of ABAWDs to comply with these federal requirements will limit their assistance to three out of thirty-six (36) months. The Balanced Budget Act of 1997 mandates that the states utilize at least 80% of the 100% federal Food Stamp E&T funds for qualifying work activities for ABAWDs. The remaining 20% may be used to provide work activities specified in the Texas State Plan, approved by the U.S. Department of Agriculture, for all mandatory work registrants. The remaining 20% funds are not subject to the restrictions placed upon the 80% of the federal funds. The Balanced Budget Act also provides the U.S. Secretary of Agriculture with the authority to set reimbursement rates for the E&T Program components provided to ABAWDs to ensure that they reflect reasonable cost for providing those activities. The U.S. Food and Nutrition Service (FNS) has set two levels for the maximum rates paid for both workfare and training components. One level is for a filled position and the other level is for an unfilled position. The adopted rules contain these reimbursement rates. The adopted rules set out the method in which the 80% program services funds for ABAWDs will be provided to local workforce development boards. TWC plans to reimburse local boards for their allowable expenditures for education, training, and job search/workfare based on the maximum reimbursement rates specified in sec.813.23 of this title (relating to Reimbursement Rates), and up to the board's allocation amount of the designated ABAWD funds. A public hearing was held on August 11, 1998, at 2:30 p.m. in the Texas Workforce Commission Building, 101 East 15th Street, Room 644, Austin, Texas 78778. No comments were offered. Written comments requesting changes were offered by the Texas AFL-CIO. The Commission's response follows each comment. Comment: The commenter asserts that there should be a provision in the rules clearly stating that displacement of current workers is prohibited in workfare situations and that this provision applies in Texas. Response: Prohibitions against displacement are found in federal law and regulation. The Commission believes a restatement of federal provisions is unnecessary. Therefore, the Commission declines to make the suggested change. Comment: The commenter believes that there should be a procedure for addressing displacement complaints so that victims and advocates will be aware of how to enforce the nondisplacement provisions. The commenter suggests expanding the procedure outlined in sec.813.43 for discrimination complaints to cover these situations. Response: The Commission does not agree with this suggestion, as it would create new administrative burdens not required by the enabling federal statutes or regulations. The Commission is committed to administering this program within the guidelines established by applicable federal law and regulation. Under current federal regulation the Commission has a duty to monitor the operating agencies of this program for compliance with the governing federal regulations, including those concerning displacement. Comment: The commenter requests that a definition of "non-profit organization," for purposes of qualification for the program, be added. Response: The Commission agrees and has added a definition of non-profit organization in sec.813.2, Definitions. Comment: The commenter requests adding a requirement for competitive bidding and disclosure for those who wish to receive workfare participants. The commenter believes that this will eliminate the potential for insider dealing and corruption. Response: The Commission does not agree with requiring this administrative burden. Any entity that meets the requirements is welcome to participate in the workfare program; as such, competitive bidding for workfare providers is not needed. The workfare program under the Food Stamp E&T Program complies with federal regulations in 7 C.F.R. sec.273.22, including the establishment of agreements between the Commission or Local Workforce Development Board and the entity providing workfare positions. The Commission therefore declines to require competitive bidding for workfare providers. The Commission has amended sec.813.22, Other Activities for all E&T Program Mandatory Work Registrants. The proposed rules stated that these activities may be funded with the 20% of the 100% federal funds and the state matching funds. In order to provide flexibility, the revised rule changes the "and" to "or." 40 TAC sec.813.1 and sec.813.2 The repeals are adopted under Texas Labor Code sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission 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 September 10, 1998. TRD-9814334 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812 SUBCHAPTER A.General Provisions 40 TAC sec.813.1, sec.813.2 The rules are adopted under Texas Labor Code, sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission programs. sec.813.2.Definitions. The following words and terms, when used in this Chapter, shall have the following meanings unless the context clearly indicates otherwise. (1) ABAWD -- able-bodied adults, age 18 to 50, without dependents. (2) Dependents -- individuals under 18 years of age. (3) E&T Program -- the Food Stamp Employment and Training Program. (4) Mandatory work registrant -- a non-exempt food stamp household member, age 16 through 59, who is required to register for employment services. (5) Non-Public Assistance Food Stamp Recipients -- a classification by the Department of Human Services for a food stamp household in which all or some of its members do not receive Temporary Assistance for Needy Families (TANF) or Refugee Cash Assistance. (6) Nonprofit Organization - any corporation, trust, association, cooperative , or other organization that is operated primarily for scientific, educational service, charitable, or similar purpose in the public interest; is not organized primarily for-profit; and uses its net proceeds to maintain, improve, or expand its operations. (7) Participant -- a Food Stamp recipient participating in the E&T program. (8) Workfare Program -- placement with a public or private nonprofit entity in an unpaid job assignment for the number of hours per month equal to an E&T Program participant's food stamp monthly allotment amount divided by the federal minimum wage. 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 September 10, 1998. TRD-9814335 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812 SUBCHAPTER B.Expenditure of Funds 40 TAC sec.sec.813.11-813.14 The rules are adopted under Texas Labor Code, sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission 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 September 10, 1998. TRD-9814336 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812 SUBCHAPTER C.Allowable Activities for Participants 40 TAC sec.sec.813.21-813.23 The rules are adopted under Texas Labor Code, sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission programs. sec.813.22.Other Activities for all E&T Program Mandatory Work Registrants. The following activities may be provided for all E&T Program mandatory work registrants, including ABAWDs, as long as they are funded with the 20% of the 100% federal funds or the state matching funds: (1) job search; (2) job readiness; (3) vocational training; (4) non-vocational education; (5) work experience; or (6) other activities approved in the current Food Stamp Employment and Training State Plan located at the Texas Workforce Commission state office building. 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 September 10, 1998. TRD-9814337 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812 SUBCHAPTER D.Support Services for Participants 40 TAC sec.sec.813.31-813.33 The rules are adopted under Texas Labor Code, sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission 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 September 10, 1998. TRD-9814338 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812 SUBCHAPTER E.Complaints and Appeals 40 TAC sec.sec.813.41-813.43 The rules are adopted under Texas Labor Code, sec.301.061 which provides the Texas Workforce Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Commission 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 September 10, 1998. TRD-9814339 J. Randel (Jerry) Hill General Counsel Texas Workforce Commission Effective date: September 30, 1998 Proposal publication date: July 31, 1998 For further information, please call: (512) 463-8812