Volume 35 Number 31 July 30, 2010 Pages 6593 – 6732

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Secretary of State – Hope Andrade

Director – Dan Procter

a section of the Staff Office of the Secretary of State Leti Benavides P.O. Box 13824 Dana Blanton Austin, TX 78711-3824 Kris Hogan (512) 463-5561 Belinda Kirk FAX (512) 463-5569 Roberta Knight Jill S. Ledbetter http://www.sos.state.tx.us Preeti Marasini [email protected]

IN THIS ISSUE GOVERNOR OFFICE OF THE SECRETARY OF STATE Appointments...... 6599 ATHLETE AGENTS ATTORNEY GENERAL 1 TAC §78.53...... 6647 Request for Opinions ...... 6601 NOTARY PUBLIC PROPOSED RULES 1 TAC §87.23, §87.24...... 6647 OFFICE OF THE SECRETARY OF STATE BUSINESS OPPORTUNITY ATHLETE AGENTS 1AC T §97.22, §97.23...... 6647 1 TAC §§78.1, 78.13, 78.21...... 6603 TEXAS HEALTH AND HUMAN SERVICES COMMISSION 1 TAC §78.11...... 6605 MEDICAID HEALTH SERVICES COMMISSION ON STATE EMERGENCY COMMUNICATIONS 1 TAC §354.1063...... 6648 ADMINISTRATION 1 TAC §§354.1070 - 354.1072 ...... 6649 1 TAC §252.5...... 6605 REIMBURSEMENT RATES 1 TAC §252.8...... 6606 1 TAC §355.8021...... 6650 PRACTICE AND PROCEDURE TEXAS EDUCATION AGENCY 1 TAC §253.2...... 6609 PLANNING AND ACCOUNTABILITY 1 TAC §253.3...... 6610 19 TAC §97.1005...... 6651 TEXAS DEPARTMENT OF INSURANCE CANCER PREVENTION AND RESEARCH INSTITUTE OF TEXAS PROPERTY AND CASUALTY INSURANCE GRANTS FOR CANCER PREVENTION AND 28 TAC §§5.4161 - 5.4167, 5.4171 - 5.4173, 5.4181 - 5.4192...... 6611 RESEARCH COMPTROLLER OF PUBLIC ACCOUNTS 25 TAC §§703.2, 703.3, 703.10, 703.16 - 703.19 ...... 6656 PROPERTY TAX ADMINISTRATION TEXAS DEPARTMENT OF INSURANCE 34 TAC §9.419...... 6630 PROPERTY AND CASUALTY INSURANCE 34 TAC §9.3004...... 6632 28 TAC §5.6601...... 6663 34 TAC §9.3034...... 6633 TEXAS PARKS AND WILDLIFE DEPARTMENT 34 TAC §9.3042...... 6633 FINANCE 34 TAC §9.3045...... 6635 31 TAC §53.9, §53.14...... 6670 AC34 T §9.3048...... 6635 31 TAC §53.30...... 6671 34 TAC §9.3049...... 6636 LAW ENFORCEMENT 34 TAC §9.3054...... 6637 31 TAC §§55.111 - 55.113, 55.116 ...... 6671 34 TAC §9.3057...... 6638 FISHERIES 34 TAC §9.3064...... 6638 31 TAC §57.125...... 6672 34 TAC §9.4033...... 6639 31 TAC §57.921...... 6672 TEXAS COMMISSION ON FIRE PROTECTION WILDLIFE TRAINING FACILITY CERTIFICATION 31 TAC §65.134, §65.136...... 6673 37 TAC §427.7...... 6641 31 TAC §65.608...... 6676 TEXAS WORKFORCE COMMISSION RESOURCE PROTECTION CHILD CARE SERVICES 31 TAC §69.310...... 6677 40 TAC §809.91...... 6642 31 TAC §69.404...... 6678 ADOPTED RULES

TABLE OF CONTENTS 35 TexReg 6595 TEXAS WATER DEVELOPMENT BOARD Notice of Rate Ceilings...... 6704 DRINKING WATER STATE REVOLVING FUND Credit Union Department 31 TAC §§371.1 - 371.3 ...... 6678 Application to Amend Articles of Incorporation...... 6704 31 TAC §§371.11 - 371.26...... 6678 Application to Expand Field of Membership...... 6704 31 TAC §§371.31 - 371.33, 371.35 - 371.40 ...... 6678 Notice of Final Action Taken...... 6704 31 TAC §§371.51 - 371.53 ...... 6679 Texas Education Agency 31 TAC §371.61, §371.62...... 6679 Request for Personal Financial Literacy Materials - High School Level 31 TAC §371.71, §371.72...... 6679 for the 2010-2011 School Year ...... 6705 31 TAC §§371.81 - 371.90 ...... 6679 Texas Commission on Environmental Quality 31 TAC §371.101, §371.102...... 6679 Agreed Orders...... 6705 31 TAC §§371.200 - 371.208 ...... 6680 Notice of Opportunity to Request a Public Meeting for a New Munic­ ipal Solid Waste Liquid Waste Processing Facility Registration Appli­ DRINKING WATER STATE REVOLVING FUND cation...... 6708 31 TAC §§371.1 - 371.4 ...... 6686 Notice of Water Quality Applications...... 6709 31 TAC §§371.10 - 371.18 ...... 6689 Notice of Water Rights Application ...... 6711 31 TAC §§371.20 - 371.23 ...... 6689 Proposal for Decision...... 6711 31 TAC §§371.30 - 371.35 ...... 6690 Texas Health and Human Services Commission 31 TAC §§371.40 - 371.50 ...... 6690 Notice of Adopted Nursing Facility Payment Rates for State Veterans 31 TAC §§371.60 - 371.62 ...... 6690 Homes ...... 6711 31 TAC §§371.70 - 371.74 ...... 6691 Notice of Adopted Reimbursement Rates for Non-State Operated In­ termediate Care Facilities for Persons with Mental Retardation ...6712 31 TAC §§371.80 - 371.89 ...... 6694 Notice of Adopted Reimbursement Rates for Nursing Facilities ..6712 COMPTROLLER OF PUBLIC ACCOUNTS Notice of Award of a Major Consulting Contract...... 6715 TAX ADMINISTRATION Notice of Public Hearing on Proposed Medicaid Payment Rate ...6715 34 TAC §3.326...... 6694 Notice of Public Hearing on Proposed Medicaid Payment Rates .6715 TEXAS COMMISSION ON FIRE PROTECTION Notice of Public Hearing on Proposed Medicaid Payment Rates..6716 MINIMUM STANDARDS FOR FIRE INSPECTORS Notice of Public Hearing on Proposed Medicaid Payment Rates .6717 37 TAC §429.203...... 6696 Notice of Public Hearing on Proposed Medicaid Payment Rates..6717 FIRE INVESTIGATION Notice of Public Hearing on Proposed Medicaid Payment Rates..6718 37 TAC §431.3...... 6697 Notice of Public Hearing on Proposed Medicaid Payment Rates..6718 RULE REVIEW Notice of Public Hearing on Proposed Medicaid Rate Reductions 6719 Proposed Rule Reviews Public Notice...... 6719 Texas Groundwater Protection Committee...... 6699 Public Notice...... 6720 TABLES AND GRAPHICS Department of State Health Services ...... 6701 Licensing Actions for Radioactive Materials ...... 6720 IN ADDITION Texas Department of Housing and Community Affairs Comptroller of Public Accounts Notice of Public Hearing for the Low-Income Home Energy Assistance Program State Plan...... 6723 Certification of the Average Taxable Price of Gas and Oil...... 6703 Notice of Public Hearing on the Section 8 PY 2011 Annual Plan.6724 Notice of Contract Amendment ...... 6703 Texas Department of Insurance Notice of Contract Award ...... 6703 Company Licensing ...... 6724 Notice of Intent to Amend Consulting Contract...... 6703 Notice of Application by a Small Employer Health Benefit Plan Issuer Office of Consumer Credit Commissioner to be a Risk-Assuming Health Benefit Plan Issuer ...... 6724

TABLE OF CONTENTS 35 TexReg 6596 Notice of Request for Qualifications for Special Deputy Receivers Notice of Application for Waiver of P.U.C. Substantive Rule §25.107 RFQ-SDR-2010-1...... 6724 ...... 6727 Texas Department of Licensing and Regulation South East Texas Regional Planning Commission Vacancy on the Polygraph Advisory Committee...... 6725 Air Quality Analysis - Request for Proposals Rescinded ...... 6727 Texas Department of Motor Vehicles Texas Department of Transportation Request for Proposal - Professional Services ...... 6725 Public Notice - Disadvantaged Business Enterprise Goals Fiscal Year 2011...... 6727 Public Utility Commission of Texas Texas Water Development Board Notice of Application for Amendment to Service Provider Certificate of Operating Authority...... 6726 Request for Statement of Qualifications for Brackish Resources Aquifer Characterization System Projects...... 6727 Notice of Application for Service Area Exception...... 6726 Notice of Application for Service Provider Certificate of Operating Au­ Workforce Solutions Capital Area thority ...... 6726 Request for Quotes for Legal Services ...... 6731 Notice of Application for Service Provider Certificate of Operating Au­ thority...... 6726

TABLE OF CONTENTS 35 TexReg 6597 Open Meetings

Statewide agencies and regional agencies that extend into four or more counties post meeting notices with the Secretary of State.

Meeting agendas are available on the Texas Register's Internet site: http://www.sos.state.tx.us/open/index.shtml

Members of the public also may view these notices during regular office hours from a computer terminal in the lobby of the James Earl Rudder Building, 1019 Brazos (corner of 11th Street and Brazos) Austin, Texas. To request a copy by telephone, please call 512-463-5561. Or request a copy by email: [email protected]

For items not available here, contact the agency directly. Items not found here: • minutes of meetings • agendas for local government bodies and regional agencies that extend into fewer than four counties • legislative meetings not subject to the open meetings law

The Office of the Attorney General offers information about the open meetings law, including Frequently Asked Questions, the Open Meetings Act Handbook, and Open Meetings Opinions. http://www.oag.state.tx.us/opinopen/opengovt.shtml

The Attorney General's Open Government Hotline is 512-478-OPEN (478-6736) or toll- free at (877) OPEN TEX (673-6839).

Additional information about state government may be found here: http://www.state.tx.us/

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Meeting Accessibility. Under the Americans with Disabilities Act, an individual with a disability must have equal opportunity for effective communication and participation in public meetings. Upon request, agencies must provide auxiliary aids and services, such as interpreters for the deaf and hearing impaired, readers, large print or Braille documents. In determining type of auxiliary aid or service, agencies must give primary consideration to the individual's request. Those requesting auxiliary aids or services should notify the contact person listed on the meeting notice several days before the meeting by mail, telephone, or RELAY Texas. TTY: 7-1-1.

Appointments Appointed to the Permian Basin Regional Review Committee for a term at the pleasure of the Governor, Leo C. Smith, Jr. of Sanderson Appointments for July 13, 2010 (replacing W.E. Bednar of Garden City). Appointed as Judge of the 367th Judicial District Court, Denton Appointed as Criminal District Attorney for Newton County for a term County, effective August 1, 2010, for a term until the next General until the next General Election and until his successor shall be duly Election and until her successor shall be duly elected and qualified, elected and qualified, Robert Choate of Wiergate. Mr. Choate is re­ Margaret Ellen Barnes of Denton. Judge Barnes is replacing Judge placing Misti Spacek who resigned. Lee Gabriel who was appointed to the Second Appellate District. Appointed to the Committee on Licensing Standards for a term to ex­ Appointed to the Texas Board of Occupational Therapy Examiners for pire February 1, 2012, Adriene Driggers of San Antonio (reappointed). a term to expire February 1, 2011, DeLana Honaker of Amarillo (re­ placing Bobby Vasquez of Frisco who resigned). Appointed to the Committee on Licensing Standards for a term to ex­ pire February 1, 2012, Kimberly Kofron of Round Rock (reappointed). Appointments for July 14, 2010 Appointed to the Committee on Licensing Standards for a term to ex­ Appointed to the State Commission on Judicial Conduct for a term to pire February 1, 2012, Sasha Rasco of Austin (reappointed). expire November 19, 2015, Martha M. Hernandez of Diboll (replacing Ann Bradford of Midland whose term expired). Appointed to the Committee on Licensing Standards for a term to ex­ pire February 1, 2012, Ann Stanley of Austin (reappointed). Appointed to the State Commission on Judicial Conduct for a term to expire November 19, 2015, Diane De La Torre Threadgill of Midloth­ Appointments for July 20, 2010 ian (replacing Bill Lawrence of Highland Village whose term expired). Appointed as Judge of the 342nd Judicial District Court, Tarrant Appointed to the Sabine River Compact Administration for a term to County for a term until the next General Election and until his suc­ expire July 12, 2016, Jerry F. Gipson of Longview. Mr. Gipson is being cessor shall be duly elected and qualified, James Wade Birdwell of reappointed. Mansfield. Mr. Birdwell is replacing Judge Bob McGrath who retired. Appointed as Justice of the Second Appellate District, Place 7, effective Rick Perry, Governor August 1, 2010, for a term until the next General Election and until her TRD-201003951 successor shall be duly elected and qualified, E. Lee Gabriel of Sanger. Judge Gabriel is replacing Justice Terrie Livingston who was appointed ♦ ♦ ♦ Chief Justice of the Second Appellate District. Appointments for July 15, 2010

GOVERNOR July 30, 2010 35 TexReg 6599 Request for Opinions Texas State Senate RQ-0898-GA Post Office Box 12068 Requestor: Austin, Texas 78711-2068 The Honorable Senfronia Thompson Re: Whether §451.616(a), Transportation Code, may be retroactively applied to a unit of election that withdrew from a metropolitan rapid Chair, Committee on Local and Consent Calendars transit authority in 1988 (RQ-0899-GA) Texas House of Representatives Briefs requested by August 18, 2010 Post Office Box 2910 For further information, please access the website at Austin, Texas 78768-2910 www.oag.state.tx.us or call the Opinion Committee at (512) 463-2110. Re: Validity of certain charitable bingo practices with regard to the TRD-201003982 redemption of tickets for merchandise (RQ-0898-GA) Stacey Napier Briefs requested by August 13, 2010 Deputy Attorney General Office of the Attorney General RQ-0899-GA Filed: July 20, 2010 Requestor: ♦ ♦ ♦ The Honorable Jeff Wentworth Chair, Senate Select Committee on Veteran’s Health

ATTORNEY GENERAL July 30, 2010 35 TexReg 6601 TITLE 1. ADMINISTRATION be to view the rule as corrected. There will be no effect on small or micro businesses. There is no anticipated economic cost to PART 4. OFFICE OF THE SECRETARY persons who are required to comply with the proposed rule. OF STATE COMMENTS Comments on the proposed amendment and repeal may be sub­ CHAPTER 78. ATHLETE AGENTS mitted in writing to: Leigh A. Joseph, Office of the Secretary SUBCHAPTER A. REGISTRATION of State, Corporations Section, P.O. Box 13697, Austin, Texas 78711-3697. Comments must be received not later than 12:00 The Office of the Secretary of State proposes amendments to 1 noon, August 30, 2010. TAC §§78.1, 78.13, and 78.21 concerning athlete agent regis­ tration and updates and the concurrent repeal of 1 TAC §78.11 1 TAC §§78.1, 78.13, 78.21 concerning renewal for registration of athlete agent. The amend­ ments and repeal are proposed to clarify and streamline the reg­ STATUTORY AUTHORITY istration and renewal requirements. The amendments are proposed under the authority of §2051.051 Currently, §78.11 requires athlete agent renewals to contain the of the Texas Occupations Code, which provides that the secre­ same information and be submitted on the same form as athlete tary may adopt rules necessary to administer the chapter and agent registrations. The Office of the Secretary of State has de­ set reasonable and necessary fees for the administration of the termined that athlete agent registrants do not need to repeat all chapter; §2051.102, which provides that a registration applica­ of the same information on the renewal that they have already tion "must provide information required by the secretary of state;" stated on the initial registration. The proposed amendments and and §2051.108(b)(3), which provides that a renewal must con­ repeal will remove the requirement that renewals contain the tain "any other information prescribed by the secretary of state." same information on the same form as initial registrations and Chapter 2051 of the Texas Occupations Code is affected by the allow the Office of the Secretary of State to create a separate proposal. and simpler form for renewals. §78.1. Registration and Renewal of Athlete Agents. In addition, the proposed amendment states a requirement that all athlete agent registrants, regardless of organizational form, (a) An application for registration or renewal will be accepted submit with a registration or renewal the name and address of for filing only upon submission of a completed registration or renewal each individual who recruits or solicits athletes on behalf of the form and payment of the applicable filing fee stated in §78.21 of this registrant, and update the information as necessary. These sup­ title (relating to Filing Fees). Forms are available on the secretary of plemental application requirements apply statutorily to corpora­ state web site at www.sos.state.tx.us/statdoc/statforms.shtml or may be tions, associations, and partnerships (Texas Occupations Code obtained by writing the Statutory Documents Section, Office of the Sec­ Annotated §2051.104). The proposed amendment extends the retary of State, P.O. Box 13550, Austin, Texas 78711-3550. supplemental application requirements to apply to all registrants, (b) Except as provided in subsection (d) of this section, an ap­ regardless of organizational form. plication for registration shall be made on Form 2501. The application Finally, the proposed amendments and repeal will consolidate for registration must comply with §2051.102, Texas Occupations Code the registration and renewal requirements into one rule, elimi­ and also provide a statement setting forth the names and addresses of nating repetitive information and thus any issues of consistency all individuals who will recruit or solicit an athlete to enter into an agent associated with the repeated information. contract, a professional sports services contract, or a financial services contract with the agent. See Form 2504. FISCAL NOTE (c) Except as provided in subsection (d) of this section, a re­ Leigh A. Joseph, Attorney in the Business and Public Filings Di­ newal shall be made on Form 2505. The renewal must contain: vision, has determined that for each year of the first five years that the section is in effect there will be no fiscal implications to (1) the applicant’s: state or local governments as a result of enforcing or adminis­ (A) name; and tering the amendment as proposed. (B) principal business address; PUBLIC BENEFIT AND SMALL BUSINESS COST NOTE (2) the name and address of each athlete for whom the ath­ Ms. Joseph has determined that for each year of the first five lete agent is performing professional services for compensation on the years the section is in effect the public benefit anticipated as a date of the renewal application; result of enforcing or administering the section as proposed will

PROPOSED RULES July 30, 2010 35 TexReg 6603 (3) the name and address of each athlete for whom the ath­ of State’s website. See Form 2501 at http://www.sos.state.tx.us/stat­ lete agent has performed professional services for compensation during doc/statforms.shtml.] the three years immediately preceding the date of the renewal applica­ (d) A person who holds a certificate of registration or license tion but for whom the athlete agent is not performing professional ser­ or who has submitted an application for renewal as an athlete agent vices on the date of the renewal application; in another state may submit a copy of the other state application and (4) whether the applicant or a person described by para­ certificate or license instead of submitting the application required by graph (6) of this subsection has been subject to any of the following, this section if the application or renewal to the other state: if not previously disclosed to the secretary of state on a prior applica­ (1) was submitted to the other state not earlier than the tion or renewal submitted by the applicant and filed by the secretary of 180th day before the date the application is submitted in this state and state: the applicant certifies that the information contained in the application (A) a conviction of a crime that in this state is a felony is current; or a crime of moral turpitude; (2) contains information substantially similar to or more (B) an administrative or a judicial determination finding comprehensive than the information required by Chapter 2051 of the the applicant or other person made a false, misleading, deceptive, or Texas Occupations Code; and fraudulent representation; (3) was signed by the applicant under penalty of perjury. (C) a sanction or suspension related to occupational or (e) A certificate of [The] registration or renewal under Chapter professional conduct; 2051 of the Texas Occupations Code is valid for one year from the date (D) a denial of an application for a certificate of reg­ of issuance [of the certificate of registration]. istration or license as an athlete agent, in any jurisdiction other than [(f) An agent that is a corporation, an association, a partner­ Texas; or ship, a limited liability company, or other entity, and not an individ­ (E) a denial, revocation, or suspension of a certificate of ual or sole proprietorship, shall file a statement setting forth the names registration or license as an athlete agent, in any jurisdiction other than and addresses of all individuals who will recruit or solicit an athlete Texas; to enter into an agent contract, a professional sports services contract, or a financial services contract with the agent. The form or specifi­ (5) whether the applicant or a person described by para­ cations pertaining to the prescribed form may be obtained by writ­ graph (6) of this subsection has engaged in conduct resulting in the ing to the Statutory Documents Section, Office of the Secretary of imposition on an athlete or educational institution of a sanction, sus­ State, P.O. Box 13550, Austin, Texas 78711-3550. The form may pension, or declaration of ineligibility to participate in an interscholas­ also be found on the Secretary of State’s website. See Form 2504 at tic or intercollegiate athletic event, if not previously disclosed to the http://www.sos.state.tx.us/statdoc/statforms.shtml.] secretary of state on a prior application or renewal submitted by the applicant and filed by the secretary of state; (f) [(g)] When the application for registration or renewal is submitted but determined by the secretary of state to be incomplete or (6) except as provided by paragraph (7) of this subsection, not accompanied by any necessary supplemental application, affidavit the name and address of each person, except a bona fide employee on or surety bond, the secretary of state may issue a provisional registra­ salary, who is financially interested as a partner, associate, or profit tion or renewal certificate valid for not more than 90 days. The secre­ sharer in the applicant’s business; tary of state will not issue a provisional certificate if the filing fee for (7) if an applicant is a member of the State Bar of Texas, the the application for registration or renewal has not been paid. If the de­ application information required under paragraph (6) of this subsection ficiencies in the registration are cured within the time specified by the must include the name and address of each person who is involved secretary of state, the secretary will issue a certificate of registration in the activities of the athlete agent. This subsection does not require that relates back to the first date of receipt of the application for regis­ an applicant to state the name and address of a member of a law firm tration. or professional corporation who is not involved in the business of the §78.13. Updates. athlete agent; and An athlete agent [entity that has filed a statement under §78.1(f) or (8) a statement setting forth the names and addresses of all §78.11(e) of this title (relating to Registration of Athlete Agents; Re­ individuals who will recruit or solicit an athlete to enter into an agent newal for Registration of Athlete Agent)]shall file an updated state­ contract, a professional sports services contract, or a financial services ment setting forth the names and addresses of all individuals who will contract with the agent. See Form 2504. recruit or solicit an athlete to enter into an agent contract, a professional [(a) Chapter 2051 of the Texas Occupations Code provides for sports services contract, or a financial services contract with the agent, the registration of athlete agents with the secretary of state.] reporting any additions to, deletions of or change in the name or ad­ dress of the individuals who recruit or solicit athletes on behalf of the [(b) The application for registration by an athlete agent will be athlete agent [entity]. The statement shall be filed no later than the 30th accepted for filing only upon submission of a completed registration day after the date the change occurs. The updates shall be made on the form and payment of the applicable filing fee stated in §78.21 of this same form and in the same manner as the original statement. title (relating to Filing Fees).] §78.21. Filing Fees. [(c) Except as provided in subsection (d) of this section, an application for an athlete agent shall be made on forms prescribed by (a) The filing fee for filing an application for registration as an the secretary of state. The form or specifications pertaining to the athlete agent is $1,000, plus $100 for each individual listed in the state­ prescribed form may be obtained by writing to the Statutory Docu­ ment setting forth the names and addresses of all individuals who will ments Section, Office of the Secretary of State, P.O. Box 13550, Austin, recruit or solicit an athlete to enter into an agent contract, a professional Texas 78711-3550. The form may also be found on the Secretary sports services contract, or a financial services contract with the agent.

35 TexReg 6604 July 30, 2010 Texas Register (b) The filing fee for filing an application for renewal of regis­ PART 12. COMMISSION ON STATE tration as an athlete agent is $1,000, plus $100 for each individual listed in the statement setting forth the names and addresses of all individu­ EMERGENCY COMMUNICATIONS als who will recruit or solicit an athlete to enter into an agent contract, a professional sports services contract, or a financial services contract CHAPTER 252. ADMINISTRATION with the agent. 1 TAC §252.5 [(c) The fee for filing the statement described in §78.1(f) and The Commission on State Emergency Communications (CSEC) §78.11(e) of this title (relating to Registration of Athlete Agents; Re­ proposes for comment new §252.5, concerning employee train­ newal for Registration of Athlete Agent) is $100 for each individual ing and education. listed in the statement.] BACKGROUND AND PURPOSE (c) [(d)] The fee for the statement update described in §78.13 of this title (relating to Updates) is $100 for each individual who was CSEC proposes §252.5 as required by the State Employees not reported in the entity’s most recent statement. If no new individuals Training Act (Texas Government Code, §§656.041 - 656.104). are named, there is no filing fee for the statement. FISCAL NOTE This agency hereby certifies that the proposal has been reviewed Paul Mallett, CSEC’s executive director, has determined that for by legal counsel and found to be within the agency’s legal author­ each year of the first five fiscal years that §252.5 is in effect there ity to adopt. will be nominal fiscal implications for the state and no implica­ tions for local governments as a result of enforcing or adminis­ Filed with the Office of the Secretary of State on July 15, 2010. tering the proposed section, and only to the extent of costs of TRD-201003937 training and education as allocatedwithin CSEC’s fiscal budget. Lorna Wassdorf PUBLIC BENEFIT Director, Business and Public Filings Mr. Mallett has determined that for each year of the first five Office of the Secretary of State years the new section is in effect the public will benefitfromthe Earliest possible date of adoption: August 29, 2010 training and educating of CSEC employees to ensure continued For further information, please call: (512) 463-5562 efficient and effective service to the public. Mr. Mallett has also ♦ ♦ ♦ determined that for each year of the first five years the proposed section is in effect there are no probable economic costs to per­ 1 TAC §78.11 sons required to comply with thesection. (Editor’s note: The text of the following section proposed for repeal REGULATORY ANALYSIS OF MAJOR ENVIRONMENTAL will not be published. The section may be examined in the Office of RULES the Secretary of State, Texas Register Division, Room 245, James Earl CSEC has determined that this proposal is not a "major environ­ Rudder Building, 1019 Brazos Street, Austin, Texas.) mental rule" as defined by Government Code §2001.0225. STATUTORY AUTHORITY LOCAL EMPLOYMENT IMPACT STATEMENT The repeal is proposed under the authority of §2051.051 of the CSEC has determined that this proposal does not directly affect Texas Occupations Code, which provides that the secretary may a local economy and therefore has not drafted a local employ­ adopt rules necessary to administer the chapter and set rea­ ment impact statement as would otherwise be required under sonable and necessary fees for the administration of the chap­ Administrative Procedure Act §2001.022. ter; §2051.102, which provides that a registration application "must provide information required by the secretary of state;" SMALL AND MICRO-BUSINESS IMPACT ANALYSIS and §2051.108(b)(3), which provides that a renewal must con­ In accordance with Government Code §2006.002(c), Mr. Mallett tain "any other information prescribed by the secretary of state." has determined that there will be no adverse economic effect Chapter 2051 of the Texas Occupations Code is affected by the on small businesses or micro-businesses. Accordingly, CSEC proposal. has not prepared the economic impact statement or regulatory flexibility analysis that would otherwise be required. §78.11. Renewal for Registration of Athlete Agent. TAKINGS IMPACT ASSESSMENT This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s legal author­ CSEC has determined that the proposal does not restrict or limit ity to adopt. an owner’s right to his or her property that would otherwise exist in the absence of government action and, therefore, does not Filed with the Office of the Secretary of State on July 15, 2010. constituteatakingunder Government Code §2007.043. TRD-201003936 PUBLIC COMMENT Lorna Wassdorf Comments on the proposal may be submitted in writing to Patrick Director, Business and Public Filings Tyler, Commission on State Emergency Communications, 333 Office of the Secretary of State Guadalupe Street, Suite 2-212, Austin, Texas 78701-3942, by Earliest possible date of adoption: August 29, 2010 fax to (512) 305-6937, or email to [email protected]. For further information, please call: (512) 463-5562 Comments will be accepted for 30 days following publication of theproposalinthe Texas Register. All comments should include ♦ ♦ ♦ in the subject line "Comments to New §252.5, Employee Training and Education."

PROPOSED RULES July 30, 2010 35 TexReg 6605 STATEMENT OF AUTHORITY authorized by the Texas Legislature. CSEC’s executive director or designee will be a Council member whose costs, if any, will The new section is proposed under Government Code §656.048. be reimbursed by CSEC as an employee of the agency. The No other statutes, articles or codes are affected by the proposed foregoing presumes that the executive director’s designee is an new section. employee of CSEC. §252.5. Employee Training and Education. CSEC staff will spend an undetermined amount of time support­ (a) The Commission may make public funds available to its ing the Council, including by Mr. Mallett or his designee as a employees for training and education in accordance with the State Em­ member of the Council. Mr. Mallett has determined that the ployees Training Act (Texas Government Code, §§656.041 - 656.104). amount of staff time, and accordingly the cost to the state, will be significantly less than it otherwise would be were CSEC to rely (b) The training or education must be related to the duties or solely upon staff to advise and make policy recommendations prospective duties of the employee. regarding a state-level ESInet. (c) Employees may be required to complete a training or edu­ PUBLIC BENEFIT cation program related to the employee’s duties or prospective duties. Mr. Mallett has determined that for each year of the first five (d) Requirements for eligibility and participation in a training years the amended section is in effect, the public benefits will or education program shall be in accordance with the Commission’s come from having a council composed of representatives from current Human Resource Policy Manual. the Texas 9-1-1 Entities whose purpose is to advise and make (e) Approval to participate in a training or education program, policy recommendations to CSEC on a critical component of including Commission-sponsored programs, shall not in any way affect NG9-1-1. Mr. Mallett has also determined that for each year an employee’s at-will status or constitute a guarantee or indication of of the first five years the proposed section is in effect there are continued employment, nor shall it constitute a guarantee or indication no probable economic costs to persons required to comply with of future employment in a current or prospective position. the section, except for the unreimbursed costs of Council mem­ bers who are not part of CSEC staff. (f) Permission to participate in any training or education pro­ gram may be withdrawn if the Commission’s Executive Director de­ REGULATORY ANALYSIS OF MAJOR ENVIRONMENTAL termines that participation would negatively impact the employee’s job RULES duties or performance. CSEC has determined that this proposal is not a "major environ­ (g) All materials received by an employee through Commis­ mental rule" as defined by Government Code §2001.0225. sion-funded training or education are the property of the Commission. LOCAL EMPLOYMENT IMPACT STATEMENT This agency hereby certifies that the proposal has been reviewed CSEC has determined that this proposal does not directly affect by legal counsel and found to be within the agency’s legal author­ a local economy and therefore has not drafted a local employ­ ity to adopt. ment impact statement as would otherwise be required under Administrative Procedure Act §2001.022. Filedwiththe Office of the Secretary of State on July 14, 2010. SMALL AND MICRO-BUSINESS IMPACT ANALYSIS TRD-201003890 Patrick Tyler In accordance with Government Code §2006.002(c), Mr. Mallett General Counsel has determined that there will be no adverse economic effect Commission on State Emergency Communications on small businesses or micro-businesses. Accordingly, CSEC Earliest possible date of adoption: August 29, 2010 has not prepared the economic impact statement or regulatory flexibility analysis that would otherwise be required. For further information, please call: (512) 305-6930 ♦ ♦ ♦ TAKINGS IMPACT ASSESSMENT CSEC has determined that the proposal does not restrict or limit 1 TAC §252.8 an owner’s right to his or her property that would otherwise exist The Commission on State Emergency Communications (CSEC) in the absence of government action and, therefore, does not proposes for comment an amendment to §252.8, concerning constitute a taking under Government Code §2007.043. State-level ESInet Advisory Council (Council). PUBLIC COMMENT BACKGROUND AND PURPOSE Comments on the proposal may be submitted in writing to Patrick CSEC proposes to amend §252.8 to change the terms of Coun­ Tyler, Commission on State Emergency Communications, 333 cil members from 2 to 3 years. The amendment is necessary in Guadalupe Street, Suite 2-212, Austin, Texas 78701-3942, by order to effectuate the staggered terms requirement in the cur­ fax to (512) 305-6937, or email to [email protected]. rent rule. Comments will be accepted for 30 days following publication of theproposalintheTexas Register. All comments should include FISCAL NOTE in the subject line "Comments to Proposed Amended §252.8, Paul Mallett, CSEC’s executive director, has determined that for State-level ESInet Advisory Council." each year of the first five fiscal years that §252.8 is in effect there STATEMENT OF AUTHORITY will be no fiscal implications to the state or local governments as a result of enforcing or administering the proposed section. As The amended section is proposed under Health and Safety Code an advisory committee governed by Government Code Chapter §771.051(a)(1), (2), (4), (7), (8), (9), (10) and §771.052; Govern­ 2110, State Agency Advisory Committees, expenses of Coun­ ment Code Chapter 2110. cil members will not be reimbursed by CSEC unless specifically

35 TexReg 6606 July 30, 2010 Texas Register No other statutes, articles or codes are affected by the proposed (3) If a vacancy occurs, a person shall be appointed to serve amended section. the unexpired portion of the vacating member’s term. §252.8. State-level ESInet Advisory Council. (4) Members serve staggered terms. Initial member [, with the terms of one-half of the members expiring August 31 of each odd- (a) Purpose. The purpose of this rule is to establish an Advi­ numbered year. To implement staggered terms, the initial]termsa reas sory Council (Council) to advise and make policy recommendations to follows: the Commission on State Emergency Communications (Commission) regarding the establishment and management of a State-level Emer­ (A) one member each from TARC, the Alliance, and gency Services Internet Protocol network (ESInet). The State-level MECDA expire in 2012 [2011]; and ESInet is a private Internet Protocol (IP) network or IP Virtual Pri­ (B) one member each from TARC, the Alliance, and vate Network (VPN) that is used for communications between public MECDA expire in 2013. safety answering points (PSAPs) and among other entities that support or are supported by PSAPs in providing emergency call handling and (f) Council Meeting Attendance. Members shall attend sched­ response. The State-level ESInet is interoperable with and intercon­ uled Council meetings. nects to regional and other state ESInets to form a Texas Next Gener­ (1) A member shall notify the presiding officerorCommis­ ation Emergency Communications System that will be used for 9-1-1 sion staff if the member is unable to attend a scheduled meeting. and other emergency services programs. (2) It is grounds for removal, including by the Commission, (b) Tasks. if a member cannot discharge the member’s duties for a substantial (1) Advise the Commission on matters regarding the estab­ part of the member’s appointed term because of illness or disability, lishment and management of the State-level ESInet; and is absent from more than half of the Council meetings during a fiscal year, or is absent from at least three consecutive Council meetings. The (2) Provide for 9-1-1 Entity collaboration on the manage­ validity of an action of the Council is not affected by the fact that it is ment of the State-level ESInet, collective decision-making, and assur­ taken when a ground for removal of a member exists. ance that the requirements of the 9-1-1 Entities are met. (g) Council Roles and Responsibilities. The Council’s roles (c) Composition of Council. Council members should have and responsibilities are based on the functions of the State-level ESInet. the requisite training, experience and knowledge in 9-1-1 systems and The Council shall, at a minimum, be responsible for the following: network management to provide meaningful input into the implemen­ tation and operation of a complex network. (1) Objectives. (1) The Council is composed of the following seven (7) (A) Provide guidance and assistance for the monitoring members: and management of the Texas Next Generation Emergency Communi­ cations System. (A) the Executive Director of the Commission or de­ signee as an ex-officio, non-voting member. (The Executive Director (B) Advise the Commission in developing and manag­ or designee may coordinate with and seek input from a county or other ing the following: entity not otherwise a member of the Council); (i) managed service contracts with vendors; (B) two members from the Texas Association of Re­ (ii) professional service contracts with subcontrac­ gional Councils (TARC); tors; (C) two members from the Texas 9-1-1 Alliance (Al­ (iii) Local Service Provider, networks, and applica­ liance); and tion provider interfaces and specifications for State-level ESInet ac­ (D) two members from the Municipal Emergency Com­ cess; and munications Districts Association (MECDA). (iv) interlocal agreements between Regional (2) No two Council members may be from the same 9-1-1 ESInets and the State-level ESInet to bind both to operating standards Entity. and requirements consistent with the delivery of service and protection and management of respective networks, services and applications. (3) The Commission may amend the composition of the Council to reflect and include emergency services other than 9-1-1 ser­ (2) Plans. The Council shall advise and make recommen­ vice. dations to the Commission in a plan(s) that, at a minimum, includes the following: (d) Bylaws. Draft bylaws for approval by the Commission. The bylaws shall, at a minimum, provide for the following: (A) Strategic Planning for the State-level ESInet. Strategic Planning is the Council’s recommendation as to how the (1) selection from among the members a presiding officer State-level ESInet is to be established, administered, operated and andanassistant presiding officer whose terms may not exceed two managed. Strategic planning also includes: years; and (i) strategic direction for the development, operation (2) establish standing committees. and management of the State-level ESInet for the five state fiscal years (e) Terms of Office for Voting Members. Each member shall following the submission of the plan; be appointed for a term of 3 [2] years. (ii) goals and objectives relating to the State-level (1) Member terms begin on September 1st of the year of ESInet; appointment. (iii) priorities for the State-level ESInet; (2) Members shall continue to serve after the expiration of their term until a replacement member is appointed.

PROPOSED RULES July 30, 2010 35 TexReg 6607 (iv) identification of major issues relating to the de­ (I) the availability of funding for the two state velopment, operation and management, and improvement of the State- fiscal years following submission; and level ESInet; (II) the projected availability of funding for the (v) recommendations for long-range policy guide­ five state fiscal years following submission; lines for the State-level ESInet; and (vi) methodology for allocating shared State-level (vi) assessment of the progress made toward meet­ ESInet costs to the 9-1-1 Entities and/or Regional ESInets; and ing the goals and objectives in prior Strategic Plans, including a survey (vii) contingencies for lack of funding, or partial of: funding, for the components and costs the Council has identified that (I) the current degree of establishmentand are to be shared by the 9-1-1 Entities and/or Regional ESInets. operation of ESInets throughout the state, including the State-level (D) Future Planning for the Texas Next Generation ESInet, Regional ESInets, and interconnection of Regional ESInets to Emergency Communications System. the State-level ESInet; (h) Reporting to the Commission. (II) Texas 9-1-1 Entities’ participation in and/or implementation of Regional ESInets; and (1) By June 1 of each year submit the plan(s) required in subsection (g) of this section. (III) Public Education. (2) By January 1 of each year, or according to the schedule (B) Network Operation Planning for the State-level established by the Commission, submit a report that includes the fol­ ESInet. Network operational planning is the Council’s recommen­ lowing: dation as to the establishment of administrative, technical, and operational requirements to assure the security and performance of (A) an update on the Council’s work, including: the State-level ESInet and interconnection to the State-level ESInet. (i) Council and committee meeting dates; Network operational planning also includes: (ii) member attendance records; (i) projected costs of network operations for the two state fiscal years following submission; and (iii) description of actions taken by the Council; (ii) tactical direction for the operations, manage­ (iv) description of how the Council has accom­ ment and performance of the State-level ESInet and for interconnection plished or addressed the tasks and objectives of this section and any to the state-level ESInet for the five state fiscal years following other issues assigned to the Council by the Commission; and submission, including: (v) anticipated future activities of the Council; (I) security operations planning for the (B) new developments for the State-level ESInet and State-level ESInet; among ESInet interconnectors and interfaces; (II) initiate and maintain a process for managing (C) evaluation and recommendations regarding the op­ the configuration and changes to the State-level ESInet; eration of the Texas NG9-1-1 System, including: (III) incident management; (i) current practices and issues; and (IV) quality control; (ii) statistical information, including a detail of (V) contingency planning from all interconnect­ the interlocal agreements established between the Commission and ing regions and vendors; and regional ESInets and other emergency services networks seeking to interface with the State-level ESInet. (VI) initiate and maintain exit strategy process for disconnection of a regional ESInet from the State-level ESInet. (D) description of the usefulness of the Council’s work; and (C) Cost Allocation Planning for the State-level ESInet. Cost allocation planning is the Council’s recommendation as to the (E) statement of costs related to the Council, including identification of cost components of the State-level ESInet and how the cost of Commission staff time spent in support of the Council. such costs are to be allocated to 9-1-1 Entities and/or Regional ESInets (i) Statement by a Member. that are connected to the State-level ESInet. Cost allocation planning includes: (1) The Commission and the Council shall not be bound in any way by any statement or action by a member except when the (i) projected costs of network operations for the two statement or action is in pursuit of specific instructions from the Com­ state fiscal years following the submission of the plan; mission. (ii) strategic direction for the on-going identification (2) The Council and its members may not participate in leg­ and allocation of State-level ESInet costs for the five state fiscal years islative activity in the name of the Commission or the Council except following submission of the plan; with approval through the Commission’s legislative process. (iii) identification of components and costs for the (j) Advisory Committee. The Council is an advisory commit­ State-level ESInet and interconnection of Regional ESInets; tee in that it does not supervise or control public business or policy. (iv) identification of components and costs to be As an advisory committee, the Committee is not subject to the Open shared by the 9-1-1 Entities and/or Regional ESInets; Meetings Act (Texas Government Code, Chapter 551). (v) survey of 9-1-1 Entities and/or Regional ESInets (k) Reimbursement for Expenses. to assess and determine:

35 TexReg 6608 July 30, 2010 Texas Register (1) In accordance with the requirements in Government (3) State-level ESInet. A private IP network or IP Vir­ Code, Chapter 2110, a Council member may receive reimbursement tual Private Network (VPN) that is used for communications between for the member’s expenses incurred for each day the member engages PSAPs and among other entities that support or are supported by PSAPs in official Council business if authorized by the General Appropria­ in providing emergency call handling and response. The State-level tions Act or budget execution process. ESInet is interoperable with and interconnects to regional and other state ESInets to form a Texas Next Generation Emergency Communi­ (2) No compensatory per diem shall be paid to Council cations System that will be used for 9-1-1 and other emergency ser­ members unless required by law. vices programs. 9-1-1 service is one application that may run on the (3) A Council member who is an employee of a state State-level ESInet, but there may be separate applications to support agency, other than the Commission, may not receive reimbursement the requirements of other users. for expenses from the Commission. (4) Texas Next Generation Emergency Communications (4) A nonmember of the Council who is appointed to serve System. A system of interconnecting regional and State-level ESInets on a committee may not receive reimbursement for expenses from the and other emergency services networks such as poison control and Commission. radio dispatch. (5) Each Council member whose expenses are reimbursed (5) Texas NG9-1-1 System. An interconnected and inter­ under this section shall submit to Commission staff the member’s re­ operable system of local, regional, and national emergency services ceipts for expenses and any required official forms no later than 14 days networks with advanced capabilities for 9-1-1 call delivery. after conclusion of the member’s engagement in official Council busi­ This agency hereby certifies that the proposal has been reviewed ness. by legal counsel and found to be within the agency’s legal author­ (6) Requests for reimbursement of expenses shall be made ity to adopt. on official state travel vouchers. Filed with the Office of the Secretary of State on July 14, 2010. (l) Commission Staff Input and Support. Commission staff shall: TRD-201003891 Patrick Tyler (1) provide administrative support and input to the Coun­ cil; General Counsel Commission on State Emergency Communications (2) with input and recommendations from the Council, Earliest possible date of adoption: August 29, 2010 oversee all administrative activities and Commission policies relating For further information, please call: (512) 305-6930 to the implementation, operation, and day-to-day management of the State-level ESInet; ♦ ♦ ♦ (3) provide administrative support and input to the Coun­ CHAPTER 253. PRACTICE AND PROCEDURE cil; and 1 TAC §253.2 (4) provide the Commission with the Council’s plan(s) and report and a staff report on the Council’s advice or policy recommen­ The Commission on State Emergency Communications (CSEC) dations. proposes for comment new §253.2, concerning bid opening and tabulation. (m) Applicable law. The Council is subject to Government Code, Chapter 2110, concerning state agency advisory committees. BACKGROUND AND PURPOSE (n) Commission Evaluation. The Commission shall annually CSEC proposes §253.2 as required of state agencies that make evaluate the Council’s work, usefulness, and the costs related to the purchases by the state’s Contract Purchase Procedure (Texas Council, including the cost of Commission staff time spent supporting Government Code, §§2156.001 - 2156.181). the Council’s activities. FISCAL NOTE (o) Report to the Legislative Budget Board. The Commission Paul Mallett, CSEC’s executive director, has determined that for shall report to the Legislative Budget Board the information developed each year of the first five fiscal years that §253.2 is in effect there in subsection (n) of this section on a biennial basis as part of the Com­ will be no fiscal implications for the state or local governments mission’s request for appropriations. as a result of enforcing or administering the proposed section. (p) Review and Duration. By September 1, 2015, the Com­ PUBLIC BENEFIT mission will initiate and complete a review of the Council to determine whether the Council should be continued or abolished. If the Council Mr. Mallett has determined that for each year of the first five is not continued, it shall be automatically abolished on that date. years the section is in effect the public will benefitfromcompli­ ance with statutory requirements. Mr. Mallett has also deter­ (q) Definitions of Terms. Unless the context clearly indicates mined that for each year of the first five years the proposed sec­ otherwise, the following terms are defined as provided in this section. tion is in effect there are no probable economic costs to persons (1) Local IP-enabled network. Local internet protocol en­ required to comply with the section. abled networks that when interconnected form regional ESInets. REGULATORY ANALYSIS OF MAJOR ENVIRONMENTAL (2) Regional ESInet. A system of interconnected local IP RULES enabled networks with core functions for emergency services, includ­ CSEC has determined that this proposal is not a "major environ­ ing but not limited to 9-1-1 service. mental rule" as defined by Government Code §2001.0225. LOCAL EMPLOYMENT IMPACT STATEMENT

PROPOSED RULES July 30, 2010 35 TexReg 6609 CSEC has determined that this proposal does not directly affect FISCAL NOTE a local economy and therefore has not drafted a local employ­ Paul Mallett, CSEC’s executive director, has determined that for ment impact statement as would otherwise be required under each year of the first five fiscal years that §253.3 is in effect there Administrative Procedure Act §2001.022. will be no fiscal implications for the state or local governments SMALL AND MICRO-BUSINESS IMPACT ANALYSIS as a result of enforcing or administering the proposed section. In accordance with Government Code §2006.002(c), Mr. Mallett PUBLIC BENEFIT has determined that there will be no adverse economic effect Mr. Mallett has determined that for each year of the first five on small businesses or micro-businesses. Accordingly, CSEC years the section is in effect the public will benefitfromhaving has not prepared the economic impact statement or regulatory defined procedures to protest Commission contract purchases. flexibility analysis that would otherwise be required. Mr. Mallett has also determined that for each year of the first TAKINGS IMPACT ASSESSMENT five years the proposed section is in effect there are no probable economic costs to persons required tocomplywiththe section. CSEC has determined that the proposal does not restrict or limit an owner’s right to his or her property that would otherwise exist REGULATORY ANALYSIS OF MAJOR ENVIRONMENTAL in the absence of government action and, therefore, does not RULES constitute a taking under Government Code §2007.043. CSEC has determined that this proposal is not a "major environ­ PUBLIC COMMENT mental rule" as defined by Government Code §2001.0225. Comments on the proposal may be submitted in writing to Patrick LOCAL EMPLOYMENT IMPACT STATEMENT Tyler, Commission on State Emergency Communications, 333 CSEC has determined that this proposal does not directly affect Guadalupe Street, Suite 2-212, Austin, Texas 78701-3942, by a local economy and therefore has not drafted a local employ­ fax to (512) 305-6937, or email to [email protected]. ment impact statement as would otherwise be required under Comments will be accepted for 30 days following publication of Administrative Procedure Act §2001.022. theproposalinthe Texas Register. All comments should include in the subject line "Comments to New §253.2, Bid Opening and SMALL AND MICRO-BUSINESS IMPACT ANALYSIS Tabulation." In accordance with Government Code §2006.002(c), Mr. Mallett STATEMENT OF AUTHORITY has determined that there will be no adverse economic effect on small businesses or micro-businesses. Accordingly, CSEC The new section is proposed under Government Code has not prepared the economic impact statement or regulatory §2156.005(d). flexibility analysis that would otherwise be required. No other statutes, articles or codes are affected by the proposed TAKINGS IMPACT ASSESSMENT new section. sCSEC ha determined that the proposal does not restrict or limit §253.2. Bid Opening and Tabulation. an owner’s right to his or her property that would otherwise exist (a) The Commission adopts by reference the rules of the Texas in the absence of government action and, therefore, does not Comptroller of Public Accounts relating to bid opening and tabulation constitute a taking under Government Code §2007.043. (34 Texas Administrative Code §20.35). PUBLIC COMMENT (b) Adoption of this rule is required of state agencies by Texas Government Code §2156.005(d). Comments on the proposal may be submitted in writing to Patrick Tyler, Commission on State Emergency Communications, 333 This agency hereby certifies that the proposal has been reviewed Guadalupe Street, Suite 2-212, Austin, Texas 78701-3942, by by legal counsel and found to be within the agency’s legal author­ fax to (512) 305-6937, or email to [email protected]. ity to adopt. Comments will be accepted for 30 days following publication of theproposalintheTexas Register. All comments should include Filedwiththe Office of the Secretary of State on July 14, 2010. in the subject line "Comments to New §253.3, Protest Proce­ TRD-201003892 dures." Patrick Tyler STATEMENT OF AUTHORITY General Counsel Commission on State Emergency Communications The new section is proposed under Government Code Earliest possible date of adoption: August 29, 2010 §2155.076. For further information, please call: (512) 305-6930 No other statutes, articles or codes are affected by the proposed ♦ ♦ ♦ new section. §253.3. Protest Procedures. 1 TAC §253.3 (a) The purpose of this rule is to provide for the efficient and The Commission on State Emergency Communications (CSEC) effective resolution of protests related to contract purchases made by proposes for comment new §253.3, concerning contracting the Commission. protest procedures. (b) These procedures are consistent with those of the Texas BACKGROUND AND PURPOSE Comptroller of Public Accounts (34 Texas Administrative Code CSEC proposes §253.3 as required of state agencies by the §20.384). In the event of a direct conflict between the two rules, the state’s Purchasing: General Rules and Procedures (Texas Gov­ procedures in §20.384 shall control. ernment Code, §§2155.001 - 2155.510).

35 TexReg 6610 July 30, 2010 Texas Register (c) Any actual or prospective bidder, offeror, or contractor (i) The Executive Director may refer the matter to the Com­ claiming to have been aggrieved in connection with the solicitation, mission for consideration or may issue a written decision regarding the evaluation, or award of a contract by the Commission may submit a appeal. formal protest to the General Counsel of the Commission (General (j) The following requirements shall apply to a formal protest Counsel). Protests must be in writing and received by the General that the Executive Director refers to the Commission: Counsel within 10 working days after the protesting party knows, or should have known, of the occurrence of the action that is the subject (1) The Executive Director shall deliver copies of the ap­ of the protest. Formal protests must conform to this subsection and peal and any responses by interested parties to each Commissioner. subsection (e) of this section, and shall be resolved through the proce­ (2) The Commission may consider any documents that dures described in subsections (f) - (l) of this section. The protesting Commission staff or interested parties have submitted. party must mail or deliver copies of the formal protest to all interested parties. (3) The Commission shall issue a written letter of determi­ nation of the appeal to the protesting party and all interested parties (d) In the event a formal protest is timely received, the Com­ which shall be final. mission shall not proceed further with the solicitation, evaluation, or award a contract unless the General Counsel, after consultation with (k) A formal protest or an appeal of a determination that is the Commission’s Executive Director, makes a written determination not filed timely shall not be considered unless good cause for delay is that a contract must be awarded without delay to protect the best inter­ shown or the General Counsel determines that an appeal raises issues ests of the state. that are significant to Commission procurement practices or procedures in general. (e) A formal protest must be sworn and contain: (l) A determination issued by either the Executive Director or (1) a specific identification of the statutory or regulatory the Commission shall be the final administrative action of the Commis­ provision(s) that the protesting party alleges has been violated; sion. (2) a specific description of each action that the protesting (m) The Commission shall maintain all documentation on the party alleges to be a violation of the statutory or regulatory provision(s); purchasing process that is the subject of a formal protest or appeal in (3) a statement of the relevant facts; accordance with the records retention schedule of the Commission. (4) a statement of any issues of law or fact that the protest­ This agency hereby certifies that the proposal has been reviewed ing party contends must be resolved; by legal counsel and found to be within the agency’s legal author­ ity to adopt. (5) a statement of the argument and authorities that the protesting party offers in support of the protest; and Filed with the Office of the Secretary of State on July 15, 2010. (6) a statement that copies of the formal protest have been TRD-201003919 mailed or delivered to all identifiable interested parties. Patrick Tyler (f) The General Counsel may settle and resolve the dispute General Counsel over the solicitation, evaluation, or award of a contract at any time be­ Commission on State Emergency Communications fore the matter is submitted on appeal to the Executive Director of the Earliest possible date of adoption: August 29, 2010 Commission (Executive Director). The General Counsel may solicit For further information, please call: (512) 305-6930 written responses to the formal protest from interested parties. (g) If the protest is not resolved by mutual agreement, the Gen­ ♦ ♦ ♦ eral Counsel shall send a determination letter resolving the formal dis­ TITLE 28. INSURANCE pute to the protesting party and interested parties. The determination letter shall set for the reasons for the determination; and PART 1. TEXAS DEPARTMENT OF (1) If the General Counsel determines that a violation of INSURANCE any statutory or regulatory provisions has occurred in a situation in which a contract has not been awarded, include in the determination CHAPTER 5. PROPERTY AND CASUALTY letter the appropriate remedy for the violation; or INSURANCE (2) If the General Counsel determines that a violation of any statutory or regulatory provisions has occurred in a situation in SUBCHAPTER E. TEXAS WINDSTORM which a contract has been awarded, may declare the awarded contract INSURANCE ASSOCIATION to be void. DIVISION 3. LOSS FUNDING, INCLUDING (h) The protesting party may appeal a determination of a protest by the General Counsel to the Executive Director. An appeal of CATASTROPHE RESERVE TRUST FUND, the General Counsel’s determination must be in writing and received FINANCING ARRANGEMENTS,AND PUBLIC in the office of the Executive Director no later than 10 working days from the date notice of the determination was sent. The protesting SECURITIES party’s appeal must contain a certified statement that a copy of the 28 TAC §§5.4161 - 5.4167, 5.4171 - 5.4173, 5.4181 - 5.4192 appeal was sent to all interested parties. The scope of the appeal shall be limited to a review of the General Counsel’s determination. The Texas Department of Insurance (Department) proposes new §§5.4161 - 5.4167, 5.4171 - 5.4173, and 5.4181 - 5.4192 to im­ plement legislative changes to the Insurance Code Chapter 2210 under House Bill (HB) 4409, 81st Legislature, 2009 Regular Ses-

PROPOSED RULES July 30, 2010 35 TexReg 6611 sion, and amend the plan of operation of the Texas Windstorm Forms, Endorsements, Manual Rules, Application Forms, and Insurance Association (Association). These sections set forth Underwriting Guidelines; respectively) the Department began to procedures for making and collecting member assessments and revise the format of the plan of operation into sections related procedures for making and assessing premium surcharges un­ to specific topics. Sections 5.4902 - 5.4908 and §5.4911 were der Chapter 2210, Insurance Code. adopted to control over conflicting provisions in §5.4001. Pro­ posed §§5.4161 - 5.4167 and 5.4173 are proposed as part of Under §2210.001 of the Insurance Code, the Legislature has de­ the Association’s plan of operation and have similar language termined that the provision of windstorm and hail insurance is with respect to controlling over §5.4001. However, references in necessary for the economic welfare of the state and its inhabi­ this proposal to the plan of operation incorporate both §§5.4001, tants; and that the lack of such insurance in the state’s seacoast 5.4902 - 5.4908, and 5.4911, unless specified otherwise. Pro­ territories would severely impede the orderly growth and devel­ posed §§5.4171, 5.4172 and 5.4181 - 5.4192 address require­ opment of the state. The Association was created by the Leg­ ments on property and casualty insurers generally, and are not islature and serves as a residual insurer of last resort for wind­ proposed as part of the Association’s plan of operation. storm and hail insurance coverage (insurance coverage) in the catastrophe area designated by the Commissioner under the In­ As stated, HB 4409 substantially amended how Association surance Code §2210.005. The catastrophe area is underserved losses and operating expenses in excess of premium and other for insurance coverage and consists of the 14 Texas coastal revenue are funded. It is necessary that these new require­ counties and parts of Harris County. Persons seeking insurance ments, which amend or augment the Association’s existing plan coverage from the Association are unable to obtain compara­ of operation, be integrated into the plan of operation. To this ble insurance coverage in the voluntary insurance market. The end the Department has proposed §§5.4101, 5.4102, 5.4111 ­ ability to obtain insurance coverage that will provide coverage 5.4114, 5.4121, 5.4131 - 5.4134, and 5.4141 - 5.4147 in the July for losses resulting from windstorm and hail is crucial to the fi­ 23, 2010, issue of the Texas Register. Those proposed sections nancial welfare of persons living and working in the designated address: (i) the catastrophe reserve trust fund; (ii) financing catastrophe area. The absence of such coverage providing for arrangements; (iii) issuance of public securities; (iv) use of the payment of losses results in the lack of an important element public securities proceeds; and (v) payment of public security for economic stability in the region. obligations. Proposed §5.4102 also sets forth definitions that will be used in this section. House Bill 4409 substantially amended how Association losses and operating expenses in excess of premium and other rev­ It is further necessary to establish the procedures and require­ enue are funded in new Subchapters B-1 and M, Chapter 2210, ments for determining and collecting member assessments and Insurance Code. In accordance with Chapter 2210 of the In­ premium surcharges for the payment of class 2 public security surance Code, compliance with these requirements is essential obligations and class 3 public security obligations under the In­ to assure the availability of Association insurance coverage for surance Code §2210.613 and §2210.6135. Compliance with all eligible persons and properties. The proposed sections im­ these requirements is essential to assure the availability of As­ plement the legislative loss funding scheme. Thus, adoption of sociation insurance coverage for all eligible persons and proper­ these proposed sections will affect the economic welfare of the ties. state and its inhabitants, and positively impact the orderly growth Thus, it is necessary to amend the plan of operation to address and development of the state. Because of this need, if, prior to the following: (i) Association member assessments under the the adoption of these sections, an occurrence or series of occur­ Insurance Code §2210.613 and §2210.6135; and (ii) the proce­ rences is reasonably likely to impact the catastrophe area, all of dure for assessing class 2 public securities under the Insurance these sections will be submitted for immediate effect as emer­ Code §2210.613. It is further necessary to establish the proce­ gency rules. dures and requirements for determining and collecting premium The Association operates under a plan of operation which is surcharges for the payment of class 2 public securities under the adopted by rule. The Insurance Code §2210.151 provides that Insurance Code §2210.613. the Commissioner shall adopt by rule the Association’s plan of To effect these necessary amendments, the Department pro­ operation to provide Texas windstorm and hail insurance in the poses for adoption §§5.4161 - 5.4167 and 5.4173 to become catastrophe area. The Insurance Code §2210.152(a)(1) sets out part of the Association’s plan of operation. Proposed §§5.4161 the requirements of the plan of operation and specifies that the -5.4167moveexisting provisions concerning member assess­ plan of operation must provide for the efficient, economical, fair ments that are currently in §5.4001(c)(2) of the plan of opera­ and nondiscriminatory administration of the Association. Fur­ tion into this division. Except as required to comply with statu­ ther, the Insurance Code §2210.152(a)(2)(G) provides that the tory changes, this proposal is intended to redesignate the ex­ plan of operation may include other provisions considered nec­ isting provisions rather than to substantively change the exist­ essary by the Department to implement the purposes of Chapter ing requirements in §5.4001(c)(2). Including the Association’s 2210. assessment procedure with other loss funding provisions will Historically the Association’s plan of operation has been spec­ make it more accessible to interested persons. Finally, as neces­ ified in §5.4001 of this subchapter (relating to Plan of Opera­ sary, the proposed section makes nonsubstantive updates and tion). Neither the Insurance Code §2210.151 nor §2210.152 re­ uses terminology more consistent with this proposal and current quire the Association’s plan of operation to be in a single sec­ statutes and rules. Because §5.4001 addresses almost all as­ tion of the Administrative Code. With the adoption of HB 4409 pects of the Association’s operations, opening that section for related requirements in §§5.4902 - 5.4908 and 5.4911 of this direct amendment may result in unforeseen consequences that chapter (relating to Additional Requirements; Declination of Cov­ could adversely affect the Association’s ability to fulfill its pur­ erage; Flood Insurance, Minimum Retained Premium, Certifi­ pose under Chapter 2210. Thus, rather than amend §5.4001, cate of Compliance Approval Program, Certificate of Compliance proposed §§5.4161 - 5.4167 control over those provisions set Transition Program, Alter and Alteration; and Insurance Policy forth in existing §5.4001 as provided in §5.4101.

35 TexReg 6612 July 30, 2010 Texas Register Additionally, the Department proposes for adoption §§5.4181 ­ of the Association. Because, the assessment period however, 5.4192, to establish the procedures and requirements for deter­ could run for up to ten years depending on the bond term, pro­ mining and collecting premium surcharges for the payment of posed §5.4162(a)(2) clarifies that the new member would be el­ class 2 public securities under the Insurance Code §2210.613. igible for assessment after its second anniversary. This proposal explains in subsequent discussions each of the Proposed §5.4162(b) provides that the participation level shall proposed sections in greater detail. be computed on a calendar year basis for the year in which the assessment is made. The participation level may thus vary over §5.4161. Member Assessments. Proposed §5.4161 reflects ex­ the term of the public security and will not be fixedinthe year isting §5.4001(c)(2)(A) of this subchapter, which it would control that the catastrophic event occurred. In preparing the proposal, over. Proposed §5.4161 is not intended to significantly alter ex­ the Department solicited comments from the public and industry isting procedural requirements, but it differs from the existing rule concerning this concept. The Department received comments because the statutory funding scheme for excess losses was that computing the participation level on calendar year basis for amended by HB 4409 and no longer relies on direct assess­ the year in which the assessment is made could result in insur­ ments to fund certain amounts. Rather, the Insurance Code, ers attempting to game the system and financial uncertainty or Chapter 2210, Subchapter B-1, now requires that losses in ex­ hardship. cess of the Association’s premium and other revenue, the Catas­ trophe Reserve Trust Fund (CRTF), and available reinsurance The systemic concern is that the insurers may determine that proceeds, must be paid with the proceeds of class 1, class 2, under a variable participationschemeitisbesttostopwriting and class 3 public securities. The Insurance Code §2210.613 wind and hail insurance coverage in the catastrophe area now and §2210.6135, provide that, if other funds are not available, and then return after the event to lower their participation per­ up to 30 percent of the class 2 public security obligations and all centage. The Department disagrees that insurers would reduce of the class 3 public security obligations are payable from As­ writings under this requirement as a general course of action. sociation member company assessments. The Insurance Code Since Hurricane Rita, insurers have reduced writing wind and §2210.608 requires the Texas Public Finance Authority (TPFA) hail insurance coverage in the catastrophe area to avoid expo­ to annually inform the Association of the amounts required to sure to catastrophic events without regard to the effect of even fund these public security obligations. the potential of an unlimited assessment under former Insur­ ance Code §2210.058. Assessments under the HB 4409 loss The Department has also proposed removing the requirement funding scheme set out in the Insurance Code §2210.613 and that the Association’s board of directors determine the Assess­ §2210.6135 would amount to an approximate maximum of $800 ment amount. This phrasing is more consistent with other pro­ million, plus interest and administrative expenses, over an eight posals in this division and, under the funding system adopted to eleven year period following catastrophic event depending on in the Insurance Code Chapter 2210, the assessment will be in the date of issuance, term, covenants, and potential early re­ large part determined by the amount of public securities issued, payment of the public securities. Thus, the annual assessment the terms of those public securities, and the choices the Associ­ requirements necessary under Insurance Code §2210.613 and ation’s board of directors makes with regards to excess assess­ §2210.6135 would approximate, albeit probably greater than, the ment revenue. Excess revenue is to be expected because the former $100 million assessment provision in the Insurance Code Department has been advised by the TPFA that lenders will likely §2210.058(a)(1). Therefore, the Department does not believe require a contractual coverage provision, which is the minimum that this provision will encourage insurers to leave the catastro­ amount that the Association is required to deposit into the appli­ phe area. Rather, the calendar year method may encourage cable public security obligation revenue fund as security for the insurers to reduce their participation level by writing in the catas­ paymentofdebtservice on the public securities, administrative trophe area either before of after a catastrophic event. expenses on public securities, or other payments required to be paid by the Association in connection with public securities. The Further, even under a fixed participation level, participation lev­ Department has proposed in §5.4145 and §5.4147 that these ex­ els would vary due to insolvencies and carriers leaving the Texas cess amounts be used to either reduce a future year’s assess­ market. The Association rules already provide for reallocating ment or redeem outstanding class 2 or class 3 public securities. an assessment based on insolvency. As for insurers leaving the Texas Market, the Department notes that the Insurance Code As previously discussed, except as required by statute, Chapter 2210, does not have a provision such as that in the §§5.4161 - 5.4167 are proposed to redesignate the existing Insurance Code §2211.209(e), relating to the FAIR Plan Asso­ requirements and incorporate them into this division. These sec­ ciation. Barring the departure of a large market share insurer, tions will continue to be considered part of the Texas Windstorm these variances should be slight, but under either the fixed or Insurance Association’s plan of operation and shall control over annual basis they may be unavoidable. Also, while it is possi­ any conflicting provision in §5.4001 of this subchapter. This is ble that annually successive catastrophic events could affect the set forth in proposed §5.4161(c). Association resulting in a large net assessment burden, the ex­ §5.4162. Amount of Assessment. Proposed §5.4162 reflects tended payment scheme may also reduce the need for some in­ existing §5.4001(c)(2)(B) of this subchapter, which it would con­ surers to rely on reinsurance as they would no longer be subject trol over. The section establishes member participation in the to the possibility of the unlimited assessment. For these reasons assessment and thus the proportionate amount each member the Department has determined that the calendar year method shall be required to pay to the Association. Proposed §5.4162(a) is most consistent with the requirements of the Insurance Code incorporates the HB 4409 amendments to the Insurance Code Chapter 2210. §2210.052(e) which provides that the Association may not in­ Finally, because §5.4001 defines terms for use in §5.4001, it is cludeinthe assessment an insurer that became a member of necessary to incorporate the definition and calculation of "net the Association after September 1, 2009, and had not previously direct premiums" into this section, which is provided for in pro­ been a member of the Association, until after the second anniver­ posed §5.4162(b). sary of the date on which the insurer first becomes a member

PROPOSED RULES July 30, 2010 35 TexReg 6613 Proposed §5.4162(c) incorporates the remainder of existing any required contractual coverage amounts that are reported to §5.4001(c)(2)(B) concerning member participation in the as­ the Association by the TPFA. sessment. Proposed §5.4162(d) incorporates the Association’s §§5.4181 - 5.4183. Premiums to be Surcharged, Allocation existing calendar year formula for determining participation lev­ Method for Specified Lines of Insurance, and Allocation Method els that are set out in existing §5.4001(c)(2)(B)(i). The proposal For Other Lines of Insurance. Insurance policies can provide also corrects an incomplete citation in the existing rule. The coverage for risks located in a single location, risks located in existing provision cites "subsection (a)(2)(i)(III) of this section." multiple locations, or even property in transit. Some insurance As all items within §5.4001(a)(2) have a following capital letter coverages, such as property insurance, are rated based on the designation, the citation does not refer to any provision. The specific location of the risk, and thus insurers can determine Department has determined that this provision referred to net how much of the policy premium relates to insured property direct premium as of 1988 using the citation (a)(2)(I)(i)(III). In or operations located within the catastrophe area. Other subsequent revisions the "(I)" was inadvertently omitted. The lines of insurance may require an allocation calculation. Pro­ Department is not aware of any time in which this alternative posed §5.4181 sets forth which premium is to be surcharged. provision was used in determining participation levels. The pro­ Proposed §5.4182 provides the method for determining the posed section restates citation as §5.4001(a)(2)(N)(i)(III) using premium surcharge for certain lines of insurance, including fire, the correct reference to "net written premium." This proposed allied lines, multi-peril crop, farmowners, homeowners, com­ section also incorporates Figure: 28 TAC §5.4162(d), which is mercial multi-peril, private passenger auto, and commercial auto thesameasthatadoptedat§5.4001(c)(2)(B)(i). policies rated based on the location of the vehicle(s). Proposed Proposed §5.4162(e) is based on existing §5.4001(c)(2)(B)(ii) §5.4183 establishes the procedure for determining the premium of this subchapter. Proposed §5.4162(f) is based on existing surcharge for other lines of insurance, including those that are §5.4001(c)(2)(B)(iii) of this subchapter. Finally, as necessary, the not rated based on the specific location of the risk. proposed section makes nonsubstantive updates and uses ter­ §5.4184. Application of the Surcharges. Proposed §5.4184 pro­ minology more consistent with this proposal and current statutes vides that all applicable policies with effective dates on or after and rules. thedateoftheCommissioner’s surchargeorderaretobesur­ §5.4163. Notice of Assessment. Proposed §5.4163 is based on charged. It also makes clear that insurers are not responsible existing §5.4001(c)(2)(C) of this subchapter. The proposed sec­ for collecting surcharges on policies that did not go into effect, tion divides the existing provision into three subsections to make or were cancelled as of the inception date, as well as provides it more accessible. As necessary, the proposed section makes instructions for surcharging policies that remain in effect for mul­ nonsubstantive updates and uses terminology more consistent tiple years. Proposed §5.4184 further discusses how surcharges with this proposal and current statutes and rules. are to be determined when the policy is either cancelled mid-term or the premium is changed on the policy in the middle of the §§5.4164 - 5.4167. Payment of Assessment, Failure to Pay policy period. The Insurance Code §2210.613 states that pre­ Assessment, Contest after Payment of Assessment, and In­ mium surcharges are non-refundable, thus there is no refund for ability to Pay Assessment by Reason of Insolvency. Proposed the "unexpired" portion of the surcharge when a policy is can­ §§5.4164 - 5.4166 are based on existing §5.4001(c)(2)(D) of celled prior to the expiration date. Similarly, since premium sur­ this subchapter. The proposed sections divide the existing charges are non-refundable, when the premium on the policy provisions into three sections and various subsections to make is changed in mid-term resulting in a reduction in the total policy them more accessible. Proposed §5.4167 is based on existing premium, there is no commensurate refund of the surcharge, but §5.4001(c)(2)(E) of this subchapter. As necessary, the proposed there is a commensurate increase in the premium surcharge for section makes nonsubstantive updates and uses terminology mid-term changes resulting in an increase in the premium. Pro­ more consistent with this proposal and current statutes and posed §5.4184(f) addresses policies that are subject to premium rules. audits, retrospective rating adjustments, or other similar adjust­ §5.4171. Premium Surcharge Requirement. Proposed ments that occur after policy expiration. §5.4171(a) identifies insurers that are, and that are not, subject §5.4185. Premium Surcharges are Mandatory. Proposed to the provisions proposed §§5.4171 - 5.4172 and 5.4181 ­ §5.4185 provides that premium surcharges are mandatory, and 5.4192. arepaidona "first dollar" basis. Insurers may not pay the §5.4172. Premium Surcharge Definitions. Proposed §5.4172 surcharge on behalf of the insured, and insurers must apply provides definitions used in this subdivision. The definitions policyholder payments to the surcharge before applying any are derived in part from Subchapter M, Chapter 2210 Insur­ payments to premiums or other amounts owed to the insurer. ance Code. The definition of "insurer" was expanded from the This subsection also reiterates the provision in Insurance definition contained in Subchapter M, Chapter 2210 Insurance Code §2210.613(d) that failure to pay a premium surcharge Code to include the Association and the Texas FAIR Plan Asso­ constitutes failure to pay premium for the purposes of policy ciation (FAIR Plan). Insurance Code §2210.613 provides that cancellation. premium surcharges also apply to Association and FAIR Plan §5.4186. Remittance of Premium Surcharges. Proposed policyholders that reside in, have insured property or operations §5.4186 establishes the procedure for remitting collected pre­ in the catastrophe area. This proposed section also provides mium surcharges to the Association and provides that insurers definitions for "insured property," "premises," and "operations," shall remit all surcharges paid by its insureds not later than since these terms are not defined in Insurance Code §2210.613. the fifteenth day of the month following the month in which the §5.4173. Determination of the Surcharge. Proposed §5.4173 surcharge was received. establishes the procedure for the Association to request Com­ §5.4187 and §5.4188. Offsets and Surcharges not Subject to missioner approval of a premium surcharge in an amount that Commissions or Premium Taxes. Proposed §5.4187 provides is sufficient to fund class 2 public security obligations, including a method for crediting an insurer for surcharges previously paid

35 TexReg 6614 July 30, 2010 Texas Register that were not due to the Association. Proposed §5.4188 provides Anticipated Public Benefits. that premium surcharges are neither subject to agents’ commis­ Member Assessments. The anticipated public benefit will be sions nor premium taxes. This reiterates the language contained ability of the Texas Windstorm Insurance Association (Associ­ in Insurance Code §2210.613(d), and prohibits an insurer from ation) to collect member assessments in order to fund its public increasing the surcharge in order to pay agents’ commissions or security obligations associated with the issuance of class 2 and premium taxes on a surcharge, and prohibits an agent from col­ class 3 public securities as prescribed in the Insurance Code lecting or charging a commission on a surcharge. §2210.613 and §2210.6135. In the absence of the Association’s §5.4189. Notification Requirements. Proposed §5.4189 pro­ ability to collect member assessments to fund its class 2 and vides that insurers must provide insureds subject to a premium class 3 public security obligations, the Association would not be surcharge a notice that a premium surcharge has been applied to able to market these classes of public securities and thus would their policy. Proposed §5.4189(a) provides the text of the notice lack the proceeds of those public securities to pay the insured required for all policyholders subject to a premium surcharge, losses of the Association’s policyholders if a substantial hurri­ and §5.4189(b) requires that insurers provide to all policyhold­ cane made landfall on the Texas coast. Additionally, moving ers subject to a premium surcharge the dollar amount of the pre­ the existing requirements related to member assessments from mium surcharge. Proposed §5.4189(c) provides the additional §5.4001(c)(2) to this division will make the item more accessible information insurers that determine the premium surcharge un­ to interested persons. der §5.4183(d) must provide to their insureds or applicants. Premium Surcharges. The anticipated public benefitwillbe §5.4190 and §5.4191. Annual Premium Surcharge Report and the ability of the Association to collect premiums surcharges Premium Surcharge Reconciliation Report. Proposed §5.4190 in order to fund debt obligations associated with the issuance and §5.4191 specify the types of information insures are re­ of class 2 Public Securities as prescribed in the Insurance quired to maintain for the purposes of determining compliance Code §2210.613. In the absence of the Association’s ability to with §§5.4171 - 5.4173 and 5.4181 and 5.4188 of this proposal. collect premium surcharges to fund its class 2 public security Proposed §5.4190 requires insurers to provide an annual report obligations, the Association would not be able to market the to the Association which provides information regarding the class 2 public securities and thus would lack the proceeds of amount of premium collected subject to surcharge, the amount those public securities to pay the insured losses of the Asso­ of premium surcharges remitted to the Association, and the ciation’s policyholders if a substantial hurricane made landfall amount of premium surcharges collected by the insurer during on the Texas coast. In addition, the proposed rules provide the previous calendar year. These reports are required to be procedures for the allocation of premium to the catastrophe provided to the Association within 60 days after the end of a area for policyholders who have insured property or operations calendar year in which a surcharge is in effect. However, annual both within and outside the catastrophe area. The proposed reports are not required if a surcharge has been in effect for less procedures provide the benefit of a more equitable system of than 45 days in the applicable calendar year. Annual reports are cost-sharing than would be provided if these policyholders were required to be provided by annual statement line of business fully surcharged or not surcharged at all. The reports required and by insurance company. Proposed §5.4191 requires insurers under the proposed rules provide the benefit of allowing the to maintain sufficient records in order to, within 10 days of a Department to ensure insurers are determining the surcharges request, provide the Department with a reconciliation report for a correctly and allows the Association to determine whether in­ time period specified in the request. These reports are proposed surers are remitting the required surcharges to the Association. under the authority set forth in the Insurance Code §2210.008, The proposed rulesalsoprovidethebene fitofguidanceto as the reports are necessary to ensure compliance with this insurers, agents, and policyholders, regarding how surcharges proposal and as such are necessary to the implementation of are to be determined in various circumstances. Such guidance Chapter 2210. is necessary to allow insurers to determine the applicable premium surcharge for individual policyholders. §5.4192. Data Collection. Proposed §5.4192 requires each in­ surer to maintain sufficient records in order to report certain in­ Estimated Costs for Persons Required to Comply with the Pro­ formation to the Department. This information will provide the posal. The persons that will incur costs for compliance with the premium base available to be surcharged and thus is necessary proposal are the Association and insurers. to the implementation of the Insurance Code §2210.613. This Member Assessments. section does not change, is not intended to change, and should not be construed as changing, any statistical plan reporting re­ The Association. It is not anticipated that the Association will in­ quirements established pursuant to the Insurance Code Chapter cur any additional cost as a result of this proposal with respect 38 or other requirement. to the member company assessments. Under the proposal the Association must determine that an assessment is necessary, FISCAL NOTE. Marilyn Hamilton, Associate Commissioner of calculate the amount of the assessment annually, notify insur­ the Property and Casualty Program, has determined that for ers of the assessment, and collect the assessment. The As­ each year of the first five years the proposed sections will be sociation performed each of these functions under the existing in effect, there will be no fiscal impact to state and local gov­ requirements. Costs associated with any requirement that the ernments as a result of the enforcement or administration of the Association would be required to now assess annually for a pe­ proposal. There will be no measurable effect on local employ­ riod of years following the issuance of public securities, or that ment or the local economy as a result of the proposal. the Association may be required to issue separate assessments PUBLIC BENEFIT/COST NOTE. Ms. Hamilton also has deter­ for class 2 and class 3 public security obligations do not result mined that for each year of the first five years the proposed sec­ from this proposal, but from the statutory requirements of the In­ tions are in effect, there will be public benefits resulting from the surance Code §§2210.052, 2210.613, and 2210.6135. proposal and there will be costs to persons required to comply with theproposal.

PROPOSED RULES July 30, 2010 35 TexReg 6615 Member Insurers. It is not anticipated that Association mem­ Association, and the Texas Fair Access to Insurance Require­ ber insurers will incur any additional cost as a result of this pro­ ments Plan Association. The term specifically includes a county posal with respect to the member company assessments. The mutual insurance company, a Lloyd’s plan, a reciprocal or interin­ requirement to pay the assessment arises from the statutory re­ surance exchange. quirements of the Insurance Code §§2210.052, 2210.613, and The total probable economic cost to each insurer to comply with 2210.6135. The Department further considers that no additional the requirements set forth in the Insurance Code §2210.613 and cost arises from the requirement that the Association determine this proposal is expected to range from several hundred thou­ the member’s participation level each calendar year participa­ sand dollars to several million dollars. Although for some in­ tion rather than fixing the participation level as of the year of the surers, the cost could reach millions of dollars, the department loss. Insurers would need to account for potential assessments does not expect costs to reach this level for the large majority under either basis as well as potential changes to those bases. of insurers. These costs arise from requirements to identify pol­ Further, theproposedsectionsdo not require or prohibit an in­ icyholders with premises, operations, or insured property in the surer from purchasing reinsurance. Purchase of reinsurance is catastrophe area, allocate the policyholder’s premium, assess a business decision of the member insurer based on the law and the premium surcharge, collect the premium surcharge, remit the its response to perceived risk. premium surcharge to the Association, notify the policy holder of Premium Surcharge. the premium surcharge, and report premium and premium sur­ charge information to the Department and the Association. The The Association. It is anticipated that the Association will in­ actual cost to each insurer will vary based on a number of fac­ cur additional cost as a result of this proposal with respect to tors, including the size of the insurer, the quality of the insurer’s the premium surcharges, both in its capacity as an administrator data processing equipment, the quality of the insurer’s data, the of the program and a participant insurer. The anticipated costs types of insurance written by the insurer, and whether the insurer to the Association as an administrator will result from proposed writes large multi-location commercial risks, or small single-loca­ §5.4173 and §5.4190(g). tion risks. Proposed §5.4173 requires the Association to review information §§5.4181 - 5.4188. Proposed §§5.4181 - 5.4188 address the re­ provided by TPFA concerning the class 2 public security obliga­ quirements to identify policyholders with premises, operations, tion, determine if a premium surcharge is necessary to fund the or insured property in the catastrophe area, allocate the poli­ class 2 public security obligation, and request the Commissioner cyholder’s premium, assess the premium surcharge, collect the to set the premium surcharge. The Department estimates that premium surcharge, remit the premium surcharge to the Asso­ the cost factors involved in completing the requirements set forth ciation. Some of this cost is result of this proposal, and some in this procedure would include the labor of senior Association of this cost would be borne in the absence of this proposal as a management, Association actuarial staff, Association legal staff, direct result of the enactment of the Insurance Code §2210.613. and Association staff as well as materials, printing and mailing With respect to each section the difference may depend on the costs. The Department does not have a specificestimatefrom line of business and the business model of the insurer. Further, the Association related to its probable cost in completing this because each requirement is not required of each insurer, this function. The Department does however, have recent estimates cost analysis set forth those requirements that may apply to an from the Association that its probable costs to determine the insurer complying with the proposed sections. need for the issuance of public securities and make a request to the Commissioner to issue such public securities would be Asignificant cost factor for insurers resulting from these sections approximately $800 per request event. The request described may include the cost of establishing and programming their pol­ in proposed §5.4173 is similar in structure but smaller in scope icy issuance systems, premium rating algorithms, and account­ than a request for public securities. Therefore the Department ing systems to calculate the premium surcharges, any additional anticipates that the Association’s estimated cost of compliance premium surcharges during the policy period, and refunds of sur­ with proposed §5.4173 would be $800, or less, per request. It charges as a result of premium audits, retrospective rating ad­ is anticipated that this cost would not change over the first five justments, or similar adjustments. Insurers may need to account year period this proposal is to be in effect. for the premium surcharges separately from premiums in their accounting ledgers, ensure agents’ commissions were not de­ Proposed §5.4190(g) requires the Association to review insurer termined based on the surcharge, collect the surcharges, and premium surcharge reports submitted under proposed §5.4190 remit the appropriate amount of surcharge to the Association. for consistency with other premium reports, and report to the De­ Insurers may also be required to program their billing systems to partment. The Association estimated the cost of this activity to be track each payment, how much of the payment is applied to pre­ between $13, 500 for the first year and less in subsequent years mium, and how much of the payment is applied to the surcharge. for the first fiveyearsthisproposalistobeineffect. Thecostes­ Insurers may also program their data processing systems in or­ timate is based on labor in the amount of $8,500, annually, and der to track, collect, and use an allocation percentage which al­ the onetime addition of an accounting receivables module for an locates premium to the catastrophe area. These systems may estimated price of $5,500. In subsequent years the Association then prepare required reports to the Association and the Depart­ would only have the licensing expense for the receivables mod­ ment under proposed §§5.4190 - 5.4192. Should the insurer not ule, so annual cost would be reduced. have these types of systems, or should they be inadequate, the Insurers. In this cost analysis "insurer" has the same meaning insurer may need to invest in the necessary hardware or develop as proposed in §5.4172 and thus refers to each property and ca­ a manual procedure for compliance. sualty insurer authorized to engage in the business of property For certain property, automobile, multiple peril, and personal or casualty insurance in the State of Texas and an affiliate of lines of insurance, insurers may be required to determine such an insurer, as described by the Insurance Code §823.003, whether each risk on the policy was located within the catastro­ including an affiliate that is not authorized to engage in the busi­ phe area. For most of these lines, there will be little additional ness of property or casualty insurance in the State of Texas, the

35 TexReg 6616 July 30, 2010 Texas Register cost since most insurers already collect and code either county then performing those tasks. It is necessary that this be done risk location or ZIP Code risk location for the purposes of before the occurrence of a catastrophic event, because this in­ determining the premium on the policy, or for the purposes for formation will be used to justify to the financial markets the As­ reporting under the Department’s residential, commercial, or sociation’s financial ability to promptly issue class 2 public secu­ private passenger automobile statistical plans. For insurers rities for the payment of the Association’s policyholder’s insured that do not use risk location when determining policy premium losses as prescribed by the insurance Code §2210.073. This for these lines of insurance, and are not required to report this infrastructure is also necessary to comply with the reporting re­ data to one of the Department’s designated statistical agents, quirements set forth in proposed §§5.4190 - 5.4192. Therefore, there could be the additional cost of determining whether each the insurer must consider these additional requirements asso­ risk on the policy is located within the catastrophe area and the ciated with extracting the data from the insurers accounting or corresponding exposures, or premium basis, for risks located policy systems and aggregating the data at the appropriate level within the catastrophe area. This may require obtaining the of detail necessary to complete these reports in determining its information, as well as programming data processing systems system for compliance. in order to capture and retain this information. The cost for each of these functions will vary by the insurer’s line Additionally, insurers may be required to identify whether risks of business, labor practices, and current systems. This analysis located in Harris County are located within the designated catas­ considers the cost of an insurance company to implement pro­ trophe area. For some risks insurers will need to determine posed §§5.4181 - 5.4188 in-house, because ultimately the insur­ whether the precise location is within certain ZIP Codes of Har­ ance company is responsible for compliance with the proposed ris County and determine whether those risks are located within requirements and the in-house reporting method is available to the catastrophe area. This could involve a manual process of every insurance company. This method is not required by the entering addresses into geographic mapping software to deter­ proposal and other methods of compliance may be available to mine the precise location of each risk. the insurance company. The method of compliance and ultimate cost of compliance is a business decision of the insurance com­ For risks that have some operations within the catastrophe area pany and not a requirement of this proposal. and some operations outside of the catastrophe area, it may be necessary for insurers to annually obtain information regarding Proposed §§5.4181 - 5.4188 do not require an insurer to use whether the insured had some, none, or all of its operations lo­ an automated process. However, as most, if not all insurers cated within the catastrophe area. This requirement mostly af­ do, the proposed sections will generate a need for information fects insurers that write medium-sized or large commercial risks. technology services. Such needs are expected to range from In addition to the cost of obtaining this information, there could hundreds of person-hours to several thousands of person-hours also be costs associated with insurers programming their elec­ of systems design, systems analysis, computer programming, tronic data processing systems in order to track, collect, and use and testing. Though each insurance company has the informa­ this information. It may also be necessary for these insurers tion needed to estimate its individual costs, the Department esti­ to program their electronic data processing systems in order to mates that to analyze and adapt an insurance company’s current track, collect, and use, an allocation percentage which allocates information systems, the insurance company may incur costs re­ premium to the catastrophe area. The proposal however, does latedtoinformation technology services, including the services not require insurers to obtain this information. Instead insurers of programmers, software engineers, database managers, and may use a default premium allocation system. computer support specialists. While it is not feasible to deter­ mine the actual cost of such employees and the actual amount Additionally, under §5.4183(d), insurers may be required to re­ of time that will be needed for such employees for each insur­ ceive and review information provided by policyholders regard­ ance company, the Texas Workforce Commission’s Labor Mar­ ing whether a lesser allocation percentage is appropriate for the ket and Career Information Department’s 2009 Texas Statewide insured. The review would require an underwriter to review the Wages, Occupational Employment Statistics Program indicates information provided by the insured, and determine whether a that the average hourly wages for these professions are $38.52 lesser allocation percentage is warranted. Insurers would also for a computer programmer, $44.22 for a computer software ap­ be required to provide notice and explanation to the insured in plications engineer, $44.11 for computer software systems en­ cases where the application for a lesser percentage is denied by gineers, $37.45 for a database administrator, and $22.76 for a the insured. Some insurers may require their agents to perform computer support specialist. However, the actual number, types, these duties, but there is no requirement under the proposed rule and cost of personnel will be determined by the insurance com­ that the agents perform these duties. These costs would not be pany’s existing data systems and staffing. borne until and unless an actual surcharge was in effect. In­ surers may decide to collect detailed exposure information from Similarly, the insurer will need to account for these premium sur­ their policyholders before there has been a catastrophic event charges. To the extent the insurer uses an automated account­ or a premium surcharge, but there is no requirement in the rule ing system, upgrading that system would be included within the that insurers do so. scope of the information technology services portion of this cost analysis. The insurer may also incur additional accounting labor The anticipated costs to comply with the described requirements costs, which may vary by insurer. Each insurance company has in proposed §§5.4181 - 5.4188 are expected to include infor­ the information needed to estimate its individual costs with re­ mation technology services, underwriting services, accounting spect to accounting and the requirements in proposed §§5.4181 services, materials and postage, and computer hardware. Fur­ - 5.4188. While it is not feasible to determine the actual cost ther, most of these costs would occur within the first months or of such employees and the actual amount of time that will be year the proposal was in effect, because the significant portion of needed for such employees for each insurance company, the these costs involves laying the infrastructure necessary to iden­ Texas Workforce Commission’s Labor Market and Career Infor­ tify policyholders with premises, operations, or insured property mation Department’s 2009 Texas Statewide Wages, Occupa- in the catastrophe area, allocate the policyholder’s premium, and tional Employment Statistics Program indicates that the average

PROPOSED RULES July 30, 2010 35 TexReg 6617 hourly wages for an accountant or auditor in Insurance Carriers ing the policy, renewal of the policy, and within 10 days of any and Related Activities is $33.33. However, the actual number, mid-policy term transition period, which is defined in proposed types, and cost of personnel will be determined by the insurance §5.4184(c) as a mid-term policy change that consists of all trans­ company’s existing data systems and staffing. actions on a policy occurring within a seven day period that result in a change in the premium. Depending on the line of business Likewise, the insurer may incur additional underwriting costs to and the term of the policy, and the propensity of an insured to review information necessary to determine whether the policy­ change coverage, the insurer may be required to send multiple holder has premises, operations or property in the catastrophe notices during the course of the year. area. Insurers may also incur additional underwriting costs if they are required to review an insured’s claim that an allocation It is anticipated that insurers may develop a means to gener­ percentage other than the default allocation percentage is ap­ ate and send the required notices. To the extent that this re­ propriate. Each insurance company has the information needed quires information technology services, the Department refers to estimate its individual costs with respect to underwriting and to its prior discussion of cost and wages related to information the requirements in proposed §§5.4181 - 5.4188. While it is not technology professionals. Implementing an automated notice feasible to determine the actual cost of such employees and the system would be in addition to the requirements necessary to actual amount of time that will be needed for such employees implement §§5.4181 - 5.4188. Further, this proposal does not re­ for each insurance company, the Texas Workforce Commission’s quire insurers to shift this delivery requirement to agents. Thus, Labor Market and Career Information Department’s 2009 Texas to the extent that insurers may attempt to shift some or all of the Statewide Wages, Occupational Employment Statistics Program cost to agents would not be a cost of compliance with this sec­ indicates that the average hourly wage for an insurance under­ tion but a matter of contract between the insurer and the agent. writer is $30.02. However, the actual number, types, and cost of The Department estimates correspondence costs, including pa­ personnel will be determined by the insurance company’s exist­ per, ink and postage at $1.00 per notice. Costs associated with ing data systems and staffing. printing notices and mailing notices would not be borne until and unless an actual premium surcharge was in effect. The costs Materials and postage cost will vary but are primarily based on would then continue for the term of the public securities, which the review requirement set forth in proposed §5.4183(d). The would be approximately the next 10 years. Department estimates correspondence costs, including paper, ink, and postage at $1.00 per letter. The cost of preparing the §§5.4190 - 5.4192. Proposed §5.4190 and §5.4191 require in­ letter will vary but in this analysis is considered to be included surers to prepare and submit reports to the Association or the within the scope of underwriter labor costs. It is likely that each Department. The costs associated with these reports are the review will generate at least one letter either agreeing or dis­ costs for extracting the data from the insurers accounting or pol­ agreeing with the insured. Additional correspondence would be icy systems, aggregating the data into a report, and transmitting expected to vary. the report to the Association or the Department. The costs as­ sociated with these tasks in drafting and submitting the reports As previously stated, proposed §§5.4181 - 5.4188 do not require under proposed §5.4190 or §5.4191 would not be borne until the insurer to use an automated system. Thus, the method of and unless an actual premium surcharge is in effect. The costs compliance is a left to the insurer and the purchase of a system associated with these tasks in drafting and submitting data un­ or the upgrade an existing system is a business decision of the der proposed §5.4192 could be borne annually. The anticipated insurer. Further, because proposed §§5.4181 - 5.4188 apply to costs to comply with the described requirements in proposed almost every type of property and casualty insurer and line of §§5.4190 - 5.4192 are expected to include information technol­ property and casualty insurance, it is not feasible to determine ogy services, underwriting services, accounting services, mate­ the actual cost of such computer hardware. rials and postage, and computer hardware. Further, the costs Additionally, many insurance companies writing insurance in incurred in creating the infrastructure to make these reports re­ Texas and/or other states may only need to make minor mod­ lies and builds upon the systems created by the insurer for com­ ifications to their automated systems, accounting procedures, pliance with §§5.4181 - 5.4188. Costs associated with §5.4190 or underwriting practices to comply with proposed §§5.4181 ­ and §5.4191, as well would likely not be borne until and unless 5.4188 because these insurance companies currently outsource an actual premium surcharge was in effect. The costs would some portion of these functions to managing general agents then continue for the term of the public securities, which would (MGAs) or other contracted vendors, who may write policies or be approximately the next 10 years. Costs associated with cre­ perform services on behalf of multiple insurance companies. As ating a system to produce reports in compliance with §§5.4190 ­ such, to the extent that insurance companies utilize MGAs or 5.4192 could begin upon the adoption of this proposal, with sys­ vendors to perform these functions and these MGAs or vendors tem maintenance and §5.4192 reporting costs continuing in each make the necessary changes on behalf of all of their contracted subsequent year of the first five years this proposed requirement insurance company clients, compliance costs associated with is in effect. proposed §§5.4181 - 5.4188 may be minimized significantly. The cost for each of these functions will vary by the insurer’s Use of an MGA or other contractor does not reduce or eliminate line of business, labor practices, and current systems. This anal­ the insurer’s responsibility for compliance with this proposal. ysis considers the cost of an insurance company to implement §5.4189. Proposed §5.4189 requires insurers to provide ap­ proposed §§5.4190 - 5.4192 in-house, because ultimately the in­ plicants and insureds with information about the premium sur­ surance company is responsible for the compliance with the pro­ charge and the actual dollar amount of the premium surcharge posed requirements and the in-house reporting method is avail­ assessed on their policy. If the insured uses the default alloca­ able to every insurance company. This method is not required tion method set forth in §5.4183(d), the insured must also pro­ by the proposal and other methods of compliance may be avail­ vide the insured or applicant the additional information set forth in able to the insurance company. The method of compliance and §5.4189(c) concerning the applicant or insured’s ability to con­ ultimate cost of compliance is a business decision of the insur­ test the allocation. The notices must be provided upon quot­ ance company and not a requirement of this proposal.

35 TexReg 6618 July 30, 2010 Texas Register Proposed §§5.4190 - 5.4192 do not require an insurer to use The Government Code §2006.002(c) provides that if a proposed an automated process. However, as most, if not all insurers rule may have an economic impact on small businesses, state do, the proposed sections will generate a need for information agencies must prepare as part of the rulemaking process an technology services. As these sections build on the systems re­ economic impact statement that assesses the potential impact quired to comply with §§5.4181 - 5.4188, it is anticipated that of the proposed rule on small businesses and a regulatory flex­ an insurer would have similar information technology services ibility analysis that considers alternative methods of achieving needs, cost factors, and labor needs in creating a system to pre­ the purpose of the rule. The Government Code §2006.001(2) pare the required reports. In preparing the reports, insurers may defines "small business" as a legal entity, including a corpora­ also incur costs related to accounting services and underwrit­ tion, partnership, or sole proprietorship, that is formed for the ing. These costs could be for internal review, and if the system purpose of making a profit, is independently owned and oper­ is not automated preparation of the report. Though each insur­ ated, and has fewer than 100 employees or less than $6 million ance company has the information needed to estimate its indi­ in annual gross receipts. The Government Code §2006.001(1) vidual costs, the Department estimates that to analyze and adapt defines "micro business" as a legal entity, including a corpora­ an insurance company’s current information systems, the insur­ tion, partnership, or sole proprietorship, that is formed for the ance company may incur costs related to information technol­ purposeofmakingaprofit; is independently owned and oper­ ogy services, including the services of programmers, software ated; and has no more than 20 employees. The Government engineers, database managers, computer support specialists, Code §2006.002(f) requires a state agency to adopt provisions accountants and underwriters. While it is not feasible to deter­ concerning micro businesses that are uniform with those provi­ mine the actual cost of such employees and the actual amount of sions outlined in the Government Code §2006.002(b) - (d) for time that will be needed for such employees for each insurance small businesses. company, the average hourly wages for these professions would The Department will consider the economic impact of (i) pro­ not differ from those figures previously provided with respect to posed sections §§5.4161 - 5.4167 concerning member assess­ §§5.4181 - 5.4188 analysis. However, the actual number, types, ment and (ii) §§5.4171 - 5.4173 and §§5.4181 - 5.4192 concern­ and cost of personnel will be determined by the insurance com­ ing premium surcharges separately. pany’s existing data systems and staffing. Member Assessments. The preferred method of delivering reports will be electronic. As this may not be available to all insurers the cost will be evaluated As discussed in the Public Benefit/Cost Note section of this for materials and postage cost. These costs may vary but are pri­ proposal, the Department does not anticipate that proposed marily based on the submission of a one or two page report. The §§5.4161 - 5.4167 will result in additional costs for the Asso­ Department estimates that each report would be approximately ciation or its member insurers. Therefore, an analysis of the onepageinlengthand thus correspondence costs, including pa­ economic impact of proposed §§5.4161 - 5.4167 pursuant to per, ink and postage at $1.00 per report. As previously stated, the Government Code §2006.002(c) is not required. proposed §§5.4181 - 5.4188 do not require the insurer to use Premium Surcharge. an automated system. Thus, the method of compliance is left to the insurer, and the purchase of a system or the upgrade an The Association. As discussed in the Public Benefit/Cost Note existing system is a business decision of the insurer. Further, be­ section of this proposal, it is anticipated that the Association will cause proposed §§5.4190 - 5.4192 apply to almost every type of incur additional cost as a result of this proposal with respect property and casualty insurer and line of property and casualty to the premium surcharges, both in its capacity as an admin­ insurance, it is not feasible to determine the actual cost of such istrator of the program and a participant insurer. The antici­ computer hardware. pated costs to the Association as an administrator will result from proposed §5.4173 and §5.4190(g). The Association does not Additionally, many insurance companies writing insurance in meet the definition of a small business under Government Code Texas and/or other states may only need to make minor mod­ §2006.001(2). The Association is an association...composed of ifications to their automated systems, accounting procedures, all property insurers authorized to engage in the business of or underwriting practices to comply with proposed §§5.4190 ­ property insurance in this state, formed under the authority of 5.4192 because these insurance companies currently outsource Insurance Code §2210.051. It is not a corporation, partnership some portion of these functions to managing general agents nor sole proprietorship. It is not formed for the purpose of mak­ (MGAs) or other contracted vendors, who may write policies or ing a profit, but to provide a method by which adequate wind­ perform services on behalf of multiple insurance companies. As storm and hail insurance may be made available in certain des­ such, to the extent that insurance companies utilize MGAs or ignated portions of this state, as mandated by Insurance Code vendors to perform these functions and these MGAs or vendors §2210.001. Under Insurance Code §2210.056, the net earnings make the necessary changes on behalf of all of their contracted of the Association may not inure to the benefitofprivate share­ insurance company clients, compliance costs associated with holders or individuals; and the assets of the Association may not proposed §§5.4190 - 5.4192 may be minimized significantly. be used, except to satisfy claims on policies, make investments Use of an MGA or other contractor does not reduce or eliminate authorized under applicable law, pay reasonable and necessary the insurer’s responsibility for compliance with this proposal. administrative expenses, satisfy the obligations of the Associ­ All other costs to the Association, insurers and others result from ation, including public securities, financial instruments and the the legislative enactment of the Insurance Code Chapter 2210 purchase reinsurance, or prepare for or mitigate the effects of and the amendments to Chapter 2210 in HB 4409 and are not catastrophic natural events. Under Insurance Code §2210.452, a result of the adoption, enforcement, or administration of this the net gain from operations of the Association in excess of in­ proposal. curred losses and operating expenses, is paid to a catastrophe reserve trust fund or used to procure reinsurance. Further, under ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX­ Insurance Code §2210.056 and §2210.452, upon dissolution of IBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. the Association, all assets revert to the state. The Association is

PROPOSED RULES July 30, 2010 35 TexReg 6619 not independently owned and operated. In addition to not being insurance coverage do so at their own choice, and as a result, owned by its members, under Insurance Code §2210.101 and agree to bear the additional costs required for compliance with §2210.102, the Association operates with a board of directors, this proposal. The costs outlined in the Public Benefit/Cost which is responsible and accountable to the Commissioner. The Note section of this proposal provide sufficient cost information Association provides windstorm and hail insurance according to for insurers operating as small or micro businesses to make a plan of operation as specified by Insurance Code §2210.152 an informed business decision on whether to sell insurance and adopted by the Commissioner by rule pursuant to Insurance coverage in the catastrophe area. Code §2210.151. Further, the Association has approximately Secondly, §2006.002(c)(2) of the Government Code requires a 150 employees (including employees who are providing services state agency, before adopting a rule that may have an adverse by contract to the FAIR Plan) and net receipts well over $6 mil­ economic effect on small or micro businesses, to prepare a reg­ lion. Therefore, based on these factors, the Association does ulatory flexibility analysis that includes the agency’s considera­ not meet the definition of a small or micro business under the tion of alternative methods of achieving the purpose of the pro­ Government Code §2006.001(1) and (2), and an analysis of the posed rule. Section 2006.002(c-1) of the Government Code re­ economic impact of this proposal on the Association pursuant to quires that the regulatory analysis "consider, if consistent with the Government Code §2006.002(c) is not required. the health, safety, and environmental and economic welfare of Insurers. As discussed in the Public Benefit/Cost Note section of the state, using regulatory methods that will accomplish the ob­ this proposal, it is anticipated that insurers subject to proposed jectives of applicable rules while minimizing adverse impacts §§5.4171 - 5.4173 and §§5.4181 - 5.4192 would be subject to on small businesses." Therefore, an agency is not required to additional costs arising from the adoption and enforcement of consider alternatives that, while possibly minimizing adverse im­ those proposed sections. The costs would generally arise from pacts on small and micro businesses would not be protective of the requirements under proposed §§5.4181 -5.4188 to identify the health, safety, and environmental and economic welfare of policyholders with premises, operations, or insured property in the state. the catastrophe area, allocate the policyholder’s premium, as­ As specified in §2210.001 of the Insurance Code, the Legisla­ sess the premium surcharge, collect the premium surcharge, re­ ture has determined that the provision of windstorm and hail in­ mit the premium surcharge to the Association; proposed §5.4189 surance is necessary for the economic welfare of the state and to notify the insurer of the assessment and of options the insured its inhabitants; and that the lack of such insurance in the state’s may have concerning the assessment allocation under proposed seacoast territories would severely impede the orderly growth §5.4183(d); and proposed §§5.4190 - 5.4192, concerning report­ and development of the state. The Association was created by ing requirements. the Legislature and serves as a residual insurer of last resort As provided in the Public Benefit/Cost Note section of this pro­ for windstorm and hail insurance coverage in the catastrophe posal, in this analysis "insurer" has the same meaning as pro­ area designated by the Commissioner under the Insurance Code posed in §5.4172 and thus refers to each property and casualty §2210.005. The Insurance Code §2210.613 premium surcharge insurer authorized to engage in the business of property or ca­ requirement ensures that the Association has access to class 2 sualty insurance in the State of Texas and an affiliate of such an public security funding to pay loss claims. insurer, as described by the Insurance Code §823.003, includ­ As a means of implementing these requirements, the Insurance inganaffiliate that is not authorized to engage in the business of Code §2210.613 requires the insurer to assess policies insuring property or casualty insurance in the State of Texas, the Associa­ premises, operations and insured property in the catastro­ tion, and the Texas Fair Access to Insurance Requirements Plan phe area. The statutory requirements in the Insurance Code Association. The term specifically includes a county mutual in­ §2210.613 and the requirements in proposed §§5.4181 - 5.4188 surance company, a Lloyd’s plan, a reciprocal or interinsurance are integral to implementing the Legislature’s determination that exchange. the provision of windstorm and hail insurance is necessary for §§5.4181 - 5.4188. Proposed §§5.4181 - 5.4188 address the re­ the economic welfare of the state and its inhabitants; and that quirements to identify policyholders with premises, operations, the lack of such insurance in the state’s seacoast territories or insured property in the catastrophe area, allocate the poli­ would severely impede the orderly growth and development cyholder’s premium, assess the premium surcharge, collect the of the state. Therefore, the Department has determined, in premium surcharge, and remit the premium surcharge to the As­ accordance with §2006.002(c-1) of the Government Code, that sociation. Costs associated with these sections will be signif­ because the purpose of the Insurance Code §2210.613 and icant both as to developing systems to handle the information proposed §§5.4181 - 5.4188 is to protect the economic welfare and the ongoing integration of new policyholders into that sys­ of the state and its inhabitants, there are no additional regulatory tem. alternatives to proposed §§5.4181 - 5.4188 that will sufficiently protect the economic welfare of the state and its inhabitants. In accordance with the Government Code §2006.002(c-1), the Department has determined that even though proposed §5.4189. Proposed §5.4189 sets forth a requirement to notify §§5.4181 - 5.4188 may have an adverse economic effect on insureds of the premium surcharge, their premium surcharge insurers operating as small or micro businesses, that these amount, the insureds ability to question an allocation under entities are required to comply with the premium surcharge proposed §5.1483(d). These notices are intended to pro­ requirements set forth in the Insurance Code §2210.613 and vide consumers with information and add transparency to the thus the Department is not required to prepare a regulatory process. These notification requirements create a cost for flexibility analysis as required in §2006.002(c)(2) of the Govern­ insurers. Therefore, the Department, in accordance with the ment Code for the following reasons. First, insurers operating Government Code §2006.002(c-1), has considered the follow­ as small or micro businesses are not required by statute or by ing alternative method of achieving the purpose of the proposed this proposed rule to sell insurance coverage in the catastrophe rule while reducing costs to insurers operating as small and area. Therefore, those small and micro businesses that sell micro businesses: reduce or eliminate the notice requirement.

35 TexReg 6620 July 30, 2010 Texas Register The Department has determined that the alternative to reduce or As a means of implementing these requirements, the Insurance eliminate the notice requirement for small or micro businesses Code §2210.613 requires the insurer to assess policies insur­ is not practical because it would have a discriminatory affect ing premises, operations and insured property in the catastro­ on those consumers that are insured by insurers operating as phe area. To be meaningful requirements, the determination of small and micro businesses. these amounts, both as to establishing the premium base to be surcharged and the amounts to be collected must be subject to §§5.4190 - 5.4192. Proposed §§5.4190 - 5.4192 address the later verification. The statutory requirements in the Insurance reporting requirements related to the collection of premium sur­ Code §2210.613 and the requirements in proposed §§5.4181 ­ charge assessments. These proposed sections are intended to 5.4188 and §§5.4190 - 5.4192 are integral to implementing the ensure that insurers fulfill the requirements to identify policyhold­ Legislature’s determination that the provision of windstorm and ers with premises, operations, or insured property in the catas­ hail insurance is necessary for the economic welfare of the state trophe area, allocate the policyholder’s premium, assess the pre­ and its inhabitants; and that the lack of such insurance in the mium surcharge, collect the premium surcharge, remit the pre­ state’s seacoast territories would severely impede the orderly mium surcharge to the Association. Costs associated with these growth and development of the state. Therefore, the Depart­ §§5.4190 - 5.4192 will involve developing systems to generate ment has determined, in accordance with §2006.002(c-1) of the the reports and making the reports. Government Code, that because the purpose of the Insurance In accordance with the Government Code §2006.002(c-1), Code §2210.613 and proposed §§5.4181 - 5.4188 is to protect the Department has determined that even though proposed the economic welfare of the state and its inhabitants, there are no §§5.4190 - 5.4192 may have an adverse economic effect on additional regulatory alternatives to proposed §§5.4181 - 5.4188 insurers operating as small or micro businesses, that these that will sufficiently protect the economic welfare of the state and entities are required to comply with the premium surcharge its inhabitants. requirements set forth in the Insurance Code §2210.613 and TAKINGS IMPACT ASSESSMENT. The Department has de­ thus the Department is not required to prepare a regulatory termined that no private real property interests are affected by flexibility analysis as required in §2006.002(c)(2) of the Govern­ this proposal and that this proposal does not restrict or limit ment Code for the following reasons. First, insurers operating an owner’s right to property that would otherwise exist in the as small or micro businesses are not required by statute or by absence of government action and, therefore, does not consti­ this proposed rule to sell insurance coverage in the catastrophe tute a taking or require a takings impact assessment under the area. Therefore, those small and micro businesses that sell Government Code §2007.043. insurance coverage do so at their own choice, and as a result, agree to bear the additional costs required for compliance with REQUEST FOR PUBLIC COMMENT. To be considered, writ­ this proposal. The costs outlined in the Public Benefit/Cost ten comments on the proposal must be submitted no later than Note section of this proposal provide sufficient cost information 5:00 p.m. on August 30, 2010, to Gene C. Jarmon, General for insurers operating as small or micro businesses to make Counsel and Chief Clerk, Mail Code 113-2A, Texas Department an informed business decision on whether to sell insurance of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An coverage in the catastrophe area. additional copy of the comment must be simultaneously submit­ tedtoMarilynHami lton, Associate Commissioner, Property and Secondly, §2006.002(c)(2) of the Government Code requires a Casualty Program, Mail Code 104-PC, Texas Department of In­ state agency, before adopting a rule that may have an adverse surance, P.O. Box 149104, Austin, Texas 78714-9104. economic effect on small or micro businesses, to prepare a reg­ ulatory flexibility analysis that includes the agency’s considera­ The Commissioner will consider the adoption of the proposed tion of alternative methods of achieving the purpose of the pro­ new sections in a public hearing under Docket No. 2718, posed rule. Section 2006.002(c-1) of the Government Code re­ scheduled for August 24, 2010, at 9:30 a.m., in Room 100 of quires that the regulatory analysis "consider, if consistent with the William P. Hobby, Jr., State Office Building, 333 Guadalupe the health, safety, and environmental and economic welfare of Street, Austin, Texas. Written and oral comments presented at the state, using regulatory methods that will accomplish the ob­ the hearing will be considered. jectives of applicable rules while minimizing adverse impacts STATUTORY AUTHORITY. The sections are proposed un­ on small businesses." Therefore, an agency is not required to der the Insurance Code §§2210.008, 2210.052, 2210.053, consider alternatives that, while possibly minimizing adverse im­ 2210.071, 2210.072, 2210.073, 2210.074, 2210.151, 2210.152, pacts on small and micro businesses would not be protective of 2210.609, 2210.613, 2210.6135, and 36.001. Section the health, safety, and environmental and economic welfare of 2210.008(b) authorizes the Commissioner to adopt reasonable the state. and necessary rules in the manner prescribed in Subchapter A, As specified in §2210.001 of the Insurance Code, the Legisla­ Chapter 36, Insurance Code. The Insurance Code §2210.052(a) ture has determined that the provision of windstorm and hail in­ requires that a member company share in the losses and/or surance is necessary for the economic welfare of the state and expenses of the Association based on the proportion that the net its inhabitants; and that the lack of such insurance in the state’s direct premiums of that member during the preceding calendar seacoast territories would severely impede the orderly growth year bears to the aggregate net direct premiums by all members and development of the state. The Association was created by of the Association. Under the Insurance Code §2210.052(c), the Legislature and serves as a residual insurer of last resort a member company’s share of the losses and/or expenses of for windstorm and hail insurance coverage in the catastrophe the Association is required to be determined annually and in the area designated by the Commissioner under the Insurance Code manner provided by the plan of operation. In the determination §2210.005. The Insurance Code §2210.613 premium surcharge of a member company’s share of the losses and/or expenses of requirement and this proposal ensure that the Association has the Association, the Insurance Code §2210.052(d) specifies that access to class 2 public security funding to pay loss claims. members are entitled to a credit for insurance voluntarily written in the catastrophe areas. The Insurance Code §2210.052(d)

PROPOSED RULES July 30, 2010 35 TexReg 6621 also requires that the method for calculating the credit be con­ vides that the Association shall pay class 2 public securities tained in the plan of operation. Section 2210.052(e) provides issued under §2210.073 with premium surcharges and member an exemption from participation in any insured losses and op­ assessments as provided by §2210.613. Section 2210.6135 erating expenses of the Association in excess of premium and provides that the Association shall pay class 3 public securities other revenue of the Association until the second anniversary issued under Section §2210.074 as provided by §2210.6135 of the date on which the insurer first becomes a member of through member assessments. Section 36.001 provides that the Association for an insurer that becomes a member of the the Commissioner of Insurance may adopt any rules necessary association and that has not previously been a member of the and appropriate to implement the powers and duties of the Association. The Insurance Code §2210.053(b) encourages the Texas Department of Insurance under the Insurance Code and Department to develop a program designed to create incentives other laws of the state. for insurers to write voluntary windstorm and hail insurance CROSS REFERENCE TO STATUTE. The following statutes in the catastrophe areas. Section 2210.071(a) provides that are affected by this proposal: Insurance Code §§2210.052, if an occurrence or series of occurrences in a catastrophe 2210.071, 2210.072, 2210.073, 2210.074, 2210.151,2210.152, area results in insured losses and operating expenses of the 2210.608, 2210.609, 2210.613, and 2210.6135. Association in excess of premium and other revenue of the Association, the excess losses and operating expenses shall be §5.4161. Member Assessments. paid as provided by Subchapter B-1, Chapter 2210, Insurance (a) The Association shall determine if a member assessment Code. Section 2210.072(a) provides that losses not paid under is necessary to fund the Association’s outstanding class 2 and class 3 the Insurance Code §2210.071 shall be paid as provided by this public security obligations, including any required contractual cover­ section from the proceeds from class 1 public securities. Section age amount (required obligations) based upon the evaluation of infor­ 2210.072(b) authorizes class 1 public securities to be issued in mation that is provided to the Association by the Texas Public Finance a principal amount not to exceed $1 billion per year. Section Authority. 2210.072(c) requires class 1 public securities to be repaid in the manner prescribed by Subchapter M, Chapter 2210, Insurance (b) Pursuant to the Insurance Code, Chapter 2210 and the As­ Code, from Association premium revenue. Section 2210.073 sociation’s plan of operation, if the Association determines that a mem­ provides that losses not paid under Insurance Code §2210.072 ber assessment is required to fulfill the Association’s required obliga­ shall be paid as provided by this section from the proceeds from tions the Association shall assess the members of the Association in an class 2 public securities issued in accordancewithSubchapter amount the Association determines to be reasonable and necessary to M, Chapter 2210, Insurance Code. Section 2210.073(b) autho­ fully provide for the Association’s required obligations. rizes class 2 public securities to be issued in a principal amount (c) Sections 5.4161 - 5.4167 of this division are a part of the not to exceed $1 billion per year and requires class 2 public Texas Windstorm Insurance Association’s plan of operation and shall securities to be repaid in the manner prescribed by Subchapter control over any conflicting provision in §5.4001 of this subchapter M, Chapter 2210, Insurance Code. Section 2210.074(a) pro­ (relating to Plan of Operation). vides that losses not paid under Insurance Code §2210.072 and §2210.073 shall be paid as provided by this section from the §5.4162. Amount of Assessment. proceeds from class 3 public securities issued in accordance (a) The Association shall determine which members of the As­ with Subchapter M, Chapter 2210, Insurance Code. Section sociation shall participate in any assessment to provide for the Associa­ 2210.074(b) authorizes class 3 public securities to be issued tion’s required obligations as determined under §5.4161 of this division in a principal amount not to exceed $500 million per year and (relating to Member Assessments). requires class 3 public securities to be repaid in the manner (1) The Association may not include in the assessment an prescribed by Subchapter M, Chapter 2210, Insurance Code. insurer that became a member of the Association after September 1, Section 2210.151 authorizes the Commissioner to adopt the 2009, and had not previously been a member of the Association, until Association’s plan of operation to provide Texas windstorm and after the second anniversary of the date on which the insurer first be­ hail insurance coverage in the catastrophe area by rule. Section comes a member of the Association. The anniversary date shall be the 2210.152 provides that the Association’s plan of operation date the insurer is authorized by the department to engage in the busi­ provide for the efficient, economical, fair, and nondiscriminatory ness of property insurance in this state. administration of the Association and include both underwriting standards and other provisions considered necessary by the (2) The Association shall include in the assessment an in­ Department to implement the purposes of this chapter. The In­ surer described under paragraph (1) of this subsection after the second surance Code §2210.152(a)(2)(A) requires the plan of operation anniversary of the date on which the insurer first becomes a member of to include a plan for the equitable assessment of the members the Association without regard as to whether the catastrophic event that of the Association to defray losses and expenses. Section gave rise to the class of public securities occurred prior to the second 2210.609 provides that the Association shall repay all public anniversary of the date on which the insurer first became a member of security obligations from available funds, and if those funds are the Association. insufficient, revenue collected in accordance with the Insurance (b) This determination shall be computed on a calendar year Code §§2210.612, 2210.613, and 2210.6135. Section 2210.609 basis for the year in which the assessment is made. This determination further provides that the Association shall deposit all revenue shall not be based on the year in which the catastrophic event occurred, collected under §§2210.612, 2210.613, and 2210.6135 in the except for an assessment made during that year. Net direct premiums public security obligation revenue fund and further provide for shall be determined as provided under §5.4001 of this subchapter (re­ the payment of the public security obligations and the public se­ lating to Plan of Operation). curity administrative expenses by irrevocably pledging revenues received from premiums, premium surcharges, and amounts on (c) The designated members of the Association shall partici­ deposit in the public security obligation revenue fund, together pate in any assessment levied in the proportion that the net direct pre­ with any public security reserve fund. Section 2210.613 pro­ miums of such member written in this state during the preceding cal­ endar year bears to the aggregate net direct premiums written in this

35 TexReg 6622 July 30, 2010 Texas Register state by all members of the Association as furnished to the Association ber company in the manner provided in this section and shall notify by the department after review of annual statements, other reports, and each member company thereof, in writing, sent by certified mail. Such required statistics; provided, however, that if at the time of such assess­ notice shall state that such notification, and the content thereof, is an ment the department has not furnished to the Association information act, ruling, or decision of the Association insofar as the mathematical necessary to compute a member’s participation during the preceding determination of the percentage of participation is concerned and that calendar year, then each member’s participation shall be based upon the member company to whom such notice is given shall be entitled information furnished to the Association from the last calendar year in to appeal therefrom within 30 days from the date of such act, ruling, which such information is available and, upon obtaining the necessary or decision as shown on said notice in accordance with the Insurance information from the department, the Association shall reassess or re­ Code §2210.551. fund to each member such amounts as are necessary to properly reflect (f) To assist the Association in determining each member in­ such member’s participation; provided, further, that a member shall be surer’s percentage of participation as soon as possible in the calendar entitled to receive the following credit for insurance, similar to catas­ year, each member insurer shall furnish to the Association on or before trophe insurance, written in such catastrophe areas. March 1 of each year a copy of its Exhibit of Premiums and Losses (d) The Figure: 28 TAC §5.4162(d) graphically depicts the (Statutory Page 14) for the State of Texas that is filed annually with the Texas Windstorm Insurance Association Procedure For Calculating department as part of the insurer’s Texas Property and Casualty Annual Member Assessment Percentages Including Credit For Voluntary Statement. Writings. All premiums are for the most recent preceding calendar §5.4163. Notice of Assessment. year ending December 31, as furnished by the department. Column 1(a): Statewide net direct premiums for extended coverage and other (a) Notice of assessment shall be sent to each member, within allied lines. Column 1(b): Statewide net direct premiums for extended 30 days after the Association levies the assessment, by certified mail, coverage and other allied lines portion of the multiple peril line. return receipt requested, addressed to the office of such member as it ap­ Column 1(c): Statewide net direct premiums for homeowners and pears on the books of the Association. Such notice shall state the mem­ farm and ranch owners. Column 2: The sum of the statewide net direct ber’s allocated amount of assessment and shall inform each member of premiums at 90% of the extended coverage and other allied lines, and the sanctions imposed by §5.4165 of this division (relating to Failure 50% of the homeowners and farm and ranch owner’s, or such percent­ to Pay Assessment) for the failure to pay such assessment within the age as may be determined in accordance with §5.4001(a)(2)(N)(i)(III) time prescribed by this section. of this subchapter (90% of Column 1(a) plus 90% of Column 1(b) (b) Such notice shall also state that such notification, and the plus 50% of Column 1(c)). Column 3: Each company’s percentage of content thereof, is an act, ruling, or decision of the Association insofar the net direct premiums as described in Column 2, which is the basis as the amount of the assessment for such company is concerned and for indicating normal required participation in the Association prior to that a member company to whom such notice is given shall be entitled credits for voluntary writings in the designated areas. Column 4: Total to appeal therefrom within 30 days from the date of such act, ruling, windstorm and hail premiums in the designated areas (Association or decision as shown on said notice, in accordance with the Insurance premiums plus voluntary premiums). Column 5: Normal company Code §2210.551; provided, however, that the right of appeal provided quota of total windstorm and hail premiums (Column 3 x Column 4). for herein shall not include the subject matter of any act, ruling, or deci­ Column 6: Each company’s voluntary writings in the designated areas sion of the Association determining the amount of net direct premiums multiplied by the same percentages as shown in Column 2. Note: of such member company or the percentage of participation for such Maximum credit shall be limited to company’s normal quota. Column member company when notice of the amount of such net direct premi­ 7: Each company’s maximum possible allocation after applying ums or such percentage of participation has previously been given by credits for voluntary writings (Column 5 minus Column 6). Negative the Association in accordance with §5.4162 of this division (relating to allocation to be shown as zero. Column 8: Percentage participation Amount of Assessment). of each member company in the Association, prior to application of offset. Note: The offset figure measures the excess premiums devel­ (c) The time period for an appeal of an act, ruling, or decision oped by the maximum credit in Column 6. Column 9: Percentage of the Association respecting net direct premiums or percentage of par­ participation of each member company in the Association. ticipation is computed from the date of the act, ruling, or decision of Figure: 28 TAC §5.4162(d) the Association respecting same. (e) The department shall furnish to the Association the amount §5.4164. Payment of Assessment. of net direct premiums of each member company written on property Each member shall remit to the Association payment in full of its as­ in this state and the aggregate net direct premiums written on property sessed amount of any assessment levied by the Association within 30 in this state by all member companies during the preceding calendar days of receipt of notice of assessment. year as reported by member companies to the department. Within a reasonable time after the receipt of same from the department, the As­ §5.4165. Failure to Pay Assessment. sociation shall notify each member company, in writing, sent by certi­ (a) If the Association has not received payment in full of a fied mail, the amount of the net direct premiums written on property in member’s allocated amount of assessment within 40 days of notice of this state during the preceding calendar year by the member company the receipt by the member of the notice of assessment, then the Asso­ to whom notice is given, including the net direct premiums of simi­ ciation shall report to the commissioner the fact that such assessment lar insurance voluntarily written in the catastrophe areas, upon which has not been paid, and the commissioner shall immediately issue an such company’s percentage of participation will be determined. Such order suspending such member’s certificate of authority to transact the notice shall state that such notification, and the content thereof, is an business of insurance in the State of Texas until such time as the As­ act, ruling, or decision of the Association and that the member com­ sociation certifies to the commissioner that such assessment has been pany to whom such notice is given shall be entitled to appeal such act, paid in full. ruling, or decision within 30 days from the date shown on the notice in accordance with the Insurance Code §2210.551. Thereafter, the Asso­ (b) Removal of a member’s certificate of authority to transact ciation shall determine the percentage of participation for each mem­ business in the State of Texas by the commissioner shall in no way

PROPOSED RULES July 30, 2010 35 TexReg 6623 affect the right of the Association to proceed against such member in (3) a mutual insurance company or a statewide mutual as­ any court of law or equity in the United States for any remedy provided sessment company engaged in business under Chapter 12 or 13, Title by law or contract to the Association, including, but not limited to, the 78, Revised Statutes, respectively, before those chapters’ repeal by §18, right to collect such member’s assessment. Chapter 40, Acts of the 41st Legislature, 1st Called Session, 1929, as amended by Section 1, Chapter 60, General Laws, Acts of the 41st Leg­ (c) In addition to any other remedy provided herein, the Asso­ islature, 2nd Called Session, 1929, that retains the rights and privileges ciation may offset assessments due from a member against any amounts under the repealed law to the extent provided by those sections. in any account of such delinquent member. §5.4172. Premium Surcharge Definitions. §5.4166. Contest After Payment of Assessment. (a) A member does not waive any right it may have to contest The following words and terms when used in §§5.4171 - 5.4173 the computation of its allocated assessment amount by mailing or oth­ and 5.4181 - 5.4192 of this division (relating to Premium Surcharge erwise delivering payment of its allocated assessment amount to the Requirement, Premium Surcharge Definitions, Premiums to be Association, as provided herein. Surcharged, Allocation Method for Specified Lines of Insurance, Allocation Method for Other Lines of Insurance, Application of (b) Such contest shall not, however, toll the time within which the Surcharges, Premium Surcharges are Mandatory, Remittance of assessments must be paid or the report to be made to the commissioner Premium Surcharges, Offsets, Surcharges not Subject to Commissions or the action to be taken by the commissioner upon receipt of such or Premium Taxes, Determination of the Surcharge, Notification Re­ report, all as set out in §5.4165 of this division (relating to Failure to quirements, Annual Premium Surcharge Report, Premium Surcharge Pay Assessment). Reconciliation Report, and Data Collection, respectively) shall have §5.4167. Inability to Pay Assessment by Reason of Insolvency. the following meanings unless the context clearly indicates otherwise: In the event a member of the association is placed in temporary or per­ (1) Affiliated insurer--An insurer that is an affiliate, as de­ manent receivership under order of a court of competent jurisdiction scribed by the Insurance Code §823.003, of an insurer authorized to based upon a finding of insolvency, and such member has been desig­ engage in the business of property or casualty insurance in the State of nated an impaired insurer by the commissioner, and in the event it is Texas. Affiliated insurer includes an insurer not authorized to engage necessary to obtain additional funds to provide for operating expenses in the business of property or casualty insurance in the State of Texas. and losses in the year the insurer is declared impaired, the aggregate (2) Affiliated surplus lines insurer--An eligible surplus net amount not recovered from such insolvent insurer shall be reallo­ lines insurer that is an affiliate, as described by the Insurance Code cated among the remaining members of the association in accordance §823.003, of an insurer authorized to engage in the business of prop­ with the method of determining participation as determined in the plan erty or casualty insurance in the State of Texas. of operation. (3) Exposure--The basic unit of risk that is used by an in­ §5.4171. Premium Surcharge Requirement. surer to determine the insured’s premium. (a) Following a catastrophic event, insurers may be required (4) Insured property--Real property, or tangible or intangi­ to assess a premium surcharge under the Insurance Code §2210.613(b) ble personal property, including automobiles, covered under an insur­ and §2210.613(c) on all policyholders with property and casualty in­ ance policy issued by an insurer. surance policies that provide coverage on premises, operations, or in­ sured property located in a catastrophe area. This requirement applies (5) Insurer--Each property and casualty insurer authorized to admitted insurers, the Association, the Texas FAIR Plan Association, to engage in the business of property or casualty insurance in the State Texas Automobile Insurance Plan Association policies, affiliated sur­ of Texas and an affiliate of such an insurer, as described by the In­ plus lines insurers, and includes policies independently procured from surance Code §823.003, including an affiliate that is not authorized to affiliated insurers. engage in the business of property or casualty insurance in the State of Texas, the Association, and the Texas Fair Access to Insurance Re­ (b) Sections 5.4171 - 5.4173 and 5.4181 - 5.4192 of this quirements Plan Association. The term specifically includes a county division (relating to Premium Surcharge Requirement, Premium mutual insurance company, a Lloyd’s plan, and a reciprocal or interin­ Surcharge Definitions, Determination of the Surcharge, Premiums to surance exchange. be Surcharged, Allocation Method for Specified Lines of Insurance, Allocation Method for Other Lines of Insurance, Application of (6) Operations--A person’s interest in property, or activi­ the Surcharges, Premium Surcharges are Mandatory, Remittance of ties, that may result in, or give rise to, a loss that is insurable under Premium Surcharges, Offsets, Surcharges not Subject to Commissions a property or casualty insurance policy, including the use of a motor or Premium Taxes, Notification Requirements, Annual Premium Sur­ vehicle; ownership, lease, or occupancy of a residence or other real charge Report, Premium Surcharge Reconciliation Report, and Data property; and activities performed by a person in connection with the Collection, respectively) do not apply to policies written and reported manufacture, distribution, or sale of goods or services. A person is con­ under the following annual statement lines of business: federal flood; sidered to have operations in the catastrophe area if the person resides medical malpractice; group accident and health; all other accident and in or maintains a physical location in the catastrophe area, regardless health; workers’ compensation; and excess workers’ compensation. of whether that location is owned, leased, rented, or occupied by the person. (c) Sections 5.4181 - 5.4192 of this division do not apply to: (7) Premises--A physical location where a person resides, (1) a farm mutual insurance company operating under the or owns, leases, rents, or occupies real property, or has operations. Insurance Code Chapter 911; (8) Premium surcharge percentage--The percentage (2) a nonaffiliated county mutual fire insurance company amount determined by the commissioner under §5.4173 of this divi­ described by the Insurance Code §912.310 that is writing exclusively sion (relating to the Determination of the Surcharge). industrial fire insurance policies as described by the Insurance Code §912.310(a)(2); or §5.4173. Determination of the Surcharge.

35 TexReg 6624 July 30, 2010 Texas Register (a) The Association shall review information provided by the Losses (Statutory Page 14), Texas, nor subject to premium taxation by Texas Public Finance Authority (TPFA) concerning the amount of the the comptroller. class 2 public security obligations and estimated amount of the class §5.4182. Allocation Method for Specified Lines of Insurance. 2 public security administrative expenses, including any required con­ tractual coverage amount, to determine whether the Association has (a) The methods addressed in subsections (b) and (c) of this sufficient available funds to pay the public security obligations and section shall apply to all: public security administrative expenses, if any, including any contrac­ (1) policies written and reported under the following an­ tual coverage amount, or whether a premium surcharge under the In­ nual statement lines of business: fire; allied lines; multi-peril crop; far­ surance Code §2210.613 is required. The Association may consider mowners; homeowners; commercial multi-peril (property); commer­ all of the Association’s outstanding obligations and sources of funds to cial multi-peril (liability); private passenger liability, personal injury pay those obligations. protection (PIP), and physical damage; and commercial auto liability, (b) If the Association determines that it is necessary to collect PIP, and physical damage for policies where the premium is determined revenue specified in the Insurance Code §2210.613, the Association based on the geographic location of the exposures, or where the vehi­ shall submit a written request to the commissioner to approve a pre­ cles are principally garaged; mium surcharge on policyholders with premises, operations, or insured (2) personal and residential policies, including boat own­ property in the catastrophe area as authorized under the Insurance Code ers, personal liability, personal umbrella, and personal inland marine §2210.613. The Association’s request must specify: policies; and (1) the total amount of the class 2 public security obliga­ (3) personal and commercial risks assigned by the Texas tions and estimated amount of the class 2 public security administrative Automobile Insurance Plan Association (TAIPA) pursuant to the In­ expenses, including any required contractual coverage amount, pro­ surance Code Chapter 2151. vided in the TPFA notice; (b) If the policy is rated based on the geographic location of (2) the amount to be collected from insurers through a the insured’s premises, operations, or insured property, the premium member assessment, which may not exceed 30 percent of the amount surcharge shall be determined by applying the premium surcharge per­ specified in the TPFA notice; centage to the policy premium determined in §5.4181 of this division (3) the amount to be collected from catastrophe area poli­ (relating to Premiums to be Surcharged), attributable to premises, op­ cyholders through premium surcharges, which may not exceed 70 per­ erations, or insured property located in the catastrophe area. cent of the amount specified in the TPFA notice; and (c) In cases where the policy is not rated based on the geo­ (4) the date upon which the premium surcharge is to com­ graphic location of the insured’s premises, operations, or insured prop­ mence and the date the premium surcharge for the noticed amount is to erty, the insurer shall allocate premium to the catastrophe area based end. on the proportion the exposure in the catastrophe area bears to the total exposure on the policy. The premium surcharge percentage shall apply (c) On approval by the commissioner each insurer shall assess to that portion of the policy premium allocated to the catastrophe area. a premium surcharge in a percentage amount set by the commissioner to the insurer’s policyholders. The premium surcharge percentage shall §5.4183. Allocation Method for Other Lines of Insurance. be applied to the premium attributable to premises, operations, and in­ (a) For lines of insurance not specified in §5.4182 of this divi­ sured property located in the catastrophe area on policies that become sion (relating to Allocation Method for Specified Lines of Insurance) effective, or on multi-year policies that become effective or have an the insurer must determine if the insured has: anniversary date, during the premium surcharge period when the pre­ (1) no premises, operations, or insured property in the mium surcharge percentage will be in effect, as specified in §§5.4181 catastrophe area and is thus not subject to premium surcharge; - 5.4188 of this division (relating to Premiums to be Surcharged, Al­ location Method for Specified Lines of Insurance, Allocation Method (2) all premises, operations, or insured property in the for Other Lines of Insurance, Application of the Surcharges, Premium catastrophe area; or Surcharges are Mandatory, Remittance of Premium Surcharges, Off­ (3) premises, operations, or insured property located both sets, and Surcharges not Subject to Commissions or Premium Taxes, in and outside of the catastrophe area. respectively). (b) For policies only covering premises, operations, or insured (d) This section is part of the Texas Windstorm Insurance As­ property within the catastrophe area, the premium surcharge amount is sociation’s plan of operation and shall control over any conflicting pro­ determined by applying the premium surcharge percentage to the pol­ vision in §5.4001 of this subchapter (relating to Plan of Operation). icy premium described in §5.4181 of this division (relating to Premi­ §5.4181. Premiums to be Surcharged. ums to be Surcharged). (a) The premium surcharge percentage shall be applied to: (c) For policies covering premises, operations, or insured property located both in and outside of the catastrophe area, where, as (1) amounts reported as premium for the purposes of re­ part of its normal underwriting, rating, or data collection processes, porting under the Annual Statement, Exhibit of Premiums and Losses the insurer has sufficient information to determine the premium or (Statutory Page 14), Texas; and exposure for each location, or can otherwise reasonably allocate (2) if not reported as described in paragraph (1) of this sub­ premium to the catastrophe area, the insurer shall use the direct section, those additional amounts collected that are subject to premium allocation methods set forth in §5.4182 of this division, and determine taxation by the comptroller, including policy fees not reported as pre­ the premium surcharge amount by applying the premium surcharge mium, surplus lines premium taxes, and independently procured pre­ percentage to the premium attributable or allocated to the catastrophe mium tax. area. (b) Premium surcharges do not apply to fees that are neither (d) For policies covering premises, operations, or insured reported as premium in the Annual Statement, Exhibit of Premiums and property located both in and outside of the catastrophe area, where, as

PROPOSED RULES July 30, 2010 35 TexReg 6625 part of its normal underwriting, rating, or data collection processes, (e) For the purposes of this section, for determining and apply­ the insurer does not have premium or exposure data by location, ing the default allocation percentage applicable, the anniversary date of or cannot otherwise reasonably allocate premium to the catastrophe a multi-year policy shall be considered to be an effective date. area, insurers shall determine the premium surcharge by applying the §5.4184. Application of the Surcharges. premium surcharge percentage and the allocation percentage to the premium determined under §5.4181 of this division. The allocation (a) When assessed under the Insurance Code §2210.613, the percentage shall be determined as follows: premium surcharges shall apply to all policies with premises, opera­ tions, or insured property in the catastrophe area that are issued or re­ (1) Initial phase. For policies subject to a premium sur­ newed with effective dates in the assessment period specified in the charge percentage that have an effective date in the first year the com­ commissioner’s order, with two exceptions: missioner orders a premium surcharge following the effective date of these rules, and that cover both catastrophe area and non-catastrophe (1) insurers shall not surcharge policies, and are not respon­ area premises, operations, or insured property, insurers shall use a de­ sible for collecting premium surcharges on policies, that did not go into fault allocation percentage of 15 percent of the premium to determine effect or were cancelled as of the inception date of the policy; and the premium attributable to the catastrophe area. (2) for multi-year policies, the premium surcharge in effect (2) Subsequent phases. The default allocation percentage on the effective date of the policy, or the anniversary date of the policy, shall be increased by three percentage points each year for the five years shall be applied to the 12-month premium for the applicable policy following the year a surcharge is first ordered by the commissioner until period. the default allocation percentage equals 30 percent. (b) Premium surcharges are non-refundable under the Insur­ (3) Subsequent percentages. The default allocation per­ ance Code §2210.613. If the policy is cancelled, a pro-rata portion of centage for policies subject to a surcharge percentage that are first ef­ the surcharge is not returned to the policyholder. fective after the calendar year a surcharge first becomes effective shall (c) A mid-term policy change consists of all transactions on a be as follows: policy occurring within a seven day period that result in a change in (A) all policies subject to a surcharge percentage first the premium. effective in the second year, 18 percent; (d) If a mid-term policy change increases the premium on the (B) all policies subject to a surcharge percentage first policy, insureds must pay an additional surcharge for the increased pre­ effective in the third year, 21 percent; mium attributable to premises, operations, or insured property in the catastrophe area which shall be determined as follows: (C) all policies subject to a surcharge percentage first effective in the fourth year, 24 percent; (1) For policies where the premium surcharge is de­ termined under §5.4182 or §5.4183(b) of this division (relating to (D) all policies subject to a surcharge percentage first Allocation Method for Specified Lines of Insurance and Allocation effective in the fifth year, 27 percent; and Method for Other Lines of Insurance) where all premises, operations, (E) all policies subject to a surcharge percentage first or insured property are located within the catastrophe area, the addi­ effective in the sixth year and thereafter, 30 percent. tional premium surcharge is determined by applying the applicable premium surcharge percentage to that portion of the additional pre­ (4) Use of Other Allocation Percentages. mium attributable to premises, operations or insured property located (A) The insurer shall provide the insured or applicant in the catastrophe area. a period of not less than 30 days after receiving a notice required un­ (2) For policies where the premium surcharge is deter­ der §5.4189 of this division (relating to Notification Requirements) in mined under §5.4182 or §5.4183(c) of this division and covering which to provide additional information to the insurer indicating that premises, operations, or insured property located both in and outside of the insured’s actual percentage of catastrophe area exposure is less than the catastrophe area, the additional premium surcharge is determined the default allocation percentage. by applying the premium surcharge percentage to that portion of the (B) Insurers are not required to audit the additional in­ additional premium attributable to premises, operations, or insured formation provided by the insured pursuant to subparagraph (A) of this property within the catastrophe area. paragraph; however, insurers shall review the information provided to (3) For policies where the premium surcharge is deter­ determine if the information is reasonably consistent with other infor­ mined under §5.4183(d) of this division, the additional premium mation the insurer has in its files and records used for underwriting or surcharge is determined by applying the premium surcharge percent­ rating, if the insurer collects such comparable information as part of its age and the default allocation percentage, or the allocation percentage normal underwriting or rating processes. if a different percentage is used pursuant to §5.4183(d)(3) of this (C) Within 20 days of the date the insurer receives in­ division, to the additional premium. formation submitted pursuant to subparagraph (A) of this paragraph, (e) If a mid-term policy change decreases the premium, there the insurer shall either: shall be no corresponding decrease in the surcharge or refund of the (i) recalculate the insured’s or applicant’s premium surcharge. surcharge to reflect the allocation percentage supported by the infor­ (f) Surcharges or refunds shall apply to all premium changes mation provided by the insured, and refund to the insured any excess due to exposure or premium audits, retrospective rating adjustments, surcharge paid, and such revised premium surcharge shall be effective or other similar adjustments that occur after policy expiration. Upon as of the inception date of the policy; or policy inception, the premium surcharge shall be collected on the de­ (ii) provide the insured with a written statement in­ posit premium paid. If after exposure or premium audit, retrospective dicating the reasons why the additional information provided by the rating adjustment, or similar adjustment after policy expiration, an ad­ insured does not reasonably support a lesser allocation percentage. ditional premium is required, an additional surcharge shall be paid. If after exposure or premium audit, retrospective rating adjustment, or

35 TexReg 6626 July 30, 2010 Texas Register other similar adjustment after policy expiration, the deposit premium cedures established by the Association relating to premium surcharge exceeds the actual premium, the excess surcharge shall be refunded to remissions from surplus lines agents. the insured, and the insurer may credit any refund paid to the Associ­ (b) Insurers, or surplus lines agents allowed by affiliated sur­ ation through the offset process described in §5.4187 of this division plus lines insurers to remit surcharges pursuant to subsection (a) of this (relating to Offsets). Additional surcharges and refunds shall be deter­ section, shall remit all surcharges paid by its insureds not later than the mined as follows: fifteenth day of the month following the month in which the surcharge (1) For policies where the premium surcharge is de­ was received. termined under §5.4182 or §5.4183(b) of this division, where all (c) Insurers and agents may not allow, or require, policyhold­ premises, operations, or insured property are located within the ers to make separate payments for the surcharge amounts which are catastrophe area, the additional premium surcharge (or refund) is payable to the Association. determined by applying the premium surcharge percentage in effect on the inception date of the policy, or the anniversary date of the policy (d) Subsection (b) of this section applies to all insurers regard­ in the case of multi-year policies, to the additional premium (or return less of whether the insured paid the premium surcharge through an premium). agent of the insurer or the insured paid the premium surcharge directly to the insurer. (2) For policies where the premium surcharge is deter­ mined under §5.4182 or §5.4183(c) of this division, and covering (e) An affiliated surplus lines insurer who allows an agent to premises, operations, or insured property located both in and outside remit premium surcharges to the Association pursuant to subsection (a) of the catastrophe area, the additional premium surcharge (or refund) of this section may be held liable by the department for the failure of is determined by applying the premium surcharge percentage in effect its agent to remit the premium surcharges or timely remit the premium on the inception date of the policy, or the anniversary date in the case surcharges, pursuant to subsection (b) of this section. of multi-year policies, to that portion of the additional premium (or §5.4187. Offsets. return premium) attributable to the catastrophe area. (a) An insurer may credit a premium surcharge amount on its (3) For policies where the premium surcharge is deter­ next remission to the Association if the insurer has already remitted the mined under §5.4183(d) of this division, the additional premium amount to the Association for: surcharge (or refund) is determined by applying the premium sur­ charge percentage in effect on the inception date of the policy, or the (1) the portion of the surcharge the insurer was not able to anniversary date in the case of multi-year policies, and the default collect from the insured prior to the collection of any funds for premium allocation percentage, or the allocation percentage if a different or any other obligation or debt owed to the insurer; percentage is used pursuant to §5.4183(d)(4) of this division, to the (2) the portion of a surcharge paid to the Association in additional premium (or return premium). excess of a deposit premium as described in §5.4184 of this division (g) Notwithstanding whether a surcharge was in effect on the (relating to Application of the Surcharges); inception date of the policy, or the anniversary date in the case of (3) the portion of a surcharge paid to the Association in ex­ multi-year policies, no additional premium surcharges or refunds shall cess of a surcharge where the insurer granted the insured a lesser sur­ apply to premium changes resulting from exposure or premium audits, charge pursuant to §5.4183(d)(4) of this division (relating to Allocation retrospective rating adjustments, or other similar adjustments that oc­ Method for Other Lines of Insurance). cur when there is no premium surcharge in effect. (b) An agent may not offset payment of a premium surcharge §5.4185. Premium Surcharges are Mandatory. to the insurer for any reason. However, a surplus lines agent allowed by an affiliated surplus lines insurer to remit surcharges to the Association (a) Insurers may not pay the surcharges in lieu of surcharging on its behalf under §5.4186(a) of this division (relating to Remittance their policyholders; however, an insurer may remit a surcharge prior to of Premium Surcharges), may offset as provided in this section. collecting the surcharge from its policyholder. §5.4188. Surcharges not Subject to Commissions or Premium Taxes. (b) Insurers shall apply any money received from the insured (a) As provided by the Insurance Code §2210.613(d), pre­ to the premium surcharge prior to applying the funds to premium or mium surcharges are not subject to either premium taxes or agents’ any other obligation or debt owed to the insurer. commissions. (1) Premium surcharges may not be allocated pro-rata or (b) Insurers may not increase the premium surcharges for otherwise mixed with premium over installment plan payments. All premium taxes or commissions, and agents, including a surplus money received under an installment plan shall be applied first to the lines agent, may not collect or charge commissions for the premium premium surcharge prior to applying the money to premium or any surcharges. other obligation or debt owed to the insurer. §5.4189. Notification Requirements. (2) Premium surcharges may not be refunded to a premium finance company. (a) Insurers shall provide written notice to policyholders re­ ceiving a premium surcharge that their policy contains a surcharge. (c) Pursuant to the Insurance Code §2210.613(d), the failure The notice shall read: "Your policy is subject to a non-refundable pre­ of a policyholder to pay the premium surcharge constitutes failure to mium surcharge. Your surcharge was determined pursuant to 28 TAC pay premium for the purposes of policy cancellation. §§5.4171 - 5.4173 and 5.4181 - 5.4192 and is authorized by Insurance §5.4186. Remittance of Premium Surcharges. Code §2210.073 and §2210.613. Your surcharge will be used by the Texas Windstorm Insurance Association to pay the debt service for (a) Insurers shall remit to the Association the aggregate public securities that were issued to pay catastrophe insurance claims of amount of surcharges paid by its policyholders; however, an affiliated the Association. Insurance Code §2210.613(d) provides that the failure surplus lines insurer may allow a surplus lines agent to remit premium to pay the surcharge constitutes failure to pay premium for the purposes surcharges to the Association on its behalf in accordance with any pro­ of policy cancellation."

PROPOSED RULES July 30, 2010 35 TexReg 6627 (b) Insurers shall provide written notice to applicants and pol­ (b) No later than 60 days following the end of a calendar year icyholders of the dollar amount of the premium surcharge. in which a premium surcharge was in effect, each insurer shall provide the Association with an annual premium surcharge report for the cal­ (c) In addition to the notices required in subsections (a) and (b) endar year. However, an annual premium surcharge report for a given of this section, insurers that determine the premium surcharge in accor­ year is not required if premium surcharges were in effect for less than dance with §5.4183(d) of this division (relating to Allocation Method 45 days within the calendar year. for Other Lines of Insurance) shall provide each applicant or policy­ holder with the following additional information: (c) Annual premium surcharge reports shall provide informa­ tion for each insurance company writing property or casualty insur­ (1) the allocation percentage used to determine the pre­ ance in the State of Texas, including affiliated surplus lines insurers, mium surcharge; and affiliated insurers not authorized to engage in the business of in­ (2) that the allocation percentage represents the percentage surance that issued independently procured insurance policies covering of the insured’s exposure assigned to coverage within the catastrophe premises, operations, or insured property in the State of Texas. area; (d) Annual premium surcharge reports shall provide informa­ (3) a description of the catastrophe area; tion for each annual statement line of business for which the insurer reported premium for the applicable calendar year. (4) that, within 30 days of receipt of the notice, the appli­ cant or policyholder may provide additional information to the insurer, (e) Annual premium surcharge reports shall provide the fol­ as provided in §5.4183(d)(4) of this division, that the percentage of the lowing information: insured’s exposure within the catastrophe area is less than the alloca­ (1) the name and contact information of the individual re­ tion percentage used; sponsible for submitting the report; (5) a description of the information the insured would need (2) the five-digit NAIC number of the insurance company; to provide; and (3) the name of the insurance company; (6) that upon receiving such information, the insurer will, within 20 days of the receipt of the information, either recalculate the (4) for policies with effective dates, or multi-year policies premium surcharge accordingly, or provide the insured with a written with anniversary dates, within the calendar year, separately for each explanation as to why the information provided did not support a lesser surcharge period in effect during the calendar year, and within each allocation percentage. surcharge period in effect during the calendar year separately by the applicable line or lines of business, as shown in the Annual Statement, (d) Notices required under subsections (a) and (b) of this sec­ Exhibit of Premium and Losses (Statutory Page 14), Texas: tion shall: (A) For policies where the premium surcharge was de­ (1) be provided at the time the policy is quoted, in the case termined under §§5.4182, 5.4183(b), or (c) of this division (relating of new business; to Allocation Method for Specified Lines of Insurance and Allocation (2) be provided with the renewal notice, in the case of re­ Method for Other Lines of Insurance): newal business; (i) the total written premium allocated to premises, (3) be provided within 10 days of the end of the transac­ operations, or insured property in the catastrophe area; and tion period as specified in §5.4184(c) of this division (relating to Ap­ (ii) the total written premium allocated to premises, plication of the Surcharges) for any mid-term change in the premium operations, or insured property outside the catastrophe area; surcharge; and (B) For policies where the premium surcharge was de­ (4) use at least 12 point font and either be contained on a termined under §5.4183(d) of this division and the default allocation separate page or shown in a conspicuous location on the declarations percentage was used to calculate the premium surcharge: page. (i) the total written premium allocated to premises, (e) Notices required under subsection (c) of this section: operations, or insured property in the catastrophe area; and (1) shall be provided at the time the policy is quoted, in the (ii) the total written premium allocated to premises, case of new business; operations, or insured property outside the catastrophe area; (2) shall be provided with the renewal notice, in the case of (C) For policies where the premium surcharge was de­ renewal business; termined under §5.4183(d) of this division and an allocation percentage (3) shall be provided within 10 days of the end of the trans­ other than the default allocation percentage was used to calculate the action period as specified in §5.4184(c) of this division for any mid­ premium surcharge: term change in the premium surcharge; (i) the total written premium allocated to premises, (4) shall be contained on separate page; and operations, or insured property in the catastrophe area; and (5) may be combined with notices required under subsec­ (ii) the total written premium allocated to premises, tions (a) and (b) of this section. operations, or insured property outside the catastrophe area; and §5.4190. Annual Premium Surcharge Report. (D) the total written premium for policies not subject to a premium surcharge because the insured had no premises, operations, (a) This section does not apply to an insurer that, during the or insured property in the catastrophe area; calendar year, exclusively wrote any or all of the following lines of insurance: federal flood insurance; medical malpractice insurance; ac­ (5) for policies effective in portions of the calendar year cident and health insurance; or workers’ compensation insurance. when no surcharge period was in effect, or in the case of multi-year

35 TexReg 6628 July 30, 2010 Texas Register policies with an anniversary date in portions of the calendar year when (A) premium increases subject to a premium surcharge, no surcharge was in effect, the total written premium separately by the including premium allocated to the catastrophe area on policies having applicable line or lines of business, as shown in the Annual Statement, premises, operations, or insured property both in and outside of the Exhibit of Premiums and Losses (Statutory Page 14), Texas; catastrophe area; and (6) the total amount of premium surcharges collected dur­ (B) premium not subject to a premium surcharge, in­ ing the applicable calendar year; and cluding premium increases not allocated to the catastrophe area on poli­ cies having premises, operations, or insured property both in and out­ (7) the total amount of premium surcharges remitted to the side of the catastrophe area and premium refunds, whether related to Association during the applicable calendar year. coverage within or without the catastrophe area; and (f) The Association shall: (3) total premium due to post-term premium changes oc­ (1) review the reports submitted under this section as nec­ curring within the specified time period, including adjustments due to essary to determine: premium or exposure audits, retrospective rating adjustments, or other similar adjustments that occur after policy expiration, separately for: (A) the consistency of premium surcharges actually re­ mitted to the Association with premium surcharges shown in the reports (A) premium subject to a premium surcharge, including as collected and the premium surcharges shown in the reports as remit­ premium allocated to the catastrophe area on policies having premises, ted to the Association; and operations, or insured property both in and outside of the catastrophe area; and (B) the consistency of premiums shown in the reports as attributable to the catastrophe area with premium surcharges shown in (B) premium not subject to a premium surcharge, in­ the reports as collected by the insurer, given the requirements regarding cluding premium not allocated to the catastrophe area on policies hav­ the determination of premium surcharges in this division; ing premises, operations, or insured property both in and outside of the catastrophe area; and (2) inform the department of any insurer the Association believes may not be in compliance with the rules established under this (4) separately for paragraphs (1)(A), (2)(A), and (3)(A) of division; and this subsection, the amounts of premium surcharges collected; and (3) before July 1 on each year reports are required to be (5) the total amount of written premium for policies writ­ submitted to the Association, provide an aggregate summary of the re­ ten in the State of Texas as reported in the Annual Statement, Exhibit ports to the department. of Premiums and Losses (Statutory Page 14), Texas, for each of the ap­ plicable lines of insurance. §5.4191. Premium Surcharge Reconciliation Report. (e) Nothing in this section limits the department’s authority to (a) This section does not apply to an insurer that, during an obtain information from insurers under the Insurance Code. applicable calendar year, exclusively wrote any or all of the following lines of insurance: federal flood insurance; medical malpractice insur­ (f) A report provided to the department under this section may ance; accident and health insurance; or workers’ compensation insur­ be provided to the Association. ance. §5.4192. Data Collection. (b) Upon the written request of the department, an insurer shall (a) The department may request from each insurer the infor­ provide the department with a premium surcharge reconciliation report mation necessary to enable the department to determine the premium for the year specified by the Association or the department in its request. surcharge percentage applicable to insureds with premises, operations, or insured property located in the catastrophe area. (c) Reconciliation reports shall be provided to the department within 10 working days after the date the request is received by the (b) For policies with effective dates on or after October 1, insurer. 2010, each insurer shall maintain sufficient records to report the fol­ lowing information to the department: (d) Reconciliation reports shall consist of the following infor­ mation concerning premiums written and surcharges collected, sepa­ (1) for policies where the premium surcharge was, or rately for each line of business and applicable surcharge period, in­ would be determined under §§5.4182, 5.4183(b), or (c) of this division cluding periods in which no premium surcharges were in effect, within (relating to Allocation Method for Specified Lines of Insurance and the specified year: Allocation Method for Other Lines of Insurance), the total written premium attributable to the catastrophe area for policies with premises, (1) premium written at policy issuance for policies effec­ operations, or insured property located in the catastrophe area; tive within the year, including anniversary dates within the year on multi-year policies, separately for: (2) for policies where the premium surcharge was, or would be determined under §5.4183(d) of this division and the default (A) premium subject to a premium surcharge, including allocation percentage was, or would be applied in order to determine premium allocated to the catastrophe area on policies having premises, the premium surcharge, the total written premium for policies with any operations, or insured property both in and outside of the catastrophe premises, operations, or insured property located in the catastrophe area; and area; and (B) premium not subject to a premium surcharge, in­ (3) for policies where the premium surcharge was deter­ cluding premium not allocated to the catastrophe area on policies hav­ mined under §5.4183(d) of this division and an allocation percentage ing premises, operations, or insured property both in and outside of the other than the default allocation percentage was used to determine the catastrophe area; and premium surcharge, the total premium allocated to the catastrophe area (2) premium written due to mid-term coverage changes oc­ based on the allocation percentage used to determine the premium sur­ curring within the specified time period separately for: charge.

PROPOSED RULES July 30, 2010 35 TexReg 6629 (c) For periods of time when no surcharge is in effect, insurers no significant anticipated economic cost to individuals who are may report all premium for policies where a premium surcharge would required to comply with the proposed rule. be determined under §5.4183(d) of this division as premium for poli­ Comments on the amendment may be submitted to Deborah cies where the default allocation percentage would be applied. Cartwright, Director, Property Tax Assistance Division, P.O. Box (d) When possible, and practical, the department will obtain 13528, Austin, Texas 78711-3528. information from the Texas Surplus Lines Stamping Office prior to re­ This amendment is proposed pursuant to Government Code, questing information from affiliated surplus lines insurers. §2001.039(c), which authorizes the readoption of a rule with (e) Nothing in subsection (d) of this section should be read to amendments upon agency assessment, in conducting a rule re­ mean that subsections (a) - (c) of this section do not apply to affiliated view, of whether the reasons for initially adopting the rule con­ surplus lines insurers. tinuetoexist. (f) Nothing in this section limits the department’s authority to This amendment implements Tax Code, §11.252 and §11.43. obtain information from insurers under the Insurance Code. §9.419. Procedures for Determining Property Tax Exemption for Mo- This agency hereby certifies that the proposal has been reviewed tor Vehicles Leased for Personal Use. by legal counsel and found to be within the agency’s legal author­ (a) Effective Date. This section is effective for motor vehicles ity to adopt. that are leased on or after January 2, 2001. Filedwiththe Office of the Secretary of State on July 19, 2010. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context TRD-201003956 clearly indicates otherwise. Gene C. Jarmon General Counsel and Chief Clerk (1) Lease--An agreement whereby an owner of a motor ve­ Texas Department of Insurance hicle for consideration gives exclusive use of a motor vehicle to another for a period that is longer than 180 days. Earliest possible date of adoption: August 29, 2010 For further information, please call: (512) 463-6327 (2) Lessee--A person who enters into a lease for a specific motor vehicle primarily for the personal use of the lessee or the lessee’s ♦ ♦ ♦ family. TITLE 34. PUBLIC FINANCE (3) Lessor--A person who owns a motor vehicle that is leased to another person. PART 1. COMPTROLLER OF PUBLIC (4) Lessee’s Affidavit--A sworn statement that a lessee ex­ ACCOUNTS ecutes to attest that the lessee does not hold the leased motor vehicle for the production of income and does not primarily use the leased motor CHAPTER 9. PROPERTY TAX ADMINISTRA­ vehicle for the production of income. TION (5) Motor vehicle--A passenger car or truck with a shipping SUBCHAPTER C. APPRAISAL DISTRICT weight of 9,000 pounds or less. ADMINISTRATION (6) Reasonable date and/or time--A work weekday, Mon­ day through Friday, and a time that is after 8:00 a.m. and before 5:00 34 TAC §9.419 p.m., unless the appraisal district and the lessor agree otherwise. The Comptroller of Public Accounts proposes an amendment to (c) The comptroller will make available model forms that are §9.419, concerning procedures for determining property tax ex­ adopted by reference in paragraph (1) of this subsection. Copies of the emption for motor vehicles leased for personal use. This section forms can [form are available for inspection at the office of the Texas is being amended to increase administrative efficiency by pro­ Register or may] be obtained from the Comptroller of Public Accounts’ viding for comptroller revision of applicable forms that are not Property Tax Assistance Division [Accounts, P.O. Box 13528, Austin, required to be adopted by rule, to improve general readability, Texas 78711. Copies may also be requested by calling our toll-free and to delete unnecessary language regarding appraisal review number, 1-800-252-9121. In Austin, call (512) 305-9999]. boards. The proposed amendment is a result of a rule review (1) The comptroller adopts by reference the following of Texas Administrative Code, Title 34, Part 1, Chapter 9, Sub­ model forms: chapter C, conducted by the comptroller. The rule review was performed pursuant to Government Code, §2001.039 and re­ (A) Lessee’s Affidavit of Primarily Non Income Pro­ sulted in a determination that the reasons for initially adopting ducing Vehicle Use (Form 50-285); and §9.419 continue to exist. [(B) Lessor’s Application for Personal Use Lease Au­ John Heleman, Chief Revenue Estimator, has determined that tomobile Exemptions (Form 50-286); and] for the first five-year period the rule will be in effect, there will (B) [(C)] Lessor’s Rendition or Property Report for be no significant revenue impact on the state or units of local Leased Automobiles (Form 50-288). government. (2) A chiefappraiserorlessormust use the comptroller’s Mr. Heleman also has determined that for each year of the first [comptroller] model forms that are adopted by reference in paragraph five years the rule is in effect, the public benefit anticipated as a (1) of this subsection, unless the non-model form: result of enforcing the rule will be by improving the administration of local property valuation and taxation. The proposed amend­ (A) [for Lessee’s Affidavit of Primarily Non Income ment would have no fiscal impact on small businesses. There is Producing Vehicle Use, for Lessor’s Application for Personal Use

35 TexReg 6630 July 30, 2010 Texas Register Lease Automobile Exemptions, and Lessor’s Rendition or Property (C) The lessor shall provide the chief appraiser with Report for Leased Automobiles] substantially complies with the corre­ reasonable accommodations to inspect and copy any of the lessees’ sponding model form [Form 50-285, Form 50-286, and Form 50-288] affidavits, or shall permit the chief appraiser to take the affidavits off by using the same language in the same sequence as the model form; premises for a period of no less than 48 hours to inspect and copy. (B) is an electronic version of a comptroller’s [comp­ (D) The lessor may provide electronic images of the troller] model form and preserves the same language in the same se­ lessees’ affidavits, unless the chief appraiser does not have equipment quence as the comptroller’s [comptroller] model form; or to receive or read electronic images. If the image is not sufficiently clear to distinguish the characteristics of a lessee’s handwriting and to (C) has been approved by the comptroller in writing be­ see the notarized signature and any other relevant details, the chief ap­ fore the form is used. praiser may request to inspect an original lessee’s affidavit. (3) After a lessee’s affidavit is signed by a lessee and prop­ (E) Ifthelessorislocated morethan 150 miles from the erly notarized, a lessor may make an electronic image of the lessee’s appraisal district’s office, then the chief appraiser may submit a written affidavit and may produce the electronic image of the affidavit to the request that the lessor either copy and mail the identified lessees’ affi­ chief appraiser when an inspection is requested, subject to the condi­ davits or send the original affidavits to the chief appraiser for at least tion of subsection (e)(1)(D) of this section. 14 days for inspection and copying. The chief appraiser and the lessor (4) Subject to the limitations that are provided in paragraph may determine who should bear the costs of copying and mailing. (2) of this subsection, if a chief appraiser uses a form other than the one (2) A chief appraiser should first attempt to obtain infor­ that the comptroller has adopted, then the chief appraiser must make mation from the lessor. If the lessor does not provide the requested the form available to the lessor. A chief appraiser may not mandate the information within the specified time period, then the chief appraiser use of his form in lieu of the comptroller’s [comptroller] model form may contact the lessee directly. and may not deny a lessor’s claim for exemption based solely on the lessor’s failure to use the chief appraiser’s form. (f) A properly executed Lessee’s Affidavit of Primarily Non Income Producing Vehicle Use (Form 50-285) is prima facie evidence (5) No provision in this section should be construed as lim­ that the motor vehicle is not held for the production of income and is iting the chief appraiser’s authority to enter into an agreement for elec­ used primarily for non-income producing activities. tronic exchange of information covered by this section in a format agreed to by the chief appraiser and the lessor. [(1)] A chief appraiser shall also consider the following ev­ idence of primarily non-income producing use: (d) A lessor satisfies the requirements of Tax Code, §11.252, for exemption of leased motorvehiclesifthe lessor: (1) [(A)]anaffidavit by the lessee’s spouse or other credi­ ble person who has information about the use of the leased motor ve­ (1) properly completes and timely files with the chief ap­ hicle and mileage records; and praiser the Lessor’s Rendition or Property Report for Leased Automo­ biles (Form 50-288); (2) [(B)] a statement by the lessee’s employer that the mo­ tor vehicle was not used or required to be used in the lessee’s employ­ (2) properly completes and timely files with the chief ap­ ment. praiser the comptroller-prescribed model application form (Lessor’s Application for Personal Use Lease Automobile Exemptions) [(Form [(2) Since the rulemaking authority that is given the comp­ 50-286)]; troller does not extend to the Appraisal Review Board, this subsection does not apply to proceedings or decisions of the Appraisal Review (3) receives Lessee’s Affidavit of Primarily Non Income Board.] Producing Vehicle Use (Form 50-285) that the lessee executed on or before the date on which the required forms that are enumerated in (g) If a chief appraiser has reason to question, in whole or in paragraphs (1) and (2) of this subsection have been filed; and part, the validity of the lessor’s application for exemption, then the chief appraiser may investigate and shall notify the lessor of the chief (4) maintains each Lessee’s Affidavit of Primarily Non In­ appraiser’s intent to investigate. The notice that is required by this rule come Producing Vehicle Use (Form 50-285) that pertains to each leased shall: motor vehicle for which the lessor seeks an exemption.[;] (1) identify the motor vehicle that the chief appraiser ques­ (e) A chief appraiser may inspect and/or obtain copies of tions as qualifying for the exemption; lessees’ affidavits that the lessor maintains. (2) state separately the reason for questioning the claimed (1) Unless agreed to otherwise, a lessor and a chief ap­ exemption or lessee’s affidavit; praiser shall use the following procedures when the chief appraiser pro­ poses to inspect lessees’ affidavits on leased motor vehicles for which (3) specify the additional information that the chief ap­ the lessor seeks an exemption. praiser seeks; and (A) No less than 10 days prior to the inspection, the (4) state the due date upon which the requested information chief appraiser shall provide the lessor with notice of the chief ap­ must be delivered. praiser’s intention to inspect the lessees’ affidavits in the lessor’s pos­ (h) If a chief appraiser determines that some of the motor ve­ session or control. The notice must state a reasonable date and time hicles that the lessor claims in the application for exemption do not when the chief appraiser proposes to inspect the lessees’ affidavits and qualify for exemption, then the chief appraiser may modify the exemp­ shall identify the affidavits that will be subject to inspection. tion by disallowing the amount of value that the non-exempt leased (B) If the proposed date or time is not convenient, then motor vehicles represent, but shall grant the exemption on the remain­ the lessor may propose an alternate reasonable date or time by notifying ing value of the leased motor vehicles. Any notice of modification or the chief appraiser in writing. denial of the claimed exemption shall be made in accordance with the notice requirements of Tax Code, §11.43 and §11.45.

PROPOSED RULES July 30, 2010 35 TexReg 6631 (i) The comptroller-prescribed, model application form (3) the separately taxable estates or interests in real prop­ (Lessor’s Application for Personal Use Lease Automobile Exemp­ erty, including taxable possessory interests in exempt real property; tions) is not adopted by reference herein and may be revised at the (4) the general description of taxable personal property and discretion of the comptroller. Current forms can be obtained from the location thereof, if available; Comptroller of Public Accounts’ Property Tax Assistance Division. (5) if the property is a manufactured home, as defined in This agency hereby certifies that the proposal has been reviewed Occupations Code, §1201.003 [Texas Manufactured Housing Stan­ by legal counsel and found to be within the agency’s legal author­ dards Act, Texas Civil Statutes, Article 5221f(3)(s)], the permanent ity to adopt. identification number(s) or serial number(s) attached to the home, together with the make and model of the home, its approximate age, Filedwiththe Office of the Secretary of State on July 13, 2010. general physical condition, and any characteristics that distinguish the TRD-201003866 home from other manufactured homes; Ashley Harden (6) the appraised value of land and, if the land is appraised General Counsel as provided by [the] Tax Code, Chapter 23, Subchapter C, D, or H [E], Comptroller of Public Accounts the market value of the land; Earliest possible date of adoption: August 29, 2010 For further information, please call: (512) 475-0387 (7) the appraised value of improvements to land; (8) the appraised value of a separately taxable estate or in­ ♦ ♦ ♦ terest in land; SUBCHAPTER H. TAX RECORD (9) the appraised value of personal property; REQUIREMENTS (10) the kind of any partial exemption the owner is entitled 34 TAC §9.3004 to receive, whether the exemption applies to appraised value, and in the case of an exemption authorized by [the] Tax Code, §11.23, the amount The Comptroller of Public Accounts proposes an amendment to of the exemption; §9.3004, concerning appraisal records of all property. This sec­ (11) whether the property qualifies for an extension of the tion is being amended to update the record requirements regard­ school tax ceiling as the residence homestead of an over-55 surviving ing land appraised as provided by Tax Code, Chapter 23, Sub­ spouse of a person who qualified the homestead for a tax ceiling before chapter H and to update the statutory reference regarding the his or her death; definition of a manufactured home. (12) the tax year to which the appraisal applies; John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will (13) an identification of each taxing unit in which the prop­ be no significant revenue impact on the state or units of local erty is taxable; government. (14) whether the property qualifies for appraisal at its value Mr. Heleman also has determined that for each year of the first as of September 1 of the year preceding the tax year; five years the rule is in effect, the public benefit anticipated as a (15) the name and address of an agent for notices, if any; result of enforcing the rule will be by improving the administration of local property valuation and taxation. The proposed amend­ (16) whether the property is a special inventory, as defined ment would have no fiscal impact on small businesses. There is by [the] Tax Code, §23.12A; no significant anticipated economic cost to individuals who are (17) whether the property is subject to a limitation of required to comply with the proposed rule. school taxes as provided by [the] Tax Code, §11.26, and whether and Comments on the amendment may be submitted to Deborah when the limitation was transferred to the homestead as provided by Cartwright, Director, Property Tax Assistance Division, P.O. Box Tax Code, §11.26(g); 13528, Austin, Texas 78711-3528. (18) whether the property is subject to a limitation on the This amendment is proposed pursuant to Tax Code, §25.02. appraised value of a residence homestead as provided by Tax Code, §23.23; and This amendment implements Tax Code, §25.02. (19) whether the property is subject to the deferred collec­ §9.3004. Appraisal Records of All Property. tion of taxes on an appreciating homestead as provided by Tax Code, (a) All appraisal district offices appraising property for pur­ §33.065. poses of ad valorem taxation shall develop and maintain appraisal (c) The entry for each real property parcel that is appraised records of all property which each office is required to appraise. as part of a residential real property inventory shall indicate that the (b) The appraisal records of all property shall be two lists-­ property is appraised as inventory and identify the inventory of which one list for real property and one list for personal property--and shall it is a part. contain the following items of information as applicable: (d) Any item required by these sections may be maintained in (1) the name and address of the owner or, if the name or electronic data processing records rather than in physical documents. address is unknown, a statement that it is unknown; However, a physical document for the appraisal roll for the appraisal district or for a taxing unit must be prepared and made readily available (2) the legal description of the real property of the owner to the public, as required by [the] Tax Code, §1.10. (this provision shall not be interpreted to require field note descrip­ tions); (e) An appraisal district may maintain its appraisal records in any form that substantially complies with the provisions of this section.

35 TexReg 6632 July 30, 2010 Texas Register This agency hereby certifies that the proposal has been reviewed (1) a statement that the exemption claimed in the previous by legal counsel and found to be within the agency’s legal author­ year must be applied for annually; ity to adopt. (2) except as provided by subsection (c) of this section, a statement that the applicant must file the application before May 1 of Filed with the Office of the Secretary of State on July 13, 2010. the tax year and must furnish the information required on the applica­ TRD-201003869 tion for the application to be valid; Ashley Harden (3) a statement that the chief appraiser, for good cause, may General Counsel extend the deadline once for a period up to 60 days; Comptroller of Public Accounts Earliest possible date of adoption: August 29, 2010 (4) a statement that, except in limited circumstances set For further information, please call: (512) 475-0387 forth in the Tax Code, if the application is not timely filed the exemp­ tion must be denied; ♦ ♦ ♦ (5) a statement that the chief appraiser is required to can­ 34 TAC §9.3034 cel a granted exemption if he discovers any reason that the exemption should not have been granted, and in such an event, the chief appraiser The Comptroller of Public Accounts proposes an amendment will deliver a written notice to the taxpayer within five days after the to §9.3034, concerning notice of exemption application require­ date he makes the cancellation. ment. This section is being amended to conform to the statutory provisions regarding exemptions requiring annual applications. (c) An organization that acquires property that qualifies for an The proposed amendment is a result of a rule review of Texas exemption under Tax Code, §11.181(a) or §11.1825 may apply for the Administrative Code, Title 34, Part 1, Chapter 9, Subchapter H, exemption for the year of acquisition not later than the 30th day after conducted by the comptroller. The rule review was performed the date the organization acquires the property [The exemption form for pursuant to Government Code, §2001.039 and resulted in a de­ property that is acquired under Property Tax Code, §11.181, by a char­ termination that the reasons for initially adopting §9.3034 con­ itable organization for use as low-income housing shall be filed within tinuetoexist. 30 days of the property’s acquisition,] in order to claim an exemption for the remaining portion of that tax year. John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will This agency hereby certifies that the proposal has been reviewed be no significant revenue impact onthestateorunits oflocal by legal counsel and found to be within the agency’s legal author­ government. ity to adopt.

Mr. Heleman also has determined that for each year of the first Filed with the Office of the Secretary of State on July 13, 2010. five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be by improving the administration TRD-201003870 of local property valuation and taxation. The proposed amend­ Ashley Harden ment would have no fiscal impact on small businesses. There is General Counsel no significant anticipated economic cost to individuals who are Comptroller of Public Accounts required to comply with the proposed rule. Earliest possible date of adoption: August 29, 2010 Comments on the amendment may be submitted to Deborah For further information, please call: (512) 475-0387 Cartwright, Director, Property Tax Assistance Division, P.O. Box ♦ ♦ ♦ 13528, Austin, Texas 78711-3528. 34 TAC §9.3042 This amendment is proposed pursuant to Government Code, §2001.039(c), which authorizes the readoption of a rule with The Comptroller of Public Accounts proposes an amendment to amendments upon agency assessment, in conducting a rule re­ §9.3042, concerning request forms for separate or joint taxation. view, of whether the reasons for initially adopting the rule con­ This section is being amended to increase administrative effi­ tinuetoexist. ciency by providing for comptroller revision of applicable forms. The proposed amendment is a result of a rule review of Texas This amendment implements Tax Code, §11.44. Administrative Code, Title 34, Part 1, Chapter 9, Subchapter H, §9.3034. Notice of Exemption Application Requirement. conducted by the comptroller. The rule review was performed pursuant to Government Code, §2001.039 and resulted in a de­ (a) Notice of explanation to accompany all application forms termination that the reasons for initially adopting §9.3042 con­ for exemptions that must be applied for annually. tinuetoexist. (1) Before February 1 of each year, the chief appraiser shall John Heleman, Chief Revenue Estimator, has determined that deliver an appropriate exemption application form to each person who for the first five-year period the rule will be in effect, there will in the preceding year was allowed an exemption that must be applied be no significant revenue impact on the state or units of local for annually. government. (2) The exemptions which require an annual application Mr. Heleman also has determined that for each year of the first are set forth in [the exemptions required by the Texas Property]Tax five years the rule is in effect, the public benefit anticipated as a Code, Chapter 11 [§11.181 (low-income housing owned by a charita­ result of enforcing the rule will be by improving the administration ble organization), §11.23 (miscellaneous), §11.24 (historic sites), and of local property valuation and taxation. The proposed amend­ §11.27 (solar or wind-powered energy devices)]. ment would have no fiscal impact on small businesses. There is (b) Witheachofthe se exemption applications, a brief expla­ no significant anticipated economic cost to individuals who are nation containing the following information shall be included: required to comply with the proposed rule.

PROPOSED RULES July 30, 2010 35 TexReg 6633 Comments on the amendment may be submitted to Deborah (A) a statement indicating that the request must be filed Cartwright, Director, Property Tax Assistance Division, P.O. Box between January 1 and before May 1; 13528, Austin, Texas 78711-3528. (B) the name and address of the property owner request­ This amendment is proposed pursuant to Government Code, ing the separate listing and his agent, if applicable; §2001.039(c), which authorizes the readoption of a rule with (C) the name(s) and address(es) of all otherownersof amendments upon agency assessment, in conducting a rule re­ the property involved; view, of whether the reasons for initially adopting the rule con­ tinuetoexist. (D) a description of the property involved; This amendment implements Tax Code, §5.07(a) - (b). (E) the property owner’s proportionate interest in the property; §9.3042. Request Forms for Separate or Joint Taxation. (F) a statement of what documents will be required to (a) Separate taxation of standing timber. prove ownership in the property and the proportion the owner’s interest (1) All appraisal offices and tax offices appraising property bears to the whole; for purposes of ad valorem taxation shall prepare and make available (G) the signature of the property owner or agent; and forms for use by taxpayers to request separate taxation of standing tim­ ber from the land on which the timber is located, as provided in [the] (H) the date of the request. Tax Code, §25.10(c). The request filed with the appraisal office shall (3) The request for separate taxation form shall include the apply to all taxing units in which the specified property is located for following affirmations. which the office appraises. (A) "I hereby affirm that I own an undivided interest in (2) The request form for separate taxation of timber shall the herein described property in the proportion stated in this request." make provision for the following items of information: (B) "I hereby request that my undivided interest in the (A) a statement indicating that the request must be filed specified property be listed on the appraisal records of the appraisal annually between January 1 and before May 1; office separately from any remaining undivided interest." (B) the year for which the request is made; (C) "I certify that the information given on this form is (C) the name and address of the property owner filing true and correct." the request or his agent, if applicable, and an indication whether the (c) Joint taxation of mineral interests. person owns an interest in the timber or the land; (1) All appraisal offices and tax offices appraising property (D) the name(s) and address(es) of all owners and for purposes of ad valorem taxation shall prepare and make available whether their ownership is in the land or the timber involved; forms for use by taxpayers to request joint taxation of separate interests (E) the description of the land which contains the stand­ in minerals, other than interests having a taxable value of less than ing timber and its location; $500, as provided in [the] Tax Code, §25.12(b). The request filed with the appraisal office shall apply to all taxing units in which the specified (F) a statement of what documents will be required to property is located for which that office appraises. prove separate ownership of the standing timber and the land; (2) The request form for joint taxation of separate interests (G) the signature of the property owner or agent; and in minerals shall make provisions for the following items of informa­ (H) the date of the request. tion: (3) The request for separate taxation form shall include the (A) a statement indicating that the request must be filed following affirmations. between January 1 and before May 1; (A) "I hereby affirm that the standing timber is sepa­ (B) the name and address of the designated operator re­ rately owned from the land on which it is located, each being owned questing the separate listing and his agent, if applicable; by the persons identified in this request." (C) an identification of the property involved; (B) "I hereby request that the standing timber located (D) the type and amount of interest expressed in deci­ on the land described in this request be listed on the appraisal records mal form to be listed jointly in the name of the designated operator; of the appraisal office separately from the land on which the timber is located." (E) if a portion of the nonroyalty mineral interest(s) is not intended to be listed jointly in the name of the designated operator, (C) "I certify that the information given on this form is the name and address of the owner(s) of such interest(s) shall be listed; true and correct." (F) the signature of the designated operator or his agent; (b) Separate taxation of undivided interests. (G) the date of the request; and (1) All appraisal offices and tax offices appraising property for purposes of ad valorem taxation shall prepare and make available (H) a statement that a request for joint taxation may not forms for use by taxpayers to request separate taxation of an undivided be filed if the taxable value of the interest is less than $500. interest as provided in [the] Tax Code, §25.11(b). The request filed with (3) The request for joint taxation of mineral interests form the appraisal office shall apply to all taxing units in which the specified shall include the affirmations found in subparagraphs (A) and (B) of property is located forwhich theoffice appraises. this paragraph. (2) The request form for separate taxation of an undivided interest shall make provisions for the following items of information:

35 TexReg 6634 July 30, 2010 Texas Register (A) "I hereby request that the separate mineral interests be no significant revenue impact on the state or units of local in the property described in this form be listed jointly in the manner government. specified herein." Mr. Heleman also has determined that for each year of the first (B) "I certify the information given on thisformistrue five years the rule is in effect, the public benefit anticipated as a and correct to the best of my knowledge and belief." result of enforcing the rule will be by improving the administration of local property valuation and taxation. The proposed amend­ (d) Compliance by appraisal offices. Offices appraising prop­ ment would have no fiscal impact on small businesses. There is erty for purposes of ad valorem taxation that fail to prepare and make no significant anticipated economic cost to individuals who are available request forms for separate taxation of timber, separate tax­ required to comply with the proposed rule. ation of undivided interests, and joint taxation of mineral interests as required in subsections (a) - (c) of this section may be judged to be in Comments on the amendment may be submitted to Deborah compliance upon a showing to the comptroller that such forms substan­ Cartwright, Director, Property Tax Assistance Division, P.O. Box tially equivalent to those required in subsections (a) - (c) of this section 13528, Austin, Texas 78711-3528. have been prepared and made available. This amendment is proposed pursuant to Government Code, (e) The comptroller may provide model forms applicable to §2001.039(c), which authorizes the readoption of a rule with this section. Such forms may be revised at the discretion of the comp­ amendments upon agency assessment,inconductinga rulere­ troller. Current forms can be obtained from the Comptroller of Public view, of whether the reasons for initially adopting the rule con­ Accounts’ Property Tax Assistance Division. [The new model forms tinuetoexist. in paragraphs (1)-(3) of this subsection are adopted by the Comptroller This amendment implements Tax Code, §5.07(a) - (b). of Public Accounts by reference. Copies of these forms are available for inspection at the office of the Texas Register or can be obtained §9.3045. Application for September 1 Inventory Appraisal. from the Comptroller of Public Accounts, Property Tax Division, P.O. Box 13528, Austin, Texas 78711-3528. Copies may also be requested (a) All appraisal districts shall prepare and make available by calling our toll-free number 1-800-252-9121. In Austin, call (512) forms [copies of State Property Tax Board Model Form 23.12(f)] 305-9999. From a Telecommunications Device for the Deaf (TDD), for taxpayers to use in requesting September 1 inventory appraisal call 1-800-248-4099, toll free. In Austin, the local TDD number is pursuant to Tax Code, §23.12(f). (512) 463-4621. The following model forms are adopted by reference:] (b) An appraisal district may, in lieu of creating a form, use [(1) Request for Separate Taxation of Standing Timber a comptroller-prescribed, model form. [substitute a different form for (Form 50-170);] special circumstances if the substitute form has been approved by the board.] [(2) Request for Separate Taxation of an Undivided Interest (Form 50-171); and] (c) The comptroller may provide model forms applicable to this section. Such forms may be revised at the discretion of the comp­ [(3) Operator’s Request for Joint Taxation of Mineral In­ troller. Current forms can be obtained from the Comptroller of Public terest (Form 50-172).] Accounts’ Property Tax Assistance Division. [Model Form 23.12(f) This agency hereby certifies that the proposal has been reviewed is adopted by reference. Copies of the form may be obtained from by legal counsel and found to be within the agency’s legal author­ the State Property Tax Board, 4301 Westbank Drive, Building B, Suite ity to adopt. 100, Austin, Texas 78746-6565.] This agency hereby certifies that the proposal has been reviewed Filed with the Office of the Secretary of State on July 13, 2010. by legal counsel and found to be within the agency’s legal author­ TRD-201003871 ity to adopt. Ashley Harden Filed with the Office of the Secretary of State on July 14, 2010. General Counsel Comptroller of Public Accounts TRD-201003887 Earliest possible date of adoption: August 29, 2010 Ashley Harden For further information, please call: (512) 475-0387 General Counsel Comptroller of Public Accounts ♦ ♦ ♦ Earliest possible date of adoption: August 29, 2010 34 TAC §9.3045 For further information, please call: (512) 475-0387 The Comptroller of Public Accounts proposes an amendment to ♦ ♦ ♦ §9.3045, concerning application for September 1 inventory ap­ praisal. This section is being amended to delete references to 34 TAC §9.3048 the State Property Tax Board and increase administrative effi­ The Comptroller of Public Accounts proposes an amendment to ciency by providing for comptroller revision of applicable forms. §9.3048, concerning publication of budget. This section is being The proposed amendment is a result of a rule review of Texas amended to delete references to the State Property Tax Board Administrative Code, Title 34, Part 1, Chapter 9, Subchapter H, and increase administrative efficiency by providing for comptrol­ conducted by the comptroller. The rule review was performed ler revision of applicable forms. The proposed amendment is pursuant to Government Code, §2001.039 and resulted in a de­ a result of a rule review of Texas Administrative Code, Title 34, termination that the reasons for initially adopting §9.3045 con­ Part 1, Chapter 9, Subchapter H, conducted by the comptroller. tinuetoexist. The rule review was performed pursuant to Government Code, John Heleman, Chief Revenue Estimator, has determined that §2001.039 and resulted in a determination that the reasons for for the first five-year period the rule will be in effect, there will initially adopting §9.3048 continue to exist.

PROPOSED RULES July 30, 2010 35 TexReg 6635 John Heleman, Chief Revenue Estimator, has determined that Filed with the Office of the Secretary of State on July 14, 2010. for the first five-year period the rule will be in effect, there will TRD-201003888 be no significant revenue impact on the state or units of local Ashley Harden government. General Counsel Mr. Heleman also has determined that for each year of the first Comptroller of Public Accounts five years the rule is in effect, the public benefit anticipated as a Earliest possible date of adoption: August 29, 2010 result of enforcing the rule will be by improving the administration For further information, please call: (512) 475-0387 of local property valuation and taxation. The proposed amend­ ment would have no fiscal impact on small businesses. There is ♦ ♦ ♦ no significant anticipated economic cost to individuals who are required to comply with the proposed rule. 34 TAC §9.3049 Comments on the amendment may be submitted to Deborah The Comptroller of Public Accounts proposes an amendment to Cartwright, Director, Property Tax Assistance Division, P.O. Box §9.3049, concerning change of use determination. This section 13528, Austin, Texas 78711-3528. is being amended to delete references to the State Property Tax Board, provide language applicable to additional statutory pro­ This amendment is proposed pursuant to Government Code, visions regarding change of use determinations, and increase §2001.039(c), which authorizes the readoption of a rule with administrative efficiency by providing for comptroller revision of amendments upon agency assessment, in conducting a rule re­ applicable forms. The proposed amendment is a result of a rule view, of whether the reasons for initially adopting the rule con­ review of Texas Administrative Code, Title 34, Part 1, Chapter tinuetoexist. 9, Subchapter H, conducted by the comptroller. The rule review This amendment implements Tax Code, §5.07(a) - (b). was performed pursuant to Government Code, §2001.039 and resulted in a determination that the reasons for initially adopting §9.3048. Publication of Budget. §9.3049 continue to exist. (a) In publishing the notice summarizing the appraisal district John Heleman, Chief Revenue Estimator, has determined that budget under the Tax Code, §6.062, the chief appraiser shall include for the first five-year period the rule willbeineffect, there will the following: be no significant revenue impact on the state or units of local (1) the time, date, and place of the public hearing on the government. proposed budget; Mr. Heleman also has determined that for each year of the first (2) the total amount of the proposed budget; five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be by improving the administration (3) the amount of increase proposed from the budget of local property valuation and taxation. The proposed amend­ adopted for the current year; ment would have no fiscal impact on small businesses. There is (4) the number of employees compensated under the cur­ no significant anticipated economic cost to individuals who are rent budget and the number of employees to be compensated under the required to comply with the proposed rule. proposed budget, provided that the number of employees shall be ex­ Comments on the amendment may be submitted to Deborah pressed as the number of full-time equivalent employees; Cartwright, Director, Property Tax Assistance Division, P.O. Box (5) the name, address, and telephone number of the ap­ 13528, Austin, Texas 78711-3528. praisal district; and This amendment is proposed pursuant to Government Code, (6) at the chief appraiser’s option, a statement explaining §2001.039(c), which authorizes the readoption of a rule with any significant differences between the current and the proposed ap­ amendments upon agency assessment, in conducting a rule re­ praisal district budget. view, of whether the reasons for initially adopting the rule con­ tinuetoexist. (b) The chief appraiser may use the comptroller-prescribed, model form applicable to this section [duplicate Model Form 6.062] This amendment implements Tax Code, §5.07(a) - (b). or use a different form that sets out the information listed in subsection §9.3049. Change of Use Determination. (a) of this section in the same language and sequence as the model form. (a) The chief appraiser shall include the following information (c) In special circumstances the chief appraiser may use a form in a notice of a change of use determination required under [the]Tax that provides additional information, deletes information required by Code, §§23.46, [§]23.55, 23.76, or 23.9807: this section, or sets out the required information in different language or sequence than that required by this section if the form has been pre­ (1) the name, street address, mailing address (if different), viously approved by the comptroller [State Property Tax Board]. and telephone number of the appraisal district office; (d) The comptroller’s model form applicable to this section (2) the property owner’s name and a description of the af­ may be revised at the discretion of the comptroller. Current forms can fected property; be obtained from the Comptroller of Public Accounts’ Property Tax As­ (3) a statement specifying the determination that has been sistance Division. [The State Property Tax Board adopts by reference made by [state that]the chiefappraiserand identifying the statutory Model Form 6.062. Copies may be obtained from the State Property provision(s) under which such determination has been made [has de­ Tax Board, 4301 Westbank Drive, Building B, Suite 100, Austin, Texas termined that the land is no longer eligible for agricultural appraisal]; 78746-6565.] (4) the year the property will begin to be taxed at its market This agency hereby certifies that the proposal has been reviewed value; by legal counsel and found to be within the agency’s legal author­ ity to adopt.

35 TexReg 6636 July 30, 2010 Texas Register (5) a statement that the taxpayer may protest the decision ernment Code, §2001.039 and resulted in a determination that to the appraisal review board; the reasons for initially adopting §9.3054 continue to exist. (6) a statement that the deadline for filing a written protest John Heleman, Chief Revenue Estimator, has determined that is not later than 30 days after the date of the notice; for the first five-year period the rule will beineffect, therewill be no significant revenue impact on the state or units of local (7) a statement that if the property owner does not protest or government. the protest is denied, [the property will incur an] additional taxes and interest will be billed and subject to penalties and additional interest Mr. Heleman also has determined that for each year of the first [tax]anda st atement that a tax lien has already attached [will attach] five years the rule is in effect, the public benefit anticipated as a to the property to secure payment of the additional taxes, interest, and result of enforcing the rule will be by improving the administration penalties [tax]; of local property valuation and taxation. The proposed amend­ ment would have no fiscal impact on small businesses. There is (8) the number of years for which the additional taxes are no significant anticipated economic cost to individuals who are being imposed [tax recaptures tax savings]; and required to comply with the proposed rule. (9) a statement that the taxpayer may contact each taxing Comments on the amendment may be submitted to Deborah unit’s tax assessor to determine the amount of additional taxes, interest, Cartwright, Director, Property Tax Assistance Division, P.O. Box and penalties. [rollback taxes; and] 13528, Austin, Texas 78711-3528. [(10) a statement that the taxpayer may consult the State This amendment is proposed pursuant to Government Code, Property Tax Board’s Manual for the Appraisal of Agricultural Land §2001.039(c), which authorizes the readoption of a rule with for information about the qualification of land.] amendments upon agency assessment, in conducting a rule re­ (b) The chief appraiser may use the comptroller-prescribed, view, of whether the reasons for initially adopting the rule con­ model form applicable to this section [duplicate Model Forms 23.46 tinuetoexist. and 23.55] or use a different form that sets out the information listed in This amendment implements Tax Code, §5.07(a) - (b). subsection (a) of this section in the same language and sequence as the model form. §9.3054. Request to Postpone Tax Bill. (c) In special circumstances the chief appraiser may use a form (a) Each collecting office shall prepare and make available to that provides additional information, deletes information required by the public forms for requesting the tax office to postpone issuing a tax this section, or sets out the required information in different language bill until the amount of unpaid tax reaches $15. The form shall require or sequence than that required by this section if the form has been pre­ the taxpayer to provide the following: viously approved by the comptroller [State Property Tax Board]. (1) the property owner’s name, current mailing address, (d) The comptroller’s model form applicable to this section and telephone number; may be revised at the discretion of the comptroller. Current forms can (2) a description of the property, the property account num­ be obtained from the Comptroller of Public Accounts’ Property Tax ber, or a copy of tax or appraisal office correspondence that identifies Assistance Division. [Model Forms 23.46 and 23.55 are adopted by the property; and reference. Copies of the forms may be obtained from the State Property Tax Board, 4301 Westbank Drive, Building B, Suite 100, Austin, Texas (3) the title or capacity of the person who signs the form. 78746-6565.] (b) The collector shall include on the form: This agency hereby certifies that the proposal has been reviewed (1) instructions that state that if the property owner files the by legal counsel and found to be within the agency’s legal author­ form, no penalty or interest will accrue on taxes until the total amount ity to adopt. of tax owed to all units for which the collector collects taxes reaches $15 or more; and Filed with the Office of the Secretary of State on July 14, 2010. (2) the name, street address, mailing address if different, TRD-201003889 and telephone number of the collector’s office. Ashley Harden (c) The collector may use the comptroller-prescribed, model General Counsel form applicable to this section [duplicate Model Form 31.01]oruse a Accounts Comptroller of Public different form that requires the information and sets out the instructions Earliest possible date of adoption: August 29, 2010 required by this section in the same language and sequence as the model For further information, please call: (512) 475-0387 form. ♦ ♦ ♦ (d) In special circumstances the collector may use a form that 34 TAC §9.3054 provides additional information, deletes information required by this section, or sets out the required information in different language or The Comptroller of Public Accounts proposes an amendment to sequence than that required by this section if the form has been previ­ §9.3054, concerning requests to postpone tax bill. This sec­ ously approved by the comptroller [State Property Tax Board]. tion is being amended to delete references to the State Prop­ erty Tax Board and increase administrative efficiency by provid­ (e) The comptroller’s model form applicable to this section ing for comptroller revision of applicable forms. The proposed may be revised at the discretion of the comptroller. Current forms can amendment is a result of a rule review of Texas Administrative be obtained from the Comptroller of Public Accounts’ Property Tax Code, Title 34, Part 1, Chapter 9, Subchapter H, conducted by Assistance Division. [State Property Tax Board Model Form 31.01 is the comptroller. The rule review was performed pursuant to Gov­ adopted by reference. Copies of the form may be obtained from the State Property Tax Board, 4301 Westbank Drive, Building B, Suite 100, Austin, Texas 78746-6565.]

PROPOSED RULES July 30, 2010 35 TexReg 6637 This agency hereby certifies that the proposal has been reviewed ♦ ♦ ♦ by legal counsel and found to be within the agency’s legal author­ ity to adopt. 34 TAC §9.3064 The Comptroller of Public Accounts proposes an amendment to Filedwiththe Office of the Secretary of State on July 15, 2010. §9.3064, concerning public notice of protest and appeal forms. TRD-201003914 This section is being amended to more thoroughly specify min­ Ashley Harden imum standards for the form and content of the notice required pursuant to Tax Code, §41.70 and to increase administrative ef­ General Counsel ficiency by providing for comptroller revision of applicable forms. Comptroller of Public Accounts The proposed amendment is a result of a rule review of Texas Earliest possible date of adoption: August 29, 2010 Administrative Code, Title 34, Part 1, Chapter 9, Subchapter H, For further information, please call: (512) 475-0387 conducted by the comptroller. The rule review was performed ♦ ♦ ♦ pursuant to Government Code, §2001.039 and resulted in a de­ termination that the reasons for initially adopting §9.3064 con­ 34 TAC §9.3057 tinuetoexist. (Editor’s note: The text of the following section proposed for repeal John Heleman, Chief Revenue Estimator, has determined that will not be published. The section may be examined in the offices of the for the first five-year period the rule will be in effect, there will Comptroller of Public Accounts or in the Texas Register office, Room be no significant revenue impact on the state or units of local 245, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) government. The Comptroller of Public Accounts proposes the repeal of Mr. Heleman also has determined that for each year of the first §9.3057, concerning notice of hearings on proposals to tax five years the rule is in effect, the public benefit anticipated as a non-business personal property. The proposed repeal is a result of enforcing the rule will be by improving the administration result of a rule review of Texas Administrative Code, Title 34, of local property valuation and taxation. The proposed amend­ Part 1, Chapter 9, Subchapter H, conducted by the comptroller. ment would have no fiscal impact on small businesses. There is The rule review was performed pursuant to Government Code, no significant anticipated economic cost to individuals who are §2001.039 and resulted in a determination that the reasons for required to comply with the proposed rule. initially adopting §9.3057 no longer exist. Comments on the amendment may be submitted to Deborah John Heleman, Chief Revenue Estimator, has determined that Cartwright, Director, Property Tax Assistance Division, P.O. Box for the first five-year period the repeal will be in effect, there will 13528, Austin, Texas 78711-3528. be no significant revenue impact on the state or units of local This amendment is proposed pursuant to Government Code, government. §2001.039(c), which authorizes the readoption of a rule with Mr. Heleman also has determined that for each year of the first amendments upon agency assessment, in conducting a rule re­ five years the repeal is in effect, the public benefit anticipated as view, of whether the reasons for initially adopting the rule con­ a result of enforcing the repeal will be by improving the admin­ tinuetoexist. istration of local property valuation and taxation. The proposed This amendment implements Tax Code, §41.70. repeal would have no fiscal impact on small businesses. There is no significant anticipated economic cost to individuals who are §9.3064. Public Notice of Protest and Appeal Forms. required to comply with the repeal. (a) The comptroller will make available to appraisal districts Comments on the repeal may be submitted to Deborah a model form of the notice required by Tax Code, §41.70. A chief Cartwright, Director, Property Tax Assistance Division, P.O. Box appraiser may use the comptroller’s model form in complying with 13528, Austin, Texas 78711-3528. Tax Code, §41.70. The comptroller’s model form will include, at a The repeal is proposed pursuant to Government Code, minimum: [The chief appraiser shall use Model Form 50-195, public §2001.039(c), which authorizes the repeal of a rule upon agency notice of property tax protest and appeal procedures published under assessment in conducting a rule review that the reasons for the Tax Code, §41.41 and the Tax Code, §41.70.] initially adopting the rule no longer exist. (1) general identification of grounds on which a property The repeal implements Government Code, §2001.039. owner may protest under Tax Code, Chapter 41; §9.3057. Notice of Hearing on Proposal To Tax Non-business Per- (2) a description of the appraisal district’s informal review sonal Property. process, if any; This agency hereby certifies that the proposal has been reviewed (3) a description of the appraisal review board and the by legal counsel and found to be within the agency’s legal author­ process of appeal to the appraisal review board; ity to adopt. (4) a description of the appraisal review board hearing process; Filedwiththe Office of the Secretary of State on July 15, 2010. (5) information regarding deadlines for filing protests with TRD-201003915 the appraisal review board; Ashley Harden General Counsel (6) information regarding methods of appealing an ap­ Comptroller of Public Accounts praisal review board order; Earliest possible date of adoption: August 29, 2010 (7) information regarding the payment of taxes pending an For further information, please call: (512) 475-0387 appeal of an appraisal review board order;

35 TexReg 6638 July 30, 2010 Texas Register (8) identification of the appraisal district’s contact informa­ comptroller revision of applicable forms. The proposed amend­ tion; and ment is a result of a rule review of Texas Administrative Code, Title 34, Part 1, Chapter 9, Subchapter I, conducted by the comp­ (9) a statement that additional information can be obtained troller. The rule review was performed pursuant to Government from the comptroller’s office. Code, §2001.039 and resulted in a determination that the rea­ (b) The chief appraiser may duplicate the comptroller’s model sons for initially adopting §9.4033 continue to exist. form [Model Form 50-195] or use a different form that sets out the John Heleman, Chief Revenue Estimator, has determined that information listed in the model form in the same language and sequence for the first five-year period the rule will be in effect, there will as the model form. Without prior approval from the comptroller, the be no significant revenue impact on the state or units of local [The] appraisal district may: [, however,] government. (1) add additional language that more fully describes its Mr. Heleman also has determined that for each year of the first protest procedures; [. The appraisal district may] five years the rule is in effect, the public benefit anticipated as a (2) substitute the actual dates on which deadlines for the result of enforcing the rule will be by improving the administration year fall for the deadlines set out in the model form; [. The appraisal of local property valuation and taxation. The proposed amend­ district may] ment would have no fiscal impact on small businesses. There is no significant anticipated economic cost to individuals who are (3) add the deadline for filing a protest concerning property required to comply with the proposed rule. omitted from the appraisal roll; and [. The appraisal district may] Comments on the amendment may be submitted to Deborah (4) modify the form as necessary to correctly set out its Cartwright, Director, Property Tax Assistance Division, P.O. Box name, address, and telephone number. 13528, Austin, Texas 78711-3528. (c) In special circumstances, if approved by the comptroller in This amendment is proposed pursuant to Government Code, writing prior to publication, the chief appraiser may use a form that §2001.039(c), which authorizes the readoption of a rule with provides additional information other than that contained in the model amendments upon agency assessment, in conducting a rule re­ form, deletes information required by the model form, or sets out the re­ view, of whether the reasons for initially adopting the rule con­ quired information in different language or sequence than that required tinuetoexist. by the model form [, if the form has been previously approved by the comptroller]. This amendment implements Tax Code, §§5.07(a) - (b), 21.03(b), and 22.24. (d) The headline of the published notice shall be in 18-point type or larger. Body copy for the notice shall be in 10-point type or §9.4033. Allocation of Value. larger. (a) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates (e) The comptroller’s model form applicable to this section otherwise. may be revised at the discretion of the comptroller. Current forms can be obtained from the Comptroller of Public Accounts’ Property (1) Commercial instrumentor commercialequip­ Tax Assistance Division. [comptroller adopts Model Form 50-195, ment--Tangible personal property used for a business purpose, which as amended, by reference. Copies of this form are available for in­ includes, but is not limited to, commercial and business aircraft, rolling spection at the offices of the Texas Register or may be obtained from stock not owned or leased by a railroad, motor vehicle, shipping the Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas containers, vessels and watercraft (except for special purpose vessels 78711. Copies may also be requested by calling our toll-free number and watercraft used as an instrumentality of commerce as defined in 1-800-252-9121. In Austin, call (512) 305-9999. From a Telecommu­ [the] Tax Code, §21.031), mobile construction or drilling equipment, nications Device for the Deaf (TDD), call 1-800-248-4099, toll free. and mobile equipment of any other sort. The term does not include In Austin, the local TDD number is (512) 463-4621.] goods, wares, ores, or merchandise held for sale or resale, stored, warehoused, or in the process of assembly, manufacture, or refinement This agency hereby certifies that the proposal has been reviewed on January 1. by legal counsel and found to be within the agency’s legal author­ ity to adopt. (2) Jurisdiction to tax--The legal power to levy a property tax on a property, regardless of whether the power to tax is exercised. Filed with the Office of the Secretary of State on July 15, 2010. (3) Situs jurisdiction--A taxing unit, state, or nation that TRD-201003916 has jurisdiction to tax a property because of the property’s location or Ashley Harden use, or because of the owner’s domicile or principal place of business. General Counsel (4) Used continually--Used several times on regular routes Comptroller of Public Accounts or for several tasks in close succession throughout the year. Earliest possible date of adoption: August 29, 2010 For further information, please call: (512) 475-0387 (b) A property owner may apply for the allocation of total mar­ ket value of a vessel, special-purpose vessel, or other watercraft. ♦ ♦ ♦ (1) The allocation of taxable value of vessels and other wa­ SUBCHAPTER I. VALIDATION PROCEDURES tercraft used outside this state shall be determined according to the pro­ visions of [the]Tax Code, §21.021 and §21.031. 34 TAC §9.4033 (2) To receive an allocation of value for vessels and other The Comptroller of Public Accounts proposes an amendment to watercraft, a property owner must apply for the allocation on the comp­ §9.4033, concerning allocation of value. This section is being troller-prescribed, model form Application for Interstate Allocation of amended to increase administrative efficiency by providing for Vessels or Other Watercraft [model form adopted by the Comptroller of

PROPOSED RULES July 30, 2010 35 TexReg 6639 Public Accounts] or a form containing information which is in substan­ (7) The chief appraiser may consider the following evi­ tial compliance with the model form if approved by the comptroller. A dence in determining where a property has taxable situs: person filing an allocation application form must include all informa­ (A) published schedules, if the property carries passen­ tion required by the form. The application must be filed with the chief gers and/or cargo on regular routes at regular times; appraiser for the district in which the property is taxable and must be filed prior to the approval of appraisal records by the appraisal board. (B) records kept in the normal course of business, such [Model Application for Interstate Allocation of Vessels or Other Wa­ as mileage, flight, or vessel logs, that indicate where the property has tercraft (Form 50-146), as amended, is adopted by reference.] traveled, how long it was located at each destination, and the purpose of its location at each destination; (3) If the chief appraiser determines that he needs informa­ tion in addition to that furnished on the application, he may request ad­ (C) reports filed with state or national agencies that in­ ditional information by written notice delivered to the property owner. dicate where the property has traveled, how long it was located at des­ A taxpayer shall furnish any additional information required within 15 tination, and the purpose of its location at each destination; and days after the date the notice is mailed. (D) actual tax bills or notices of appraisal or assessment (c) The guidelines for determination of jurisdiction to tax are from other jurisdictions. as follows. (d) The chief appraiser shall allocate the market value of that (1) The chief appraiser shall determine whether property is property used in interstate or foreign commerce that qualifies for allo­ within the taxing jurisdiction of another state or nation from the evi­ cation under this subsection. dence supplied by the property owner. The burden of proof in estab­ (1) Property qualifies for allocation if it: lishing such jurisdiction is upon the property owner. (A) constitutes a commercial instrument or commercial (2) The State of Texas has jurisdiction to tax property if: equipment; (A) it is physically present within the State of Texas on (B) is used for a business purpose; January 1 for more than a temporary period; (C) has taxable situs in a taxing unit within the appraisal (B) it has been used continually in Texas during the 12 district as provided by [the] Tax Code, §21.02 or §21.021; and months preceding January 1, regardless of its location on January 1; or (D) is used continually outside Texas in interstate or for­ (C) its owner resides or does business in Texas and the eign commerce, whether regularly or irregularly. property is outside Texas for a temporary period on January 1. (2) A commercial instrument or item of business equip­ (3) Property is within the jurisdiction to tax of another state ment is present in the state for more than a temporary period if: or nation if: (A) its owner maintains one or more places of business (A) it is physically present within that state or nation’s in this state and the property is present in this state on January 1 or at boundaries on the state or nation’s property tax lien date for more than any time during the 12 months preceding January 1; and a temporary period; (B) the property has contact with this state of a character (B) it has been used continually in the state or nation that would permit this state to tax it under applicable federal law. during the 12 months preceding January 1, regardless of its location on January 1; (e) A property owner who is entitled to an allocation of prop­ erty must file a rendition form that provides enough information nec­ (C) its owner resides or does business in that state or essary to prove the entitlement to allocation and permit the chief ap­ nation and the property is outside that state or nation for temporary praiser to apply an allocation formula appropriate to the subject prop­ period on January 1; or erty. An appraisal district shall use the comptroller-prescribed, model (D) the state or nation has in fact assessed a property form Rendition of Property Qualified for Allocation of Value [model tax against the property. form adopted by the Comptroller of Public Accounts]oraformc on­ taining information which is in substantial compliance with the model (4) Property is neither physically present nor used in a ju­ form if approved by the comptroller. Each form shall require the prop­ risdiction when it flies over the jurisdiction without landing. erty owner to identify the property that is the subject of the rendition (5) Property that leaves the boundaries of this state, and and provide information measuring the use of the property within Texas returns without being exposed to the taxing jurisdiction of another state and within other states or nations. The form must permit the property or nation, remains within this state’s taxing jurisdiction for the duration owner to state an opinion of the total market value of the property and of the trip. the amount of value that should be allocated to each taxing unit in which the property has situs. [Model Rendition of Property Qualified for Al­ (6) Property is not within the jurisdiction to tax of this state location of Value (Form 50-145-1) is adopted by reference.] or any other state of the United States if: (f) If the chief appraiser determines that the property was (A) it is an instrumentality of commerce; within the taxing jurisdiction of this state and within the taxing juris­ (B) it is owned by a foreign domiciliary; diction of another state or nation for the same calendar year, he shall allocate to each taxing unit in which the property has situs the portion (C) it is taxed in the nation where its owner is domi­ of the property’s market value that fairly reflects its use in this state. ciled; If an allocation formula specified in this subsection does not fairly (D) it is used exclusively in foreign commerce; and reflect the use of the property in this state and other situs jurisdictions, the chief appraiser may use another formula that more adequately (E) it is not present in this state for more than a tempo­ reflects use. Such alternate formulas may include revenue-ton miles, rary period on January 1. equipment load factors, or other measures of property use.

35 TexReg 6640 July 30, 2010 Texas Register (1) For commercial aircraft property, as definedbyTax This agency hereby certifies that the proposal has been reviewed Code, §21.055, the chief appraiser shall use the following allocation by legal counsel and found to be within the agency’s legal author­ formula: the fair market value of the aircraft multiplied by a fraction, ity to adopt. the numerator of which is the product of 1.5 and the number of revenue departures by the aircraft from Texas during the preceding tax year Filed with the Office of the Secretary of State on July 15, 2010. and the denominator of which is the greater of: TRD-201003917 (A) the number of hours in a year (8,760); or Ashley Harden (B) the numerator. General Counsel Comptroller of Public Accounts (2) For vessels, the chief appraiser will normally use an Earliest possible date of adoption: August 29, 2010 allocation formula based on port days. The ratio of the days the vessel For further information, please call: (512) 475-0387 spends in port in Texas to total days spent in port in all situs jurisdictions is the allocation ratio. ♦ ♦ ♦ (3) For motor vehicles and rolling stock, not including ves­ TITLE 37. PUBLIC SAFETY AND CORREC- sels or aircraft, the chief appraiser will normally use an allocation for­ mula based on mileage. The ratio of total miles traveled in Texas during TIONS the year to the total miles traveled in all situs jurisdictions during the year is the allocation ratio. PART 13. TEXAS COMMISSION ON (4) For business aircraft property as defined by Tax Code, FIRE PROTECTION §21.055, the chief appraiser shall use the following allocation formula: the fair market value of the aircraft multiplied by a fraction, the numer­ CHAPTER 427. TRAINING FACILITY ator of which is the number departures by the aircraft from a location CERTIFICATION in Texas during the preceding tax year and the denominator of which is the number departures by the aircraft from all locations during the SUBCHAPTER A. ON-SITE CERTIFIED preceding tax year. TRAINING PROVIDER (5) For other equipment, the chief appraiser will normally 37 TAC §427.7 use an allocation formula based on time. The ratio of time spent in Texas during the year to the total time spent in all situs jurisdictions The Texas Commission on Fire Protection (the Commission) pro­ during the year is the allocation ratio. poses an amendment to Chapter 427, Training Facility Certifica­ tion, Subchapter A, On-site Certified Training Provider, §427.7, (g) If the appraisal office allocates the value of property in a Protective Clothing. The proposed amendment will allow a chief given year: training officer of a training facility to provide a student with the (1) the chief appraiser shall note on the property’s appraisal protective clothing that is suitable for the type of fire the student record for the year: is being trained for during live-fire training for aircraft rescue. (A) that the allocation has been granted; Jake Soteriou, Deputy Director of Standards and Certification, has determined that for the first five-year period this proposed (B) the market value of the property; amendment is in effect, there will be no fiscal implications for (C) the allocation formula factor; and state or local government as a result of enforcing or administer­ ing this section as amended. (D) the appraised value of the property after allocation. Mr. Soteriou has also determined that for the first five years this (2) the chief appraiser shall retain a record of the allocation proposed amendment is in effect, there will be no effect on mi­ for three years after it is granted, including: cro businesses, small businesses or persons required to comply (A) the rendition form requesting allocation; with the amended section as proposed; therefore, no regulatory flexibility analysis is required. The public will benefitfrom the (B) supporting documents filed by the property owner; passage of this section because it will ensure the safety of the and student by being provided with proper protective clothing for the (C) the formula chosen and calculations used in making task they are being asked to perform. the allocations. Written comments on this proposal may be submitted to Gary (h) The comptroller’s forms applicable to this section may be L. Warren, Sr., Executive Director, Texas Commission on Fire revised at the discretion of the comptroller. Current forms can be ob­ Protection, 1701 N. Congress, Suite 1-105, Austin, Texas 78701. tained from the Comptroller of Public Accounts’ Property Tax As­ Written comments must be received no later than 30 days from sistance Division. [Copies of the forms listed in subsections (b)(2) the date of publication of the proposed amendment in the Texas and (e) of this section are available for inspection at the offices of the Register. Texas Register or may be obtained from the Comptroller of Public Ac­ This amendment is proposed under Government Code, Title 4, counts, P.O. Box 13528, Austin, Texas 78711. Copies may also be Subtitle B, Chapter 419, Subchapter B, Regulating and Assist­ requested by calling toll-free 1-800-252-9121. In Austin, call (512) ing Fire Fighters and Fire Departments, §419.040, Protective 305-9999. From a Telecommunications Device for the Deaf (TDD), Clothing, which requires that the protective clothing an individ­ call 1-800-248-4099, toll free. In Austin, the local TDD number is ual wears shall be suitable for the task that individual is expected (512) 463-4621.] to perform and must comply with the minimum standards of the National Fire Protection Association.

PROPOSED RULES July 30, 2010 35 TexReg 6641 No other statutes, articles, or codes are affected by this proposal. relative’s home to be a listed family home with the Texas De­ partment of Family and Protective Services (DFPS). The intent §427.7. Protective Clothing. of the new requirement was to minimize the risk of having Com­ Each and every set of protective clothing, including proximity clothing, mission-funded child care services provided by individuals with that will be used during the course of instruction for a commission ap­ a history of child abuse or neglect or with a criminal background proved fire protection personnel curriculum shall comply with §435.1 that could call into question the individual’s suitability for provid­ of this title (relating to Protective Clothing). This rule applies whether ing publicly funded child care. DFPS conducts checks of listed the protective clothing is provided by the academy or the trainee. [Pro­ family homes against its Child Protective Services’ (CPS) cen­ tective clothing and elements that are no longer of use to the organiza­ tral registry of neglect and abuse and also conducts a criminal tion for emergency operations service but are not contaminated, defec­ history check. The background and criminal history checks are tive, or damaged may be used for training that does not involve live fire conducted on the relative caring for a child receiving subsidized training provided such clothing and elements are appropriately marked care, and any individual age 14 years of age or older who re­ to be easily recognized.] sides in or is frequently present in the relative’s home during the (1) Protective Clothing and elements no longer in use to hours of child care. the organization for emergency operations service, but are not contam­ However, because child care provided exclusively in the child’s inated, defective, or damaged, may be used for training that does not home (in-home child care) does not meet the statutory defini­ involve live fire training, provided such clothing and elements are ap­ tion of a family home in Texas Human Resources Code, Chap­ propriately marked to be easily recognized. ter 42, there is no such background check for relatives providing (2) Protective clothing used for aircraft rescue, live fire in-home care. Instead, §809.91(f)(2) requires Boards to ensure training, shall be suitable for the type of fire the student is being that relative in-home care providers do not appear on the Texas trained for and shall be determined by the chief training officer of the Department of Public Safety’s (DPS) Sex Offender Registry, pur­ training facility. suant to Texas Code of Criminal Procedure, Chapter 62. This agency hereby certifies that the proposal has been reviewed Because in-home child care providers are subject only to sex by legal counsel and found to be within the agency’s legal author­ offender registry checks--but not criminal background checks or ity to adopt. checks against the CPS central registry--this significantly weak­ ens the background and criminal history check requirement for Filedwiththe Office of the Secretary of State on July 12, 2010. relative providers. As such, in-home providers pose a greater risk to children with regard to subsidies paid to providers who TRD-201003862 might not be eligible to provide care--especially when compared Gary L. Warren, Sr. to relative providers caring for children in the relative’s home who Executive Director must undergo background checks every two years. Even when TexasCommissiononFireProtection DPS Sex Offender Registry checks are required for caregivers, Earliest possible date of adoption: August 29, 2010 this does not ensure that all other individuals who regularly or For further information, please call: (512) 936-3813 frequently stay or work in the home are not on the Sex Offender ♦ ♦ ♦ Registry. To ensure that Commission-funded child care services are pro­ TITLE 40. SOCIAL SERVICES AND ASSIS- vided in a safe environment, the Commission’s proposed Chap­ TANCE ter 809 amendments address the following: --The frequency of DPS Sex Offender Registry Checks for rela­ PART 20. TEXAS WORKFORCE tive in-home childcareproviders. COMMISSION --The placement of additional requirements on the use of relative CHAPTER 809. CHILD CARE SERVICES in-home child care. SUBCHAPTER E. REQUIREMENTS TO PART II. EXPLANATION OF INDIVIDUAL PROVISIONS (Note: Minor editorial changes are made that do not change the PROVIDE CHILD CARE meaning of the rules and, therefore, are not discussed in the 40 TAC §809.91 Explanation of Individual Provisions.) The Texas Workforce Commission (Commission) proposes SUBCHAPTER E. REQUIREMENTS TO PROVIDE CHILD amendments to the following section of Chapter 809, relating to CARE Child Care Services: The Commission proposes the following amendments to Sub­ Subchapter E. Requirements to Provide Child Care, §809.91 chapter E: PART I. PURPOSE, BACKGROUND, AND AUTHORITY §809.91. Minimum Requirements for Providers PART II. EXPLANATION OF INDIVIDUAL PROVISIONS Child Care and Development Fund (CCDF) regulations at 45 C.F.R. §98.30(e) require states to allow parents to choose from PART III. IMPACT STATEMENTS a variety of child care settings, including in-home care. Further, PART IV. COORDINATION ACTIVITIES §98.30(f) states that CCDF funds will not be available to a Lead Agency if state or local rules, procedures, or other requirements PART I. PURPOSE, BACKGROUND, AND AUTHORITY significantly restrict parental choice by expressly or effectively On May 29, 2007, the Commission adopted Chapter 809 Child excluding or limiting parent access to provider types. Care Services rules requiring relatives caring for children in the

35 TexReg 6642 July 30, 2010 Texas Register However, CCDF regulations at 45 C.F.R. §98.30(e) allow states (C) When the parent changes to a different relative in-home child to impose limitations on the use of in-home care. care provider. The preamble to the CCDF regulations states: The language reflects guidance in WD Letter 18-10, issued March 24, 2010, and entitled "Texas Department of Public Child care administrators have faced a number of special chal­ Safety Sex Offender Registry Checks." lenges in monitoring the quality of care and the appropriateness of payments to in-home providers. For that reason, we give Lead Requiring that relative in-home child care providers do not ap­ Agencies complete latitude to impose conditions and restrictions pear on the DPS Sex Offender Registry at these points aligns on in-home care. We have revised §98.16(g)(2) to require that with the Commission’s intent to: Lead Agencies, in their CCDF Plans, specify any limitations on --protect the health and safety of children served by Commis­ in-home care and the reasons for those limitations. (Federal sion-funded child care; and Register, Vol. 63, No. 142, Friday, July 24, 1998, p. 39949) --minimize the risk of child care subsidies being paid to individu­ As allowed by regulation, and because DFPS does not regulate als who appear on the registry. in-home child care, the Commission: Section 809.91(e)(3) sets forth the situations under which --has always limited in-home child care to eligible relatives who Boards must allow relative in-home child care. CCDF regula­ are exempt from CCDF-required health and safety standards; tions require that states allow parents to choose in-home child and care, but states can limit the use of in-home child care. --does not allow in-home child care by unregulated nonrelatives Section 809.91(e)(3)(A) - (D) requires that Boards allow relative such as friends, neighbors, babysitters, or nannies. in-home child care for the following: As further allowed by CCDF regulations, the Commission may (A) A child with disabilities as defined in §809.2(6), and his or impose additional, more-stringent standards on the use of in- her siblings; home child care; thus, making fewer relatives exempt from a criminal history check and a check against the CPS central reg­ (B) A child under 18 months of age, and his or her siblings; istry of child abuse and neglect conducted by DFPS. These limits (C) A child of a teen parent; and on the use of in-home care meet the Commission’s intent to min­ imize the risk of having Commission-funded child care services (D) When the parent’s work schedule requires evening, provided by suitable individuals. overnight, or weekend care, in which taking the child outside of the child’s home for child care would be disruptive to the child. However, the Commission recognizes there are a variety of situ­ ations in which in-home care may be the best or only option. For Section 809.91(e)(4) provides a Board may allow relative in- example, a child with disabilities, especially a very young child, home child care when the Board’s child care contractor deter­ may require access to special medical or adaptive equipment mines and documents that other child care arrangements are that is in the child’s home. In most cases, it would be impractical not available to the parent in the community. The Commission or ill-advised to move the child and the child’s equipment to a recognizes that in many communities in the state, particularly in relative’s home, and care in the child’s home would be the only rural communities and small towns, there are no regulated child practical option. Also, given the scarcity of regulated infant care care facilities available to parents. in many areas of the state, relative in-home care may be the Certain subsections, paragraphs, and subparagraphs in §809.91 only option for families with very young children. Additionally, have been relettered and renumbered to accommodate addi­ parents who work evenings, nights, or weekends may experi­ tions or deletions. ence considerable difficulty in locating child care arrangements and in-home care may be the only option available to the family. PART III. IMPACT STATEMENTS Section 809.91(e), specifying the circumstances in which a rela­ Randy Townsend, Chief Financial Officer, has determined that tive child care provider can reside in the same household as the for each year of the first five years the rules will be in effect, the eligible child, is removed and incorporated in new §809.91(e)(3). following statements will apply: Section 809.91(e)(1) adds the phrase "which is not the child’s There are no additional estimated costs to the state and local home" to clarify that the eligible relative child care provider governments expected as a result of enforcing or administering cannot reside in the same household as the eligible child un­ the rules. less the care is provided under the circumstances specified in There are no estimated reductions in costs to the state and to §809.91(e)(3). This change in rule language reflects the current local governments as a result of enforcing or administering the practice and guidance provided in Workforce Development rules. (WD) Letter 40-07, Change 1, issued June 22, 2007, and entitled "Background Checks for Relative Child Care Providers: There are no estimated losses or increases in revenue to the Implementation Timeline." state or to local governments as a result of enforcing or admin­ istering the rules. Section 809.91(e)(2) defines "caring for a child in the child’s own home" as "in-home child care." There are no foreseeable implications relating to costs or rev­ enue of the state or local governments as a result of enforcing Section 809.91(e)(2)(A) - (C) specifies that a relative in-home or administering the rules. child care provider must undergo a check against the DPS Sex Offender Registry at the following points: There are no anticipated economic costs to persons required to comply with the rules. (A) The parent’s initial eligibility determination; (B) The parent’s redetermination; and

PROPOSED RULES July 30, 2010 35 TexReg 6643 There is no anticipated adverse economic impact on small or mi­ Mark Hughes, Director of Labor Market Information, has deter­ crobusinesses as a result of enforcing or administering the rules. mined that there is no significant negative impact upon employ­ The proposed rules affect unregulated relatives caring for Com­ ment conditions in the state as a result of the rules. mission-subsidized children in the children’s homes. However, Laurence M. Jones, Director, Workforce Development Division, such providers are not considered microbusinesses. has determined that for each year of the first five years the rules Our reasoning for these conclusions is as follows: are in effect, the public benefit anticipated as a result of enforcing the proposed rules will be to: In Fiscal Year 2009 (FY’09), according to data provided by the Workforce Development Division (as originally reported in the --protect the health and safety of children served by Commis­ local child care service delivery system (CCSD)), approximately sion-funded child care; 2 percent, or 2,470, of all children in child care (i.e., Commission- --minimize the risk of child care subsidies being paid to individu­ funded child care services) received child care in the child’s own als who appear on the DPS Sex Offender Registry; and home (i.e., in-home child care). The associated proportion of the subsidized children, corresponding child care expenditures, --ensure that public child care funds are spent in accordance with or the magnitude of child care regulations affected by these rules federal laws, regulations, and guidelines. is not significant, in any case. PART IV. COORDINATION ACTIVITIES Of the 2,470 children in subsidized in-home child care--as re­ In the development of these rules for publication and public com­ ported in CCSD in FY’09--approximately one-third were infants, ment, the Commission sought the involvement of Texas’s 28 the siblings of infants, or children of teen parents. Fewer than Local Workforce Development Boards. The Commission pro­ 1 percent of children in subsidized in-home child care were vided the concept paper regarding these rule amendments to children with disabilities or received in-home care during irreg­ the Boards for consideration and review on April 27, 2010. The ular hours (evening/nights/weekend care). An undetermined Commission also conducted a conference call with Board exec­ proportion of children in subsidized in-home child care would utive directors and Board staff on April 30, 2010, to discuss the have fallen into the category in the proposed rules in which concept paper. During the rulemaking process, the Commission other (i.e., extenuating) circumstances exist (as determined and considered all information gathered in order to develop rules that documented by the Board’s child care contractor), which result provide clear and concise direction to all parties involved. in alternative child care provider arrangements being unavail­ able. Therefore, it is possible during the next five years--if they Comments on the proposed rules may be submitted to TWC are similar to FY’09--that the majority of these 2,470 children in Policy Comments, Workforce Policy and Service Delivery, attn: subsidized in-home child care may not be eligible for subsidized Workforce Editing, 101 East 15th Street, Room 440T, Austin, in-home child care, were these proposed rules to be in effect. Texas 78778; faxed to (512) 475-3577; or e-mailed to TWCPol­ As a result, the implementation of these rules may lead to a [email protected]. The Commission must receive somewhat lower workload of DFPS background checks and comments postmarked no later than 30 days from the date this DPS Sex Offender Registry checks. Were the same number of proposal is published in the Texas Register. children formerly in subsidized in-home child care (but no longer The rules are proposed under Texas Labor Code §301.0015 and eligible) to transfer to licensed or otherwise regulated child care §302.002(d), which provide the Commission with the authority facilities, then workloads would generally be the same. to adopt, amend, or repeal such rules as it deems necessary Federal regulations and Commission rules support parental for the effective administration of Agency services and activities, choice in selecting a child care provider. Motivated by the need and Texas Human Resources Code §44.002, regarding Admin­ to ensure that Commission-funded child care services are pro­ istrative Rules. vided in a safe environment, the Commission is now proposing The proposed rules affect Texas Labor Code, Title 4, particu­ that the requirements associated with in-home child care result larly Chapters 301 and 302, as well as Texas Government Code, in a somewhat more regulated context. Parents--even those Chapter 2308. who may be precluded from in-home child care--may still choose for the relative to care for the childintherelative’s home(if the §809.91. Minimum Requirements for Providers. relative agrees, and if the home is or can become a listed family home with DFPS). It is not possible to estimate with any degree (a) A Board shall ensure that child care subsidies are paid only of certainty the future background check workload for DFPS to: that could result from implementation of these rules; however, (1) regulated child care providers as described in it is likely that potential increases could be accommodated §809.2(17); with modest increases of pertinent federal child care funding provided through interagency contract from the Commission. (2) relative child care providers as described in §809.2(18), Of course, parents precluded from in-home child care also may subject to the requirements in subsection (e) [subsections (e) and (f)] select some other licensed or otherwise regulated child care of this section; or alternatives. (3) at the Board option, listed family homes as defined Economic Impact Statement and Regulatory Flexibility Analysis in §809.2(12), subject to the requirements in subsection [paragraph] (b)(2) of this section. The Agency has determined that the proposed rules will not have an adverse economic impact on small businesses as these pro­ (b) For providers listed with DFPS, the following applies: posed rules place no requirements on small businesses, includ­ (1) A Board shall not prohibit a relative child care provider ing child care providers. The proposed rules affect unregulated who is listed with DFPS and who meets the minimum requirements of relatives caring for subsidized children in the children’s homes. this section from being an eligible relative child care provider. However, such providers are not considered small businesses.

35 TexReg 6644 July 30, 2010 Texas Register (2) If a Board chooses to include listed family homes, as list with DFPS; however, pursuant to 45 C.F.R. §98.41(e), relative child defined in §809.2(12), that provide care for children unrelated to the care providers listed with DFPS shall be exempt from the health and provider, a Board shall ensure that there are in effect, under local law, safety requirements of 45 C.F.R. §98.41(a).[;] requirements applicable to the listed family homes designated to pro­ (2) For relative child care providers caring fora childinthe tect the health and safety of children. Pursuant to 45 C.F.R. §98.41, the child’s own home (in-home child care) [residence], Boards shall ensure requirements shall include: that [the] relative child care providers do [provider does] not appear on (A) the prevention and control of infectious diseases the Texas Department of Public Safety’s (DPS) Sex Offender Registry, (including immunizations); pursuant to [Chapter 62 of the] Texas Code of Criminal Procedure, Chapter 62, at the following points:[.] (B) building and physical premises safety; and (A) The parent’s initial eligibility determination; (C) minimum health and safety training appropriate to the child care setting. (B) The parent’s redetermination; and (c) Except as provided by the criteria for Texas Rising Star (C) When the parent transfers the care to a different rel­ Provider Certification, a Board or the Board’s child care contractor ative in-home child care provider. shall not place requirements on regulated providers that: (3) A Board shall allow relative in-home child care for the (1) exceed the state licensing requirements stipulated in following: Texas Human Resources Code, Chapter 42; or (A) A child with disabilities as defined in §809.2(6), (2) have the effect of monitoring the provider for compli­ and his or her siblings; ance with state licensing requirements stipulated in Texas Human Re­ (B) A child under 18 months of age, and his or her sib­ sources Code, Chapter 42. lings; (d) When a Board or the Board’s child care contractor, in the (C) A child of a teen parent; and course of fulfilling its responsibilities, gains knowledge of any pos­ sible violation regarding regulatory standards, the Board or its child (D) When the parent’s work schedule requires evening, care contractor shall report the information to the appropriate regula­ overnight, or weekend child care in which taking the child outside of tory agency. the child’s home would be disruptive to the child. [(e) Relative child care providers shall not reside in the same (4) A Board may allow relative in-home child care for cir­ household as the eligible child unless:] cumstances in which the Board’s child care contractor determines and documents that other child care provider arrangements are not avail­ [(1) the eligible child is a child of a teen parent; or] able in the community. [(2) the Board’s child care contractor determines and doc­ This agency hereby certifies that the proposal has been reviewed uments that other child care provider arrangements are not reasonably by legal counsel and found to be within the agency’s legal author­ available. Factors used to determine the reasonable availability of child ity to adopt. care may include, but are not limited to:] [(A) the parent’s work schedule;] Filed with the Office of the Secretary of State on July 13, 2010. [(B) the availability of adequate transportation; or] TRD-201003872 Reagan Miller [(C) the age of the child.] Deputy Division Director, Workforce Policy and Service Delivery (e) [(f)] For relative child care providers to be eligible for re­ Texas Workforce Commission imbursement for Commission-funded child care services, the following Earliest possible date of adoption: August 29, 2010 applies: For further information, please call: (512) 475-0829 (1) Relative child care providers caring for a child in the relative’s own home, which is not the child’s home, [residence]shall ♦ ♦ ♦

PROPOSED RULES July 30, 2010 35 TexReg 6645 TITLE 1. ADMINISTRATION SUBCHAPTER C. ADMINISTRATIVE ACTION PART 4. OFFICE OF THE SECRETARY 1 TAC §87.23, §87.24 OF STATE The Office of the Secretary of State adopts amendments to 1 TAC §87.23 and §87.24 concerning procedures for handling CHAPTER 78. ATHLETE AGENTS complaints against notaries public. The amendments are adopted without change to the text as proposed in the April 30, SUBCHAPTER D. ADMINISTRATIVE 2010, issue of the Texas Register (35TexReg3357). PENALTIES The amendments remove a potentially misleading or confusing 1 TAC §78.53 statement related to the initiation of a contested case proceeding and clarify the procedure upon a determination that further action The Office of the Secretary of State adopts an amendment to 1 on a complaint is appropriate. TAC §78.53 concerning late athlete agent contract filings. The COMMENTS amendment is adopted without change to the text as proposed in the April 30, 2010, issue of the Texas Register (35 TexReg No comments were received concerning the amendments. 3357). STATUTORY AUTHORITY The amendment removes a formula for calculating the adminis­ The amendments are adopted under the authority of Texas trative penalty for late contract filings. Upon further consideration Government Code, §406.023(a), which requires the secretary of of the calculation, the Office of the Secretary of State has deter­ state to establish rules for the enforcement and administration mined that a strict formula is not appropriate for the calculation. of Chapter 406. Removing the formula does not leave the assessment of fees without guidance; the provisions of §78.60 continue to provide Chapter 406 of the Texas Government Code is affected by the guidance for the assessment of administrative penalties. amendments. COMMENTS This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency’s No comments were received concerning the amendment. legal authority. STATUTORY AUTHORITY Filed with the Office of the Secretary of State on July 14, 2010. The amendment is adopted under the authority of §2051.051 of the Texas Occupations Code which provides that the secretary TRD-201003911 may adopt rules necessary to administer the chapter. Lorna Wassdorf Chapter 2051 of the Texas Occupations Code is affected by the Director, Business and Public Filings amendment. Office of the Secretary of State Effective date: August 3, 2010 This agency hereby certifies that the adoption has been reviewed Proposal publication date: April 30, 2010 by legal counsel and found to be a valid exercise of the agency’s For further information, please call: (512) 463-5562 legal authority. ♦ ♦ ♦ Filed with the Office of the Secretary of State on July 14, 2010. TRD-201003909 CHAPTER 97. BUSINESS OPPORTUNITY Lorna Wassdorf SUBCHAPTER D. FEES AND GENERAL Director, Business and Public Filings INFORMATION Office of the Secretary of State Effective date: August 3, 2010 1 TAC §97.22, §97.23 Proposal publication date: April 30, 2010 The Office of the Secretary of State adopts amendments to For further information, please call: (512) 463-5562 §97.22 and §97.23, concerning business opportunity. The amendments are adopted without change to the text as pro­ ♦ ♦ ♦ posed in the March 26, 2010, issue of the Texas Register (35 CHAPTER 87. NOTARY PUBLIC TexReg 2391).

ADOPTED RULES July 30, 2010 35 TexReg 6647 The amendments remove a requirement that notices of exemp­ adverse events as the Centers for Medicare and Medicaid Ser­ tion and notices of voluntary termination of business opportu­ vices (CMS) imposes in Medicare for the same types of health nities include a statement that the person executing the docu­ care-associated adverse conditions, health care providers and ment is authorized to do so. Such a statement is not required by facilities. In addition, S.B. 203 provides that HHSC may deny or the Business Opportunity Act, Business and Commerce Code, reduce reimbursement for any other preventable adverse event Chapter 51, and, upon further consideration of the requirement, that causes patient death or serious disability in health care the Office of the Secretary of State has determined that it would settings. not be appropriate to reject notices of exemption or notices of Since the enactment of S.B. 203, CMS has expanded the Medi­ voluntary termination for lack of such a statement. care preventable adverse event policy, originally limited to in­ COMMENTS patient hospital services, to include certain outpatient services and professional services. To reflect that expansion, proposed No comments were received concerning the amendments. new §354.1063 states that HHSC will deny or reduce reimburse­ STATUTORY AUTHORITY ment for physician services associated with preventable adverse events. The term "preventable adverse event" is definedinnew The amendments are adopted under the authority of the Busi­ §354.1070 of this title, relating to Definitions, which is currently ness Opportunity Act, Business and Commerce Code, Chapter proposedinthisissueofthe TexasRegister. HHSC will align 51, which provides for the secretary of state to prescribe forms, Medicaid preventable adverse event policy with Medicare pol­ set fees, and adopt rules to administer and enforce Chapter 51. icy as much as possible and will add other preventable adverse No other code or statute is affected by the amendments. events as deemed appropriate. This agency hereby certifies that the adoption has been reviewed Comments by legal counsel and found to be a valid exercise of the agency’s The 30-day comment period ended June 28, 2010. During this legal authority. period, which included a public hearing on June 14, 2010, HHSC received one set of comments regarding the proposed new rule. Filedwiththe Office of the Secretary of State on July 14, 2010. A summary of the comments and HHSC’s response follows. TRD-201003912 Comment: The Texas Medical Association (TMA) commented Lorna Wassdorf that TMA does not oppose the rule but does have concerns. Director, Business and Public Filings TMA commented that new §354.1063(b) does not make any ex­ Office of the Secretary of State ceptions for payment of physicians involved in the treatment of Effective date: August 3, 2010 patients who acquire a potentially preventable condition while in Proposal publication date: March 26, 2010 the hospital, such as an infection, or suffer a never event, such For further information, please call: (512) 463-5562 as wrong site surgery. TMA stated that Medicare policy makes clear that physicians who provide treatment in response to a hos­ ♦ ♦ ♦ pital acquired condition or never event will be paid, and stated that the rule should beamendedtoallow thetreatingor"rescu­ PART 15. TEXAS HEALTH AND ing" physician to be paid. For example, the proposed language HUMAN SERVICES COMMISSION would discourage a surgeon from removing a retained foreign body left in a previous surgery in which he/she was not involved. CHAPTER 354. MEDICAID HEALTH HHSC Response: HHSC acknowledges the comment, but no SERVICES changes were made to the rule. The language of the rule uses the term "associated" which is the same term used in S.B. 203, SUBCHAPTER A. PURCHASED HEALTH 81st Legislature, Regular Session, 2009. HHSC does agree with SERVICES TMA that any denial or reduction in payments for physicians will only be for physician services directly related to the triggering DIVISION 5. PHYSICIAN AND PHYSICIAN preventable adverse event. Services provided to remedy a pre­ ASSISTANT SERVICES ventable adverse event will be considered for reimbursement. HHSC will add this clarification to the medical policy. No changes 1 TAC §354.1063 were made to the rule based on this comment. The Texas Health and Human Services Commission (HHSC) COMMENT: TMA commented that physician participation in the adopts new §354.1063, Preventable Adverse Events, relating to Medicaid network is "tenuous, at best" and that the new rule denied or reduced reimbursement for services associated with is "yet another disincentive for physicians to participate in the preventable adverse events, without changes to the proposed program. For Medicaid to make advances in quality, physicians text as published in the May 28, 2010, issue of the Texas Regis- must be treated as partners and rewarded for adopting evidence- ter (35 TexReg 4285) and will not be republished. based quality improvement practices." Background and Justification HHSC Response: HHSC acknowledges the comment, but no Senate Bill (S.B.) 203, 81st Legislature, Regular Session, 2009, changes weremadetothe rule basedonthiscomment. requires the adoption of rules regarding the denial or reduction COMMENT: TMA commented that the rule does not articulate of Medicaid reimbursement for preventable adverse events, whether physicians may appeal a payment reduction or denial sometimes referred to as "never events," that occur in a hospital associated with a potentially preventable adverse event. TMA setting. Senate Bill 203 also requires that HHSC impose the stated that the proposed rule should be amended to reflect that same reimbursement denials or reductions for preventable any denial of payment for a potentially preventable readmission

35 TexReg 6648 July 30, 2010 Texas Register is an appealable action and physicians should follow the appeal House Bill (H.B.) 1218, 81st Legislature, Regular Session, process as articulated in the Texas Medicaid Provider Proce- 2009, requires the adoption of rules for identifying potentially dures Manual. preventable readmissions of Medicaid recipients. House Bill 1218 also directs HHSC to exchange data with hospitals on HHSC Response: HHSC acknowledges the comment, but no present-on-admission indicators. changes were made to the rule. Any denial or reduction of a provider claim for payment for physician services rendered to a Comments Medicaid recipient is an action that may be appealed. The 30-day comment period ended June 28, 2010. During Statutory Authority this period, which included a public hearing on June 14, 2010, HHSC received comments regarding the new and amended The new rule is adopted under Texas Government Code rules from the Texas Medical Association (TMA). The comments §531.033, which authorizes the Executive Commissioner of and HHSC’s responses follow. HHSC to adopt rules necessary to carry out HHSC’s duties; and the Texas Human Resources Code §32.021 and Texas Comment: TMA objected to language in §354.1070, Defini­ Government Code §531.021(a), which provide HHSC with the tions, maintaining that the phrase "HHSC will determine what authority to administer the federal medical assistance (Medic­ constitutes a Medicaid preventable adverse event" is too broad. aid) program in Texas. Instead, TMA supports appointment of a committee to advise HHSC on issues pertaining to preventable adverse events, as This agency hereby certifies that the adoption has been reviewed well as hospital-acquired conditions. TMA also requested that by legal counsel and found to be a valid exercise of the agency’s HHSC add "for the same types of health providers and facilities" legal authority. to the definition of preventable adverse event. Additionally, TMA objected to the language "any other preventable adverse event" Filed with the Office of the Secretary of State on July 19, 2010. as too broad. TRD-201003954 HHSC Response: HHSC has adopteddefinitions to mirror Medi­ Steve Aragon care as closely as possible. However, because Medicaid serves Chief Counsel a very different population from that of Medicare, e.g., clients Texas Health and Human Services Commission under age 21, it is necessary for HHSC to have the discretion to Effective date: September 1, 2010 define preventable adverse events that may not be identified by Proposal publication date: May 28, 2010 Medicare or the National Quality Forum. HHSC has chosen not For further information, please call: (512) 424-6900 to convene a committee at this time. No changes were made to ♦ ♦ ♦ the rules based on these comments. Comment: TMA commented that S.B. 203 specifies that Medic­ DIVISION 6. HOSPITAL SERVICES aid will abide by Medicare policy "for the same types of health care-associated adverse conditions and the same types of 1 TAC §§354.1070 - 354.1072 health care providers and facilities" and that the rule should The Texas Health and Human Services Commission (HHSC) be amended to state "for the same types of health providers adopts new §354.1070, Definitions, and amended §354.1071, and facilities". TMA also stated that the language "any other Additional Claim Information Requirements, and §354.1072, Au­ preventable adverse event" is too broad. thorized Inpatient Hospital Services, relating to present-on-ad­ HHSC Response: HHSC is imposing payment reduction and de­ mission requirements, preventable adverse events, and nials for the same types of health care facilities and providers as potentially preventable readmissions, without changes to the identified by Medicare. HHSC will define the actual preventable proposed text as published in the May 28, 2010, issue of the adverse event within Medicaid policy. Texas Register (35 TexReg 4286) and will not be republished. Comment: TMA objected to "classifying potentially preventable Background and Justification readmissions as potentially preventable events for which physi­ Senate Bill (S.B.) 203, 81st Legislature, Regular Session, 2009, cian payment may be denied or reduced." Additionally, TMA requires the adoption of rules regarding the denial or reduction of stated that the language regarding the timeframe for what might reimbursement under the Medicaid program for preventable ad­ constitute a preventable readmission is too vague. TMA also verse events, sometimes referred to as "never events," that oc­ recommended that HHSC appoint an advisory committee to cur in a hospital setting. Senate Bill 203 also requires that HHSC advise the agency on any additional events that may relate to impose the same reimbursement denials or reductions for pre­ the Medicaid program and may be added. ventable adverse events as the Centers for Medicare and Med­ HHSC Response: HHSC is not clear on the basis for this com­ icaid Services (CMS) imposes in Medicare for the same types of ment, but HHSC did not state and did not intend to imply that pay­ health care-associated adverse conditions and the same types ments would be reduced or denied for a potentially preventable of health care providers and facilities. readmission. HHSC will provide an annual report that will identify Since the enactment of S.B. 203, CMS has expanded its Medi­ potentially preventable readmissions to hospitals, as directed by care preventable adverse events policy, originally limited to hos­ H.B. 1218. HHSC will define the readmission timeframe for po­ pital settings, to include certain outpatient services and profes­ tentially preventable readmissions within Medicaid policy. HHSC sional services. HHSC will align Medicaid policies regarding has chosen not to convene an advisory panel at this time. No the types of preventable adverse events with Medicare as much changes were made to the rules based on these comments. as possible and will add other preventable adverse events as Statutory Authority deemed appropriate.

ADOPTED RULES July 30, 2010 35 TexReg 6649 The new rule and amendments are adopted under Texas Gov­ Legal Authority ernment Code §531.033, which authorizes the Executive Com­ The amendment is adopted under Texas Government Code missioner of HHSC to adopt rules necessary to carry out the §531.033, which provides the Executive Commissioner of commission’s duties; and the Texas Human Resources Code HHSC with broad rulemaking authority; Human Resources §32.021 and Texas Government Code §531.021(a), which pro­ Code §32.021 and Texas Government Code §531.021(a), vide HHSC with the authority to administer the federal medical which provide HHSC with the authority to administer the federal assistance (Medicaid) program in Texas. medical assistance (Medicaid) program in Texas; and Texas This agency hereby certifies that the adoption has been reviewed Government Code §531.021(b), which provides HHSC with the by legal counsel and found to be a valid exercise of the agency’s authority to propose and adopt rules governing the determina­ legal authority. tion of Medicaid reimbursements. §355.8021. Reimbursement Methodology for Home Health Services Filedwiththe Office of the Secretary of State on July 19, 2010. and Durable Medical Equipment, Prosthetics, Orthotics and Supplies. TRD-201003955 Steve Aragon (a) Reimbursement methodology for services provided by a home health agency. Chief Counsel Texas Health and Human Services Commission (1) Except for durable medical equipment, prosthetics, or­ Effective date: September 1, 2010 thotics and supplies (DMEPOS), authorized home health services pro­ Proposal publication date: May 28, 2010 vided for eligible Medicaid recipients are reimbursed the lesser of: For further information, please call: (512) 424-6900 (A) the amount billed to Medicaid by the agency; or ♦ ♦ ♦ (B) the fee established for the specific authorized home health service and published in the Medicaid fee schedules. CHAPTER 355. REIMBURSEMENT RATES (2) HHSC will update the fee schedules for Medicaid-reim­ SUBCHAPTER J. PURCHASED HEALTH bursable therapy, nursing, and aide services provided by a home health SERVICES agency as needed. DIVISION 2. MEDICAID HOME HEALTH (A) HHSC bases the fee schedules on: an analysis of the Centers for Medicare and Medicaid Services fees for similar ser­ PROGRAM vices; Medicaid fees paid by other states; a survey of costs reported 1 TAC §355.8021 by Medicaid home health agencies; the Medicare Low Utilization Pay­ ment Adjustment (LUPA) fees; previous Medicaid payments for Med­ The Texas Health and Human Services Commission (HHSC) icaid-reimbursable therapy, nursing, and aide services; or some com­ adopts the amendment to §355.8021, concerning Reimburse­ bination thereof. Reimbursement information for therapy, nursing and ment Methodology for Home Health Services and Durable aide services provided through the Early and Periodic Screening, Di­ Medical Equipment, Prosthetics, Orthotics and Supplies, with agnosis and Treatment (EPSDT) program, known in Texas as Texas changes to the proposed text as published in the May 28, 2010, Health Steps, is defined in §355.8441 of this subchapter (relating to issue of the Texas Register (35 TexReg 4289). The text of the Reimbursement Methodologies for Early and Periodic Screening, Di­ rule will be republished. agnosis and Treatment (EPSDT) Services). Background and Justification (B) HHSC may conduct periodic rate reviews that will include, but not be limited to, payments for as well as the costs associ­ The amended rule describes the reimbursement methodology ated with providing these Medicaid-reimbursable therapy, nursing, and utilized to calculate Medicaid payment rates for therapy, nursing, aide services. HHSC may seek input from contracted home health ser­ and aide services for home health agencies. It also updates the vices providers and other interested parties in performing this review. list of sources that may be used to determine payment rates for these providers. (3) Payment for these services will be adjusted within available funding. The amended rule replaces the term "durable medical equipment (DME) and expendable supplies" with "durable medical equip­ (b) Reimbursement methodology for DMEPOS items pro­ ment, prosthetics, orthotics, and supplies (DMEPOS)" to match vided by home health agencies and providers/suppliers of DMEPOS. the terminology now used by the Centers for Medicare and Med­ Participating providers are reimbursed for items of DMEPOS the lesser icaid Services and used in the recently amended Texas Medic­ of the billed amount or the Medicaid reimbursement rate established aid State Plan. The amended rule outlines the steps taken to by HHSC in one of the following ways: determine a payment rate for a DMEPOS procedure code when (1) If Medicare reimburses a DMEPOS item, the Medicaid Medicare provides reimbursement for the procedure code, when reimbursement rate will be equal to or a percentage of the Medicare re­ Medicare does not reimburse for the procedure code, and when imbursement rate for the procedure code on the Medicare fee schedule manual pricing is used. specific to Texas that is available at the time of review unless HHSC de­ The amended rule also deletes obsolete information and refer­ termines based on documented evidence that the Medicare reimburse­ ences. ment rate is insufficient for the items covered under the procedure code that are required by the Medicaid population. Comments (2) If Medicare does not reimburse for the item, other The 30-day comment period ended June 27, 2010. HHSC did sources are used to determine a Medicaid payment rate as follows: not receive any comments regarding the proposed amended rule.

35 TexReg 6650 July 30, 2010 Texas Register (A) Analysis of custom or published reports and of re­ excerpts of the Performance-Based Monitoring Analysis System imbursement rates for the same or similar item within a specificgeo­ 2010 Manual. Earlier versions of the manual will remain in effect graphic area of Texas; with respect to the school years for which they were developed. (B) Analysis of Medicaid payment rates for thesameor House Bill 3459, 78th Texas Legislature, 2003, added the Texas similar items in other states; Education Code (TEC), §7.027, limiting and redirecting monitor­ ing done by the TEA to that required to ensure school district (C) 82 percent of the manufacturer’s suggested retail and charter school compliance with federal law and regulations; price (MSRP); or financial accountability, including compliance with grant require­ (D) Cost shown on a manufacturer’s invoice submitted ments; and data integrity for purposes of the Public Education In­ by the provider to HHSC. formation Management System (PEIMS) and accountability un­ der TEC, Chapter 39. Legislation passed in 2005 renumbered (3) Regardless of whether Medicare reimburses the proce­ TEC, §7.027, to TEC, §7.028. To meet this monitoring require­ dure code, if a single procedure code covers a broad range of items ment, the agency developed the PBMAS, which is used in con­ with a broad range of costs such that HHSC has determined that a sin­ junction with other evaluation systems, to monitor performance gle payment rate is unreasonable or could unduly limit access to care, and program effectiveness of special programs in school districts manual pricing may be used. If manual pricing is used, the payment and charter schools. rate is determined by using either the documented manufacturer sug­ gested retail price (MSRP) less 18 percent or the documented Average Agency legal counsel has determined that the commissioner of Wholesale Price (AWP) less 10.5 percent, whichever is applicable. If education should take formal rulemaking action to place into the neither an MSRP nor an AWP is available, the provider’s documented Texas Administrative Code procedures related to the PBMAS. invoice cost is used as the basis for manual pricing. Given the statewide application of the PBMAS and the existence of sufficient statutory authority for the commissioner of education This agency hereby certifies that the adoption has been reviewed to formally adopt rules in this area, portions of each annual PB­ by legal counsel and found to be a valid exercise of the agency’s MAS Manual have been adoptedsince thefi rst PBMAS Manual legal authority. was developed in 2004-2005. The PBMAS evolves from year to year, and the intent is to annually update 19 TAC §97.1005 to Filed with the Office of the Secretary of State on July 14, 2010. refer to the most recently published PBMAS Manual. TRD-201003903 The adopted amendment to 19 TAC §97.1005 updates the cur­ Steve Aragon rent rule by adopting excerpted sections of the PBMAS 2010 Chief Counsel Manual. These excerpted sections describe the specific criteria Texas Health and Human ServicesCommission and calculations that will be used to assign 2010 PBMAS perfor­ Effective date: September 1, 2010 mance levels. Proposal publication date: May 28, 2010 The 2010 PBMAS includes several key changes from the 2009 For further information, please call: (512) 424-6900 system. New standards and cut-points were adopted for several ♦ ♦ ♦ PBMAS indicators, including the Limited English Proficient (LEP) Participation Rate, the 3-5 Year Olds Less Restrictive Environ­ TITLE 19. EDUCATION ment (LRE) Placement Rate, the 6-11 Year Olds LRE Placement Rate, the 12-21 Year Olds LRE Placement Rate, the Special Ed­ PART 2. TEXAS EDUCATION AGENCY ucation Discretionary Discipline Alternative Education Program (DAEP) Placements, and the Special Education Discretionary CHAPTER 97. PLANNING AND Placements to In-School Suspension (ISS). Several PBMAS in­ ACCOUNTABILITY dicators moved from "Report Only" indicators to indicators with performance level assignments, including the LEP (Not Served SUBCHAPTER AA. ACCOUNTABILITY AND in Bilingual Education/English as a Second Language) Texas As­ PERFORMANCE MONITORING sessment of Knowledge and Skills (TAKS) Passing Rate, the Texas English Language Proficiency Assessment System (TEL­ 19 TAC §97.1005 PAS) Reading Multi-Year Beginning Proficiency Level Rate, the (Editor’s note: In accordance with Texas Government Code, TELPAS Composite Rating Levels for Students in U.S. Schools §2002.014, which permits the omission of material which is "cum- Multiple Years, the Title I, Part A Annual Dropout Rate (Grades bersome, expensive, or otherwise inexpedient," the figure in 19 TAC 7-12), the Special Education TAKS-M Participation Rate, the §97.1005 is not included in the print version of the Texas Register. The Special Education TAKS-Alt Participation Rate, and the Special figure is available in the on-line version of the July 30, 2010, issue of Education Discretionary Placements to Out-of-School Suspen­ the Texas Register.) sion (OSS). The Texas Education Agency (TEA) adopts an amendment to To address the final phase-in of TAKS (Accommodated) perfor­ §97.1005, concerning accountability and performance monitor­ mance results, a "hold harmless" provision has been added to ing. The amendment is adopted with changes to the proposed two subject-area indicators in both the Career and Technical Ed­ text as published in the May 14, 2010, issue of the Texas Reg- ucation and the Special Education program areas. Changes to ister (35 TexReg 3754). The section describes the purpose of the PBMAS indicators for 2010 are marked in the manual as the Performance-Based Monitoring Analysis System (PBMAS) "New!" for easy reference. and manner in which school districts and charter school perfor­ The adopted amendment also modifies subsection (d) to spec­ mance is reported. The section also adopts the most recently ify that the PBMAS Manual adopted for the school years prior published PBMAS Manual. The amendment adopts applicable

ADOPTED RULES July 30, 2010 35 TexReg 6651 to 2010-2011 will remain in effect with respect to those school posed changes to the standards are also shared in advance with years. the performance-based monitoring contacts at each of the 20 re­ gional education service centers who, in turn, are responsible for In response to public comment, a clarification to page 3 of the ex­ sharing that information with their districts. cerpted sections of the manual adopted in rule has been added to explain that the Not Assigned performance level includes cir­ The agency also disagrees that the PBMAS standards do not cumstances in which that performance level must be assigned to remain the same for more than a period of one year. The stan­ address situations in which compromised data render any other dards for PBMAS indicators have remained relatively stable over performance level designation impossible to determine. time and, in the area of student assessment, have closely mir­ rored the Academically Acceptable subject-area standards used Also in response to public comment, a clarification to Appendix C in the state’s accountability system. As in the state accountability of the excerpted sections of the manual adopted in rule has been system and the federal (AYP) accountability system, the PBMAS added to explain that a district can continue (by a specified date) standards increase in rigor over time as appropriate and based to request from the agency a recalculation of an incorrect per­ on the considerations outlined in each year’s PBMAS Manual. formance level if a district determines that one or more PBMAS Additionally, the rule text in 19 TAC §97.1005(c) referenced by performance level assignments were based on a data or calcu­ the commenter is identical to the rule text used for the state ac­ lation error attributable to the agency or one of the agency’s data countability manual (see 19 TAC §97.1001(d)) and the federal contractors. accountability (AYP) manual (see 19 TAC §97.1004(c)). The adopted amendment establishes in rule the PBMAS proce­ Comment. The founder and director of Rise Academy stated that dures for assigning the 2010 PBMAS performance levels. Appli­ PBMAS punishes charter schools that are doing exactly what cable procedures will be adopted each year as annual versions they said they were going to do as per their original charter con­ of the PBMAS Manual are published. The adopted amendment tracts; that many Texas charters are "drop-out recovery" and that has no locally maintained paperwork requirements. there are going to be a certain number of casualties at these The TEA determined that there is no direct adverse economic schools no matter what; and that the same holds for charters tar­ impact for small businesses and microbusinesses; therefore, geting special-needs students. The commenter stated that the no regulatory flexibility analysis, specified in Texas Government problems PBMAS is intended to lessen are made worse by the Code, §2006.002, is required. entanglements that the interventions system imposes on char­ ters; that the school’s response to the interventions and man­ The public comment period on the proposal began May 14, 2010, dates consumes a great deal of time, attention, and energy of and ended June 14, 2010. In addition, a request for a public the charter staff, which means less time, attention, and energy hearing on the proposal was submitted under the Administrative paid to the students. The commenter stated that Rise Academy Procedure Act. The public hearing was held on June 18, 2010, received several infractions because two special education stu­ following notice of the public hearing being filedwiththeTexas dents did not pass some of their TAKS (Accommodated) tests Register on June 9, 2010. Following is a summary of public in 2009 and recommended that charters with tiny subsets of a comments received, including those received at the public hear­ given student population should not be dragged into the inter­ ing, and corresponding agency responses regarding the pro­ ventions tangle. posed revisions to 19 TAC Chapter 97, Planning and Account­ ability, Subchapter AA, Accountability and Performance Monitor­ Agency Response. The agency disagrees in part and cannot ing, §97.1005, Performance-Based Monitoring Analysis System. address the comment in part. To the extent the comment ad­ dresses issues concerning interventions and mandates, those Comment. The assistant director/supervisor of the Freestone- issues are outside of the scope of the current rule proposal. Navarro Bi-County Co-op stated there is no dispute that districts need to be monitored and that the PBMAS has an overall pos­ The agency disagrees that Rise Academy received an adverse itive effect on student education but that 19 TAC §97.1005(c), performance level (PL) assignment through the PBMAS be­ which states that the specific criteria and calculations used in the cause two special education students did not pass some of PBMAS are established annually by the commissioner of educa­ their TAKS (Accommodated) tests in 2009. The publicly-posted tion and communicated to all school districts and charter schools, 2009 PBMAS report for Rise Academy indicates the special places an undue burden on schools. The commenter stated that education students at the charter met the PBMAS standard making necessary changes and seeing results often takes two for mathematics, reading/English language arts (ELA), and to three years from implementation to fruition. The commenter science, which were all designated with a PL 0; while no data recommended a system more like the Academic Excellence Indi­ were available to evaluate the special education students for cator System (AEIS) or Adequate Yearly Progress (AYP) where social studies or writing, which were all designated with a PL expectations are clear, communicated in advance, and increase No Data. The agency also disagrees with the recommendation in rigor over time. The commenter also recommended keeping concerning student group size. The PBMAS already includes standards thesamefortwo tothree years. consideration of student group size, which is outlined in each year’s PBMAS Manual, and is carefully balanced with one of Agency Response. The agency agrees that the PBMAS has the system’s guiding principles of maximum inclusion. had an overall positive effect on student performance but dis­ agrees that the system does not provide clear expectations that Comment. The executive director of the Texas Charter Schools are communicated in advance and increase in rigor over time. Association (TCSA) stated that there are two potential deficien­ Each year’s PBMAS Manual includes a standards table outlining cies in the legal foundation of the 2010 PBMAS. First, the exec­ the proposed standards for both the current year and subsequent utive director commented that the TEC, §7.028, does not give year. Proposed changes to the standards are shared in advance clear authority to TEA to adopt or enforce these rules. The com­ when the Performance-Based Monitoring Focus Group is con­ menter stated that a second area of legal concern relates to the vened, and this group’s members are responsible for sharing extent to which open-enrollment charter schools are subject to that information with their regional peers and colleagues. Pro­ the PBMAS under TEC, §7.028.

35 TexReg 6652 July 30, 2010 Texas Register Agency Response. The agency agrees in part and disagrees program graduation as a failure and a ground for an imposition in part. The comment misconstrues the rulemaking authority of an intervention level. for the proposed revisions to 19 TAC Chapter 97, Planning and The commenters stated that charter schools that were founded Accountability, Subchapter AA, Accountability and Performance to assist at-risk students, which are demographically minor­ Monitoring, §97.1005, Performance-Based Monitoring Analysis ity dominated, and that commonly receive students qualified System. The proposed rule adoption referenced TEC, §7.028, for special education services are inappropriately denigrated which deals with monitoring activities authorized by TEC, and sanctioned for "over identification" of students in these §§29.001(5), 29.010(a), 39.056, 39.057, and similar provisions. categories. The commenters urged the agency to make the In referencing TEC, §7.028, the agency intended a reference considerations for alternative education through PBMAS as it to these underlying statutory authorities as well. However, in does in the accountability system ortoassignaperformance response to this comment, the order finally adopting the rule will level of Report Only to districts in the alternative education include citation to these additional provisions. As to the extent accountability system. to which open-enrollment charters are covered by TEC, §7.028, that section expressly provides for monitoring a "school granted Additionally, the commenters stated that PBMAS standards of­ charters under Chapter 12." Since an open-enrollment charter ten align with the standard state accountability system, which school is granted a charter under TEC, Chapter 12, §7.028 results in the application of unreasonable measures to the alter­ makes clear that TEC, §§29.001(5), 29.010(a), 39.056, 39.057, native education charters. The commenters further stated that and similar provisions do authorize monitoring of open-enroll­ they are experiencing significant adverse effects on their schools ment charter schools. This is in accord with TEC, §12.104(b)(2), once they enter a PBMAS intervention stage and that the sanc­ which among other provisions specifies that an open-enroll­ tions can result in the denials of federal and state grants, denials ment charter school is subject to a prohibition, restriction, or of requests for expanded programs and campuses, and damag­ requirement relating to public school accountability under TEC, ing accreditation consequences. Chapter 39, Subchapters B, C, D, E, and J. See also TEC, Agency Response. The agency disagrees in part and cannot §39.104, and 19 TAC Chapter 100, Charters, Subchapter AA, address the comment in part. To the extent the comment ad­ Commissioner’s Rules Concerning Open-Enrollment Charter dresses issues concerning interventions, sanctions, and accred­ Schools, Division 2, Commissioner Action and Intervention, itation, those issues are outside of the scope of the current rule §100.1029, Agency Audits, Monitoring, and Investigations. Fi­ proposal. nally, the commissioner is expressly charged by TEC, §§39.051, 39.052, and 39.054, with adopting standards for assessing the The agency disagrees that the PBMAS is a one-size-fits-all sys­ effectiveness of school district and charter programs for special tem. On the contrary, the PBMAS was developed to take into populations and career and technology, as well as reporting data consideration the diversity that exists across districts, not only in through the Public Education Information Management System terms of charter schools, but also between small and large dis­ (PEIMS)orother reports required by state or federal law or tricts, rural and urban districts, economically disadvantaged and court order; an item listed under TEC, §§7.056(e)(3)(C)-(I), and non-economically disadvantaged districts, and districts with sig­ other factors. The commissioner is further charged, by TEC, nificant numbers of English language learners (ELLs) and dis­ §§39.056, 39.057, 39.058, 39.102, 39.103, 39.104, and other tricts with small numbers of ELLs. The diversity of the state’s provisions of TEC, Chapter 39, Subchapter E, with determining districts and charters is accommodated in the PBMAS through a when accreditation intervention or sanctions are warranted, variety of unique components, including performance level cut- in part based on the factors identified by TEC, §39.052 and points, special analysis, minimum size requirements, and re­ §39.054. In response to this comment, the order finally adopting quired improvement. the rule will also include citation to these additional provisions. The agency disagrees with the suggestion to add alternative ed­ Comment. The executive director of the TCSA, along with the ucation accountability provisions to the PBMAS or to assign a TCSA vice president for member services and TCSA members performance level of Report Only to districts in the alternative ed­ representing Focus Learning Academy, Phoenix Charter School, ucation accountability system. As noted by one of commenters, Responsive Education Solutions, Winfree Academy, Austin Can a primary purpose of the PBMAS is to meet federal monitor­ Academy, Evolution Academy, and Rise Academy, stated that for ing expectations and federal program requirements. There are many open-enrollment charter schools that serve special popu­ no provisions in federal law permitting alternative accountability lations under specially tailored programs, a one-size-fits-all PB­ procedures for charter schools or provisions in federal program MAS monitoring system is unfair and unworkable. The com­ requirements that would allow only certain districts’ performance menters urged the TEA staff to exercise its professional judg­ and data to "count" in the state’s monitoring system while districts ment and give significant weight to charter mission when eval­ in the alternative education accountability system would be as­ uatingaschool’s rating against the PBMAS performance stan­ signed Report Only performance levels. As such, both the AYP dards. and PBMAS systems do not include a set of alternative provi­ sions for charter schools. Furthermore, as summarized earlier The commenters further stated that the alternative education in this response, the PBMAS already includes components that provisions of the state accountability system are not present in acknowledge and effectively accommodate the diversity of the the performance-based monitoring system and the PBMAS, re­ state’s districts and charters. Moreover, districts currently per­ sulting in the application of unreasonable standards to some forming at the lower end of the PBMAS indicators are likely to charter school programs. Expanding upon this point, one of the benefit from the implementation of improvement efforts given the commenters provided an example of the charter for one school strong alignment between the PBMAS and the requirements and recognizing that a minimum graduation program will be the most performancemeasuresinAYP;Title I, PartA; TitleI,PartC;the appropriate for its students, yet the performance-based monitor­ Carl D. Perkins Act, and the Individuals with Disabilities Educa­ ing diploma rate standard excludes all consideration of students tion Act (IDEA). graduating on a minimum program, and considers a minimum

ADOPTED RULES July 30, 2010 35 TexReg 6653 The agency disagrees that the PBMAS diploma indicator results subject-area test is more than 20 percentage points below the in the application of unreasonable standards to a school with PL 0 designation, or less than 35% of students passing. a charter recognizing that a minimum graduation program will Comment. The founder/chief executive officer (CEO) of Shek­ be the most appropriate for its students. Depending on the inah Learning Institute stated that the use of PBMAS threat­ particular program area within PBMAS, between 70% and ens the school’s accountability to its mission, hinders student 98.6% of any district’s students can earn a minimum high school growth and market growth, and that charter schools are penal­ diploma and still avoid the lowest PL designation within the ized with punitive rankings and graduated interventions. The PBMAS. In addition, passing end-of-course examinations will commenter suggested that multiple data sources (parent sur­ soon be a graduation requirement for high school students, veys, enrollment trends, progress gains) be allowed to help tell and these examinations will be based on the Texas Essential the story about a charter’s performance and that performance- Knowledge and Skills (TEKS) for high-level courses. Continuing based monitoring should align with charter mission. to focus exclusively on minimum diploma requirements could put students’ graduation in jeopardy. Furthermore, statutory Agency Response. The agency disagrees in part and cannot ad­ requirements (TEC, §39.057(a)(10)) state that the commis­ dress the comment in part. To the extent the comment addresses sioner shall authorize special accreditation investigations to issues concerning interventions and sanctions, those issues are be conducted "when excessive numbers of students graduate outside of the scope of the current rule proposal. under the minimum high school program." Districts currently The agency disagrees that the PBMAS threatens a school’s ac­ performing at the lower end of the PBMAS diploma indicator countability to its mission or that the PBMAS hinders student are likely to benefit from the implementation of improvement growth and market growth. Longitudinal, publicly available, per­ efforts given this new statutory requirement. Finally, under 19 formance data across PBMAS indicators and across PBMAS TAC Chapter 100, Charters, Subchapter AA, Commissioner’s program areas indicate significant and continuous student im­ Rules Concerning Open-Enrollment Charter Schools, Division provement at both the state level and across all 20 education 1, General Provisions, §100.1011(15), ". . .the terms of an service center regions. open-enrollment charter include. . . (B) all applicable state and federallaws, rules, and regulations...(E) to the extent they The agency disagrees with the suggestion that additional quali­ are consistent with subparagraphs (A)-(D) of this paragraph, all tative data sources should be added or that performance-based statements, assurances, commitments, and/or representations monitoring should align with any specific charter mission. The made by the charter holder in writing in its application for charter, PBMAS is designed to align with the program requirements and attachments, or related documents, or orally during a public priorities of state and federal programs that apply to all districts meeting of the SBOE or any of its committees." Thus, to the serving students in those programs, irrespective of district type extent that the content of a charter application conflicts with or "mission." The PBMAS appropriately accommodates the di­ current law respecting graduation requirements, the current law versity of districts and charters in the state through a variety controls over the charter application. This rule applies to all of system components and cut-points. The PBMAS already in­ charter holders that accepted funding under TEC, §12.1071. cludes more than 100 core indicators of student performance and program effectiveness that are based on a variety of reli­ In addition, the agency disagrees that the PBMAS considers a able data sources and aligned with priorities and program re­ minimum program graduate a failure. While, by definition, a stu­ quirements, including those outlined in Carl D. Perkins, IDEA, dent who graduates with a minimum high school diploma does and No Child Left Behind (NCLB) legislation. To ensure contin­ not meet the definition of a student who graduates with a rec­ ued system validity, any future indicators must be quantifiable, ommended high school diploma (which is the specificdiploma reliable, valid, derivable from official agency data sources, and type the PBMAS diploma indicator was purposely designed to based on state and federal, rather than individual, standards. evaluate), the PBMAS also includes a graduation rate indicator in every one of its program areas. These graduation rate indi­ Comment. The special mission school representative of the cators count each graduate irrespective of diploma type. In this TCSA stated that there is no appeal of the performance-based comprehensive way, the PBMAS provides valuable information monitoring level and no opportunity for explanation of the data about both a district’s overall graduation rate as well as its ability prior to findings and corrective actions. The commenter also to graduate a certain percentage of its students under the recom­ stated that some of the data in PBMAS lag behind and sug­ mended high school or distinguished high school achievement gested there should be a preliminary assessment and a final programs. assessment using more current data. The agency disagrees that the alignment of certain PBMAS stan­ Agency Response. The agency disagrees in part and cannot dards with the standard state accountability system results in the address the comment in part. To the extent the comment is sug­ application of unreasonable measures to the alternative educa­ gesting appeals concerning interventions and corrective actions, tion charters. Unlike the state accountability system, the PBMAS those issues are outside of the scope of the current rule proposal. includes a wide range of performance level cut-points that allow To the extent the comment is suggesting appeals of PBMAS per­ for significant variation in performance across diverse districts formance levels, the agency disagrees that additional appeal and charters. For example, the starting point PL 0 designation in of PBMAS performance levels is necessary. In the event the PBMAS for passing the TAKS science subject-area test is 55%, agency determines that it incorrectly calculated a performance which is the lowest level of acceptable performance in the state level or any of its data contractors provided inaccurate data that accountability system. The PL 1 designation in the 2010 PB­ were used in the PBMAS calculations, the agency automatically MAS for passing the TAKS science subject-area test is up to 10 re-runs the PBMAS to determine whether any districts’ perfor­ percentage points below that. The PL 2 designation in the 2010 mance levels are affected by those errors. However, the agency, PBMAS for passing the TAKS science subject-area test is up at adoption, has clarified in Appendix C of the excerpted sections to 20 percentage points below the PL 0 designation. The PL 3 of the manual adopted in rule that a district can continue (by a designation in the 2010 PBMAS for passing the TAKS science specified date) to request from the agency a recalculation of an

35 TexReg 6654 July 30, 2010 Texas Register incorrect performance level if a district determines that one or promised data render any other performance level designation more PBMAS performance level assignments were based on a impossible to determine. data or calculation error attributable to the agency or one of the Comment. The superintendent of Northside Independent School agency’s data contractors. District stated that the PBMAS currently uses the Title I, Part A Notwithstanding agency error, the PL assignments, by definition, graduation rate as an indicator of effectiveness for the NCLB; describe a specific outcome. For example, if the PL 3 designa­ the Title I, Part A annual dropout rate as an indicator for the first tion for the TAKS passing rate indicator in science is defined as time; and the Title I, Part A RHSP/DAP diploma rate indicator as "equal to or less than 34.9%" of students passing the TAKS sci­ a Report Only indicator. The commenter expressed that these ence test and a district reports 25% of its students passed the are inaccurate and misleading measures for its district due to TAKS science test, then the district meets the definition of a PL program design and requested that districts with no schoolwide 3. Assuming there is no agency error, there is only one of two or targeted high school programs, or other similar program de­ possibilities that could have occurred, neither of which would be signs, receive a performance level of Not Assigned for these indi­ appropriate for any further performance-level appeal in a perfor­ cators. Additionally, the commenter requested clarification from mance-based monitoring system that is fundamentally based on the NCLB program that non-Title I students served with Title I student performance and data integrity: 25% of the district’s stu­ funds can continue to be counted as non-Title I students. dents passed the TAKS science test or the district itself reported The commenter further stated that the special education gradu­ incorrect data. ation rate indicator is another indicator of program effectiveness The agency disagrees that some of the data in PBMAS lag be­ influenced by program design and requested consideration of hind and that there should be a preliminary assessment and a Completion Rate I (including both graduates or continuers) or final assessment using more current data. The PBMAS always five-year graduation rate as a more appropriate measure of stu­ uses the most current data available. dent achievement for this group of students. Additionally, the commenter stated that program design may require districts to Comment. A representative of Phoenix Charter school stated undertake a more extensive and time-consuming data analysis that PBMAS provides data in formats the charter school would that should be reserved for programs with true program compli­ not have the capacity to compute without spending countless ance and effectiveness issues. hours in hand-numbering calculations of numerous indicators and that these aggregated data combined in various formulas Agency Response. The agency disagrees in part and cannot have assisted the charter in planning and making progress. The address the comment in part. To the extent the comment re­ commenter stated, however, that the hours not spent counting quests clarification from the NCLB program and to the extent and calculating indicators are spent creating and monitoring fruit­ the comment addresses issues concerning required data analy­ less action plans that result in adverse economic impact because ses, those issues are outside of the scope of the current rule the charter has had to hire specialized and highly qualified staff proposal. to keep up with the interventions requirements. Expanding upon The agency disagrees that the Title I, Part A graduation rate; Ti­ this point, the commenter stated that its intervention for the spe­ tle I, Part A annual dropout rate; and Title I, Part A RHSP/DAP cial education representation indicator resulted in a loss to stu­ diploma rate indicators are inaccurate and misleading measures dents in instructional time and resources, that the charter school for districts due to program design. These indicators are based is under the threat of random selection, and that PBMAS could not only on a PL 0 standard but also include several variations or be used to close schools. "cut points" from that PL 0 standard as well as differentiated per­ Agency Response. The agency cannot address this comment formance level methodologies based on the size of the student because it is outside of the scope of the current rule proposal. group being evaluated, all of which effectively allow the PBMAS to evaluate a very diverse set of districts while at the same time Comment. The principal of Austin Can Academy commented on generously accounting for any unique circumstances that exist the cohort rules for the graduation rate calculation and the extent for any given indicator or district. As such, the agency disagrees to which dropouts count multiple times in the dropout calculation. with the suggestion that districts with no schoolwide or targeted Agency Response. The agency cannot address this comment high school programs, or other similar program designs, should because it is outside of the scope of the current rule proposal. receive a performance level of Not Assigned for these indicators. Comment. The CEO of Evolution Academy suggested that the The agency disagrees that the special education graduation rate agency conduct individual reviews for intervention stages, cor­ indicator is another indicator of program effectiveness influenced rective actions, and sanctions based on a school’s unique qual­ by program design that should be replaced with a Completion ity. Rate I or five-year graduation rate indicator. The PBMAS spe­ cial education graduation rate indicator is well aligned with both Agency Response. The agency cannot address this comment the NCLB and IDEA authorizing statutes and their correspond­ because it is outside of the scope of the current rule proposal. ing federal performance measures. For example, the four-year Comment. An education service center performance-based special education graduation rate methodology used in the PB­ monitoring contact inquired about the performance level that will MAS is aligned with the State Performance Plan (SPP) four-year be assigned to a district that reports data integrity issues. graduation rate required under IDEA. In addition, the PL 3 and PL 2 cut points for the PBMAS special education graduation rate Agency Response. The agency offers the following clarification. indicator are set appreciably far away from the PL 0 standards At adoption, the agency has clarified on page 3 of the excerpted so that districts performing at the lower end of these PBMAS in­ sections of the manual adopted in rule that the Not Assigned dicators are likely to benefit from the implementation of improve­ performance level includes circumstances in which that perfor­ ment efforts given how far their performance varies from the PL mance level must be assigned to address situations where com­ 0 standards. For example, only districts with fewer than 35% of their students served in special education graduating in four

ADOPTED RULES July 30, 2010 35 TexReg 6655 years (irrespective of diploma type) receive a PL 3 on the special Act. The performance of a school district or charter school is reported education graduation rate indicator. through indicators of student performance and program effectiveness and corresponding performance levels established by the commissioner The indicators used in the PBMAS can also serve as precursors of education. to andan early warningfor districtsonareas that will become the focus of other state or federal systems. As such, the varied cut (b) The assignment of performance levels for school districts point information provided by the PBMAS enables districts to get and charter schools in the 2010 PBMAS is based on specific criteria and a head start locally on one or more areas they ultimately will be calculations, which are described in excerpted sections of the PBMAS held accountable for at a more rigorous level than is currently the 2010 Manual provided in this subsection. case in the PBMAS. The four-year special education graduation Figure: 19 TAC §97.1005(b) rate indicator is a good example. In 2012, under the federal (c) The specific criteria and calculations used in the PBMAS AYP system, districts and campuses will be required to meet are established annually by the commissioner of education and com­ either a four-year or five-year graduation rate for each of the municated to all school districts and charter schools. student groups evaluated under AYP, including students served in special education. Districts currently performing at the lower (d) The specific criteria and calculations used in the annual end of the PBMAS special education four-year graduation rate PBMAS manual adopted for the school years prior to 2010-2011 re­ indicator (i.e., a graduation rate of 34.9% or less) are likely to main in effect for all purposes, including accountability and perfor­ benefit from the implementation of improvement efforts between mance monitoring, data standards, and audits, with respect to those now and 2012 since they may have difficulty meeting either the school years. four-year or five-year AYP graduation measure, given the current This agency hereby certifies that the adoption has been reviewed generous PBMAS cut points in relation to where the future AYP by legal counsel and found to be a valid exercise of the agency’s targets are likely to be set as well as the relatively small additional legal authority. impact the five-year rate is likely to have for districts across the state (currently about a four percentage point increase statewide Filed with the Office of the Secretary of State on July 15, 2010. over the four-year graduation rate). TRD-201003938 The amendment is adopted under the TEC, §7.028, which au­ Cristina De La Fuente-Valadez thorizes the agency to monitor as necessary to ensure school district and charter school compliance with state and federal law Director, Policy Coordination and regulations; TEC, §29.001(5), which authorizes the agency Texas Education Agency to effectively monitor all local educational agencies (LEAs) to en­ Effective date: August 4, 2010 sure that rules relating to the delivery of services to children with Proposal publication date: May 14, 2010 disabilities are applied in a consistent and uniform manner, to en­ For further information, please call: (512) 475-1497 sure that LEAs are complying with those rules, and to ensure that specific reports filedbyLEAsareaccurate andcomplete; TEC, ♦ ♦ ♦ §29.010(a), which authorizes the agency to adopt and implement TITLE 25. HEALTH SERVICES a comprehensive system for monitoring LEA compliance with federal and state laws relating to special education, including PART 11. CANCER PREVENTION AND ongoing analysis of LEA special education data; TEC, §39.051 and §39.052, which authorize the commissioner to determine RESEARCH INSTITUTE OF TEXAS criteria for accreditation statuses and to determine the accred­ itation status of each school district and open-enrollment char­ CHAPTER 703. GRANTS FOR CANCER ter school; TEC, §39.054, which authorizes the commissioner to PREVENTION AND RESEARCH adopt rules to evaluate school district and campus performance, including evaluation against state standards and consideration 25 TAC §§703.2, 703.3, 703.10, 703.16 - 703.19 of the performance of each campus in a school district and each The Cancer Prevention and Research Institute of Texas (Institute open-enrollment charter school on the basis of the campus’s or or CPRIT) adopts amendments to §§703.2, 703.3 and 703.10; school’s performance on student achievement indicators; TEC, and new §§703.16 - 703.19, regarding intellectual property and §§39.056-39.058, which authorize the commissioner to adopt commercialization standards to be incorporated in all grant con­ procedures relating to on-site and special accreditation inves­ tracts awarded by the Institute, with changes to the proposed tigations; and TEC, §§39.102-39.104, which authorize the com­ text as published in the February 5, 2010, issue of the Texas missioner to implement procedures to impose interventions and Register (35TexReg842). sanctions for districts, campuses, and open-enrollment charter schools. The Texas Health and Safety Code §102.256 directs the CPRIT Oversight Committee to establish standards that require all grant The amendment implements the TEC, §§7.028, 29.001(5), awards to be subject to an intellectual property agreement that 29.010(a), 39.051, 39.052, 39.054, 39.056-39.058, and allows the state to collect royalties, income, and other benefits 39.102-39.104. realized as a result of projects undertaken with money awarded §97.1005. Performance-Based Monitoring Analysis System. by the Institute. The purpose of these amendments and new rules is to promulgate comprehensive rules regarding the intel­ (a) In accordance with Texas Education Code, §7.028(a), the lectual property and commercialization standards to be incorpo­ purpose of the Performance-Based Monitoring Analysis System (PB­ ratedinallgrantcont racts awarded by the Institute. MAS) is to report annually on the performance of school districts and charter schools in selected program areas: bilingual education/English The Institute received comments from the following parties: as a Second Language, career and technical education, special educa­ Asuragen, Baylor Licensing Group at Baylor College of Medicine tion, and certain Title programs under the federal No Child Left Behind (BCM), Rice University (Rice), Texas Methodist Hospital

35 TexReg 6656 July 30, 2010 Texas Register Research Institute (TMHRI), and the UT System. No party indi­ the subsection includes the modifier "if applicable" with regard cated that they did not support the amendments and new rules to acknowledging copyright ownership. For these reasons, the with revisions. Specific observations and suggested changes Institute declines to make the change. are provided in the following section-by-section summary of the §703.16. Intellectual Property Agreement. comments received and the Institute’s response. BCM and UT System propose editorial changes to delete text §703.2. Definitions. that is already included as part of one or more defined terms. BCM, TMHRI and UT System propose changes to the definition The Institute agrees and the rule is amended. of "Intellectual Property Rights" to clarify that the definition refers UT System proposes changes to subsection (c) because "the only to claims arising from research funded by the Institute, to section implies that the recipient may not pass on the obligation remove trademarks and other marketing activities from the defi­ for patent expenses to its licensees." This is not the Institute’s nition, and to clarify that the grant recipient retains the copyright intent and the subsection has been amended to clarify that grant for academic works for publication. The Institute agrees and proceeds shall not be used to pay the costs and expenses asso­ the definition has been amended. TMHRI and UT System pro­ ciated with patent protection or commercialization activities un­ poseachangetothede finition of "Intellectual Property Rights" less specifically authorized by the Institute. to eliminate derivative works because it is duplicative and may be overbroad. The Institute agrees and the definition has been BCM and Rice propose changing subsection (d)(1) to clear up amended. any ambiguity regarding the responsibility for determining com­ mercially reasonable efforts. Similarly, UT System proposes a BCM proposes changes to the definition of "License Agreement" change to subsection (d)(1) on the grounds that it implies that to add intellectual property rights. The Institute agrees and the the grant recipient "is obligated to file patent or other intellec­ definition is amended. BCM comments that the use of the unde­ tual property protection for each and every invention that arises." fined term "technology" is confusing. The Institute agrees and This is not the Institute’s intent and the subsection has been the definition of term has been included in the amended rule. amendedtoclarify that thegrant recipient will determine the BCM, TMHRI and UT System propose several non-substantive commercially reasonable efforts necessary to protect, develop, editorial changes that are reflectedinthe final rule. commercialize or otherwise bring the project results to practical application. This is a fact-specific determination for each project. Because changes to the amended rule render the proposed defi­ Upon review of the particular invention or other discovery, the nition of "Drug" superfluous, the Institute has removed it from the grant recipient may determine that is not commercially reason­ final rule. For clarification purposes, the Institute has included a able to take further action to protect, develop, commercialize or definition of "Project Results." otherwise bring the project results to practical application. The §703.3. Grant Applications. subsection is further clarified to provide that the grant recipient is relieved of obligations imposed pursuant to this section so long UT System proposes to replace the term "commercialized" in as the grant recipient notifies the Institute of intention to decline subsection (c)(7) with "commercializable." The Institute agrees to pursue, abandon, waive or disclaim some or all of the intel­ and the rule is amended. lectual property and associated responsibilities pursuant to sub­ UT System proposes to delete the phrase "anticipated regulatory section (d)(3) within the time period provided by the contract. filings" from subsection (e) on the grounds that it is "not evidence BCM, Rice, TMHRI and UT System propose to eliminate, either of commercial prospects, but stage development." The Institute in whole or in part, the requirement that the grant recipient keep declines to make the change because information about antici­ the Institute promptly and reasonably informed of the grant re­ pated regulatory filings may be useful in evaluating the proposed cipient’s activities with respect to agreements to license, lease, project. sale, or otherwise generate revenue from the invention and con­ UT System proposes a change to §703.16 clarify that the review sider the Institute’s input regarding the same. Rice comments and sharing of commercialization information with the Institute seeking clarification regarding the requirement to provide no­ is subject to appropriate confidentiality obligations. The Insti­ tice to the Institute if the grant recipient elects to abandon, con­ tute agrees with the clarification regarding third-party information vey, or assign intellectual property rights. UT System objects to submitted to the Institute. However, the clarification is more ap­ what it characterizes as a "reach-in requirement to involve the propriately included in subsection (g) where the efforts taken by Institute in licensing negotiations." Similarly, these commenters the Institute to protect third-party information from unauthorized contend that compliance would be difficult because many in­ disclosure are addressed. ventions arise as a result of multiple sources of funding and, as argued by UT System "a system requiring the input of all §703.10. Awarding Grants by Contract. the sponsors before making a decision would be slow, cumber­ BCM proposes deleting "and copyright ownership" from subsec­ some, and unmanageable," ultimately impeding commercializa­ tion (c)(3) on the basis that "the Institute should not claim own­ tion rather than enhancing commercialization of the discoveries. ership of the copyright for the investigator’s work." The Insti­ BCM, Rice, TMHRI, and UT System propose a similar change tute disagrees that this subsection, referring to a contract term to delete the requirement that the grant recipient consult with that requires the grant recipient to acknowledge grant funding the Institute regarding the prosecution strategy for protection of or copyright ownership in published material, creates copyright such intellectual property rights in foreign countries because, as ownership rights for the Institute. It is not the Institute’s intent to argued by UT System, "recipients are paying for patent prose­ claim ownership of copyrights for scholarly work reporting can­ cution, it would not be reasonable for the Institute to participate cer research or prevention project results. However, it may be in decisions that affect recipient resources." appropriate for the Institute to own the copyright for certain ed­ The Institute disagrees with the premise of the comments that ucational/promotional materials created with grant funds, partic­ the rule impedes commercialization efforts. The suggestion that ularly for cancer prevention projects. The Institute notes that

ADOPTED RULES July 30, 2010 35 TexReg 6657 the rule imposes a reach-in requirement to involve the Institute stream from the commercial activities of research funded by the in licensing negotiations or creates a system whereby all spon­ Institute. Although the Institute declines to make the requested sors must provide input before decisions are made is overreach­ changes, the Institute has revised the subsection for clarity as ing and incorrect. The Institute serves as the steward for Texas’ described below. three billion dollar investment in cancer research efforts. It is rea­ BCM, Rice, TMHRI and UT System urge several changes to the sonable that the Institute, as an interested investor in the cancer section as proposed regarding specific revenue sharing formu­ research projects it funds, should be kept informed of certain crit­ las and cost factors. For example, speaking to the calculation ical commercialization activities affecting the long term viability for the percentage of net income proceeds from a license agree­ and commercial availability of the project results. UT System ment to be shared with the Institute, UT System contends, "A acknowledges that it is customary to provide prompt notice to a fixed rate of ten percent for all Grants seems inconsistent with sponsor of an invention disclosure and subsequent licensing. the requirements of the statute. The statute seems to require Requiring the grant recipient to communicate with the Institute a case-by-case balancing and determination of the appropriate and consider Institute input, if any, regarding these critical com­ rate of the Institute’s share of net income. It is suggested that the mercialization activities facilitates the Institute’s statutory obliga­ Institute’s share should be negotiated on a case-by-case basis tions. The Institute disagrees with the presumption that the recip­ with a cap of 10%." TMHRI comments that the provisions will be ient’s payment of patent prosecution costs forecloses any obli­ "burdensome to track and administerand maybeinconflict with gation to inform the Institute regarding prosecution strategy. In each institution’s license definition of net revenue." fact, such communication may help ensure long term viability of The Institute has taken these comments under advisement and the project results by making it possible for the Institute to con­ agrees that the use of fixed revenue sharing formulas in the rule tribute to patent prosecution costs, if necessary. Although the as originally proposed may be too restrictive for the Institute’s Institute declines to delete the subsection, it has revised or elim­ purposes. The Institute is mindful of imposing financial terms inated several requirements BCM, Rice, TMHRI, and UT System that unreasonably remove the incentive on the part of the grant identified as onerous or duplicative. The changes to subsection recipient by inadvertently discouraging future private investment. (d)(4) provide additional clarity and are intended to reduce po­ The best intellectual property agreement is worthless if potential tential impediments to commercialization while ensuring that the downstream investors perceive little opportunity for substantial Institute is kept reasonably informed of the recipient’s commer­ returns and decide to invest their capital in non-Institute funded cialization efforts. projects. In order to provide the Institute the maximum amount UT System proposes a change to make clear that the recipient of flexibility to negotiate revenue sharing terms that are appro­ shall notify the Institute of a decision not to pursue intellectual priate for the type of project funded and for the grant recipient, property protection of an invention developed as a result of grant thesectionis revisedtoeliminate fixed revenue sharing formu­ funding awarded by the Institute. The Institute agrees and sub­ las as originally proposed. The revenue sharing terms for the section (d)(1) and (3) and §703.19 have been amended to reflect project will be specified in the contract between the Institute and the change. the grant recipient. UT System proposes a change to indicate that the review and Asuragen comments that there "doesn’t appear to be a mecha­ sharing of commercialization information with the Institute is sub­ nism where well established companies are envisioned to partic­ ject to appropriateconfidentiality obligations. As noted above, ipate in CPRIT funding. We suggest that CPRIT create a mecha­ the Institute agrees with the clarification regarding third-party in­ nism within the revenue sharing standards where the State gets formation submitted to the Institute and has amended §703.3(g) a revenue interest through commercialization milestones and/or accordingly. an ongoing revenue sharing/royalty interest in a specificproject that CPRIT supports." Asuragen’s comments are premised on BCM proposes a change to subsection (d)(6) to list specificitems its interpretation that the sole revenue-sharing option available the grant recipient must report annually to the Institute regarding to the Institutewithregard toafor-profit company is for the Insti­ commercialization activities. While the list of items suggested tute to take an equity stake in the company. AccordingtoAsura­ by BCM is instructive, the Institute declines to make the change. gen, this option "won’t work for well established companies, such The subsection as written provides the Institute maximum flexi­ as Asuragen, that have no immediate intention of raising addi­ bility to seek information from the grant recipient as may be dic­ tional outside capital and have multiple projects leading to mul­ tated by the legislature or by programmatic requirements. tiple commercial products." §703.17. Revenue Sharing Standards. The Institute agrees that for-profit companies, whether they are BCM, Rice, TMHRI and UT System propose deleting subsec­ early stage ventures or well-established companies, are impor­ tions (a) and (b) in their entirety because the subsections are tant partners in the Institute’s mission to fight cancer and create unnecessary or appear inapplicable to not-for-profit organiza­ jobs in Texas. It is not the Institute’s intent that its revenue shar­ tions. The Institute disagrees and will not make the proposed ing options exclude an otherwise beneficial collaboration with a change. Texas Health and Safety Code §102.256(a) directs the for-profit grant recipient. Nor is it the Institute’s interpretation of Oversight Committee to establish standards requiring all grant the statute or agency rules that its revenue sharing alternatives awards be subject to an intellectual property agreement that al­ related toafor-profit company are limited exclusively to an eq­ lows the state to collect royalties, income, and other benefits re­ uity stake in the grant recipient’s company. The statute does not alized as a result of projects funded by the Institute. The statute mandate or exclude the type of revenue sharing mechanism to makes no exception for not-for-profit grant recipients. Texans’ be used for the grant recipient. The statute provides options for three billion dollar investment is critical to the growth of the can­ the state to share in the revenues generated by Institute-funded cer research community in Texas. Texans should expect to re­ research project results, including patent royalties, license rev­ ceive a return on the substantial outlay for cancer research, both enues and other benefits, such as milestone payments. through increased economic development and a direct revenue

35 TexReg 6658 July 30, 2010 Texas Register Similarly, the options available to the Institute, as listed in sub­ ent has done a good job of (i) defining fields of use; (ii) defining section (a), are not limited by type of grant recipient. The mech­ commercial milestones and dates for their achievement and (iii) anisms are consistent with Asuragen’s recommendations to in­ providing and enforcing consequences for lack of commercial clude "revenue sharing commercialization milestones and/or an achievement, then the original purpose for the march-in rights ongoing revenue sharing/royalty interest in a specificproject that will have been realized and assistance from CPRIT will not be CPRIT supports." Subsection (b) specifically provides that the In­ necessary." stitute will elect the form of revenue payment in the contract be­ The Institute has taken the comments under advisement. The tween the Institute and the grant recipient. The Institute agrees Institute agrees with Rice that the intent of the section is to make with Asuragen that maintaining flexibility in the revenue sharing certain that otherwise commercializable diagnostic and cancer options will contribute to "a range of collaborative arrangements curing technologies achieve practical application and are broadly with academics and industry that will encourage the very best op­ disseminated. However, it is clear that the rule, as proposed, portunities for funding technologies that would have a significant creates considerable uncertainty for the commenters regarding impact on cancer." The Institute has made changes to the section whether and to what extent the Institute expects to direct the to clarify that the revenue sharing mechanism will be specified actions of a grant recipient or is licensee. by the contract between the Institute and the grant recipient. In order to avoid any ambiguity that may impair negotiation with Based upon the foregoing, and to clarify that all funding mecha­ third parties, the Institute has amended the rule to describe the nisms available to the Institute will be considered when negotiat­ Institute’s ability to pursue protection of the applicable intellec­ ing grant award contracts, the Institute has deleted the proposed tual property rights and/or commercialize or otherwise bring to subsection (j). practical application the project results. The Institute’s option to §703.18. Licensing and Assignment of Inventions and Technol­ do so is triggered by the grant recipient’s notice that it declines ogy. to pursue, abandons, waives, or disclaims any intellectual prop­ erty rights or that it will cease efforts to commercialize the project BCM and TMHRI propose deleting a substantial amount of this results. section, contending that the provisions impose undue admin­ istrative burdens on the licensing process and make the Insti­ The rule is further amended to specify the grant recipient’s obli­ tute-funded technology less attractive to business. The Institute gations in the event of such an occurrence. The changes should has taken the comments under advisement and has revised the not be interpreted as relieving the grant recipient of its respon­ rule to eliminate several provisions identified by commenters and sibility to diligently protect and develop the intellectual property to clarify the expectations of the Institute with regard to the licens­ resulting from a funded project to the extent that it is commer­ ing and assignment of intellectual property rights. cially reasonable to do so. Instead, the changes are intended to provide certainty to the grant recipient and any third parties with BCM proposes inserting "and maintains sole authority" for licens­ whom the grant recipient is negotiating licenses. ing activities in subsection (a). The change is unnecessary be­ cause the subsection as written already provides that the respon­ The amendments and new rules are adopted under the author­ sibility for commercialization activities lies with the grant recipient ity of the Texas Health and Safety Code Annotated §102.108 and the rule is not amended. and §102.251 which authorize the Oversight Committee to adopt rules to administer the chapter and award contracts and Rice recommends modifying certain subsections to provide §102.256, which directs the Oversight Committee to establish more clarity regarding requirements to be included by the standards requiring all grant awards to be subject to an intellec­ grant recipient in any exclusive license agreement. Rice also tual property agreement. proposes deleting the subsection requiring the grant recipient to take reasonable action to enforce the terms of the exclusive §703.2. Definitions. license and promptly report a material breach of such license to the Institute, on the grounds that the requirement adds to the The following words and terms, when used in this chapter, shall have "unique administrative burden." The Institute disagrees that the the following meanings, unless the context clearly indicates otherwise. administrative obligation to enforce the terms of its licensing (1) Applicant--the public or private institution of higher ed­ agreement and report any material breach is so great that it ucation as defined by §61.003, Education Code, research institution, justifies deletion and will not make the change. government organization, non-governmental organization, non-profit UT System proposes a clarifying change to subsection (d) re­ organization, other public entity, private company, individual, or con­ garding the granting of non-exclusive licenses. The Institute sortia, including any combination of the aforementioned, that submits agrees and the rule is amended. an application to the Institute for a grant funded by the Cancer Preven­ tion and Research Fund or the proceeds of general obligation bonds §703.19. March In Rights. issued on behalf of the Institute. Unless otherwise indicated, this term BCM, TMHRI and UT System recommend deleting the section includes the principal investigator. as proposed in its entirety. UT System contends that, as pro­ (2) Authorized expenses--items including honoraria, posed, the section is broader than Federal march-in-rights and salaries and benefits, consumable supplies, other operating expenses, would make it nearly impossible to negotiate licenses with third contracted research and development, capital equipment, construction parties. Rice proposes modifications to §703.18 to clarify ex­ or renovation of state or private facilities, travel, and conference fees pectations and create opportunities for communication between and expenses, except as otherwise provided by this chapter. the Institute and the grant recipient before march-in rights be­ come necessary, reasoning that "The purpose of march-in rights (3) Cancer prevention--a reduction in the risk of develop­ are to ensure that the potentially diagnostic and cancer-curing ing cancer, including early detection, control and/or mitigation of the technologies achieve practical application and are broadly dis­ incidence, disability, mortality, or post-diagnosis effects of cancer. seminated in order to eradicate the disease. If the grant recipi­

ADOPTED RULES July 30, 2010 35 TexReg 6659 (4) Cancer prevention and control program--cancer pre­ as professional articles and presentations, lab notebooks, and original vention programs designed to mitigate the incidence of all types of medical records; and cancer in humans. (D) All mask works, mask work registrations and appli­ (5) Cancer Prevention and Research Fund--the dedicated cations therefore, and any equivalent or similar rights in semiconductor account in the general revenue fund consisting of patent, royalty, and masks, layouts, architectures or topography. license fees and other income received under a contract with a grant (17) Invention--any method, device, process or discovery recipient, legislative appropriations, gifts, grants, and other donations, that is conceived and/or reduced to practice, whether patentable or not, and earned interest. by the grant recipient in the performance of work funded by the grant. (6) Cancer research--research into the causes, detection, (18) License agreement--an understanding by which an treatments, and cures for all types of cancer in humans, including owner of technology and associated intellectual property rights grants pre-clinical studies, animal studies, translational research, and clinical any right to make, use, develop, sell, offer to sell, import, or otherwise research to develop therapies, protocols, medical pharmaceuticals, exploit the technology or intellectual property rights in exchange for medical devices or procedures for the detection, treatment, cure or consideration. substantial mitigation of all types of cancer in humans. (19) Prevention Review Council--the group of individuals (7) Chief Commercialization Officer--the individual em­ designated as chairs of the prevention program committees created to ployed by the Institute to oversee the review and evaluation of com­ review cancer prevention program applications. mercial prospects of the grant applications for cancer research and pre­ vention activities. (20) Project Results--any and all technology and associated intellectual property Rights. (8) Chief Prevention Officer--the individual employed by the Institute to oversee the scientific and program review and evaluation (21) Recipient--the public or private institution of higher of the grant applications for cancer prevention activities. education as defined by §61.003, Education Code, research institution, government organization, non-governmental organization, non-profit (9) Chief ScientificOfficer--the individual employed by organization, other public entity, private company, individual, or con­ the Institute to oversee the scientific review and evaluation of the grant sortia, or any combination of the aforementioned that is awarded a grant applications for cancer research activities. funded by the Cancer Prevention and Research Fund or the proceeds (10) Commercialization Review Council--the group of in­ of general obligation bonds issued on behalf of the Institute. dividuals designated to review the commercial prospects of cancer re­ (22) Scientific research and prevention program commit- search and prevention program applications. tee--one or more groups of experts in the field of cancer research, pre­ (11) Commercial prospects--the potential for development vention or commercialization appointed by the Executive Director and of commercial products or services or the development of infrastruc­ approved by the Oversight Committee for the purpose of reviewing ture to support these efforts, including but not limited to pre-clinical, grant applications and making recommendations to the Executive Di­ clinical, manufacturing, and scale up activities. rector regarding the award of cancer research and prevention grants. (12) Encumbered funds--funds that are designated by a re­ (23) ScientificReviewCouncil--the group of individuals cipient for a specific purpose. designated as chairs of the scientific research and prevention program committees created to review cancer research applications. (13) Grant--a funding mechanism, including a direct com­ pany investment, awarded by the Institute providing money to the re­ (24) Technology--any and all of the following resulting or cipient to carry out the research or prevention program objectives. arising from work funded by the grant: (14) Indirect costs--the expenses of doing business that are (A) inventions; not readily identified with a particular grant, contract, project, function, (B) proprietary and confidential information, including or activity, but are necessary for the general operation of the organiza­ but not limited to data, trade secrets and know-how; tion or the performance of the organization’s activities. (C) databases, compilations and collections of data; (15) Institute--the Cancer Prevention and Research Insti­ tute of Texas. (D) tools, methods and processes; and (16) Intellectual Property Rights--any and all of the follow­ (E) works of authorship, excluding all scholarly works, ing and all rights in, arising out of, or associated therewith, but only to but including, without limitation, computer programs, source code and the extent resulting from the grant awarded by the Institute: executable code, whether embodied in software, firmware or otherwise, documentation, files, records, data and mask works; and all instantia­ (A) The United States and foreign patents and utility tions of the foregoing in any form and embodied in any form, includ­ models and applications therefore and all reissues, divisions, re-ex­ ing but not limited to therapeutics, drugs, drug delivery systems, drug aminations, renewals, extensions, provisionals, continuations and such formulations, devices, diagnostics, biomarkers, reagents and research claims of continuations-in-part as are entitled to claim priority to the tools. aforesaid patents or patent applications, and equivalent or similar rights anywhere in the world in inventions and discoveries; §703.3. Grant Applications. (B) All trade secrets and rights in know-how and pro­ (a) The Institute will accept grant applications for cancer re­ prietary information; search and prevention programs to be funded by the Cancer Prevention and Research Fund or the proceeds of general obligation bonds issued (C) All copyrights, whether registered or unregistered, on behalf of the Institute in response to standard format requests for ap­ and applications therefore, and all other rights corresponding thereto plications that will be publicly issued by the Institute at least annually. throughout the world excluding scholarly and academic works such The requests for applications will be announced in the Texas Register and available through the Institute’s public website.

35 TexReg 6660 July 30, 2010 Texas Register (b) The Institute reserves the right to modify the format and (i) To assist the Institute in identifying and protecting the con­ content requirements for the requests for applications from time to time. fidentiality of information submitted to the agency, the applicant shall Notice of modifications will be announced in the Texas Register and identify all confidential and proprietary information on the application available through the Institute’s public website. or other documents provided to the Institute. However, the applicant’s failure to identify information as confidential and proprietary does not (c) Requests for cancer research grant applications issued by constitute a waiver of the designation for purposes of Chapter 552 of the Institute may address, but are not limited to, the following areas: the Government Code, or other applicable federal or state law or regu­ (1) Short-term, high-impact programs; lation. (2) Individual investigator awards; §703.10. Awarding Grants by Contract. (3) Multiple investigator awards, including collaborative (a) The Oversight Committee shall negotiate on behalf of the projects, centers, core facilities, shared instrumentation, and infrastruc­ state regarding the awarding of grant funds and enter into a written ture; contract with the grant recipient. (4) Recruitment to the state of new, emerging, and estab­ (b) The Oversight Committee may delegate contract negotia­ lished investigators; tion duties to the Executive Director and the General Counsel for the Institute. The Executive Director may enter into a written contract with (5) Training; the grant recipient on behalf of the Oversight Committee. (6) Translational research, including proof of concept, pre­ (c) The contract between the Institute and the grant recipient clinical, and clinical trials; may include the following provisions: (7) Commercialization investment grant awards, including (1) If any portion of the grant has been approved by the cancer-related infrastructure and services to support development of OversightCommitteetobeusedto build a capital improvement, the commercializable products; and contract shall specify that: (8) Implementation of the Texas Cancer Plan. (A) The state retains a lien or other interest in the capital (d) Requests for cancer prevention grant applications issued improvement in proportion to the percentage of the grant amount used by the Institute may address, but are not limited to, the following areas: to pay for the capital improvement; and (1) Innovation awards; (B) If the capital improvement is sold, then the grant re­ cipient agrees to repay to the state the grant money used to pay for the (2) Education, outreach and training; capital improvement, with interest, and share with the state a propor­ (3) Evidence based prevention programs and services; tionate amount of any profit realized from the sale; (4) Collaborative projects; (2) Terms relating to intellectual property rights and the sharing with the Institute of revenues generated by sale, license, or (5) Infrastructure/capacity building grants; and other conveyance of such Project Results consistent with the standards (6) Implementation of the Texas Cancer Plan. established by this chapter; (e) The request for applications shall seek information from (3) Terms relating to publication of material created with applicants regarding whether the proposed project has commercial grant funds or related to the research or prevention program that is prospects, including, but not limited to anticipated regulatory filings, the subject of grant funds, including an acknowledgement of Institute commercial abstracts or business plans. funding and copyright ownership, if applicable; (f) Failure to comply with the material and substantive require­ (4) Repayment terms, including interest rates, to be en­ ments set forth in the request for applications may serve as grounds for forced if the grant recipient has not used grant money for the purposes disqualification from further consideration of the grant application by for which the grant was intended; the Institute. (5) A statement that the Institute does not assume respon­ (g) The Institute will undertake reasonable efforts to protect sibility for the conduct of the research project or prevention program, information submitted to the agency by third parties from unauthorized and that the conduct of the project and activities of all investigators are disclosure, consistent with the need for objective review of the appli­ under the scope and direction of the recipient; cation and the requirements of state law, including the establishment of (6) A statement that the cancer research project or preven­ procedures to be followed by Oversight Committee members, Institute tion program is conducted with full consideration for the ethical and employees, and scientific research and prevention program committee medical implications of the research and that the project will comply members. with all federal and state laws regarding the conduct of the research; (h) The following information is public information and may (7) Standards established by the Oversight Committee pur­ be disclosed under Chapter 552, Government Code: suant to §102.258 and §102.259, Health and Safety Code, to ensure that (1) The applicant’s name and address; grant recipients, to the extent reasonably possible, in a good faith effort to achieve a goal of more than 50 percent of such purchases, purchase (2) The amount of funding applied for; goods and services for the project funded by the Institute from suppliers (3) The type of cancer to be addressed under the proposal; in this state and purchase goods and services from historically under- and utilized businesses as defined by Chapter 2161, Government Code, and any other state law; (4) Any other information designated by the Institute with the consent of the grant applicant. (8) An agreement by the grant recipient to submit to regular inspection reviews of the grant project during normal business hours and upon reasonable notice;

ADOPTED RULES July 30, 2010 35 TexReg 6661 (9) An agreement by the grant recipient to present progress (2) To share with the Institute a portion of the benefitde­ reports to the Executive Director on a schedule specified by the con­ rived from the commercial development of the project results, as set tract that include information on a grant-by-grant basis quantifying the forth in the contract. amount of additional research funding, if any, secured as a result of (3) To notify the Institute in writing prior to declining to Cancer Prevention and Research funding; pursue, abandoning, waiving or disclaiming some or all intellectual (10) An agreement that, to the extent possible, the grant re­ property rights related to the project results. Such notification shall cipient will evaluate whether any new or expanded preclinical testing, be made with sufficient time to provide the Institute an opportunity to clinical trials, commercialization, or manufacturing of any real or in­ license or pursue the appropriate applications and other protections for tellectual property resulting from the award can be conducted in this such intellectual property rights to the fullest extent permitted by law. state, including the establishment of facilities to meet this purpose; (4) To keep the Institute promptly and reasonably informed (11) An agreement that the recipient will abide by the Uni­ regarding the activities undertaken by the grant recipient to protect form Grant Management Standards adopted by the Governor’s Office and/or commercialize the project results and to consider in good faith of Budget and Planning, if applicable; Institute input, if any, regarding same. Such activities may include, but are not limited to, the following: (12) An agreement that the grant recipient is under a con­ tinuing obligation to notify the Executive Director of any adverse con­ (A) Filing of an invention disclosure forms (including ditions that materially impact milestones and objectives included in the updates and revisions); contract; (B) Creation of commercial development plans; (13) An agreement that the design, conduct, and reporting (C) Application, issuance, prosecution and mainte­ of the research or prevention program will not be biased by conflicting nance of patents; and financial interest of the applicant or any individuals associated with the grant. This duty is fulfilled by certifying that an appropriate written, (D) Negotiation of final term sheets and license agree­ enforced conflictofinterestpolicy governs the recipient. ments. §703.16. Intellectual Property Agreement. (5) To allow access to the books and records of the grant recipient for the purpose of conducting an audit during normal business (a) To the extent that there is a conflict between this chapter hours with reasonable notice to verify amounts paid to the Institute and the award contract between the Institute and the grant recipient, pursuant to this chapter. Notwithstanding the time limitation provided the contract terms will control. in §703.13 of this chapter, the right to audit the books and records of (b) The grant recipient may retain, assign or transfer all or a the grant recipient to verify amounts required to be paid to the Institute portion of any of the intellectual property rights relating to the project shall continue for so long as the payments shall be made. results. Any such assignment or transfer to a third party is subject to (6) To report to the Institute at least annually describing the following requirements: commercialization activities for the project results in a manner and (1) The grant recipient shall notify the Institute of the pro­ form to be prescribed by the Institute. posed transfer or assignment; §703.17. Revenue Sharing Standards. (2) The grant recipient shall ensure that the assignment or (a) The Institute shall share in the financial benefit received by transfer is subject to the licenses, interests and other rights provided to the grant recipient resulting from the patents, royalties, assignments, the Institute pursuant to the contract and any applicable law or regula­ sales, conveyances, licenses and/or other benefits associated with the tion; and project results. Such payment may include royalties, income, mile­ (3) Unless the transfer is taking place pursuant to an exer­ stone payments, or other financial interest in an existing company or cise of the United States government’s rights under 35 U.S.C. §203, other entity. the Institute may provide comments to the grant recipient related to (b) The Institute’s election as to form of payment and the cal­ the proposed transfer or assignment of rights, which the grant recipient culation of such payment shall be specified in the grant contract. shall consider in good faith and use reasonable efforts to account for and incorporate such comments into the actual transfer or assignment (c) Unless otherwise provided by the contract between the In­ of such rights. stitute and the grant recipient, payments to the Institute required by this section shall be made no less than annually pursuant to a schedule set (c) Unless specifically authorized by the Institute, grant pro­ forth in the contract and shall be accompanied by an appropriate finan­ ceeds shall not be used to pay the costs or expenses associated with the cial statement supporting the calculation of the payment. efforts to protect the intellectual property rights or to pay the costs or expenses associated with commercialization activities. (d) Nothing herein shall affect or otherwise impair the appli­ cation of federal laws for projects receiving some portion of funding (d) As a condition of accepting grant funding from the Insti­ from the U.S. Government. tute, the grant recipient agrees to the following required commitments as defined in the contract with regard to any project results: §703.18. Licensing and Assignment of Intellectual Property Rights. (1) To use commercially reasonably efforts to protect, de­ (a) The grant recipient bears the responsibility for licensing velop, commercialize, or otherwise bring Project Results to practical activities including identification of potential licensees, negotiation of application to the fullest extent feasible as determined by the Grant license agreements, documentation of the progress and development Recipient. The Grant Recipient is relieved of its obligations pursuant under a license agreement, monitoring the performance of the licensee, to this section so long as the Grant Recipient complies with paragraph and taking commercially reasonable actions to enforce the terms of the (3) of this subsection and §703.19 of this chapter. license agreements. (b) Each license agreement for project results entered into by the grant recipient shall include an acknowledgement by the licensee

35 TexReg 6662 July 30, 2010 Texas Register that such license agreement is subject to the Institute’s licenses, inter­ William "Bill" Gimson ests and other rights, if any. Executive Director (c) Nothing herein prohibits the grant recipient from negoti­ Cancer Prevention and Research Institute of Texas ating an exclusive license agreement for project results if exclusivity Effective date: August 1, 2010 is reasonably believed by the grant recipient to provide an economic Proposal publication date: February 5, 2010 incentive necessary for achieving commercial development and avail­ For further information, please call: (512) 305-8422 ability of the project results. The grant recipient shall take reasonable action to enforce the terms of the exclusive license and report any de­ ♦ ♦ ♦ fault notice to the Institute. TITLE 28. INSURANCE (d) All not-for-profit grant recipients negotiating exclusive or non-exclusive license agreements shall seek to retain the right to exploit PART 1. TEXAS DEPARTMENT OF the use of its project results and utilize the same for its non-commercial INSURANCE purposes. §703.19. Opt-Out and Default. CHAPTER 5. PROPERTY AND CASUALTY (a) The Institute shall have the option, but not the obligation, INSURANCE to pursue protection of the applicable intellectual property rights and/or SUBCHAPTER G. WORKERS’ COMPENSA­ to commercialize or otherwise bring to practical application the appli­ cable project results either directly or through one or more licensees, TION INSURANCE in the event of the following: DIVISION 4. TEXAS DETAILED CLAIM (1) Upon receipt of grant recipient’s notice of its election to INFORMATION STATISTICAL PLAN abandon, waive or disclaim any intellectual property rights or to cease its efforts to commercialize or otherwise bring to practical application 28 TAC §5.6601 any particular project results; or The Commissioner of Insurance (Commissioner) adopts new (2) Grant recipient’s failure to materially comply with its Division 4, §5.6601, concerning the Texas Detailed Claim In­ obligations to protect the intellectual property rights or to use dili­ formation Statistical Plan. Section 5.6601 adopts by reference gent and commercially reasonable efforts to commercialize or other­ the Texas Detailed Claim Information Statistical Plan, 2010 wise bring to practical application the project results in accordance with Edition (2010 Statistical Plan), effective September 1, 2010, for the grant recipient’s commercial development plan(s), and grant recip­ insurance companies writing workers’ compensation insurance ient fails cure such non-compliance within a reasonable period of time in Texas. The section is adopted with nonsubstantive changes following written notice from the Institute specifically describing the to the proposed text published in the April 30, 2010, issue of the events of non-compliance. Texas Register (35 TexReg 3422). (b) If the Institute elects to exercise its options pursuant to this REASONED JUSTIFICATION. The new section and the 2010 section, it shall notify the grant recipient in writing of such election. Statistical Plan are necessary to provide needed clarification re­ Upon receipt of notification, the grant recipient shall: garding the reporting requirements of certain data fields, elimi­ nate unnecessary and noncritical data elements, add necessary (1) Fully cooperate with the Institute’s efforts to protect, data elements, and to adopt by reference the 2010 Statistical commercialize or otherwise bring to practical application the applica­ Plan. The 2010 Statistical Plan specifies the detailed claim in­ ble project results at the Institute’s cost, including but not limited to formation (DCI) data that must be submitted to the Department the transfer to the Institute or the Institute’s designee of the grant recip­ of Insurance (Department) or its statistical agent relating to work­ ient’s rights, title and interest in and to the applicable project results, to ers’ compensation and employers’ liability claims. The 2010 Sta­ the maximum extent allowedbylaw; tistical Plan will not apply to employers certified to self-insure (2) Not take any action that would materially impede the under the Labor Code, Chapter 407, employers who participate Institute’s ability to protect, commercialize or otherwise bring to prac­ in self-insurance groups under the Labor Code, Chapter 407A, tical application the applicable project results. and governmental entities, because they are not insurance com­ panies authorized to engage in the business of workers’ com­ (c) If the Institute exercises its option under this section, the pensation insurance under the Insurance Code, Chapter 2051, grant recipient shall have no further claim or interest in or to the appli­ or defined as insurance companies under the Insurance Code, cable project results and shall not be entitled to any share of the revenue §2053.001(2). or other compensation with respect to such project results, except to the minimum extent required by law, if any. The Insurance Code §2053.101 authorizes the Commissioner to establish a statistical plan and the Insurance Code §2053.151 re­ (d) The Institute’s exercise of rights pursuant to this section is quires that the statistical plan be established by rule. This section subject to any applicable rights of the United States government. applies to workers’ compensation insurance and includes em­ This agency hereby certifies that the adoption has been reviewed ployers’ liability insurance. Whenever the term "workers’ com­ by legal counsel and found to be a valid exercise of the agency’s pensation" is used in this adoption, the term includes and applies legal authority. to employers’ liability insurance. Currently, insurance companies writing workers’ compensation Filed with the Office of the Secretary of State on July 12, 2010. insurance in Texas must use the statistical plan adopted effective TRD-201003865 January 1, 1991, and last amended effective January 1, 1997 (1997 Statistical Plan). The 1997 Statistical Plan was adopted under the procedures outlined in Article 5.96 of the Insurance

ADOPTED RULES July 30, 2010 35 TexReg 6663 Code. Subsequent changes in the industry, as well as the de­ ment type code; (12) return to work rate of pay indicator; and sire to more closely align the Texas DCI reporting requirements (13) total paid medical amount. Additionally, both the NCCI DCI with the DCI reporting requirements of other states, create the plan and 2010 Statistical Plan modify seven existing data ele­ need to update the 1997 Statistical Plan. Pursuant to the In­ ments, none of which are specific to Texas, including: (1) ben­ surance Code §2053.151, as amended by Senate Bill (SB) 471, efit amount paid (excludes lump-sum settlements); (2) benefit 80th Legislature, Regular Session, effective September 1, 2007, type code (excludes lump-sum settlements); (3) birth year (ex­ the Commissioner has determined that the update should be cludes month and day); (4) hire year (excludes month and day); adopted by rule under the Administrative Procedure Act, Gov­ (5) lump-sum settlement amount (separated from benefitamount ernment Code Chapter 2001, rather than under the Insurance paid); (6) record type code (eliminated CIC and revision codes); Code Article 5.96. The updated reporting requirements in the and (7) report type (to valuation level code). 2010 Statistical Plan shall apply to all claims with a Reported to Further, the 2010 Statistical Plan will gather comprehensive data Insurer Date of September 2010 and thereafter. All claims with for all indemnity claims with a loss value greater than zero. This a Reported to Insurer Date prior to September 2010 shall use change is consistent with the NCCI’s DCI plan. Under the 1997 the reporting requirements set out in the 1997 Statistical Plan, Statistical Plan, only claims with incurred losses of $5,000 or and those claims shall continue to be reported using the 1997 greater were required to be reported. This change will provide Statistical Plan up to and including reports due April 30, 2014. enhanced opportunities for research and monitoring of claims The rule text in §5.6601(j)(2) was changed from "April, 2014" in below $5,000, as well as more accurate pricing of statutory and the proposal to "April 30, 2014" in this order to clarify that reports regulatory changes affecting those claims. due through April 30, 2014 are included. The six Texas-specific data elements that are in the 1997 Sta­ The 2010 Statistical Plan has been designed to gather informa­ tistical Plan and that remain in the 2010 Statistical Plan include: tion to meet Texas-specific requirements. These requirements (1) Employer Federal Employer Identification Number (FEIN); differ from those in other states, many of which use a DCI plan (2) Employee Social Security Number (SSN); (3) Hospital Costs created by the National Council on Compensation Insurance, Amount Paid; (4) Total Payments to Physicians; (5) Date of First Inc. (NCCI). The NCCI DCI plan is also being updated at this Payment; and (6) ZIP Code of Injury Site. The Commissioner time. The 2010 StatisticalPlan isnotrequiredtobeuniform has determined that collecting employee SSN and employer with the NCCI DCI plan. However, minimizing differences in the FEIN data elements are essential to associate the DCI data with plans can promote efficiencies in the Department’s comparison other Division of Workers’ Compensation claims data, which and evaluation of products and costs of products for insurance enhances the usability of DCI data for research and compliance companies that report in multiple states. The NCCI also serves tracking purposes. Likewise, it is essential to keep certain fields as the Department’s statistical agent for the collection of Texas for research purposes, including analyzing claims by geographic DCI data. Thus, the Department has worked with the NCCI so region (ZIP Code of injury site). Additionally, the Commissioner that the 2010 Statistical Plan utilizes most of the same DCI data has determined that the 2010 Statistical Plan should continue elements used by the NCCI plan and reduces the number of to collect hospital and physician payments broken out for each Texas-specificdata elements from the 1997 Statistical Plan from claim valuation level in the 2010 Statistical Plan, because similar sixteentosix. Providingamore uniform collection of DCI data data for these claims by valuation level is not available from across states will allow Texas data to be more easily compared other data sources. Further, the Commissioner has determined with similar data from other states for research purposes by the that collection of the Date of First Payment provides necessary Department, the Department’s designated statistical agent, and information to the Division of Workers’ Compensation for certain the industry in general. benefit types. This data is useful for compliance monitoring Conforming DCI data collection across states will improve effi­ and/or for conducting the performance based oversight reviews ciency for workers’ compensation insurance companies that op­ the Division of Workers’ compensation is required to conduct erate in Texas and other NCCI DCI plan states. It will allow them for insurance companies. to consolidate reporting efforts for those states, to more easily Originally, the Department had contemplated continuing the re­ monitor their data submissions, and reduce the need for these in­ quirement that insurance companies report the Employer Stan­ surance companies to maintain multiple systems for maintaining dard Industrial Classification (SIC) code as a Texas-specificdata and reporting DCI data. These efficiencies could impact compli­ element, but as a result of a comment received on the proposed ance costs favorably. 2010 Statistical Plan, the Department has determined that re­ The2010Statistical Plan eliminates 29 unnecessary data ele­ porting of the SIC industrial classification code is no longer nec­ ments required under the NCCI DCI plan and the 1997 Statisti­ essary. The commenter asserted that the federal government is cal Plan. Nine of these elements are specific to the 1997 Statis­ moving away from the use of the SIC codes for employer iden­ tical Plan. Thirteen new data elements were added to both the tification purposes, and requested to have the requirement for 2010 Statistical Plan and the NCCI’s DCI plan. A 14th data el­ inclusion of the SIC code either altered or removed. Previously, ement was added to the NCCI DCI plan, but was not included the Department had required the code in order to associate new in the 2010 Statistical Plan because it was not consistent with data with old. While the Department has determined that it still Texas statutory workers’ compensation requirements. The 13 has a business need to analyze DCI data by industry classifica­ new data elements (none of which are Texas-specific) include tions, it recognizes that since the last update to the DCI Statis­ (1) type of benefit covered by lump sum settlement - impairment tical Plan in 1997, the insurance industry has now transitioned income benefits only in Texas; (2) extraordinary loss event indi­ to a new industrial classification system - the North American In­ cator; (3) impairment percentage basis code; (4) loss conditions dustrial Classification System (NAICS), which replaced the older -typeof claim, type of loss, type of recovery; (5) previous car­ SIC classification system. The Department discussed the pos­ rier code; (6) previous claim number; (7) previous policy effec­ sibility of substituting the SIC code with the NAICS code with tive date; (8) previous policy number; (9) previous reported to NCCI and determined that substituting these fields would result insurer date; (10) recovery reimbursement code; (11) replace­ in additional programming for both insurance carriers and NCCI,

35 TexReg 6664 July 30, 2010 Texas Register and that this additional programming would postpone the imple­ designated statistical agent, concerning workers’ compensation mentation of the Texas DCI Statistical Plan. Consequently, the claims pursuant to §2053.151 of the Insurance Code, to ensure Department has removed the SIC code field from the Texas DCI that the data collection methodology will yield data necessary for Statistical Plan. Using the employer’s FEIN, the Department has research and medical cost containment efforts. Though employ­ determined that itcanuse theTexasDCIdatatocoordinatewith ers’ liability claims and coverage are not specifically mentioned other databases, such as the Division of Workers’ Compensa­ in §2053.151 of the Insurance Code, employers’ liability cover­ tion claims database, to obtain the NAICS industry classification age is part of the workers’ compensation policy prescribed by the code associated with an individual claim. Commissioner, and must be included in the DCI Statistical Plan reporting requirements. Section 5.6601(b)(2) specifies that the Additionally, the new section clarifies that the Texas uniform in­ purpose of the section is also to adopt by reference the Texas surance policy prescribed by the Commissioner under the In­ Detailed Claim Information Statistical Plan, 2010 Edition. surance Code §2052.002 provides both workers’ compensation insurance coverage and employers’ liability insurance coverage. Section 5.6601(c) provides definitions for the purposes of the Reporting requirements for both coverages are addressed in the section and the Statistical Plan. Section 5.6601(c)(1) provides 2010 Statistical Plan. that "centrally located" means located in a place with ready ac­ cess to the insurance company’s claims files and detailed claims Finally, because the type and nature of workers’ compensation information. Section 5.6601(c)(2) provides that the terms "insur­ insurance losses are not related to the volume of claims pro­ ance company, insurance carrier, insurer, and carrier" have the cessed by an insurance company, the 2010 Statistical Plan ap­ same meaning as the term "insurance company" which is de­ plies to all insurance companies. The new section does not re­ fined in the Insurance Code, §2053.001(2). Section 5.6601(c)(3) duce or eliminate the 2010 Statistical Plan reporting requirement provides that "Jurisdiction state" means the state responsible for for insurance companies whose workers’ compensation busi­ the claim. Section 5.6601(c)(4) provides that the term "Statisti­ ness falls below a specific minimum premium volume. Such an cal Plan" means the Texas Detailed Claim Information Statistical exclusion or exemption from reporting under the 2010 Statistical Plan, 2010 Edition adopted by reference pursuant to the new Plan could result in a distortion of the DCI data, which would min­ section. imize its usefulness for research and/or compliance monitoring purposes. The 1997 Statistical Plan covers all insurance com­ Under §5.6601(d), the Texas Detailed Claim Information Statis- panies writing workers’ compensation insurance in Texas. The tical Plan, 2010 Edition is adopted by the Commissioner by ref­ 2010 Statistical Plan will continue to apply to the same insurance erence, effective September 1, 2010. Section 5.6601(d) also companies that are currently reporting DCI data under the 1997 specifies that the 2010 Statistical Plan includes the rules, re­ Statistical Plan. The 2010 Statistical Plan reporting requirements quirements, and examples for reporting detailed claim informa­ do not apply to employers certified to self-insure under the Labor tion for claims with a Reported to Insurer Date of September 1, Code Chapter 407; employers who participate in self-insurance 2010 and later and provides reporting instructions, a data dictio­ groups under the Labor Code Chapter 407A; and governmental nary, and claim selection and sampling methodologies. entities, because they are not authorized to engage in the busi­ Section 5.6601(e) provides that the 2010 Statistical Plan is pub­ ness of workers’ compensation insurance under the Insurance lished by the Department and is available from the Data Ser­ Code Chapter 2051 ordefined as insurance companies under vices Division, Mail Code 105-5D, Texas Department of Insur­ the Insurance Code, §2053.001(2). ance, P.O. Box 149104, Austin, Texas 78714-9104 or the De­ Nonsubstantive changes were made to §5.6601(c) to capitalize partment’s website at www.tdi.state.tx.us. the firstletterofthefi rst word of definitions of terms used in the Section 5.6601(f) sets out the reporting requirements. Section section to conform to current agency style. None of the changes 5.6601(f)(1) provides that the 2010 Statistical Plan specifies the made to the proposed text materially alter issues raised in the requirements for reporting claims data, including (i) criteria for proposal, introduce new subject matter, or affect persons other determining which claims to report; (ii) data elements and record than those previously on notice. layouts for the information that must be reported on each claim; HOW THE SECTION WILL FUNCTION. The new section func­ (iii) standards and procedures for categorizing insurance and tions as follows. Section 5.6601(a) sets forth the applicability of medical benefits required to be reported on each claim; (iv) in­ the new section. Section 5.6601(a)(1) provides that the section formation to be used for determining the specificlossvaluation applies to workers’ compensation insurance and includes em­ levels for eachclaim, whichrequiresittobereported; and(v) ployers’ liability insurance. It further provides that whenever the instructions regarding how and when to report required data on term "workers’ compensation" is used in the section, the term claims. includes and applies to employers’ liability insurance. Section Section 5.6601(f)(2) requires each insurance company to com­ 5.6601(a)(2) provides that the section applies to each insurance ply with the reporting requirements of the 2010 Statistical Plan company authorized to write workers’ compensation insurance pursuant to the Insurance Code §2053.151. Section 5.6601(f)(2) in the State ofTexasasthat termis de fined in the Insurance further requires each insurance company to submit required in­ Code, §2053.001(2). Section 5.6601(a)(2) further specifies that formation and data on each claim to the Commissioner, or the each insurance company is required to report to the Commis­ Commissioner’s designated statistical agent, no later than three sioner, or the Commissioner’s designated statistical agent, in­ months after the loss valuation dates specified in the 2010 Sta­ formation prescribed by the Commissioner under the Insurance tistical Plan. Code, §2053.151, for each workers’ compensation insurance claim. Section 5.6601(g) sets out which claims are required to be re­ ported. It specifies that a claim’s eligibility for reporting is based Section 5.6601(b) sets forth the purpose of the new section. Sec­ on an incurred indemnity loss value greater than zero. It further tion 5.6601(b)(1) specifies that the purpose of the section is to specifies that even if no income benefit payments have been prescribe the reporting requirements for the information and data made, but reserves have been set on the claim in anticipation to be submitted to the Commissioner, or the Commissioner’s

ADOPTED RULES July 30, 2010 35 TexReg 6665 of payment, the claim is still eligible to be reported. Section Texas Department of Insurance, P.O. Box 149104, Austin, Texas 5.6601(g) requires the following claims to be reported: (i) death 78714-9104. claims; (ii) lifetime income benefitclaims (i.e., permanent to­ SUMMARY OF COMMENTS. The Department received several tal disability claims); (iii) other open indemnity claims; and (iv) comments: closed claims selected in accordance with the sampling method outlined in the 2010 Statistical Plan adopted under the new sec­ (1) Texas Unique Data Reporting Elements tion. Comment: A commenter stated that although they supported Section 5.6601(h) sets out which claims are excluded from re­ the reduction of unique Texas data reporting elements from 16 porting. It specifies that the following claims are not required to to seven, the Department and NCCI should continue to look at be reported: (i) claims where the jurisdiction state is not Texas; ways to eliminate Texas unique data elements so that Texas (ii) claims in which income benefits have not yet accrued or been claims data reporting can be consistent with national standards. paid (i.e., medical only claims); (iii) losses paid to another insur­ The commenter asserted that this would reduce the reporting ance company because of reinsurance assumed by the reporting burdens on carriers and provide better information when com­ insurance company; and (iv) claims that involve benefits payable paring the Texas market with the national market and other ju­ under federal workers’ compensation laws. risdictions. Section 5.6601(i) mandates that each insurance company must Agency Response: The Department appreciates the com­ designate one individual as the carrier coordinator for claims re­ menter’s support for the reduction of the number of unique porting within its organization and provide the coordinator’s con­ Texas data reporting requirements in the proposed 2010 DCI tact information, including the coordinator’s name, working ti­ Statistical Plan. The Department made every effort to reduce the tle, mailing address, e-mail address, and telephone number, to number of required data elements by identifying unnecessary the Commissioner, or the Commissioner’s designated statistical and noncritical data elements, and considered system partic­ agent. Section 5.6601(i)(1) requires that the designated carrier ipants’ costs by not adding any new Texas specific required coordinator must: (i) be a centrally-located employee of the in­ data elements. Moreover, in response to this comment, the surance company who has responsibility for claims, statistical, or Department removed the Texas specific SIC code requirement, data management; (ii) receive and appropriately disperse data thereby reducing the number of Texas specificdataelements reporting information received from the Commissioner, or the to six. The required Texas specific data elements that remain Commissioner’s designated statistical agent; and (iii) serve as are essential to enhance the usability of the DCI data and to central compliance control for data reporting under the 2010 Sta­ enable the agency to meet its regulatory requirements and tistical Plan. business needs which include statutorily required research and compliance monitoring activities. Section 5.6601(i)(2) further requires that an insurance company authorized to write workers’ compensation insurance in this state (2) Claimant Information Elements as of the effective date of §5.6601 must provide the coordinator’s Comment: The Department received a comment that, although contact information required by §5.6601(i) to the Commissioner, theneedforcomplete andaccurate informationiswellestab­ or the Commissioner’s designated statistical agent, no later than lished, the risks to injured workers with the transmission of So­ September 1, 2010. Section 5.6601(i)(2) also provides that, ex­ cial Security identification numbers may be significant. The com­ cept as otherwise provided by §5.6601(i), an insurance company menter requested that the Department and NCCI look into the that obtains a certificate of authority to write workers’ compensa­ feasibility of eliminating or reducing the number of times that sen­ tion insurance in this state after September 1, 2010, must provide sitive identification information is transmitted that may create fi­ the coordinator’s contact information required by §5.6601(i) to nancial risks for injured workers, employers and carriers. The the Commissioner, or the Commissioner’s designated statistical commenter believed that Texas is unique in requiring the report­ agent, no later than the 30th day after the insurance company’s ing of injured workers’ Social Security numbers as a result of the certificate of authority becomes effective. need to associate carrier reported DCI data with DWC data. The Section 5.6601(i)(3) mandates that an insurance company must commenter suggested that DWC look for ways to eliminate this report any changes to the designated carrier coordinator’s con­ unique reporting requirement. tact information to the Commissioner, or the Commissioner’s Agency Response: The Department agrees with the com­ designated statistical agent, not later than 30 days after the ef­ menter’s concern regarding the confidentiality of Social Security fective date of the change. numbers, but has not made a change as a result of the comment. Section 5.6601(j) sets forth the effective dates of the section and Precautions are always taken when confidential information Statistical Plan. Section 5.6601(j)(1) provides that the section is being handled and that the reporting of injured employees’ is effective on September 1, 2010. Section 5.6601(j)(2) man­ identifying information, including social security numbers, is dates that claims with a Reported to Insurer Date of September consistent with other agency data reporting requirements. 1, 2010, and later must be reported in accordance with the Sta­ Currently, injured employees’ social security numbers are being tistical Plan. It further mandates that claims with a Reported to reportedtothe Department as part of the current DCI Statistical Insurer Date prior to September 1, 2010, must be reported in Plan as well as to the Division by various methods. At this accordance with the 1997 Statistical Plan (Texas Detailed Claim time no viable alternative to properly associate DCI data with Information Statistical Plan, effective January 1, 1997). other Department or Division databases has been identified. In addition to coordinating DCI-DWC data, the SSN is also the key The2010Statistical Plan and 1997 Statistical Plan have been field to coordinate required data from external agencies such as submitted to the Secretary of State with this filing and are also the Department of Assistive and Rehabilitative Services (DARS) available from the Department website at www.tdi.state.tx.us or and the Texas Workforce Commission (TWC). As a result, the the Department’s Data Services Division, Mail Code 105-5D, Department has determined that collecting this information remains the most effective method to associate DCI data with

35 TexReg 6666 July 30, 2010 Texas Register other Department or Division data without generating new data Agency Response: The Department disagrees. Reporting of reporting requirements, such as requiring the reporting of a DCI data and reporting of medical billing and payment data to Division-assigned claim number. Also, the Department notes theDivisionisnot collectedinthe samem anner, nor is it col­ that in order to meet the statutory research and compliance lected at the same time. Reporting to DCI is done at different monitoring requirements that are unique for Texas, it must be valuation points (i.e., 6 months, 18 months, etc) post-injury on a able to obtain required data to meet those business needs. per claim basis while reporting to the Division is done on a trans­ action level per claim (i.e., each medical bill processed by an (3) Employer Information Elements insurance carrier). As a result, data regarding payments on in­ Comment: The Department received a comment regarding the dividual claims, such as hospital costs, physician payments and information employers are required to submit under the 2010 date of first payment collected by either system cannot be easily Statistical Plan. Currently, the Department requires Texas carri­ replicated in the other system because of the differences in the erstouse theemployerNorth American Industrial Classification timeframes for data reporting, making each system and its infor­ System (NAICS) code (as opposed to Standardized Industrial mation unique. Classification or SIC code) for the electronic filing of Employer (5) Application to All Texas Workers’ Compensation Carriers First Report of Injury or Illness (DWC-1) and Supplemental Re­ port of Injury (DWC-6). Consequently the NAICS codes are al­ Comment: The commenter acknowledged that Insurance Code ready in the Texas claim systems for potential claim data report­ §2051.001 makes the DCI statistical plan applicable to all insur­ ing. However, the proposed rule requires the carrier to submit ance carriers authorized to write workers’ compensation insur­ the federal employer identification number (FEIN) and SIC code ance in the state of Texas. However, the commenter was con­ for claims data reporting instead of the NAICS code, which, the cerned about the burden on small carriers who currently write commenter claimed, requires extra data retrieval and work. In very few policies in Texas, and requested that as part of the De­ addition, the commenter asserted that the federal government is partment’s Sunset process, the Department analyze whether or moving away from the use of the SIC codes for employer identifi­ not there is a legitimate need to impose this burden on small cation purposes, and requested that Texas carriers be allowed to carriers. If not, then the commenter suggested that statutory report detailed claim information for employers using the NAICS changes should be recommended in the Sunset process to put codes rather than the FEIN and SIC codes. In addition, the com­ Texas back in line with other jurisdictions, and that Texas should menter did not understand why Texas requires employers to sub­ only require DCI reporting from carriers that meet the minimum mit the ZIP code of the injury site. participation thresholds set by NCCI. Agency Response: The Department agrees that the NAICS Agency Response: The Department disagrees. The require­ codes, as opposed to SIC codes, are currently being used ment that the 2010 Statistical Plan apply to all Texas workers’ for other workers’ compensation claims reporting with the compensation carriers is consistent between the previous DCI Department and the Division. The Department discussed the statistical plans. All insurance companies licensed to write work­ possibility of substituting the SIC code with the NAICS code ers’ compensation in Texas are currently required to report DCI with NCCI and determined that substituting these fields would data under the 1997 Statistical Plan and this requirement is con­ result in additional programming for both insurance carriers and tinued under this adopted rule. Further, such an exclusion or NCCI and that this additional programming may postpone the exemption from reporting under the 2010 Statistical Plan could implementation of the Texas DCI Statistical Plan. Consequently, result in a distortion of the DCI data, which would minimize its the Department agrees with the comment and will remove the usefulness for statutorily required research and/or compliance SIC code field from the Texas DCI Statistical Plan. However, monitoring purposes. The Department disagrees that Texas DCI the Department clarifies that it still has a business need to reporting requirements should meet the minimum participation analyze Texas DCI claim data by industry and geographic region thresholds required by NCCI and notes that premium exceptions and declines to eliminate the employer FEIN and zip code of are also not imposed on other Texas Department of Insurance, injury site fields in the Texas DCI Statistical Plan. Specifically, Division of Workers’ Compensation data reporting requirements the Department has determined that collecting the employer’s relating to claim-level information. FEIN is necessary in order to enable proper association of (6) Adoption and Implementation Schedule information between the databases available to the Department and the Division as well as databases from TWC and DARS. Comment: The Department received a comment that because Using the employer’s FEIN, the Department can coordinate there are changes in the NCCI national data reporting elements the Texas DCI data with that in other databases to obtain the in addition to the changes in the NCCI Texas data reporting el­ NAICS code associated with an individual claim. Additionally, ements, Texas testing and implementation should take place af­ the Department clarifies that the zip code of injury site field is ter the national testing and implementation since Texas carriers the only field available in the Texas DCI data to assign a claim have to report the national data in addition to the Texas unique to a geographic region. data elements. This would facilitate efficient implementation na­ tionally and locally. (4) Hospital Costs, Physician Payments, and Date of First Pay­ ment Agency Response: The Department disagrees. The Depart­ ment’s designated statistical agent for the collection of DCI data, Comment: The Department received a comment that the rule’s NCCI, has reported that the insurance company members who requirement that employers report hospital costs, physician pay­ worked with NCCI to revise DCI data reporting requirements at ments, and the date of first payment is unnecessary because the national level supported the concurrent implementation of Texas carriers already report this data electronically to DWC. both new NCCI DCI and Texas DCI programs and that these in­ The commenter asserted that any legal or technology barriers surance companies also supported a coordinated 2014 ceasing between NCCI and DWC should be resolved to allow for NCCI of the current NCCI DCI and Texas DCI programs. The designs access to this information without requiring separate reporting of the new NCCI DCI and Texas DCI programs were developed by Texas carriers that is not necessary in other jurisdictions.

ADOPTED RULES July 30, 2010 35 TexReg 6667 as one integrated system - with both programs sharing a com­ propriate to implement the powers and duties of the Texas De­ mon record layout of 500 bytes, and an additional 100 bytes partment of Insurance under the Insurance Code and other laws built in for the Texas DCI unique requirements. Consequently, of this state. NCCI reports that many insurance companies have already be­ §5.6601. Texas Detailed Claim Information Statistical Plan. gun building one data reporting system with a single 600 byte record layout and have begun programming the requirements (a) Applicability. for the new NCCI DCI and Texas DCI programs simultaneously. (1) This section applies to workers’ compensation insur­ NCCI also reports that coordinating the implementation of the ance and includes employers’ liability insurance. Whenever the term NCCI DCI and the Texas DCI changes also makes it easier for "workers’ compensation" is used in this section, the term includes and insurance companies to report its data, as both NCCI DCI and applies to employers’ liability insurance. TexasDCIclaims canbereportedinthe same file submission. (2) This section applies to each insurance company autho­ NCCI will edit this file for all states, including Texas, treating it rized to write workers’ compensation insurance in the State of Texas as one submission. Also, the editing results will be provided as specified in the Insurance Code §2053.001(2). Each insurance com­ together, and insurance carriers will use NCCI’s online tool for pany is required to report to the commissioner, or the commissioner’s all states, including Texas. Finally, if the implementation dates designated statistical agent, information prescribed by the commis­ were staggered, insurance carriers would have to maintain sioner under the Insurance Code §2053.151 for each workers’ com­ the current Texas DCI program for a longer period. With the pensation insurance claim. adopted approach, all reporting for the current DCI programs will cease at the same time on April 30, 2014, so those systems (b) Purpose. The purpose of this section is to: can be shut down simultaneously. This also provides cost (1) prescribe the reporting requirements for the informa­ advantages in shutting down both old NCCI DCI and Texas tion and data to be submitted to the commissioner, or the commis­ DCI systems together. The Department also notes that NCCI sioner’s designated statistical agent, concerning workers’ compensa­ has communicated the proposed changes to the NCCI DCI tion claims pursuant to the Insurance Code §2053.151 to ensure that and Texas DCI programs in its circulars and during the January the data collection methodology will yield data necessary for research 2010 NCCI Data Educational Program in order to make the and medical cost containment efforts; and insurance industry affected by these proposed changes aware of the upcoming changes. (2) adopt by reference the Texas Detailed Claim Informa- tion Statistical Plan, 2010 Edition. NAMES OF THOSE COMMENTING FOR AND AGAINST THE SECTION. (c) Definitions. The following words and terms when used in this division shall have the following meanings unless the context For: None clearly indicates otherwise: For with changes: Property Casualty Insurers Association of (1) Centrally-located--Located in a place with ready access America to the insurance company’s claims files and detailed claims informa­ Against: None tion. STATUTORY AUTHORITY. The new section and 2010 Statistical (2) Insurance company, insurance carrier, insurer, and car­ Plan are adopted pursuant to the Insurance Code, §§2053.001, rier--Has the same meaning as "Insurance company" as defined by the 2053.101, 2053.151, and 36.001. Section 2053.001(2) defines Insurance Code §2053.001(2). "insurance company" as a person authorized to engage in the (3) Jurisdiction state--The state responsible for the claim. business of workers’ compensation insurance in this state, in­ cluding: (A) the Texas Mutual Insurance Company; (B) a Lloyd’s (4) Statistical Plan--The Texas Detailed Claim Information plan under Chapter 941; and (C) a reciprocal and interinsurance Statistical Plan, 2010 Edition adopted by reference pursuant to this exchange under Chapter 942. Section 2053.101 authorizes the section. Commissioner to develop and periodically modify reasonable (d) Adoption by Reference. The commissioner adopts by ref­ statistical plans for workers’ compensation insurance to be used erence the Texas Detailed Claim Information Statistical Plan, 2010 by each insurance company in recording and reporting the insur­ Edition. The Statistical Plan includes the rules, requirements, and ex­ ance company’s loss experience and other data required by the amples for reporting detailed claim information for claims with a Re­ Department. Section 2053.151(a) requires the Commissioner to ported to Insurer Date of September 1, 2010 and later and provides prescribe by rule the information that must be reported on each reporting instructions, a data dictionary, and claim selection and sam­ workers’ compensation claim. Section 2053.151(b) requires the pling methodologies. Commissioner to establish standards and procedures for cate­ gorizing insurance and medical benefits required to be reported (e) Statistical Plan Availability. The Statistical Plan is pub­ on each workers’ compensation claim to ensure that the data col­ lished by the Texas Department of Insurance and is available from the lection methodology will yield data necessary for research and Data Services Division, Mail Code 105-5D, Texas Department of In­ medical cost containment efforts. Section 2053.151(c) further surance, P.O. Box 149104, Austin, Texas 78714-9104 or the depart­ requires the Commissioner to establish by rule reporting require­ ment’s website at www.tdi.state.tx.us. ments for insurance companies regarding workers’ compensa­ (f) Reporting Requirements. tion claims. Section 2053.151(c) also provides that the Com­ missioner may reduce or eliminate reporting requirements for (1) The Statistical Plan specifies the requirements for re­ insurance companies whose workers’ compensation insurance porting claims data, including: business falls below a specific minimum premium volume estab­ (A) criteria for determining which claims to report; lished by the Commissioner by rule. Section 36.001 provides that the Commissioner may adopt any rules necessary and ap­ (B) data elements and record layouts for the informa­ tion that must be reported on each claim;

35 TexReg 6668 July 30, 2010 Texas Register (C) standards and procedures for categorizing insur­ state after September 1, 2010, must provide the coordinator’s contact ance and medical benefits requiredtobereportedoneachclaim; information required by this subsection to the commissioner, or the commissioner’s designated statistical agent, no later than the 30th (D) information to be used for determining the specific day after the insurance company’s certificate of authority becomes loss valuation levels for each claim, which requires it to be reported; effective. and (3) An insurance company must report any changes to the (E) instructions regarding how and when to report re­ designated insurance company coordinator’s contact information to the quireddataonclaims. commissioner, or the commissioner’s designated statistical agent, not (2) Each insurance company is required to comply with the later than 30 days after the effective date of the change. reporting requirements of the Statistical Plan pursuant to the Insurance (j) Effective Date. Code §2053.151. Each insurance company must submit required in­ formation and data on each claim to the commissioner, or the commis­ (1) This section is effective on September 1, 2010. sioner’s designated statistical agent, no later than three months after the (2) Claims with a Reported to Insurer Date of September 1, loss valuation dates specified in the Statistical Plan. 2010 and later must be reported in accordance with the Statistical Plan. (g) Claims Required to be Reported. A claim’s eligibility for Claims with a Reported to Insurer Date prior to September 1, 2010 must reporting is based on an incurred indemnity loss value greater than zero. be reported in accordance with the Texas Detailed Claim Information Even if no income benefitpaymentshave been made, but reserves have Statistical Plan effective January 1, 1997 up to and including reports been set on the claim in anticipation of payment, the claim is still eli­ due April 30, 2014. gible to be reported. The following claims must be reported: This agency hereby certifies that the adoption has been reviewed (1) death claims; by legal counsel and found to be a valid exercise of the agency’s legal authority. (2) lifetime income benefit claims (i.e., permanent total disability claims); Filed with the Office of the Secretary of State on July 14, 2010. (3) other open indemnity claims; and TRD-201003910 (4) closed claims selected in accordance with the sampling Gene C. Jarmon method outlined in the Statistical Plan adopted under this section. General Counsel and Chief Clerk (h) Claims Excluded from Reporting. The following claims Texas Department of Insurance are not required to be reported: Effective date: August 3, 2010 Proposal publication date: April 30, 2010 (1) claims where the jurisdiction state is not Texas; For further information, please call: (512) 463-6327 (2) claims in which income benefits have not yet accrued or been paid (i.e., medical only claims); ♦ ♦ ♦ (3) losses paid to another insurance company because of TITLE 31. NATURAL RESOURCES AND reinsurance assumed by the reporting insurance company; and CONSERVATION (4) claims that involve benefits payable under federal workers’ compensation laws. PART 2. TEXAS PARKS AND (i) Designated Carrier Coordinator. Each insurance company WILDLIFE DEPARTMENT must designate one individual as the coordinator for claims reporting within its organization and provide the coordinator’s contact informa­ CHAPTER 53. FINANCE tion, including the coordinator’s name, working title, mailing address, SUBCHAPTER A. FEES e-mail address, and telephone number, to the commissioner, or the commissioner’s designated statistical agent. The Texas Parks and Wildlife Commission adopts amendments to §§53.9, 53.14, and §53.30, concerning Fees, without changes (1) The designated carrier coordinator must: to the proposed text as published in the April 23, 2010, issue of (A) be a centrally-located employee of the insurance the Texas Register (35 TexReg 3205). company who has responsibility for claims, statistical, or data man­ The amendment to §53.9, concerning Falconry Permits, estab­ agement; lishes fee amounts for falconry permits issued on a four or five- (B) receive and appropriately disperse data reporting year basis. Recent changes to federal rules governing falconry information received from the commissioner, or the commissioner’s allow states to issue falconry permits with a period of validity of designated statistical agent; and up to five years. This change to the period of validity in federal rulesisalsoreflected in recently adopted changes to the depart­ (C) serve as central compliance control for data report­ ment’s falconry rules. See 31 TAC §65.265; adopted in the May ing under the Statistical Plan. 28, 2010, issue of the Texas Register (35 TexReg 4425). The de­ (2) An insurance company authorized to write workers’ partment’s rules regarding fees for falconry permits must there­ compensation insurance in this state as of the effective date of this fore be adjusted to address the new validity periods. Although section must provide the coordinator’s contact information required by current §53.9 addresses a variable fee depending on the period this subsection to the commissioner, or the commissioner’s designated of validity of a permit, the rule addresses a maximum period of statistical agent, no later than September 1, 2010. Except as otherwise validity of three years. The amendment does not increase the provided by this subsection, an insurance company that obtains a cer­ fee, but provides for a pro-rata falconry fees for periods of valid­ tificate of authority to write workers’ compensation insurance in this ity of up to five years. Specifically, the amendment adds a fee of

ADOPTED RULES July 30, 2010 35 TexReg 6669 $84 for a four-year permit and $105 of a five year permit for both The amendments establish a pro rata fee for falconry permits is­ the apprentice falconer’s permit and falconer’s renewal permit. sued on a four or five-year basis; reduce the fee for deer breeder permit renewals for permittees who submit reports electronically; The amendment to §53.14, concerning Deer Management and create a generic authorization for the department to collect fees Removal Permits, provides a reduced fee for renewal of a deer for department-sponsored activities, programs, and events; and breeder permit for permittees who have met certain reporting implement a flat admission fee of $5 per person for entry to the standards. Under current rule, the fee for renewing a deer lower visitation area at Old Tunnel Wildlife Management Area breeder permit is $400. Under the terms of Parks and Wildlife (WMA). Code, §43.369, as added by Senate Bill 1586 (S.B. 1586), enacted by the 81st Texas Legislature in 2009, the department The department received five comments opposing adoption of is required to develop a process for a database to be shared the proposed rules. Three of the five comments provided a rea­ with the Texas Animal Health Commission for the purpose of son or rationale for opposition. Those comments, accompanied collecting data required to be submitted to each agency by by the department’s response to each, follow. deer breeders. S.B. 1586 also requires the department to The department received two comments opposing the imposition provide incentives to deer breeders whose cooperation results of a flat entry fee for all persons at thelowerviewingareaofthe in reduced costs and increased efficiency by offering reduced Old Tunnel Wildlife Management Area. Both commenters stated fees for deer breeder permits. that the fee would discourage family visitation. The department The department has created an electronic reporting system for disagrees with the comments and responds that because the persons who hold deer breeder permits. Increased utilization upper viewing area is open to the public at no charge, the area of the system by deer breeders results in cost savings to the continues to provide an affordable viewing opportunity for those department and makes data more immediately available to de­ whodonotwish to pay afee to observe from the lower viewing partment, regulatory, and enforcement personnel, which makes area. those activities more efficient. The department has determined The department received one comment opposing the creation that deer breeders who use the electronic reporting system are of pro-rata fee amounts for four and five-year falconry permits. therefore contributing to a reduction in administrative costs as­ The commenter stated that the fee for falconry permits was ex­ sociated with their permits. In order to implement a renewal fee orbitant and should be reduced. The department disagrees with that reflects this reduced administrative cost, and to create an the comment and responds that the intent of the rulemaking was incentive for deer breeders to use the electronic reporting sys­ to make pro-rata adjustments to the department’s fee schedule tem exclusively, the department adopts another rule (appearing to accommodate federal action that created a five-year falconry elsewhere in this issue of the Texas Register) that provides a re­ permit, not to increase or decrease the fee amounts themselves. duced renewal fee for deer breeders who submit at least 85% of Therefore, the comment is not germane to the rulemaking. No specified reports and permit activations via the department’s on­ changes were made as a result of the comment. line system. The amendment provides a reduced fee for using the on-line system of $200, rather then the current fee of $400. The department received six comments supporting adoption of theproposedamendments. The amendment to §53.30, concerning Facility Admission and Use Fees, creates a generic authorization for the department to The Texas Deer Association commented in support of adoption collect fees for department-sponsored activities, programs, and of the proposed amendment concerning fees for renewal of deer events; and implements a flat admission fee of $5 per person for breeder permits. entry to the lower visitation area at Old Tunnel Wildlife Manage­ No groups or associations commented in opposition to adoption ment Area (WMA). of the proposed amendments. The department hosts a number of workshops, educational pro­ grams, and other similar activities at department facilities. At DIVISION 1. LICENSE, PERMIT, AND BOAT these events, the department usually collects a nominal fee to AND MOTOR FEES recoup the cost of providing the programs. There is currently no specific regulatory provision explicitly establishing fees for those 31 TAC §53.9, §53.14 programs. The amendment addresses this by creating a generic The amendments are adopted under Parks and Wildlife Code, fee authorization to allow the department to recover the costs of §43.357, which authorizes the commission to promulgate rules providing workshops, educational programs, and other similar governing deer breeder permits, including fees and reporting re­ activities. quirements; §49.014, which authorizes the department to pre­ Current entry fees for the lower visitation area at the Old Tun­ scribe fees for any falconry, raptor propagation, or nonresident nel WMA are based on age and/or type of group. Under current trapping permit; and §11.027, which authorizes the commission rules, children under the age of five pay no admission fee, chil­ to establish and provide for the collection of a fee for entering, dren between the ages of six and 16 pay a $2 admission fee, per­ reserving, or using a facility or property owned or managed by sons between 17 and 64 pay a $5 admission fee, and persons the department. 65 and over pay a $3 admission fee. The amendment imple­ This agency hereby certifies that the adoption has been reviewed ments a flat admission fee of $5 per person, irrespective of age. by legal counsel and found to be a valid exercise of the agency’s The Old Tunnel WMA is popular with the public; however, due to legal authority. staffing priorities at other wildlife management areas, Old Tunnel WMA is staffed by only one employee and the department must Filed with the Office of the Secretary of State on July 15, 2010. rely on unpaid volunteers to fill additional staffing needs. By im­ TRD-201003939 plementing a flat fee, the admissions process will be simplified, easier to administer, and will provide for simplified bookkeeping and fiscal control.

35 TexReg 6670 July 30, 2010 Texas Register Ann Bright ments, and make additional nonsubstantive, housekeeping-type General Counsel changes. Texas Parks and Wildlife Department The amendment to §55.111, concerning Definitions, alters para­ Effective date: August 4, 2010 graph (3) to clarify that the OGT coordinator also serves as the Proposal publication date: April 23, 2010 secretary for the OGT committee. Under Parks and Wildlife For further information, please call: (512) 389-4775 Code, §12.202(a), the executive director (the director) of the Texas Parks and Wildlife Department (the department) or his or ♦ ♦ ♦ her designee is required to serve as the secretary to the commit­ tee. The change is necessary to clarify that the secretary and the DIVISION 2. FACILITY ADMISSION AND coordinator are the same person. The amendment also alters USE FEES paragraph (6) to provide that the term "director" includes any per­ son designated by the director to act for the director. The amend­ 31 TAC §53.30 ment is necessary to eliminate awkward sentence construction The amendment is adopted under Parks and Wildlife Code, throughout the rules. The amendment also alters paragraph (8) §11.027(e), which authorizes the commission to establish and to clarify that eligibility for reward is contingent upon arrest and provide for the collection of a fee for entering, reserving, or using conviction with respect to an eligible violation. The amendment a facility or property owned or managed by the department. to paragraph (11) updates the definition for "line of duty". The 81st Texas Legislature enacted Senate Bill (S.B.) 872, amend­ This agency hereby certifies that the adoption has been reviewed ing Government Code, Chapter 615, which governs the provi­ by legal counsel and found to be a valid exercise of the agency’s sion of financial assistance to eligible survivors of certain public legal authority. servants killed in the line of duty. Senate Bill 872 amended the definition of "line of duty" in Government Code, §615.021(e)(2) Filed with the Office of the Secretary of State on July 15, 2010. to includeanactionperformed as partof atrainingprogram the TRD-201003940 individual is required or authorized by rule, condition of employ­ Ann Bright ment, or law to undertake. The amendment is necessary to be General Counsel consistent with current statutory law. Texas Parks and Wildlife Department The amendment to §55.112, concerning Donations and Dis­ Effective date: August 4, 2010 bursements, eliminates references to the "designee" of the Proposal publication date: April 23, 2010 director, for reasons already identified in the discussion of For further information, please call: (512) 389-4775 the amendment to §55.111(6). The amendment also alters subsection (d) to remove a statement concerning approval of ♦ ♦ ♦ rewards and death benefits by the committee; to replace the requirement for approval of the chairman of the committee of CHAPTER 55. LAW ENFORCEMENT all disbursements in excess of $500 with a requirement that the SUBCHAPTER D. OPERATION GAME THIEF chairman be notified in writing of all such disbursements; and, to make a grammatical change in the interest of clarity. The FUND statement regarding the approval of rewards and death benefits 31 TAC §§55.111 - 55.113, 55.116 by the chairman of the committee is unnecessary because it is redundant. Parks and Wildlife Code, §12.202(c), already The Operation Game Thief Committee adopts amendments to stipulates that four members of the committee must approve dis­ §§55.111 - 55.113 and 55.116, concerning Operation Game Thief bursement of rewards or death benefits; therefore, the current (OGT), without changes to the proposed text as published in the provision is unnecessary. The amendment also requires the no­ March 19, 2010, issue of the Texas Register (35 TexReg 2284). tification of the chairman of the committee of all disbursements Operation Game Thief is a type of crime-stopper program de­ in excess of $500. The current rule requires the chairman of signed to encourage the public to assist the Texas Parks and the committee to approve all disbursements other than rewards Wildlife Department (TPWD) in enforcing conservation laws by and death benefits. The OGT program is a round-the-clock reporting unlawful conduct. Created in 1981 by the 67th Texas program that incurs many expenses throughout the year. Since Legislature, the program offers rewards of up to $1,000 for infor­ the OGT committee meets only twice per year under normal mation leading to the arrest and conviction of persons who com­ circumstances, it is therefore problematic to condition disburse­ mit crimes involving wildlife resources. The program also pro­ ments on the prior approval of the chairman. Therefore, it is vides supplemental benefits to the families of department peace necessary to provide for a mechanism that preserves oversight officers killed in the line of duty. The program is privately funded while providing operational flexibility. The change requires the but administered by the Operation Game Thief Committee under notification of the chairman of all disbursements in excess of the provisions of Parks and Wildlife Code, Chapter 12, Subchap­ $500, which will allow for the smooth day-to-day operation of ter C. the OGT program while keeping the chairman of the committee informed. The amendment also makes grammatical changes The amendments provide for a more expedited method of dis­ to improve the readability of subsection (c) and to remove a bursing death benefits to families of peace officers killed in the reference to a telephone service that no longer exists. line of duty, clarify the definition of "in the line of duty," provide for a more efficient method of approving routine expenditures to The amendment to §55.113, concerning Reporting Violations; enhance program delivery and administration, incorporate leg­ Eligibility of Applicant, nonsubstantively alters subsection (f) to islative changes that retroactively affect death-benefitdisburse­ enhance readability. The current provision is a run-on sentence that it is difficult to understand.

ADOPTED RULES July 30, 2010 35 TexReg 6671 The amendment to §55.116, concerning Death Benefits: Pay­ Parks and Wildlife Commission and published in the August 7, ment, makes nonsubstantive changes regarding capitalization 2009, issue of the Texas Register (34 TexReg 5381), an obsolete of titles and provides that the provisions of the subsection apply fee reference appears in Chapter 57 (relating to Fisheries). The retroactively to October 1, 2008. Senate Bill 872 also amended amendment eliminates all references to fee amounts in Chapter Government Code, §615.081, which allows eligible survivors of 57 to rectify the conflict. peace officers killed in the line of duty to retroactively apply for The amendment will function by removing confusing references. benefits provided or created as a consequence of S.B. 872 for line-of-duty deaths occurring after 1993. The only instance of The department received three comments opposing adoption of the death of a department peace officer that wouldbeaffected the proposed rule. None of the commenters offered a reason by S.B. 872 occurred in 2008. The amendment is necessary to or rationale for opposing adoption. The department disagrees comply with the provisions of statutory law. with the comments. No charges were made as a result of the comments. The amendments will function by providing for a more expedited method of disbursing death benefits to families of peace officers The department received six comments supporting adoption of killed in the line of duty, clarifying the definition of "in the line of the proposed amendment. duty," providing for a more efficient method of approving routine No groups or associations commented in favor of or opposition expenditures to enhance program delivery and administration, to adoption of the proposed amendment. incorporating legislative changes that retroactively affect death- benefit disbursements, and making housekeeping-type changes The amendment is adopted under Parks and Wildlife Code, to enhance the readability oftherules. §11.027, which authorizes the commission to establish and providefor thecollectionofa fee to cover costs associated with The committee received no comments concerning adoption of the review of an application for a permit required by the Parks the proposed amendments. and Wildlife Code. No groups or associations commented in support of or opposition This agency hereby certifies that the adoption has been reviewed to adoptions of the proposed amendments. by legal counsel and found to be a valid exercise of the agency’s The amendments are adopted under Parks and Wildlife Code, legal authority. §12.201, which authorizes the Operation Game Thief Commit­ tee to adopt rules for the implementation of the Operation Game Filed with the Office of the Secretary of State on July 15, 2010. Thief program and maintenance of the Operation Game Thief TRD-201003942 fund. Ann Bright This agency hereby certifies that the adoption has been reviewed General Counsel by legal counsel and found to be a valid exercise of the agency’s Texas Parks and Wildlife Department legal authority. Effective date: August 4, 2010 Proposal publication date: April 23, 2010 Filedwiththe Office of the Secretary of State on July 15, 2010. For further information, please call: (512) 389-4775 TRD-201003941 Ann Bright ♦ ♦ ♦ General Counsel SUBCHAPTER K. SCIENTIFIC AREAS Texas Parks and Wildlife Department Effective date: August 4, 2010 31 TAC §57.921 Proposal publication date: March 19, 2010 The Texas Parks and Wildlife Commission adopts an amend­ For further information, please call: (512) 389-4775 ment to §57.921, concerning the Redfish Bay State Scientific Area (RBSSA), without changes to the proposed text as pub­ ♦ ♦ ♦ lished in the April 23, 2010, issue of the Texas Register (35 CHAPTER 57. FISHERIES TexReg 3209). SUBCHAPTER A. HARMFUL OR Submerged seagrass meadows are a dominant, unique subtrop­ ical habitat in many Texas bays and estuaries. These communi­ POTENTIALLY HARMFUL FISH, SHELLFISH, ties of highly evolved marine flowering plants play a critical role in AND AQUATIC PLANTS the coastal environment, including functioning as nursery habi­ tat for estuarine fisheries, a major source of organic biomass for 31 TAC §57.125 coastal food webs, effective agents for stabilizing coastal ero­ sion and sedimentation, and major biological agents in nutri­ The Texas Parks and Wildlife Commission adopts an amend­ ent cycling and water quality processes. Recent studies show ment to §57.125, concerning Triploid Grass Carp Permit; Appli­ that seagrasses are sensitive to nutrient enrichment and water cation, Fee, without changes to the proposed text as published quality problems, as well as physical stress from human distur­ in the April 23, 2010, issue of the Texas Register (35 TexReg bances. 3209). Destruction of seagrasses in the RBSSA by boat propellers The amendment removes references to fee amounts in the rule. has been well documented. See, e.g., Montagna, Holt et al., In 2009 the department increased the fees for a number of per­ Characterization of Anthropogenic and Natural Disturbance on mits, including the triploid grass carp permit. Although the fee Vegetated and Unvegetated Bay Bottom Habitats in the Corpus amounts in Chapter 53 of the Texas Administrative Code (relat­ Christi Bay Natural Estuary Program Study Area (1998); Pulich ing to Finance) reflect the correct fee amount as adopted by the et al., Current Status and Historical Trends of Seagrass in

35 TexReg 6672 July 30, 2010 Texas Register the Corpus Christi Bay National Estuary Program Study Area Ann Bright (1997). As a result, many Texas scientists, resource managers General Counsel and environmentally aware citizens have concerns about the Texas Parks and Wildlife Department ecosystem health of these seagrass resources. In January Effective date: August 4, 2010 1999, (TPWD), the Texas General Land Office and the Texas Proposal publication date: April 23, 2010 Natural Resource Conservation Commission(theprecursor For further information, please call: (512) 389-4775 agency to the Texas Commission on Environmental Quality) published "The Seagrass Conservation Plan for Texas." The ♦ ♦ ♦ Seagrass Conservation Plan recommends that these three agencies take measures within their jurisdictions to conserve CHAPTER 65. WILDLIFE this critical coastal resource. The Seagrass Conservation Plan identified propeller scarring as a factor in seagrass destruction. SUBCHAPTER D. DEER MANAGEMENT In 2000, a large triangle-shaped area on the mid-Texas coast PERMIT (DMP) (encompassing all of Redfish Bay) was established as a state 31 TAC §65.134, §65.136 scientific area. The substantial meadows of submerged aquatic vegetation (seagrasses) within RBSSA were receiving extensive The Texas Parks and Wildlife Commission adopts amendments boating pressure and subsequently the seagrasses were being to §65.134 and §65.136, concerning the deer management uprooted and scarred by outboard motor propellers. Initial ef­ permit (DMP). The amendment to §65.134, concerning Facility forts for five years (2000-2005) of establishing voluntary no-prop Standards, is adopted with changes to the proposed text as zones proved ineffective and unenforceable. In 2006, the Com­ published in the April 23, 2010, issue of the Texas Register mission reauthorized the RBSSA, effective until June 30, 2010 (35 TexReg 3215). The proposed amendment to §65.136, and prohibited the uprooting of seagrasses within the area. Sci­ concerning Release, is adopted without changes and will not be entific research, following extensive efforts by staff to educate republished. boaters, indicates that seagrasses are being protected by the The change to §65.134 alters the "grandfather" provisions of the current regulation. Therefore the department believes that con­ proposed rule. Generally, §65.134 prohibits a DMP pen of less tinuation of the Redfish Bay State Scientific Area without a term than five acres in size or with less than 50,000 square feet of limit is warranted. vegetative cover. As proposed, subsection (c)(1) and (2) would The amendment also replaces taxonomic references in subsec­ have allowed permittees to continue to engage in DMP activities tion (d) in order to be consistent with the scientific nomenclature. using an existing pen of less than five acres in size or with less than 50,000 square feet of vegetative cover, provided the pen The amendment will function by removing the self-contained ex­ was authorized as of August 31, 2010 and was included in the piration date from the current regulation. permittee’s DMP application for the 2011 permit year and subse­ The department received one comment opposing adoption of the quent permit applications without interruption. The rule as pro­ proposed amendment. The commenter did not provide a reason posed also allowed "grandfathering" of properties inherited by a or rationale for opposing adoption. The department disagrees spouse or child. The intent of the proposed rule was to allow with the comment. No changes were made as a result of the for the possibility of continued DMP issuance for properties ac­ comment. quired by a spouse or child of an existing permittee, since DMP infrastructure is an improvement to the property. The department The department received 54 comments supporting adoption of has determined that for clarity’s sake, it is necessary to alter the the proposed amendment. rule as proposed to account for the various ways that a spouse The Coastal Conservation Association commented in support of or child can obtain an ownership interest in the property from adoption of the proposed amendment. an existing permittee. Therefore, the rule has been changed to provide that pens less than five acres in size, or with less than No groups or associations commented in opposition to adoption 50,000 square feet of vegetative cover, will continue to be au­ of the proposed amendment. thorized, provided the pen was authorized under a DMP for the The amendment is adopted under Parks and Wildlife Code, 2010 - 2011 permit year, the applicant is otherwise in compliance §81.501, which authorizes the commission to create state sci­ with all requirements of the subchapter, and the applicant is the entific areas for the purposes of education, scientific research, original permittee or is the spouse or child (including a legal en­ and preservation of flora and fauna of scientific or educational tity through which a spouse or child has an ownership interest value, and §81.502(c), which authorizes the commission to in the property) of the original permittee who has obtained their adopt rules necessary for the management and protection of ownership interest in the property where the DMP facility is lo­ scientificareas. cated from the original permittee by inheritance, will, intestate succession, gift transfer or sale. This agency hereby certifies that the adoption has been reviewed by legal counsel and foundtobea validexercise ofthe agency’s The change also removes the proposed requirement that such legal authority. "grandfathered" pens be continuously included in subsequent DMP applications, which allows such pens to be included or ex­ Filed with the Office of the Secretary of State on July 15, 2010. cluded from an application at the permittee’s convenience. TRD-201003943 Under Parks and Wildlife Code, Chapter 43, Subchapter R, the department may issue a permit for the management of the wild white-tailed deer population on acreage enclosed by a fence ca­ pable of retaining white-tailed deer. This permit is the Deer Man­ agement Permit (DMP). The current rule states that a DMP pen may be no more than 100 acres nor fewer than five acres in

ADOPTED RULES July 30, 2010 35 TexReg 6673 area; however, there is an exception that allows for a DMP pen trapping season, there is very little probability that bred does will of fewer than five acres in area, provided it contains a minimum be recaptured. of 50,000 square feet of continuous natural vegetative cover of Staff has determined that the amendments will not result in neg­ the type typically used by deer for cover and concealment. The ative biological implications for the resource. vegetative cover requirement is intended to provide a safe envi­ ronment for wild white-tailed deer capturedandplacedinpens The rules will function by imposing pen size and vegetative cover of less than five acres for DMP purposes. Wild animals are less restrictions for DMP pens, which the department believes will re­ susceptible to capture-induced trauma if they are kept in enclo­ sult in an environment more favorable to fawn survival, and by al­ sures that mimic their usual habitat. The cover requirement cur­ lowing the department to determine releasedatesbyecoregion, rently does not apply to pens larger than five acres in size. based on breeding chronology, which the department believes might increase the survivability of fawns in the wild. The department’s White-tailed Deer Advisory Committee (WT­ DAC) discussed the issue of adequate cover and space and con­ The department received 62 comments opposing adoption of all cluded that a five-acre pen without cover does not provide a safe or parts of the amendments as proposed. Of those comments, environment for wild-caught white-tailed deer. Furthermore, the 29 opposed adoption of any part of the proposed amendments WTDAC concluded that a 50,000 sq. ft. pen (approximately 1.1 and 33 opposed adoption of specific provisions. A total of 22 acre) is not large enough to safely contain the maximum num­ commenters articulated a specificreason or rationale for oppos­ ber of deer allowed under a DMP (21). Therefore, the WTDAC ing adoption. Those comments, accompanied by the depart­ recommended that the department initiate rulemaking to prohibit ment’s response to each, follow. DMP pens of fewer than five acres in area and to require all DMP One commenter opposed adoption and stated that high fences pens to provide a minimum of 50,000 square feet of natural vege­ should be torn down because deer should be free ranging. The tative cover. The WTDAC also advised that the rule be amended department disagrees with the comments and responds that un­ to eliminate the requirement that vegetative cover be continuous, der Parks and Wildlife Code, §1.013, the commission is specif­ because studies have shown that wild deer prefer broken cover ically restricted from prohibiting or restricting the owner or oc­ to continuous cover. cupant of land from constructing or maintaining a fence of any The department concurs with the recommendations of the WT­ height on the land owned or occupied, an owner or occupant DAC and believes that the rules as adopted will reduce stress who constructs such a fence is not liable for the restriction of the on wild deer held in captivity under the authority of a DMP. movement of wild animals by the fence, and the existence of a fencedoesnotaffect thestatusofwild animalsaspropertyof The WTDAC also recommended that existing DMP infrastruc­ the people of this state. No changes were made as a result of ture of less than five acres and larger than five acres but with the comment. fewer than 50,000 square feet of natural cover be "grandfa­ thered." The amendment addresses that recommendation by One commenter opposed adoption of the "grandfather" provi­ allowing a property in compliance with current requirements to sions of proposed §65.134 that would have required a permittee be excepted from the proposed new standards provided the to continuously maintain a pen that would otherwise be non-com­ ownership of the pens in question does not change, except by pliant and stated that it would be expensive to bring the pens into transfer, sale, or inheritance to a spouse or child of the permit­ compliance or to continue to include them in his permit applica­ tee. The amendment allows a spouse or child who inherits a tion in years when he wasn’t using them. The department agrees DMP property to continue to operate infrastructure that is less with the comment and has made changes accordingly. than five acres or larger than five acres but with fewer than Two commenters opposed adoption and stated that the depart­ 50,000 square feet of natural cover. ment was favoring large breeding operations over smaller ones The amendment to §65.136, concerning Release, allows for the and that large pens make deer wilder while small pens facilitate extension of release dates, based on the ecoregion in which a handling, identification, moving, and care of deer. The depart­ property is located. In addition to the matters already addressed ment disagrees with the comment and responds that the rules in this preamble, the WTDAC also engaged in a discussion of are not intended or designed to benefit permittees based on the release dates. Under current rule, deer kept under a DMP must relative scope of permit activities, and that deer held under a be released by no later than August 31 of each year. This date DMP are in fact wild deer and that the intent of the DMP is to was selected because it is the end of the state’s fiscal year and authorize temporary detention of wild deer, not domestication of did not conflict with the trapping period. Testimony provided to wild deer. No changes were made as a result of the comments. the WTDAC indicated that fawn survivability would be enhanced Two commenters opposed adoption of the "grandfather" pro­ if permittees were allowed to retain deer until the fawns were visions of proposed §65.134 and stated that the department older and thus more likely to survive in the wild. The depart­ should unconditionally continue to permit existing pens that ment has determined that there is no resource concern asso­ otherwise would be non-compliant. The department agrees in ciated with extending release dates; therefore, the amendment part and disagrees in part with the comments. The department eliminates the current universal release date in order to allow the has made changes to the "grandfather" provisions to allow department to specify the release date on a permit-by-permit ba­ a spouse or child of a permittee to continue to use existing sis, depending on the ecoregion in which the permitted property pens. However, allowing the unconditional continuation existing is located. The department intends to use breeding chronology DMP pens that do not meet the acreage or vegetative cover data to determine the latest date in each ecoregion that deer requirements would frustrate the purpose of the rule which is to could be released without creating the likelihood that bred does provide adequate area, as well as the cover and concealment would be recaptured in the following trapping season. Breeding necessary to reduce stress on captured wild deer. chronology data indicate that if deer are released a minimum of 45 days prior to the trapping deadline of the subsequent DMP Two commenters opposed adoption and stated that the 50,000 square-foot vegetative cover requirement was unenforceable

35 TexReg 6674 July 30, 2010 Texas Register and that there are no studies proving that 50,000 square feet is "grandfathered" pens to be acquired by persons unrelated to a good number. The department disagrees with the comment the permittee. The department disagrees with the comment and responds that the 50,000 square-foot standard has been and responds that allowing the unconditional continuation of in effect since 1995 and that neither the department nor the permitting for existing pens would frustrate the purpose of regulated community has encountered difficulties with enforcing the rule which is to ensure sufficient area and the cover and or complying with it. The 50,000 square-foot standard was concealment necessary to reduce stress on captured wild deer. not chosen on the basis of scientific publications but on a con­ The intent of the "grandfather" provision is to allow spouses and sensus of professional biological opinion that it represents an children who inherit or otherwise acquire permitted DMP pens adequate area to provide the cover and concealment necessary to continue to utilize those pens. However, an appropriate time to significantly reduce stress on captured wild deer. No changes to eliminate the continuation of DMP pens that are less than were made as a result of the comments. 5 acres or contain less than 50,000 square feet of vegetative cover is at the time of sale or transfer to a person other than Two commenters opposed adoption and stated that the proposal a child or spouse. At such a time, the prospective buyer or is not based on sufficient scientific data. The commenters stated recipient of the property, as part of the acquisition decision, may that the larger the pen, the less successful breeding will be, and consider the adequacy of pens on the property with respect that a large pen makes it more difficult for a buck to breed does. to DMP issuance. No changes were made as a result of the The commenter also stated that in larger pens, the deer are comment. less willing to be liberated and are therefore more vulnerable to predators. Lastly, the commenters stated that since the per­ One commenter opposed adoption and stated that proper nutri­ mittee has a vested interest in the DMP activities, the permittee tion is more important than pen size. The department agrees will naturally make the best decisions and does not need inter­ that nutrition is an important component of overall deer health, ference from government. The department disagrees with the but disagrees that the issue is a choice between proper nutrition comments and responds that 50,000 square-foot standard was and pen size, and responds that the minimum pen size and veg­ not chosen on the basis of scientific publications but on a con­ etative cover requirements are intended to address capture-in­ sensus of professional biological opinion that it represents an ad­ duced stress, not the nutritional requirements of DMP deer. No equate area to provide the cover and concealment necessary to changes were made as a result of the comment. significantly reduce stress on captured wild deer. With respect to Two commenters opposed adoption and stated that the depart­ breeding and liberation success, the department responds that ment should postpone adoption while collecting and analyzing wild animals are inherently unpredictable and neither behave nor data from DMP pens to determine what requirements, if any, can be treated in the same fashion or with the same expecta­ there should be with respect to pen size and vegetative cover. tions as domestic livestock; therefore, there is an innate element The department disagrees with the comments and responds that of unpredictability with breeding success. The department does due to the variations in the size of pens, and the diet, manage­ not believe that liberation difficultyisasignificant contributor to ment, exposure, and other factors within DMP pens, it is cur­ DMP deer mortality, particularly as a result of predation. Lastly, rently difficult to correlate those factors to produce an ideal pen the department disagrees that a permittee’s vested interest in size or cover requirement; however, the department believes DMP activities eliminates the need for oversight and responds that the standards in the rules as adopted are sufficient. No that such a position is not supported by law. Section 43.601(b) changes were made as a result of the comments. of the Parks and Wildlife Code states, "The deer managed under the (deer management) permit remain the property of the state, Two commenters opposed adoption of the "grandfather" provi­ and the holder of the permit is considered to be managing the sions of proposed §65.134 and stated that in order to ensure the population on behalf of the state." The department is statutorily welfareofwilddeer, there should be no exceptions to the min­ charged with conserving and protecting such wildlife. Therefore, imum standards for pen size or vegetative cover. The depart­ it is appropriate for the department to impose such permit con­ ment disagrees with the comment and responds that although ditions. No changes were made as a result of the comments. adequate acreage and adequate cover and concealment is nec­ essary to reduce stress on captured wild deer, allowing pens per­ One commenter opposed adoption and stated that smaller pens mittedforthe2010-2011 permitye ar to continue to be permitted will result in tamer deer. The department disagrees with the com­ is an appropriate action to phase in this requirement in light of ment and responds that a DMP authorizes the temporary reten­ the cost to the regulated community if such existing permitted tion of wild deer for breeding purposes. The department believes pens were no longer lawful. No changes were made as a result that wild animals cannot and should not be tamed. No changes of the comment. were made as a result of the comment. One commenter opposed adoption and stated that deer are too One commenter opposed adoption and stated that the proposed difficult to locate in a large pen. The department disagrees with rules constitute overregulation. The commenter stated that the the comment and responds that although the department ac­ permittee has a vested interest in the success of DMP activities knowledges that one of the inherent aspects of DMP activities and will do what is necessary to succeed. The department dis­ is that wild deer in native habitat may be difficult to locate at agrees with the comment and responds that, as noted above, times; however, since DMPs are for the purpose of managing the wild deer are the property of the people of the state and that the state’s deer, the welfare of the wildlife outweighs issues about department is statutorily required under Parks and Wildlife Code, locating deer. Adequate cover and area is necessary to reduce Chapter 43, Subchapter R, to regulate DMP activities. The de­ capture-induced stress. No changes were made as a result of partment believes that the rules as adopted are reasonable and the comment. do not impose unnecessary burdens on the regulated commu­ nity. No changes were made as a result of the comment. Three commenters opposed adoption of the proposed rule re­ garding release dates, specifying a statewide release date of, One commenter opposed adoption and stated that because variously, March 1, April 1, and May 1. The department dis­ of the significant financial investment, the rules should allow agrees with the comments and responds that the rule as adopted

ADOPTED RULES July 30, 2010 35 TexReg 6675 allow the department to establish release dates by ecoregion (1) one buck deer; and/or (based on breeding chronology data), which is necessary to en­ (2) 20 doe deer. sure that in each part of the state, DMP facilities receive the lat­ est release date possible without introducing the probability that This agency hereby certifies that the adoption has been reviewed bred does will be trapped during subsequent capture activities. by legal counsel and found to be a valid exercise of the agency’s No changes were made as a result of the comments. legal authority. The amendments are adopted under Parks and Wildlife Code, Filed with the Office of the Secretary of State on July 15, 2010. §43.603, which authorizes the commission to establish condi­ tions for the deer management permit. TRD-201003944 Ann Bright §65.134. Facility Standards. General Counsel (a) No pen used to detain deer under aDMPshall bemorethan Texas Parks and Wildlife Department 100 acres in area or less than five acres in area. Effective date: August 4, 2010 (b) A pen must contain at least 50,000 square feet of natural Proposal publication date: April 23, 2010 vegetation of the type typically used by white-tailed deer for conceal­ For further information, please call: (512) 389-4775 ment and cover. ♦ ♦ ♦ (c) Exceptions. SUBCHAPTER T. DEER BREEDER PERMITS (1) The department may issue a DMP for a property that includes a pen of less than five acres in area, provided: 31 TAC §65.608 (A) the pen contains at least 50,000 square feet of nat­ The Texas Parks and Wildlife Commission adopts an amend­ ural vegetation of the type typically used by white-tailed deer for con­ ment to §65.608, concerning Annual Reports and Records, with­ cealment and cover; out changes to the proposed text as publishedinthe April23, 2010, issue of the Texas Register (35 TexReg 3217). (B) the pen was authorized under a DMP in the 2010 ­ 2011 permit year; and The amendment sets forth the reporting requirements that deer breeder permittees would be required to meet in order to qualify (C) the property for which the DMP is sought is owned for a reduced fee for permit renewal. The specified reduced fee by one of the following: appears elsewhere in this issue of the Texas Register. (i) the same person who owned the property as of Under current rule, the fee for renewing a deer breeder permit September 1, 2011; or is $400. Under the terms of Parks and Wildlife Code, §43.369, (ii) a spouse or child (including a legal entity as added by Senate Bill 1586 (S.B. 1586), enacted by the 81st through which a spouse or child has an ownership interest in the Texas Legislature in 2009, the department is required to develop property) of the person who owned the property as of September 1, a process for a database to be shared with the Texas Animal 2011, if the spouse or child obtained their ownership interest in the Health Commission for the purpose of collecting data required to property by inheritance, will, intestate succession, gift, transfer, or sale be submitted to each agency by deer breeders. S.B. 1586 also from the person who owned the property as of September 1, 2011. requires the department to provide incentives to deer breeders whose cooperation results in reduced costs and increased effi­ (2) The department may issue a DMP for a property that ciency by offering reduced fees for deer breeder permits. includes a pen containing less than 50,000 square feet of natural veg­ etation of the type typically used by white-tailed deer for concealment The department has created an electronic reporting system for and cover, provided: persons who hold deer breeder permits. Increased utilization of the system by deer breeders will result in cost savings and (A) the pen includes at least five acres in area; greater efficiency because electronic reporting makes data more (B) the pen was part of an approved facility in the 2010 immediately available to department regulatory and enforcement - 2011 permit year; personnel and eliminates the need for manual data entry by de­ partment employees. In addition, the data reported electronically (C) the property for which the DMP is sought is owned is accessible by the Animal Health Commission. The department by one of the following: and the Animal Health Commission have agreed that electronic (i) the same person who owned the property as of reporting will also satisfy the Animal Health Commission’s re­ September 1, 2011; or porting requirements. Therefore, users will benefit by having to submit their reports to only one agency rather than two, and by (ii) a spouse or child (including a legal entity receiving a reduced fee for reporting online. through which a spouse or child has an ownership interest in the property) of the person who owned the property as of September 1, The department has determined that deer breeders who use the 2011, if the spouse or child obtained their ownership interest in the electronic reporting system are therefore reducing the costs of property by inheritance, will, intestate succession, gift, transfer, or sale administering and enforcing the program. In order to implement from the person who owned the property as of September 1, 2011. a renewal fee that reflects this reduced administrative cost and to create an incentive for deer breeders to maximize their uti­ (3) The provisions of subsections (a) and (b) of this section lization of the electronic reporting system, the department be­ apply to all applications that do not qualify for an exception under the lieves that a fee reduction of 50% is appropriate. Therefore, the provisions of subsection (c) of this section. amendment reduces the renewal fee by 50% for deer breeders (d) Except for fawns born in a DMP facility during the current who submit at least 85% of specified reports and permit activa­ permit year, no pen at any time shall contain more than: tions via the department’s online system. The department se­

35 TexReg 6676 July 30, 2010 Texas Register lected the 85% criterion because it was necessary to establish Ann Bright a standard that while effectively encouraging permittees to sub­ General Counsel mit all reports electronically was not so stringent that permittees Texas Parks and Wildlife Department could be disqualified for a reduced renewal fee because of fac­ Effective date: August 4, 2010 tors beyond their control (technical problems, unavoidable cir­ Proposal publication date: April 23, 2010 cumstances, etc.) that necessitated reporting by phone or over­ For further information, please call: (512) 389-4775 land mail. The department expects that permittees who choose to submit required information electronically will submit all infor­ ♦ ♦ ♦ mation electronically. The rule will function by establishing a qualification standard for CHAPTER 69. RESOURCE PROTECTION deer breeders who wish to obtain a reduced fee for permit re­ The Texas Parks and Wildlife Commission adopts amendments newal. to §69.310, concerning Fees, and §69.404, concerning Permit Application, Issuance, and Fees, without changes to the pro­ The department received 17 comments opposing adoption of posed text as published in the April 23, 2010, issue of the Texas the proposed amendment. Eight of the 17 comments oppos­ Register (35 TexReg 3218). ing adoption offered a specific reason or rationale for opposition. Those comments, accompanied by the department’s response The amendments remove references to fee amounts in the rules. to each, follow. In 2009 the department increased the fees for a number of per­ mits, including the fees for scientific research, educational dis­ One commenter opposed adoption and stated that the fee should play, zoological collection, and protected nongame sales per­ be $5,000. The department disagrees with the comment and re­ mits. Although the fee amounts in Chapter 53 of the Texas sponds that the intent of the rulemaking was to provide a reduced Administrative Code (relating to Finance) reflect the correct fee fee for permittees who file at least 85% of required reports and amounts as adopted by the Texas Parks and Wildlife Commis­ notifications electronically, because electronic recordkeeping re­ sion and published in the August 7, 2009, issue of the Texas duces costs for the department. Increasing the permit renewal Register (34 TexReg 5392), obsolete fee references for these feeto$5,000woulddefeat the purpose of the rulemaking. No permits appear in Chapter 69 (relating to Resource Protection). changes were made as a result of the comment. The amendment eliminates all references to fee amounts in the Five commenters opposed adoption and stated that the deer subchapter to rectify the conflict. breeder permit should not exist in the first place. The depart­ The amendment will function by removing confusing references. ment disagrees with the comments and responds that the intent of the rulemaking was to create a reduced fee for deer breeders The department received three comments opposing adoption of who assisted in reducing operating costs to the department and the proposed rules. None of the commenters offered a reason did not extend to contemplating the elimination of the program. or rationale for opposing adoption. The department disagrees Therefore, the comments are not germane to the rulemaking. No with the comments. No charges were made as a result of the changes were made as a result of the comments. comments. One commenter opposed adoption and stated that fees paid by The department received six comments supporting adoption of deer breeders should be adequate to offset the costs to the de­ the proposed rules. partment of administering the program. The department agrees No groups or associations commented in support of or opposition with the comment and responds that current fees for breeder per­ to adoption of the proposed rules. mits and renewals currently offset the costs to the department of administering the program. No changes were made as a result SUBCHAPTER J. SCIENTIFIC, EDUCA­ of the comment. TIONAL, AND ZOOLOGICAL PERMITS The department received 182 comments supporting adoption of the proposed amendment. 31 TAC §69.310 No groups or associations commented in favor of or opposition The amendments are adopted under Parks and Wildlife Code, to adoption of the proposed amendment. §43.002, which authorizes the commission to set fees for review of permit applications, inspections, laboratory analysis, or other The amendment is adopted under Parks and Wildlife Code, department actions related to permits governing the collecting, §43.357, which authorizes the commission to promulgate rules holding, possession, propagation, release, display, or transport governing deer breeder permits, including fees and reporting of protected wildlife for scientific research, educational display, requirements. zoological collection, or rehabilitation. This agency hereby certifies that the adoption has been reviewed This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency’s by legal counsel and foundtobea validexercise ofthe agency’s legal authority. legal authority.

Filed with the Office of the Secretary of State on July 15, 2010. Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003945 TRD-201003946

ADOPTED RULES July 30, 2010 35 TexReg 6677 Ann Bright Cross reference to statute: Texas Water Code Chapters 15, 16, General Counsel and 17. Texas Parks and Wildlife Department This agency hereby certifies that the adoption has been reviewed Effective date: August 4, 2010 by legal counsel and found to be a valid exercise of the agency’s Proposal publication date: April 23, 2010 legal authority. For further information, please call: (512) 389-4775 ♦ ♦ ♦ Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003928 SUBCHAPTER K. SALE OF NONGAME Kenneth L. Petersen SPECIES General Counsel Texas Water Development Board 31 TAC §69.404 Effective date: August 4, 2010 The amendment is adopted under Parks and Wildlife Code, Proposal publication date: June 4, 2010 Chapter 67, which requires the commission to establish any lim­ For further information, please call: (512) 463-8061 itations on the taking, possession, transportation, exportation, sale, and offering for sale of nongame fish and wildlife. ♦ ♦ ♦ This agency hereby certifies that the adoption has been reviewed SUBCHAPTER B. PROGRAM REQUIRE­ by legal counsel and found to be a valid exercise of the agency’s MENTS legal authority. 31 TAC §§371.11 - 371.26 Filedwiththe Office of the Secretary of State on July 15, 2010. The repeal is adopted under the authority of Texas Water Code TRD-201003947 §6.101, which authorizes the Board to adopt rules necessary to Ann Bright carry out the powers and duties of the Board. General Counsel Cross reference to statute: Texas Water Code Chapters 15, 16, Texas Parks and Wildlife Department and 17. Effective date: August 4, 2010 Proposal publication date: April 23, 2010 This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency’s For further information, please call: (512) 389-4775 legal authority. ♦ ♦ ♦ Filed with the Office of the Secretary of State on July 15, 2010. PART 10. TEXAS WATER TRD-201003929 DEVELOPMENT BOARD Kenneth L. Petersen General Counsel CHAPTER 371. DRINKING WATER STATE Texas Water Development Board REVOLVING FUND Effective date: August 4, 2010 Proposal publication date: June 4, 2010 The Texas Water Development Board (Board) adopts the For further information, please call: (512) 463-8061 repeal of Chapter 371, §§371.1 - 371.3, 371.11 - 371.26, 371.31 - 371.33, 371.35 - 371.40, 371.51 - 371.53, 371.61, ♦ ♦ ♦ 371.62, 371.71, 371.72, 371.81 - 371.90, 371.101, 371.102, and 371.200 - 371.208, relating to the Drinking Water State SUBCHAPTER C. APPLICATION FOR Revolving Fund (DWSRF). The proposed repeal appeared in ASSISTANCE theJune4,2010,issueof the Texas Register (35TexReg4616). 31 TAC §§371.31 - 371.33, 371.35 - 371.40 The Board proposed the repeal of Chapter 371 relating to the DWSRF because the Board proposed a new Chapter 371. The The repeal is adopted under the authority of Texas Water Code Board is adopting new Chapter 371 elsewhere in this issue of §6.101, which authorizes the Board to adopt rules necessary to the Texas Register. carry out the powers and duties of the Board. No comments were received regarding the proposed repeal. Cross reference to statute: Texas Water Code Chapters 15, 16, SUBCHAPTER A. INTRODUCTORY and 17. This agency hereby certifies that the adoption has been reviewed PROVISIONS by legal counsel and found to be a valid exercise of the agency’s 31 TAC §§371.1 - 371.3 legal authority.

The repeal is adopted under the authority of Texas Water Code Filed with the Office of the Secretary of State on July 15, 2010. §6.101, which authorizes the Board to adopt rules necessary to carry out the powers and duties of the Board. TRD-201003930

35 TexReg 6678 July 30, 2010 Texas Register Kenneth L. Petersen The repeal is adopted under the authority of Texas Water Code General Counsel §6.101, which authorizes the Board to adopt rules necessary to Texas Water Development Board carry out the powers and duties of the Board. Effective date: August 4, 2010 Cross reference to statute: Texas Water Code Chapters 15, 16, Proposal publication date: June 4, 2010 and 17. For further information, please call: (512) 463-8061 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. SUBCHAPTER D. BOARD ACTION ON APPLICATION Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003933 31 TAC §§371.51 - 371.53 Kenneth L. Petersen The repeal is adopted under the authority of Texas Water Code General Counsel §6.101, which authorizes the Board to adopt rules necessary to Texas Water Development Board carry out the powers and duties of the Board. Effective date: August 4, 2010 Cross reference to statute: Texas Water Code Chapters 15, 16, Proposal publication date: June 4, 2010 and 17. For further information, please call: (512) 463-8061 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. SUBCHAPTER G. BUILDING PHASE 31 TAC §§371.81 - 371.90 Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003931 The repeal is adopted under the authority of Texas Water Code §6.101, which authorizes the Board to adopt rules necessary to Kenneth L. Petersen carry out the powers and duties of the Board. General Counsel Texas Water Development Board Cross reference to statute: Texas Water Code Chapters 15, 16, Effective date: August 4, 2010 and 17. Proposal publication date: June 4, 2010 This agency hereby certifies that the adoption has been reviewed For further information, please call: (512) 463-8061 by legal counsel and found to be a valid exercise of the agency’s ♦ ♦ ♦ legal authority. SUBCHAPTER E. ENGINEERING DESIGN Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003934 31 TAC §371.61, §371.62 Kenneth L. Petersen The repeal is adopted under the authority of Texas Water Code General Counsel §6.101, which authorizes the Board to adopt rules necessary to Texas Water Development Board carry out the powers and duties of the Board. Effective date: August 4, 2010 Cross reference to statute: Texas Water Code Chapters 15, 16, Proposal publication date: June 4, 2010 and 17. For further information, please call: (512) 463-8061 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. SUBCHAPTER H. POST BUILDING PHASE 31 TAC §371.101, §371.102 Filed with the Office of the Secretary of State on July 15, 2010. TRD-201003932 The repeal is adopted under the authority of Texas Water Code §6.101, which authorizes the Board to adopt rules necessary to Kenneth L. Petersen carry out the powers and duties of the Board. General Counsel Texas Water Development Board Cross reference to statute: Texas Water Code Chapters 15, 16, Effective date: August 4, 2010 and 17. Proposal publication date: June 4, 2010 This agency hereby certifies that the adoption has been reviewed For further information, please call: (512) 463-8061 by legal counsel and found to be a valid exercise of the agency’s ♦ ♦ ♦ legal authority. SUBCHAPTER F. PREREQUISITES TO Filed with the Office of the Secretary of State on July 15, 2010. RELEASE OF FUNDS TRD-201003935 31 TAC §371.71, §371.72

ADOPTED RULES July 30, 2010 35 TexReg 6679 Kenneth L. Petersen thoseprocessesinthe Intended UsePlan(IUP).TheBoardcan General Counsel adapt to new requirements without going through a rules change Texas Water Development Board process by listing the new requirements inanIUP.Thisadditional Effective date: August 4, 2010 flexibility allows the Board to distribute funds more quickly than Proposal publication date: June 4, 2010 if the Board had to adopt new rules each time the federal appro­ priations language changes. For further information, please call: (512) 463-8061 Other changes in the adopted rules include shortened times ♦ ♦ ♦ for loan closing to address the issue of unliquidated obligations and specific deadlines for receipt of application information to SUBCHAPTER I. PROVISIONS RELATING TO expedite the loan commitments and disbursement of funds. APPLICATIONS FOR FINANCIAL ASSISTANCE Also, the Board has created different types of financial assis­ tance whereby the Board will provide loans solely for planning, UNDER SPECIAL CAPITALIZATION GRANTS; acquisition and design and solely for construction. These more EXPEDITED REVIEW, PROCESSING AND discrete purpose loans are designed to provide funds more quickly and avoid over-funding some projects; thereby creating LOAN CLOSING REQUIREMENTS the abilitytofundmoreprojects. 31 TAC §§371.200 - 371.208 The majority of the comments, forty-three of forty-four received The repeal is adopted under the authority of Texas Water Code by the Board, concerned alternative methods of project deliv­ §6.101, which authorizes the Board to adopt rules necessary to ery. In addition to traditional methods of procurement for public carry out the powers and duties of the Board. works projects, the Legislature has authorized alternative meth­ ods, including design-build and construction manager at risk. Cross reference to statute: Texas Water Code Chapters 15, 16, The Board appreciates the comments about this method of pro­ and 17. curement which may affect certain Board procedures such as This agency hereby certifies that the adoption has been reviewed the timing of the release of funds and review of construction con­ by legal counsel and found to be a valid exercise of the agency’s tracts. The Board has very limited experience funding projects legal authority. procured by alternative delivery methods. Therefore, the Board has decided that the best approach to these new methods of pro­ Filedwiththe Office of the Secretary of State on July 16, 2010. curement is to develop guidance addressing these issues. The Board intends to work with stakeholders and to use its experi­ TRD-201003949 ence with alternative methods of project delivery to determine Kenneth L. Petersen whether and how the Board’s processes and procedures may General Counsel need alteration or amendment. At this point, the Board is not Texas Water Development Board making any substantive changes to the rules. The Board prefers Effective date: August 5, 2010 to work closely with Applicants and other stakeholders to ensure Proposal publication date: June 4, 2010 that rule changes, if any, in the future are focused and relevant For further information, please call: (512) 463-8061 to the Board’s requirements. ♦ ♦ ♦ The Board believes that instead of making extensive changes to the proposed rules to deal with a so far relatively rare method CHAPTER 371. DRINKING WATER STATE of procurement, it is wiser to gain some experience handling these transactions. However, the Board is adopting this chap­ REVOLVING FUND ter with §371.60(d), relating to alternative methods of project de­ The Texas Water Development Board (Board) adopts without livery. The Board is deleting §371.13(b) relating to the pre-de­ changes Chapter 371, Drinking Water State Revolving Fund sign funding option because this section, slightly modified, is part (DWSRF), §§371.2 - 371.4, 371.10 - 371.12, 371.14 - 371.18, of §371.60(d). Section 371.60(d) expands the Board’s ability 371.20, 371.22, 371.23, 371.30 - 371.35, 371.40 - 371.50, to adjust internal procedures and processes as needed to ad­ 371.62, 371.72, 371.74, and 371.80 - 371.89. Sections 371.1, dress the particular circumstances on a case by case basis when 371.13, 371.21, 371.60, 371.61, 371.70, 371.71 and 371.73 are an alternative method is used. These changes are responsive adopted with changes and will be republished. The proposal to the commenters’ concerns, but also allow the Board to pro­ was published in the June 4, 2010, issue of the Texas Register ceed deliberately and cautiously until it becomes more clear what (35 TexReg 4620). changes, if any, are eventually needed to Board rules. Section 371.60(d) provides that the Board will issue guidance documents BACKGROUND AND SUMMARY OF THE BASIS FOR THE that allow alterations to Board procedures and so will ensure that ADOPTED RULE AMENDMENTS. the Board’s procedures and practices are conducive to the use The Board adopts new Chapter 371 to provide flexibility to adapt of alternative methods of project delivery. to changing federal requirements and to reorganize and clarify PUBLIC COMMENTS. the rules relating to the DWSRF. New EPA requirements include a greater focus on funding disadvantaged communities, sustain- Section 371.1. Definitions. ability, green projects and compliance with the Davis-Bacon Act Comment: A commenter recommends the addition of the def­ relating to prevailing wage rates. The previous Chapter 371 inition of "alternative project delivery" and "alternative project constrained the Board’s ability to respond quickly to new fed­ delivery contract documents" and provided the language. This eral requirements. Therefore, this new chapter removes certain commenter offers these definitions in support of other comments requirements relating to the rating of projects and criteria and methods of distribution of funds and places many of the details of

35 TexReg 6680 July 30, 2010 Texas Register made throughout the rules pertaining to implementing alternative Comment: One commenter requested that the Board replace project delivery. the term "private placement memorandum" with the term "finan­ cial application memorandum" or other similar term. The com­ Response: These terms are specific to methods of procure­ menter stated that the extension of a loan by the Board should ment used by local governmental entities and are not necessary not be treated as the placement of a security. Additionally, the for rules describing the DWSRF. The rules do not discuss de­ commenter stated that the private placement memorandum is a tails about traditional forms of project delivery and therefore, the summary of a loan transaction. Board declines to provide detailed rules on a matter not within the jurisdiction of the Board. No change has been made based Response: Many of the Board’s borrowers issue bonds as ev­ on this comment. idence for Board loans. These bonds are issued as securities under Texas and federal law. The Board’s acceptance of the Comment: The addition of the definition of "alternative project bonds as evidence of the borrower’s obligation for repayment delivery contract documents--The contract and related engineer­ for the loan is a private placement of securities, in the Board’s ing documents for implementation of a project or a phase of a opinion. project under an alternative project delivery method" is recom­ mended by one commenter. The private placement memorandum summarizes the Appli­ cant’s issuance of a security. Therefore, the Board is not making Response: These terms are specificto methods of procure­ any changes based on this comment. However, the Board is ment used by local governmental entities and are not necessary changing the definition of "private placement memorandum." for rules describing the DWSRF. The rules do not discuss de­ The new definition is not substantively different and conforms to tails about traditional forms of project delivery and therefore, the the proposed definition in the Board’s pending changes to rules Board declines to provide detailed rules on a matter not within relating to the Clean Water State Revolving Fund. the jurisdiction of the Board. No change has been made based on this comment. Comment: Suggesting a change to the definition of "Project", one commenter recommends adding "procurement" after "the Comment: One commenter suggests that the definition of design" and before "construction." §371.1(18), "contract documents", might need to be expanded. The commenter recommends adding to the definition: "In the Response: The definition of project in these rules refers to case of an alternative delivery project, contract documents projects eligible for funding under the DWSRF. The definition shall mean engineering documentation, as determined by the does not dictate or affect the method of project procurement. executive administrator, that is in sufficient detail to allow the Therefore, there is no reason to amend the definition of project. initiation of construction." No change has been made based on this comment. Response: These terms are specific to methods of procure­ Comment: A commenter suggests that the definition of "project ment used by local governmental entities and are not necessary engineer" as written implies that the "engineer for the project" for rules describing the DWSRF. The rules do not discuss de­ i.e. engineer of record. This commenter suggests that it is prob­ tails about traditional forms of project delivery and therefore, the lematic in that the definition states "hired by the Applicant". This Board declines to provide detailed rules on a matter not within commenter recommends expanding the definition so this defini­ the jurisdiction of the Board. No change has been made based tion is an "either or" definition and accounts for a design build on this comment. where the project engineer (engineer of record) is either the de­ sign builder or part of the design build team. The commenter Comment: One commenter recommends modifying the defini­ recommends the following language: "In the case of a design tion of "design" to include "design criteria packages, conceptual build project, project engineer shall mean the engineer that is or preliminary drawings and specifications, performance spec­ the design builder or engaged by the design builder to provide ifications" in support of other comments offered by this com­ services during any phase of a project." menter pertaining to implementing alternative project delivery. This commenter also recommends changing "and any proce­ Response: A project engineer may refer to any engineer em­ dures" to and/or any procedures." ployed by the Applicant for work on the project. The commenter infers that "hired by the Applicant" may only be interpreted in the Response: These terms are specific to methods of procure­ most literal way. The Board disagrees; the project engineer will ment used by local governmental entities and are not necessary likely be paid by the Applicant; whether the contract is directly for rules describing the DWSRF. The rules do not discuss de­ with the Applicant is not relevant if the engineer can provide in­ tails about traditional forms of project delivery and therefore, the voices, approved by the Applicant, for work on the project. No Board declines to provide detailed rules on a matter not within change has been made based on this comment. the jurisdiction of the Board. No change has been made based on this comment. Comment: Commenting on the definition of "ready to proceed," a commenter indicates that the phrase "design is complete" is Comment: A commenter suggests adding the definition of "No­ problematic for construction manager at risk and design-build. ticeto Proceed(NTP)"toread"Anoticegiven by theApplicant The commenter requests clarification that for alternative delivery to an engineer, construction manager at-risk, contractor or de­ projects, design is completed to a point to allow for the initiation signer-builder to initiate performance of a project or a phase of of construction. The commenter recommends adding: "In the a project under either traditional or alternative project delivery case of an alternative delivery project, design is completed to a methods" in support of other comments offered by this com­ level of sufficient detail to allow the initiation construction." menter pertaining to implementing alternative project delivery. Another commenter recommends modifying the definition of Response: This term refers to a document issued by the Appli­ "ready to proceed" to read "(i) For traditional delivery; a project cant. The Board does not want to interfere with the Applicant’s that has obtained all permits, legally required authorizations, right to control the content of the notice to proceed. No change and all land and water rights, has complied with all engineering has been made based on this comment.

ADOPTED RULES July 30, 2010 35 TexReg 6681 design and environmental planning review requirements and Comment: One commenter suggests that §371.11(b) as written other Board requirements and design is complete.; and (ii) for assumes that design is completed before construction and that if alternative project delivery: the project or phase of the project completed within three years, then there is a construction fund­ has satisfactorily met the design and permitting requirements ing priority. This commenter suggests that for alternative delivery so as to allow the designer-builder or construction manager projects, construction funding is needed while design is being at-risk to proceed with the pre-construction or construction of completed. The commenter questions how this instance would the project or phase of the project." This commenter proposes fit into the priority treatment and that the rules need to account this revision to define terminology for alternative project delivery. for alternative delivery projects. This commenter suggests the following addition: "In the case of an alternative delivery project, Response: The Board agrees that these rules should enable Applicants who have completed the planning, acquisition and de­ the Board to adjust its procedures as necessary to accommo­ sign in sufficient detail to allow for the initiation of construction date Applicants who use alternative methods of project deliv­ for a proposed project within three years of the closing of finan­ ery. Therefore, the Board is adopting §371.60(d) relating to al­ cial assistance will receive a priority for construction funding of ternative methods of project delivery; the new section provides the project in the next available IUP if project is ready to pro­ that the executive administrator will issue guidance on different ceed." This commenter further indicates that §371.13(b) makes forms of procurement and it authorizes the executive administra­ the modification for §371.11(b) moot, but that the suggested lan­ tor to alter and amend processes and procedure to ensure that guage is provided to clarify the intent in §371.11(b). the state revolving fund loan program is conducive to alternative methods of project delivery. Response: The Board agrees with the commenter’s statement that where design and permitting are sufficient to initiate con­ In addition, the Board adopts §371.1 with changes to the pro­ struction, at least some portion of the project may be deemed posed text. The definition of "disadvantaged community," at ready to proceed, which is necessary for priority listing for §371.1(23) is altered from the proposed definitionduetoaner­ construction. The Board has very limited experience financing ror in the published version. In the Board’s preamble proposing projects using alternative methods and therefore prefers to adoption of the definition, the Board stated that the purpose develop guidance in conjunction with stakeholders rather than of the change was to allow flexibility in determining whether adopting rules at this time. The Board is adopting §371.60(d) so an entity was unable to otherwise afford a state revolving fund that the Board can maintain necessary flexibility in adapting its loan. In particular, the Board wanted the ability to deviate from practices to alternative methods of project delivery. the requirement that the entity show that its customers earned no more than 75% of the state median household income. Section 371.12. Construction Funding. Therefore, to conform the language of the rule to the Board’s Comment: A commenter suggests that the definition of "ready intention, the definition has been altered to provide that the to proceed" be revised and suggests language for that revision. Board may make an independent determination that an entity The commenter indicates that should the definition be revised as cannot otherwise afford a loan. suggested, then this section is acceptable as is. The definition of "private placement memorandum" at §371.1(44) Response: The Board has very limited experience funding is also being changed for consistency with the proposed changes projects procured with alternative methods and therefore is to the Board’s Clean Water State Revolving Fund rules and to adopting §371.60(d) giving the executive administrator the make the definition more aligned with common industry usage. option of providing guidance and altering and amending the loan The substantive meaning of the phrase has not changed. processes and procedure to ensure that Applicants may utilize Section 371.10. Type of Financial Assistance. alternative methods of project delivery. No change is made to the definition of "ready to proceed". Comment: To include the use of alternative project delivery and to allow for project phasing in alternative project delivery im­ Section 371.13. Pre-Design Funding Option. plementation, a commenter recommends adding a sentence to Comment: To include the use of alternative project delivery and §371.10 to read "The executive administrator shall recognize the to allow for project phasing in alternative project delivery, a com­ determination made by the Applicant as to the selected method menter proposes modifying subsection (b) by striking the pe­ of project delivery, provided that the applicable legal require­ riod at the end of the section and adding: "methods. and may ments for such determination have been satisfied by the Appli­ be available for the planning, acquisition, design, procurement cant." and construction for a project that is implemented by alternative Response: Alternative project delivery is a procurement method project delivery. The utilization of this option, by itself, shall not andnotatypeof fi nancial assistance and therefore it has no ef­ require any special finding by the executive administrator and fect on the type of financial assistance. Pursuant to §371.10, the shall be available to all Applicants that decide to utilize alterna­ determination of the type of financial assistance is based upon tive project delivery in accordance with the applicable laws of the project information forms, the application and the availabil­ the State of Texas." This commenter also proposes adding sub­ ity of funds. The Applicant’s procurement decisions are not a section (c) to read as follows: "(c) Funds for alternative project factor in the executive administrator’s decision about the type of delivery may be made available for one or more of the phases financial assistance available for a project. Further the Board of a project including but not limited to planning, acquisition, en­ does not dictate the type of procurement used by the Applicant gineering feasibility studies, environmental review, site investi­ so there is no need to "recognize" the Applicant’s procurement. gations, permitting, design criteria packages, value engineering, However, the Board is adopting §371.60(d) which allows the ex­ preliminary design, and/or final design for discrete portions or ecutive administrator to fashion combinations of types of finan­ phases of the project or for the complete project), pre-construc­ cial assistance to adapt to different procurement methods. tion services (including but not limited to cost estimating, sched­ uling, constructability reviews, and/or construction work packag­ Section 371.11. Planning, Acquisition and Design Funding. ing), procurement, construction and engineering services on be­

35 TexReg 6682 July 30, 2010 Texas Register half of the owner during design and construction, such as design Comment: To further clarify the difference between traditional review, inspection and testing of materials and other services." project delivery and alternative project delivery, a commenter suggests striking the number 4, leaving the sentence, and Response: The alternative method of project delivery is a pro­ adding a number 4 under subsection (e) to read: "the method curement method that may be selected by the Applicant pursuant of project delivery may change." to state law. The Board does not use the type of procurement as a criterion for determining which type of financial assistance Response: The rating process does not take into account the is most appropriate for a particular project. The executive ad­ method of project delivery. Since the method of project delivery ministrator will work with Applicants to evaluate modifications to hasnoeffectonthe ratingthereisnoneedtospeci fically mention the project delivery methods and to the Board’s procedures while it in this section. No change is made based on this comment. recognizing that the method of procurement lies within the dis­ Section 371.23. Criteria and Methods for Distribution of Funds. cretion of the Applicant. The Board is not making this change recommended by the commenter however the Board is adopt­ Comment: A commenter indicates that as written, §371.23(d)(1) ing §371.60(d) relating to alternative methods of project deliv­ can work for alternative delivery projects or the Board can con­ ery allows the executive administrator to alter Board policies and sider expanding and adding language. The commenter recom­ procedures to ensure that they do not exclude and procurement mends adding: "In the case of an alternative delivery project, method. project costs could include a preliminary Guaranteed Maximum Price (GMP), final GMP or a guaranteed Lump Sum (LS) price." Section 371.16. Term of Loan. Response: The criteria and methods for distribution of funds Comment: One commenter questions whether the Pre-Design is not dependent upon the method of project delivery. Project Funding Option (§371.13) loan needs to be added to this sec­ costs are not relevant to the criteria and methods of distribution tion, since §371.11 and §371.12 loans are listed here. This com­ of funds; project rating and ranking and federal requirements for menter suggests adding "(4) A number of years determined by disadvantaged, green and other selected and stated criteria in the executive administrator to be appropriate for the pre-design the IUP describe the criteria and methods of distribution of funds. funding option in Section 371.13(b) herein but will not exceed The project costs should be described in the project information the number of years in subsections (1) through (3) immediately form and the Applicant decides the amount of funds necessary above." for the project. The Applicant may use any generally acceptable Response: Terms of the loan are related to the rate of repay­ method to estimate project costs. No change is made based on ments to the DWSRF. The term of a loan does not depend upon this comment. the method of project delivery. The term of a loan under pre-de­ Section 371.30. Pre-application Conferences. sign funding option may be up to 20 years or up to 30 years for a disadvantaged community, either of should be sufficient for an Comment: To provide for application for financial assistance alternative project delivery method and furthermore, these terms when an alternative project delivery method is utilized, a are set by federal statute and cannot be altered by the Board. No commenter recommends adding after "financial assistance" change is made based on this comment. and before "general," the following language: "the method of alternative project delivery and related project phases, if any, Section 371.20. Submission of Project Information Forms. selected by the Applicant". Comment: To further clarify the differences between traditional Response: The pre-application conference is a relatively infor­ project delivery and alternative project delivery, one commenter mal process wherein the Applicant and Board staff may discuss suggests modifying (a)(4) by inserting after "schedule" the fol­ any and all aspects of a proposed project, including an alterna­ lowing language: "including project phases (if any) for which sep­ tive method of project delivery; the list of items for discussion in arate authorizations of financial assistance would be requested the proposed rule is not exclusive and not intended to capture ev­ under alternative project delivery." ery possible issue or topic that may be relevant to the discussion Response: The project information form is used to determine of project and applicant eligibility for funding under the DWSRF project eligibility and to score the project for ranking on the program. No change is made based on this comment. project priority list. The type of project delivery is not relevant to Section 371.31. Timeliness of Application and Required Appli­ the project eligibility or to the rating and ranking of the project in cation Information. the Intended Use Plan. Therefore the Board is not making any changes based on this comment. Comment: To provide for application for financial assistance when an alternative project delivery method is utilized, one Comment: A commenter suggests adding a new section to commenter suggests adding the phrase "and, if applicable, the (3)(B) to read "an indication by Applicant that it will use alter­ method of alternative project delivery" to the end of (b)(1)(A). native delivery for the project and if so what type of alternative delivery or an indication that Applicant is strongly considering Response: The required information is important to the Board’s alternative delivery". effort to disburse federal funds as soon as practicable. The type of procurement method is not relevant to the timeliness of the ap­ Response: The project information form is used to determine plication and such information is not necessary in the resolution project eligibility and to score the project for ranking on the from the Applicant. The Applicant may include such information project priority list. The type of project delivery is not relevant to in their resolution if it is helpful to the Applicant; however there is the project eligibility or to the rating and ranking of the project in no legal requirement to describe the type of procurement in the the Intended Use Plan. Therefore the Board is not making any application and the Board declines to add to the already lengthy changes based on this comment. list of required items. No change is made based on this com­ Section 371.21. Rating Process. ment.

ADOPTED RULES July 30, 2010 35 TexReg 6683 Comment: A commenter suggests that in §371.31(b)(3)(A), the market purchase price. The commenter offers no suggested re­ use of the word "any" implies some contracts may not exist; the vision. construction manager at risk contract or design-build contract Response: The method of procurement does not determine would suffice for the construction requirement; presuming the whether an entity is a private entity. The federal law and "any" in this section would not penalize an Applicant if a con­ regulations define the types of eligible Applicants. The Board struction manager at risk or design build contract is not in exis­ defines the eligible entities in §375.1(a)(25) consistent with the tence. This commenter recommend adding: "In the case of an definitions in the Safe Drinking Water Act. No change has been alternative delivery project, this could include the proposed or made based on this comment. existing construction manager at risk contract, design build con­ tract and/or contract for construction manager at risk to provide Comment: Regarding §371.31(b)(3)(A), a commenter suggests preconstruction services." adding: "In the case of an alternative delivery project, this could include the proposed or existing construction manager at risk Regarding §371.31(b)(3)(A), to provide for application for finan­ contract, design build contract and/or contract for construction cial assistance when an alternative project delivery method is manager at risk to provide preconstruction services." utilized, another commenter suggests that "legal services" be inserted between "engineering" and "and bond counsel". This Response: The Board is not excluding any particular type of con­ commenter also suggests adding after "financial assistance" the tract but is asking for contracts that exist at the time of the appli­ following: "procuring the project under alternative project deliv­ cation. As the project proceeds other contracts are developed ery." and awarded. The Board is not making this change because the particular type of contract does not need to be specified in Response: The fact that particular contracts are not available this rule and the precise details about the contracts requested at atthetimeofsubmission ofth eapplicationisnotfataltothe thetimeofapplicationwillbeaddressedinthe Board’sguidance application. The Applicant can simply state that contracts have documents. No change is made based on this comment. not yet been executed. The requirement is to provide the Board with any contracts that will bepaidfrom loanfund, regardless Comment: Regarding §371.31(b)(3)(B), a commenter suggests of the type of contracts. Therefore, any reasonable, necessary adding: "In the case of an alternative delivery project, this could and allocable contract may be paid from DWSRF loan funds. No include the proposed or existing construction manager at risk changes have been made based on these comments. contract, design build contract and/or contract for construction manager at risk to provide preconstruction services, provided Comment: One commenter notes that in §371.31(b)(3)(B), the these contracts include the required information in this subsec­ contract for engineering would be included within the design tion." build contract. This commenter suggests that this subsection may need to expanded and include a design build contract. Response: The Board is not asking for contracts available at the The commenter further notes that for a construction manager at time of application and the Board’s guidance will address other risk, there would be an engineering agreement and a separate contracts that are awarded as the project proceeds. No change construction manager at risk agreement for the preconstruction is made based on this comment because the particular type of services and construction. The commenter inquires whether contract does not need to be specified in this rule. the construction manager at risk agreement for preconstruction Section 371.44. Environmental Information Document: Appli­ services should be included in (B) as it is so closely related cant Requirements. to the design effort. The commenter recommends adding: "In the case of an alternative delivery project, this could include Comment: A commenter recommends adding "(including the the proposed or existing construction manager at risk contract, method of project delivery)" to the end of (c)(1). design build contract and/or contract for construction manager Response: The type of procurement or alternative project deliv­ at risk to provide preconstruction services, provided these ery method is completely unrelated to the environmental review contracts include the required information of this subsection." and determinations required by the Board’s rules. No change is Response: The Board’s rules are not intended to discuss or de­ made based on this comment. scribe all types of procurements or contracts that may be rel­ Section 371.60. Engineering Feasibility Report. evant to a particular method of project delivery. The allowable contracts and procurement methods are well-described in the Comment: To allow for review and implementation of a project Local Government Code, Chapters 252, 262 and 271 and the utilizing alternative project delivery methods, a commenter rec­ Applicant is presumed to know the relevant procurement law. ommends adding after "biddability" the following language: "(or The Board is adopting §371.60(d) to provide flexibility to Board to obtain responsive proposals in the case of alternative project staff when reviewing contracts relating to alternative methods of delivery)." project delivery. Response: The Board is adopting §371.60(d) to address the is­ Comment: Regarding §371.31(c), including (6)(A) and (B), a sues particular to alternative project delivery methods that may commenter inquires if a private company was to undertake a require some alteration of the Board’s processes and proce­ water project on behalf of a public owner, who would otherwise dures. be eligible for funding, and the contract called for the private Section 371.61. Contract Documents: Review and Approval. company to design, build, finance, own and operate the project, would the private company be considered an eligible private ap­ Comment: A commenter suggests revising §371.61(a) to read: plicant. The commenter suggests that if so, there would have to "Contract documents mean the documents that form the con­ be other conditions to govern the transfer of ownership, princi­ struction contracts and for alternative methods of project deliv­ pal among those conditions assurance that the funding obtained ery, the documents that may include construction contracts for from TWDB is in some way deducted from any fair market value a portion of the construction scope of work to allow initiation of purchase price should the asset being transferred require a fair construction and that may include other phases of the project.

35 TexReg 6684 July 30, 2010 Texas Register For alternative methods of project delivery, contract documents Comment: To allow for loan closing and funding for projects for each portion of construction will be submitted as the project utilizing alternative project delivery methods, a commenter rec­ is being constructed." ommends adding "or phase of the project" to the end of (b)(1). This commenter also recommends adding to (d)(2) "alternative Response: The Board’s rules are not intended to discuss or project delivery, including but not limited to" after "project utilizes" describe all types of procurements or contracts that may be and before "the design-build." relevant to a particular method of project delivery. The allowable contracts and procurement methods are well-described in the Response: The Board is adopting §371.60(d) to explicitly allow Local Government Code, Chapters 252, 262 and 271 and the for accommodation of phases of a project. The loan closings Applicant is presumed to know the relevant procurement law. are not affected by the alternative methods of project delivery The Board is adopting §371.60(d) that provides flexibility to and the addition of the proposed language is unnecessary. No Board staff when reviewing contracts relating to alternative change is made to §371.70 based on this comment. methods of project delivery. Section 371.72. Disbursement of Funds. Comment: To allow for review and implementation of a Comment: One commenter suggests an addition to (b)(4) to project utilizing alternative project delivery methods, another §371.72 to read as follows: "(4) for alternative methods of project commenter recommends adding "including both design and delivery, funds may be disbursed in a non-sequential manner to construction or other integration of design and construction" at allow for design and construction activities to be concurrent." the end of subsection (a). This commenter also recommends modifying subsection (c) by adding "for the project or phase of Response: The Board agrees that with the commenter that the the project" after "plans and specification" and before "from any disbursement of funds may require different timing for alternative other local." project delivery methods. In response to this and the many other comments relating to alternative methods of project delivery, the Response: The Board’s rules are not intended to discuss or de­ Board is adopting §371.60(d) relating to alternative methods of scribe all types of procurements or contracts that may be rel­ project delivery. The new section provides that funds may be evant to a particular method of project delivery. The allowable released in a manner that assures continuous and expeditious contracts and procurement methods are well-described in the execution of the project. No changes are made to this section Local Government Code, Chapters 252, 262 and 271 and the basedonthecomment. Applicant is presumed to know the relevant procurement law. However, the Board is adopting §371.60(d) that provides flexibil­ Comment: To allow for loan closing and funding for projects ity to Board staff when reviewing contracts relating to alternative utilizing alternative project delivery methods, a commenter rec­ methods of project delivery. ommends adding (b)(4) to read: "for alternative project delivery costs, after receipt of executed contract or contracts for each Comment: A commenter suggests revising §371.61(c), one phase of the project." by adding the following sentence: "For alternative methods of project delivery, the Applicant may obtain the approval of the Response: In view of the comments received about alternative plans and specifications for each portion of the construction as methods of project delivery, the Board is adopting §371.60(d) re­ the project is being constructed." lating exclusively to alternative methods of project delivery which allows Board staff to alter or amend processes and procedures Response: The Board agrees that approval of the plans and to address funding at or during a particular phase of the project. specifications may be are sequenced in a different manner when No change is made to §371.72 based on this comment. using alternative methods of project delivery. Therefore, the Board is adding §371.60(d) relating exclusively to these alterna­ Section 371.80. Inspection During Construction. tive methods and is including language in that new section that Comment: Commenting on the use of the phrase "Applicant allows Board staff the necessary flexibility in reviewing plans and shall provide for" in §371.80(a), a commenter comments that in specifications. a Design Build, these inspections are performed by the Design Section 371.62. Advertising and Awarding Construction Con­ Builderorthe Design Builder’s engineering subcontractor. The tracts. commenter notes that in virtually all cases the Owner engages an engineer to oversee and monitor the construction and that Comment: One commenter suggests adding a narrative of oversight includes all the activities mentioned in §371.80(a). §371.62(b) for alternative delivery projects. This commenter This commenter recommends adding: "For a Design Build recommends the following language: "For alternative methods project delivery, the Applicant shall provide for, through the of project delivery, the solicitation documents are the request Design Builder and an engineer engaged by the Applicant, the for qualifications (RFQ) and request for proposal (RFP) (for two adequate qualified inspection of the project under the supervi­ step procurement) or RFP (for one step procurement)." sion of a registered engineer and shall require the engineer’s Response: The Board’s rules are not intended to mention or assurance that the work is being performed in a satisfactory note all methods of procurement or solicitations authorized under manner in accordance with the plans and specifications and Texas law. The different types of solicitation documents are al­ other engineering design or permit documents, approved alter­ ready utilized in traditional methods of project delivery where an ations or changes, and in accordance with the requirements in engineer is procured through an RFQ while a construction con­ the environmental determination applicable to the project and to tractor is procured through an RFP. The Board relies on the Ap­ the sound engineering principles and construction practices." plicant’s discretion in accordance with state statutes in the meth­ Response: The Applicant’s engineer shall conduct inspections ods of solicitations and procurement. No change is made based and the contractual arrangement under which the engineer is on this comment. paid is not relevant to the Applicant’s required inspection of the Section 371.70. Loans Secured by Bonds or Other Authorized project during construction. No change is made based on this Securities. comment.

ADOPTED RULES July 30, 2010 35 TexReg 6685 Section 371.81. Alterations During Construction. Response: The retainage provision is based on requirements in the Local Government Code, Chapters 252, 262 and 271 Comment: To allow for project completion and closeout for and Texas Water Code §17.183 relating to construction contract projects utilizing alternative project delivery methods, a com­ requirements. Release of retainage is constrained by these menter recommends inserting after "construction" the following statutes and the Board cannot by rule change the statutory language: "or applicable phase of construction." requirements. No change is made based on this comment. Response: In response to this comment, the Board is adopting General comments. §371.60(d) relating exclusively to alternative methods of project delivery and providing Board staff with the flexibility to alter and Comment: One commenter suggests that if there is a possibility amend procedures as necessary to accommodate alternative that an Applicant will be involved in a DBO project or a project methods of project delivery. The staff may, when appropriate, where there would be a long term operation, maintenance and decide that the Board’s traditional distinctions among phases of management contract on a project that received funding, the a project are not wholly appropriate for alternative methods of compensation arrangements for those contracts would have to project delivery. comply with IRS Rev Procedures 97-13. The commenter indi­ cates that these requirements mustbeadheredtoifthe facility Section 371.82. Force Account. was financed using tax exempt debt. The commenter further Comment: To allow for project completion and closeout comments that if the rules are not complied with, the tax ex­ for projects utilizing alternative project delivery methods, a empt status of the bonds could be in jeopardy and they could be­ commenter suggests inserting after "bidding" the words "or come taxable. The commenter suggests that other states have competitive proposal." included compliance with these rules for state funded projects and consultation with State’s bond counsel for the tax exempt Response: This proposed rule concerns the use of the Appli­ bonds the state issues for the Board funding. The commenter cant’s staff in executing the work needed for the project. The suggests that the proposed rules may have to be amended to Board is adding §371.60(d) which will address the impact, if any, include some language that for certain types of projects compli­ on the use of force account in conjunction with alternative meth­ ance with Rev Procs 97-13 is required and that the Board might ods of project delivery. No change is made based on this com­ consider requiring Applicant’s counsel to attest to compliance or ment. State’s bond counsel or both. Section 371.84. Certificate of Approval and Project Completion. Response: The Board agrees that Internal Revenue Service Comment: To allow for project completion and closeout for (IRS) requirements are always relevant to bond issuance. The projects utilizing alternative project delivery methods, a com­ rule at §371.70 relating to Loans Secured by Bonds or other au­ menter recommends adding at the end of subsection (a) "or thorized securities references IRS rules related to arbitrage at alternative project delivery phase contract, if applicable." This subsection (b)(2)(I). The Board is not making any changes based commenter also recommends modifying subsection (b) by on this comment because the issue raised by the comment may inserting "or final alternative project delivery construction" after apply to some loans and the Applicant should rely on bond coun­ "prime construction" and before "contract" in both places in sel to identify and comply with relevant IRS regulations. The which it appears in this subsection. purpose of the Board’s rules is not to be a complete listing of all potential relevant IRS regulations and therefore, the Board de­ Response: The completion of work under a construction contract clines to make changes to the rule based on this comment. is the trigger for the certificate of approval. This section does not differentiate by the type of contract; therefore this section applies In addition to the adopted amendment associated with this rule- to any contract which provides for construction work even where making, various stylistic non-substantive changes are included the contract may include work in addition to construction. No to update rule language to current Texas Register style and for­ change is made based on this comment. mat requirements such as inserting the words "the federal statute at" prior to the citation in the definition of "Davis-Bacon Act;" the Section 371.85. Final Accounting. addition of the words "when implemented, will result in" to the Comment: To allow for project completion and closeout for definition of Green Project Reserve; the deletion of the extra­ projects utilizing alternative project delivery methods, a com­ neous words "decrease with limit, but" in §371.21(e)(3); and re­ menter recommends adding "or, alternative project delivery placing the words "feasibility report" with the words "plans and contract phase," after "construction contract" and before "and specifications" to correct the error in §371.61(b). Other changes the final". include appropriate and consistent use of acronyms, section ref­ erences, rule structure, and certain terminology. These changes Response: The type of procurement is not relevant to final ac­ are non-substantive and generally are not specifically discussed counting; the final accounting occurs after the last prime con­ in this preamble. struction contract is completed. That event occurs at a definite time regardless of the method of project delivery. No change is Comments were received from First Southwest, Camp, Dresser made based on this comment. &McKee,Inc., and Brown and Caldwell. Section 371.87. Release of Retainage. SUBCHAPTER A. GENERAL PROGRAM Comment: To allow for project completion and closeout for REQUIREMENTS projects utilizing alternative project delivery methods, a com­ menter recommends adding "contract or the construction phase 31 TAC §§371.1 - 371.4 or phases of the APD" after "construction" and before "contract". STATUTORY AUTHORITY. This commenter also suggests inserting "or project phase" after "project" and before "is substantially complete". The new sections are adopted under the authority of Texas Water Code §15.605 which authorizes the Board to adopt rules neces­

35 TexReg 6686 July 30, 2010 Texas Register sary to carry out its authority relating to the Drinking Water State (15) Construction--The erection, acquisition, alteration, re­ Revolving Fund. modeling, improvement, extension or other man-made change neces­ sary for an eligible project or activity. Cross reference to statute: Texas Water Code Chapter 15, Sub­ chapter J. (16) Construction fund--A fund established with loan pro­ ceeds, kept separate from all other funds of the Applicant, and held at §371.1. Definitions. an official state depository institution. The following words and terms, when used in this chapter, shall have (17) Contaminant--Any physical, chemical, biological, or the following meanings, unless the context clearly indicates otherwise. radiological substance present in water. Words defined in Chapter 15 of the Texas Water Code and not defined here shall have the meanings provided by Chapter 15. (18) Contract documents--The engineering documentation relating to the project including engineering drawings, maps, techni­ (1) Act--The federal Safe Drinking Water Act, 42 U.S.C.A. cal specifications, design reports, instructions and other contract con­ §300f, et seq., as amended. ditions and forms that are in sufficient detail to allow contractors to bid (2) Applicant--The entity applying for financial assistance on the work. from the DWSRF and includes the entity that receives the financial as­ (19) Corporation--A nonprofit water supply corporation sistance, and the entity that owns the project funded under this chapter. created and operating under Chapter 67 of the Texas Water Code. (3) Application--The forms provided by the executive ad­ (20) Davis-Bacon Act--The federal statute at 40 U.S.C. ministrator that must be completed for consideration for financial as­ §§3141 et seq. as amended and in conformance with the U.S. Depart­ sistance from the DWSRF. ment of Labor regulations at 29 CFR Part (Labor Standards Provisions (4) Authorized representative--The signatory agent of the Applicable to Contracts Covering Federally Financed and Assisted Applicant authorized and directed by the Applicant’s governing body Construction) and 29 CFR Part 3 (Contractors and Subcontractors on to file the application and to sign documents relating to the project, on Public Work Financed in Whole or in Part by Loans or Grants from behalf of the Applicant. the United States). (5) Board--The Texas Water Development Board. (21) Debt--All bonds or other documents issued or to be issued by any political subdivision or eligible applicant pledging re­ (6) Bonds--All bonds, notes, certificates of obligation, payment of the Board’s financial assistance. book-entry obligations, and other obligations issued or authorized to be issued by any political subdivision. (22) Design--Surveys, plans, working drawings, specifica­ tions, and any procedures and protocols necessary for the project. (7) Bypass--The selection of projects for funding without adhering to the priorities resulting from the project’s rating in the IUP. (23) Disadvantaged community--The service area of a po­ litical subdivision, or the service area of a community that is located (8) Capitalization grant--The Federal grant awarded annu­ outside the political subdivision and that has an adjusted median house­ ally to the State for capitalization of the DWSRF. hold income that is no more than 75% of the state median household (9) Closing--The exchange of the Applicant’s approved income for the most recent year for which statistics are available; and if debt instruments for DWSRF financial assistance. the service area is not charged for sewer services, has a household cost factor for water rates that is greater than or equal to one percent; or if (10) Commission--The Texas Commission on Environ­ the service area is charged for water and sewer services, has a combined mental Quality. household cost factor for water and sewer rates that is greater than or (11) Commitment--An offer by the Board to provide finan­ equal to two percent. The Board may alter or add to these factors to cial assistance to an Applicant who timely fulfills the conditions in a provide financial assistance to an entity that cannot otherwise afford a Board resolution. state revolving fund loan. (12) Commitment term--The amount of time, after the (24) Drinking Water State Revolving Fund (DWSRF)--The Board commitment, within which the commitment for financial financial assistance program authorized by Texas Water Code, Chapter assistance must be closed. 15, Subchapter J. (13) Community water system--A public water system (25) Eligible entity--Any of the following entities: that: (A) a nonprofit noncommunity water system; (A) serves at least 15 service connections used by year- (B) a nonprofit community water system; round residents of the area served by the system; or (C) a political subdivision that is a municipality, inter- (B) regularly serves at least 25 year-round residents. municipal, interstate or state agency, or a nonprofit water supply cor­ (14) Consolidation--Any one of the following activities: poration created and operating under Chapter 67 of the Texas Water Code; or (A) a public water system acquiring another public wa­ ter system; (D) and any other entity eligible under federal law to receive funds from the DWSRF. (B) a public water system providing retail service to an­ other public water system; or (26) EPA--The U.S. Environmental Protection Agency or a designated representative. (C) a public water system providing wholesale service, which may include operation of the system, to another public water (27) Executive administrator--The executive administrator system. of the Board or a designated representative.

ADOPTED RULES July 30, 2010 35 TexReg 6687 (28) Financial assistance--The DWSRF loans, including (A) apply to public and private water systems; principal forgiveness and negative interest loans and grants to eligible (B) specify contaminants which, in the judgment of the Applicants. administrator, may have any adverse effect on the health of persons; (29) Force majeure--Acts of god, strikes, lockouts or other (C) specify for each such contaminant either: industrial disturbances, acts of the public enemy, war, blockades, in­ surrections, riots, epidemics, landslides, lightning, earthquakes, fires, (i) a maximum contaminant level if, in the judgment storms, floods, washouts, droughts, tornadoes, hurricanes, arrests and of the administrator, it is economically and technologically feasible to restraints of government and people, explosions, breakage or damage ascertain the level of such contaminant in water in public water sys­ to machinery, pipelines or canals, and any other inabilities of either tems; or party, whether similar to those enumerated or otherwise, and not within (ii) if, in the judgment of the administrator, it is not the control of the party claiming such inability, which by the exercise economically or technologically feasible to so ascertain the level of of due diligence and care such party could not have avoided. such contaminant, each treatment technique known to the administrator (30) Fund--The DWSRF created pursuant to the Texas Wa­ which leads to a reduction in the level of such contaminant sufficient ter Code, Chapter 15, Subchapter J. to satisfy the requirements of the Act;and (31) Green project--A project or components of a project (D) contain criteria and procedures to assure a supply of that, when implemented, will result in energy efficiency, water effi­ drinking water which dependably complies with such maximum con­ ciency, green infrastructure, or environmental innovation that are char­ taminant levels including quality control and testing procedures to in­ acterized as green projects either categorically or by utilizing a business sure compliance with such levels and to ensure the proper operation case where required. and maintenance of the system, and requirements as to: (32) Green project reserve--A federal directive requiring (i) the minimum quality of water which may be a specified portion of the capitalization grant to be used for green taken into the system; and projects. (ii) the siting of new facilities for public water sys­ (33) Intended use plan (IUP)--A document prepared annu­ tems. ally by the Board, after public review and comment, which identifies (43) Priority list--That portion of the IUP listing eligible the intended uses of all DWSRF program funds and describes how projects ranked according their rating and that may be further priori­ those uses support the overall goals of the DWSRF program. tized as described in an applicable IUP. (34) Lending rate--The rate of interest applicable to a par­ (44) Private placement memorandum--A document func­ ticular DWSRF loan. tionally similar to an official statement used in connection with an of­ (35) Market interest rates--Interest rates comparable to fering of municipal securities in a private placement. those attained for municipal securities in an open market offering. (45) Project--The planning, the acquisition of land, water (36) Municipality--A city, town, or other public body cre­ rights and permits, the design, the construction and other activities el­ ated by or pursuant to Statelaw. igible for funding under the Act. (37) Nonprofit organization--Any legal entity that is recog­ (46) Project engineer--The engineer hired by the Applicant nized as a tax exempt organization by the Texas Comptroller of Public to provide services during any phase of a project. Accounts pursuant to 34 Texas Administrative Code, Chapter 3, Sub­ (47) Project information form--The Board form required chapter (relating to State Sales and Use Tax). from Applicants seeking funds from the DWSRF. (38) Nonprofit noncommunity (NPNC) water system--A (48) Public water system-­ public water system that is not a community water system and that is owned and operated by a nonprofit organization. (A) In General. A system that provides water to the public for human consumption through pipes or other constructed con­ (39) Outlay report--The Board’s form used to withdraw veyances, if such system has at least 15 service connections or regularly funds. serves at least 25 individuals. Such term includes: (40) Political subdivision--A municipality, intermunicipal, (i) any collection, treatment, storage, and distribu­ interstate, or state agency, any other public entity eligible for assistance, tion facilities under control of the operator of such system and used or a nonprofit water supply corporation created and operating under primarily in connection with such system; and Texas Water Code Chapter 67. (ii) any collection or pretreatment storage facilities (41) Population--The number of people who reside within not under such control which are used primarily in connection with the territorial boundaries of or receive wholesale or retail water service such system. from the Applicant based upon data that is acceptable to the executive administrator and which includes the following: (B) Connections. A connection to a system that deliv­ ers water by a constructed conveyance other than a pipe shall not be (A) acceptable demographic projections or other infor­ considered a connection, if: mation in the engineering feasibility report or the latest official census for an incorporated city; or (i) the water is used exclusively for purposes other than residential use (consisting of drinking, bathing, cooking, or other (B) information on the population for which the project similar uses); is designed, where the Applicant is not an incorporated city or town. (ii) the administrator or the commission determines (42) Primary drinking water regulation--Regulations pro­ that alternative water to achieve the equivalent level of public health mulgated by EPA which: protection provided by the applicable national primary drinking water

35 TexReg 6688 July 30, 2010 Texas Register regulation is provided for residential or similar uses for drinking and Kenneth L. Petersen cooking; or General Counsel (iii) the administrator or the commission determines Texas Water Development Board that the water provided for residential or similar uses for drinking, Effective date: August 4, 2010 cooking, and bathing is centrally treated or treated at the point of entry Proposal publication date: June 4, 2010 by the provider, a pass-through entity, or the user to achieve the equiv­ For further information, please call: (512) 463-8061 alent level of protection provided by the applicable national primary drinking water regulations. ♦ ♦ ♦ (C) Irrigation districts. An irrigation district in exis­ SUBCHAPTER B. FINANCIAL ASSISTANCE tence prior to May 18, 1994, that provides primarily agricultural service through a piped water system with only incidental residential or similar 31 TAC §§371.10 - 371.18 uses shall not be considered to be a public water system if the system STATUTORY AUTHORITY. or the residential or similar users of the system comply with subpara­ graph (B)(ii) and (iii) of this paragraph. The new sections are adopted under the authority of Texas Water Code §15.605 which authorizes the Board to adopt rules neces­ (D) Transition period. A water supplier that would be a sary to carry out its authority relating to the Drinking Water State public water system only as a result of modifications made shall not be Revolving Fund. considered a public water system until two years after August 6, 1996. If a water supplier does not serve 15 service connections or 25 people at Cross reference to statute: Texas Water Code Chapter 15, Sub­ any time after the conclusion of the two-year period, the water supplier chapter J. shall not be considered a public water system. §371.13. Pre-Design Funding Option. (49) Ready to proceed--A project that has obtained all per­ Description. This type of financial assistance is available for the plan­ mits, legally required authorizations, and all land and water rights, has ning, design, acquisition and construction of a project. The funds for complied with all engineering and environmental planning review re­ the construction phase of a project will be released only when construc­ quirements and other Board requirements and design is complete. tion contracts have been executed and the project is ready to proceed. This option is available only when the executive administrator recom­ (50) Release of funds--The sequence and timing for Appli­ mends it to the Board based on a finding that available information indi­ cant’ access to funds. cates that there are no significant permitting, social, contractual, envi­ (51) Secondary drinking water regulation--Regulations ronmental, engineering or financial issues that would make the funding promulgated by EPA which apply to public water systems and which unavailable. specify the maximum contaminant levels which, in the judgment of This agency hereby certifies that the adoption has been reviewed the administrator, are necessary to protect the public welfare. Such by legal counsel and found to be a valid exercise of the agency’s regulations may vary according to geographic and other circumstances legal authority. and may apply to any contaminant in drinking water: (A) which may adversely affect the odor or appearance Filed with the Office of the Secretary of State on July 15, 2010. of such water and consequently may cause a substantial number of the TRD-201003921 persons served by the public water system providing such water to dis­ Kenneth L. Petersen continue its use; or General Counsel (B) which may otherwise adversely affect the public Texas Water Development Board welfare. Effective date: August 4, 2010 (52) Small water system--An entity that serves ten thou­ Proposal publication date: June 4, 2010 sand persons or fewer. For further information, please call: (512) 463-8061 (53) State--State of Texas. ♦ ♦ ♦ (54) Subsidy--Any special financial terms and conditions SUBCHAPTER C. INTENDED USE PLAN available including loan forgiveness, negative interest rates, grants or other financial incentives as detailed in an IUP. 31 TAC §§371.20 - 371.23 (55) Water conservation plan--A report outlining a pro­ STATUTORY AUTHORITY. gram that contains the methods and means for achieving water The new sections are adopted under the authority of Texas Water conservation in an area. Code §15.605 which authorizes the Board to adopt rules neces­ (56) Water conservation program--A comprehensive de­ sary to carry out its authority relating to the Drinking Water State scription and schedule of the methods and means to implement and Revolving Fund. enforce a water conservation plan. Cross reference to statute: Texas Water Code Chapter 15, Sub­ This agency hereby certifies that the adoption has been reviewed chapter J. by legal counsel and found to be a valid exercise of the agency’s §371.21. Rating Process. legal authority. (a) Projects in an IUP will be rated based upon the information Filed with the Office of the Secretary of State on July 15, 2010. detailed within the submitted project information form. TRD-201003920 (b) Projects will be rated based on the following factors:

ADOPTED RULES July 30, 2010 35 TexReg 6689 (1) Health and compliance. Factors regarding public health Cross reference to statute: Texas Water Code Chapter 15, Sub­ concerns/issues or violations of maximum contaminant levels pursuant chapter J. to 40 C.F.R. Part 141. This agency hereby certifies that the adoption has been reviewed (2) Affordability. A project which qualifies as a Disadvan­ by legal counsel and found to be a valid exercise of the agency’s taged Community shall have an affordability rating factor as defined legal authority. within the applicable IUP. Filed with the Office of the Secretary of State on July 15, 2010. (3) Emergency relief. Projects which are affected by events of natural disaster. TRD-201003923 Kenneth L. Peterson (4) Additional factors as designated within the applicable IUP and determined by the executive administrator. General Counsel Texas Water Development Board (c) Source Water Protection projects are rated and ranked ac­ Effective date: August 4, 2010 cording to the criteria and procedures within the applicable IUP. Proposal publication date: June 4, 2010 (d) Previously funded projects. Planning, acquisition, or de­ For further information, please call: (512) 463-8061 sign phase projects, completed within three years from loan closing will receive a priority for construction funding if there are no signif­ ♦ ♦ ♦ icant changes that affect the original project rating and the project is ready to proceed. SUBCHAPTER E. ENVIRONMENTAL (e) Subsequent to adoption of an IUP, certain changes to a REVIEWS AND DETERMINATIONS ranked project included in the IUP may be allowed without requiring a 31 TAC §§371.40 - 371.50 re-ranking in the following circumstances: STATUTORY AUTHORITY. (1) the Applicant for a proposed project may change; The new sections are adopted under the authority of Texas Water (2) the number of participants in a consolidation project Code §15.605 which authorizes the Board to adopt rules neces­ may change provided that the change does not result in a change to sary to carry out its authority relating to the Drinking Water State the combined rating factor; and Revolving Fund. (3) the total cost of the project may not increase in an Cross reference to statute: Texas Water Code Chapter 15, Sub­ amount of more than 10% of the amount listed in the adopted IUP. chapter J. (f) If any changes are proposed to the nature of the improve­ This agency hereby certifies that the adoption has been reviewed ments of a proposed project, or in the number of participants in a con­ by legal counsel and found to be a valid exercise of the agency’s solidation project which would result in a change to the combined rat­ legal authority. ing factor as determined in the IUP, the projects must be re-ranked. In this case, the project’s ranking will be determined based on the revised Filed with the Office of the Secretary of State on July 15, 2010. combined rating factor. TRD-201003924 This agency hereby certifies that the adoption has been reviewed Kenneth L. Peterson by legal counsel and found to be a valid exercise of the agency’s General Counsel legal authority. Texas Water Development Board Effective date: August 4, 2010 Filedwiththe Office of the Secretary of State on July 15, 2010. Proposal publication date: June 4, 2010 TRD-201003922 For further information, please call: (512) 463-8061 Kenneth L. Petersen General Counsel ♦ ♦ ♦ Texas Water Development Board SUBCHAPTER F. ENGINEERING REVIEW Effective date: August 4, 2010 Proposal publication date: June 4, 2010 AND APPROVAL For further information, please call: (512) 463-8061 31 TAC §§371.60 - 371.62 ♦ ♦ ♦ STATUTORY AUTHORITY. SUBCHAPTER D. APPLICATION FOR The new sections are adopted under the authority of Texas Water Code §15.605 which authorizes the Board to adopt rules neces­ ASSISTANCE sary to carry out its authority relating to the Drinking Water State 31 TAC §§371.30 - 371.35 Revolving Fund. STATUTORY AUTHORITY. Cross reference to statute: Texas Water Code Chapter 15, Sub­ chapter J. The new sections are adopted under the authority of Texas Water Code §15.605 which authorizes the Board to adopt rules neces­ §371.60. Engineering Feasibility Report. sary to carry out its authority relating to the Drinking Water State (a) Applicant shall submit an engineering feasibility report Revolving Fund. signed and sealed by a professional engineer registered in the State.

35 TexReg 6690 July 30, 2010 Texas Register The report, based on guidelines provided by the executive administra­ binations of planning, design and construction funding, in accordance tor, shall provide: with programmatic requirements. The executive administrator will provide written guidance regarding modifications of the type of finan­ (1) a description and purpose of the project; cial assistance, and the review, approval and release of funds processes (2) the names of the entities to be served and current and for alternative delivery projects. future population; §371.61. Contract Documents: Review and Approval. (3) the cost of the project; (a) Contract documents mean the documents that form the (4) a description of the alternatives considered and reasons construction contracts and for alternative methods of project delivery, for selection of the project proposed; the documents that include construction and that may include other (5) sufficient information to evaluate the engineering fea­ phases of the project. sibility and biddability and constructability; (b) An Applicant shall submit three copies of proposed con­ (6) maps and drawings as necessary to locate and describe tract documents, including the engineering plans and specifications, the project area; which shall be as detailed as would be required for submission to con­ tractors bidding on the work. The Applicant shall provide the executive (7) sufficient detail to document that the project will rem­ administrator with all contract documents proposed for bid advertising. edying the drinking water issues and problems that were evaluated for The executive administrator shall review contract documents: rating on the IUP; (1) to ensure consistency with the approved engineering (8) information showing that the project is cost effective; feasibility report and with approved environmental planning docu­ and for projects that implement new systems or significantly alter cur­ ments; rent systems, a detailed cost-effective analysis, including detailed op­ eration and maintenance costs, may be requested to document program (2) to ensure the meet the requirements of biddability, op­ eligibility; erability and constructability; (9) a detailed project schedule with timelines for each (3) to ensure compliance with commission rules at Title 30, phase of the project and the milestones within each phase of the Texas Administrative Code, Chapter 290, relating to Public Drinking project; and Water and other applicable state and federal laws and rules; (10) any other information or data necessary to evaluate the (4) to ensure the contract documents notify the contractor proposed project. about the Board’s authority to audit and inspect during construction; and (b) Approval of engineering feasibility report. The executive administrator will approve the engineering feasibility report when: (5) to ensure compliance with other requirements as pro­ vided in guidance forms and documents. (1) the items listed in subsection (a) of this section have been completed, including requests for additional information or data; (c) Other approvals. The Applicant shall obtain the approval of the plans and specifications from any other local, state and federal (2) the appropriate environmental determinations have agencies having jurisdiction over the project. The executive admin­ been completed in accordance with this chapter and the Applicant has istrator’s approval is not an assumption of the Applicants’ liability or agreed to incorporate into project documents, including contracts, all responsibility to conform to all requirements of applicable laws relat­ mitigation measures as a result of the environmental review; and ing to design, construction, operation or performance of the project. (3) the project and alternatives to the project have been an­ This agency hereby certifies that the adoption has been reviewed alyzed and the proposed project is cost effective. by legal counsel and found to be a valid exercise of the agency’s (c) Request for project amendment. A request for a change legal authority. or amendment, after the approval of the engineering feasibility report, to a project shall be granted only if implementation of the amendment Filed with the Office of the Secretary of State on July 15, 2010. does not affect the original purpose of the project. The implementation TRD-201003925 of a project amendment must remedy the problems and issues identi­ Kenneth L. Peterson fied in the Applicant’s original project information form. Significant General Counsel amendments to a project require previous approval by the executive Texas Water Development Board administrator. The Applicant shall: Effective date: August 4, 2010 (1) provide a description of and the need for amendment or Proposal publication date: June 4, 2010 changes; For further information, please call: (512) 463-8061 (2) submit additional engineering or environmental infor­ ♦ ♦ ♦ mation as requested by the executive administrator; (3) provide an estimate of any increase or decrease in total SUBCHAPTER G. LOAN CLOSINGS AND project costs resulting from the proposed change; and AVAILABILITY OF FUNDS (4) certify that the proposed changes will not significantly 31 TAC §§371.70 - 371.74 alter the purpose of the project. STATUTORY AUTHORITY. (d) Alternative Methods of Project Delivery. Design build, construction manager at-risk and other alternative methods of project The new sections are adopted under the authority of Texas Water delivery are eligible for available financial assistance, including com­ Code §15.605 which authorizes the Board to adopt rules neces-

ADOPTED RULES July 30, 2010 35 TexReg 6691 sary to carry out its authority relating to the Drinking Water State (J) establish a construction fund at an official state de­ Revolving Fund. pository institution; the fund shall be kept separate from all other funds of the Applicant; Cross reference to statute: Texas Water Code Chapter 15, Sub­ chapter J. (K) require the maintenance of current, accurate and complete records and accounts in accordance with generally accepted §371.70. Loans Secured by Bonds or Other Authorized Securities. accounting standards to demonstrate compliance with requirements in (a) Disbursement required. No loan shall close unless the Ap­ the loan documents; plicant provides an outlay report requesting a disbursement at least (L) require the Applicant to annually submit an audit, seven days prior to the loan closing date. prepared by a certified public accountant in accordance with generally (b) Applicability. This section applies to loan closings for en­ accepted auditing standards; tities issuing bonds or other authorized securities. The following docu­ (M) require the Applicant to submit a final accounting ments are required for closing a loan secured by bonds or other autho­ within 60 days of the receipt of the final inspection report; rized securities: (N) document the adoption of a water conservation pro­ (1) evidence that applications have been filed for all gram and the implementation of an approved water conservation pro­ licenses, permits, registrations, and other authorizations required by gram for the duration of the loan; and local, state and federal laws and rules that are necessary for planning, design, acquisition and construction of the authorized project; (O) require the Applicant’s agreement to comply with special environmental conditionsspecified in the Board’s environmen­ (2) a certified copy of the ordinance or resolution adopted tal determination as well as with any applicable Board laws or rules by the governing body authorizing the issuance of debt to be sold to the relating to use of the loan funds; Board. The ordinance or resolution shall: (3) unqualified approving opinions of the attorney general (A) require the Applicant’s to fix and maintain rates, in of Texas and, if bonds or other authorized securities are issued, a certi­ accordance with state law, and collect charges to provide adequate op­ fication from the comptroller of public accounts that such debt has been eration and maintenance of the project and to provide insurance cover­ registered in that office; age on the project in an amount sufficient to protect the Board’s interest; (4) an unqualified approving opinion by a recognized bond (B) require the use of a book-entry-only system; attorney; (C) require the use of a paying agent/registrar that is a (5) if the project will result in the development of surface or Depository Trust Company (DTC) participant; groundwater resources, the Applicant shall provide information show­ (D) require that the payment all DTC closing fees as­ ing that it has the legal right to use the quantity of water necessary for sessed by the Board’s custodian bank be directed to the Board’s custo­ project effectiveness and efficiency. Upon receipt of the information, dian bank by the Applicant; the executive administrator shall prepare a finding that the Applicant has a reasonable expectation of obtaining the water rights necessary (E) require evidence that one fully registered bond has for project implementation prior to any release of funds for planning, been sent to the DTC or to the Applicant’s paying agent/registrar prior land acquisition and design activities. Prior to the release of funds for to closing; construction, a written water rights certification shall be prepared by (F) require that all payments are made to the Board via the executive administrator. The certification shall be based upon the wire transfer at no cost to the Board; Applicant’s information showing the necessary water rights have been acquired; (G) require that the partial redemption of bonds or other authorized securities be made in inverse order of maturity; (6) evidence that the Applicant has the technical, manage­ rial, and financial capacity to maintain the system unless the use of the (H) require that insurance coverage be obtained and funds will be to ensure that the system has the technical, managerial, maintained in an amount sufficient to protect the Board’s interest in and financial capacity to comply with the national primary or applica­ the project; ble state drinking water regulations over the long term; (I) require that the Applicant, or an obligated person for (7) a private placement memorandum containing a detailed whom financial or operating data is presented, will undertake, either in­ description of the issuance of debt to be sold to the Board. The Appli­ dividually or in combination with other issuers of the Applicant’s obli­ cant shall submit a draft private placement memorandum at least 30 gations or obligated persons, in a written agreement or contract to com­ days prior to loan closing; a final version of the memorandum shall be ply with requirements for continuing disclosure on an ongoing basis as submitted no later than seven days before closing; and required by Securities and Exchange Commission (SEC) rule 15c2-12 and determined as if the Board were a Participating Underwriter within (8) any additional information specified in writing by the the meaning of such rule, such continuing disclosure undertaking be­ executive administrator. ing for the benefit of the Board and the beneficial owner of the political (c) Certified bond transcript. Within sixty (60) days of closing subdivision’s obligations, if the Board sells or otherwise transfers such the loan, the Applicant shall submit a transcript of proceedings relating obligations, and thebeneficial owners of the Board’s bonds if the polit­ to the debt purchased by the Board which shall contain those instru­ ical subdivision is an obligated person with respect to such bonds under ments normally furnished by a purchaser of debt. rule 15c2-12. The ordinance or resolution shall also contain any other requirements of the SEC or the IRS relating arbitrage, private activity (d) Phased closing. The executive administrator may deter­ bonds or other relevant requirements regarding the securities held by mine that closing a loan in phases is appropriate when: the Board;

35 TexReg 6692 July 30, 2010 Texas Register (1) the project has distinct phases for planning, design, ac­ (C) that there is no pending suit, action, proceeding or quisition and for construction or if any one of the phases can be logi­ investigation by a public entity that would materially adversely affect cally and practically divided into discrete sections; the enforceability or validity of the required loan documents; (2) the project utilizes the design-build or construction (D) evidence that the entity is in good standing with the manager-at-risk process or any process wherein there is simultaneous Office of the Secretary of State; and design and construction; (E) a statement relating to any other issues deemed rel­ (3) there are limitations on the availability of funds; evant by the executive administrator. (4) additional oversight is required due to the financial con­ (8) evidence that an approved water conservation plan has dition of the Applicant or the complexity of the project; or been adopted and will be implemented through the life of the project; (5) due to any unique facts arising from the particular trans­ (9) evidence of the Applicant’s agreement to comply with action. special environmental conditions contained in the Board’s environmen­ tal determination; §371.71. Loans Secured by Promissory Notes and Deeds of Trust. (10) evidence that TCEQ has approved the entity’s water (a) Disbursement required. No loan shall close unless the Ap­ rates; plicant provides an outlay report requesting a disbursement at least seven days prior to the loan closing date. (11) copies of executed service and revenue contracts; (b) Applicability. This section contains loan closing require­ (12) evidence that the Applicant has the technical, manage­ ments for a water supply corporation, an eligible NPNC, or an eligi­ rial, and financial capacity to maintain the system unless the use of the ble private Applicant or other Applicant who is not authorized to issue funds will be to ensure that the system has the technical, managerial, bonds or other securities. This section applies to loans for either pre-de­ and financial capacity to comply with the national primary or applica­ sign or construction funding. ble state drinking water regulations over the long term; (c) Use of consultants. The executive administrator may rec­ (13) if the project will result in the development of surface ommend, but not require, that the entity engage the services of a fi­ or groundwater resources, the Applicant shall demonstrate that it has nancial adviser or other consultant to ensure the appropriateness of the the right to use the quantity of water necessary for project effective­ proposed debt and to provide advice to the entity. ness and efficiency. Upon receipt of the information, the executive ad­ ministrator shall prepare a finding that the Applicant has a reasonable (d) Documents required for loan closing. The executive ad­ expectation of obtaining the water rights necessary for project imple­ ministrator shall ensure that the following documents have been sub­ mentation prior to any release of funds for planning, land acquisition mitted prior to loan closing: and design activities. A written water rights certification must be pre­ (1) evidence that applications have been filed for all pared by the executive administrator before funds can be released for licenses, permits, registrations, and other authorizations required by construction activities based upon a showing by the Applicant that the local, state and federal laws and rules that are necessary for planning, necessary water rights have been acquired; and design, acquisition or and construction of the authorized project; (14) any other documents relevant to the particular trans­ (2) an executed promissory note and loan agreement in a action. form approved by the executive administrator; (e) Phased closing. The executive administrator may deter­ (3) a Deed of Trust and Security Agreement that shall con­ mine that closing a loan in phases is appropriate when: tain a first mortgage lien evidenced by a deed of trust on all the real and (1) the project has distinct phases for planning, design, ac­ personal property of the water system; quisition and for construction or if any one of the phases can be logi­ (4) an owner’s title insurance policy for the benefitof the cally and practically divided into discrete sections; Board covering all the real property identified in the deed of trust; (2) the project utilizes the design-build or construction (5) evidence that the rates on which the Applicant intends manager-at-risk process or any process wherein there is simultaneous to rely for repayment of the financial assistance have received final and design and construction; binding approval from the commission and, for Applicants required to (3) there are limitations on the availability of funds; utilize a surcharge account, evidence that the approval of the commis­ sion was conditioned on the creation of a surcharge account; (4) additional oversight is required due to the financial con­ dition of the Applicant or the complexity of the project; or (6) a certified copy of the resolution adopted by the gov­ erning body authorizing the indebtedness and a certificate from the sec­ (5) due to any unique facts arising from the particular trans­ retary of the governing body attesting to adoption of the resolution in action. accordance with the by-laws or rules of the governing body and in com­ §371.73. Surplus Funds. pliance with the Open Meetings Act, if applicable; (a) Surplus funds means those funds remaining after the ap­ (7) a legal opinion from Applicant’s counsel that provides: proved project is completed. (A) that the entity has the legal authority to enter into (b) After the final accounting, the executive administrator the loan agreement and to execute a promissory note and a statement shall notify the Applicant if surplus funds exist and advise the Appli­ that the entity is in good standing; cant that the surplus funds may be used for: (B) that the entity is not in breach or default of any State (1) payment of bonds in inverse order of maturity; of Texas or United States order, judgment, decree or other instrument which would have a material effect on the loan transaction; (2) deposit into the interest and sinking fund; or

ADOPTED RULES July 30, 2010 35 TexReg 6693 (3) enhancements to the project that are explicitly approved creating a sales and use tax exemption for certain components by the executive administrator, including green components. of tangible personal property installed in connection with an ad­ vanced clean energy project, as defined by Health and Safety This agency hereby certifies that the adoption has been reviewed Code, §382.003, or a clean energy project, as defined by Natu­ by legal counsel and found to be a valid exercise of the agency’s ral Resources Code, §120.001. legal authority. The comptroller’s office has made the following changes to the Filedwiththe Office of the Secretary of State on July 15, 2010. proposed rule. Subsection (a)(1) is amended to state that an Ad­ TRD-201003926 vanced Clean Energy Project must meet the standards set forth in Health and Safety Code, §382.003(1-a) at the conclusion of Kenneth L. Petersen theprojectandtoenumerate thetyp es of activities that are in­ General Counsel cluded in the definition of such a project. Subsection (a)(3) is Texas Water Development Board amended to enumerate the types of activities that are included Effective date: August 4, 2010 in the definition of a Clean Energy Project. Subsection (a)(6) Proposal publication date: June 4, 2010 is added, with the succeeding subsections renumbered, to pro­ For further information, please call: (512) 463-8061 vide the definition of the term "maintenance on real property." Subsection (a)(6) is renumbered to new subsection (a)(7), the ♦ ♦ ♦ definition of the term "modify" is changed to the definition of the term "modification," and the subsection is reworded with respect SUBCHAPTER H. CONSTRUCTION AND to clarity. Subsection (b)(1)(A) is amended to reflect that the ex­ POST-CONSTRUCTION REQUIREMENTS clusive use of certain components of tangible personal property is not required for exemption. Subsections (c) and (d) are ex­ 31 TAC §§371.80 - 371.89 cised, with subsequent sections re-lettered, to reflect changes STATUTORY AUTHORITY. with respect to the timing of, and qualifications for, an exemption for an advanced clean energy project and a clean energy project. The new sections are adopted under the authority of Texas Water Subsection (e) is re-lettered as new subsection (c) and clarified Code §15.605 which authorizes the Board to adopt rules neces­ to describe the records required to substantiate that conditions sary to carry out its authority relating to the Drinking Water State supporting an exemption have been met. Subsection (f) is re-let­ Revolving Fund. tered as new subsection(d)and clari fied to reflect changes with Cross reference to statute: Texas Water Code Chapter 15, Sub­ respect to the timing of an exemption for an advanced clean en­ chapter J. ergy project and a clean energy project. Subsection (g) is re-let­ tered as new subsection (e) and amended to reflect the excision This agency hereby certifies that the adoption has been reviewed of subsection (d). Subsection (h) is re-lettered as new subsec­ by legal counsel and found to be a valid exercise of the agency’s tion (f) and amended to clarify the treatment of certain services legal authority. performed on exempt items. Subsection (g) is changed to ad­ dress maintenance on real property. Filedwiththe Office of the Secretary of State on July 15, 2010. No comments were received regarding adoption of the new sec­ TRD-201003927 tion. Kenneth L. Petersen General Counsel This new section is adopted under Tax Code, §111.002, which Texas Water Development Board provides the comptroller with the authority to prescribe, adopt, Effective date: August 4, 2010 and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2. Proposal publication date: June 4, 2010 For further information, please call: (512) 463-8061 The new section implements Tax Code, §151.334. ♦ ♦ ♦ §3.326. Carbon Dioxide Capture and Sequestration. TITLE 34. PUBLIC FINANCE (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context PART 1. COMPTROLLER OF PUBLIC clearly indicates otherwise. ACCOUNTS (1) Advanced Clean Energy Project--A project for which an application for a permit or for an authorization to use a standard CHAPTER 3. TAX ADMINISTRATION permit under Health and Safety Code, Chapter 382 is received by the Texas Commission on Environmental Quality on or after January 1, SUBCHAPTER O. STATE SALES AND USE 2008, and before January 1, 2020. At its conclusion, the project will TAX meet all standards with respect to energy sourcing, method of related generation or co-generation of electricity, emissions levels, and car­ 34 TAC §3.326 bon dioxide capture and sequestration as set forth in Health and Safety Code, §382.003(1-a). A project may include new construction; nonres­ The Comptroller of Public Accounts adopts new §3.326 concern­ idential repair, remodeling, or restoration; maintenance; or the sale and ing carbon dioxide capture and sequestration with changes to installation of qualifying components of tangible personal property. the proposed text as published in the January 22, 2010, issue of the Texas Register (35 TexReg 442). This section implements (2) Anthropogenic Emission Source--A location that emits House Bill 469, 81st Legislature, 2009. Effective September 1, man-made carbon dioxide, including but not limited to, a coal burning 2009, Tax Code, Chapter 151, is amended to add new §151.334, electric production plant.

35 TexReg 6694 July 30, 2010 Texas Register (3) Clean Energy Project--A project defined by Natural Re­ (b) Exemption for certain components of tangible personal sources Code, §120.001(2), and certified as such by the Railroad Com­ property. mission of Texas as provided by Natural Resources Code, §120.004. A (1) The sale, use, storage or consumption of components of project may include new construction; nonresidential repair, remodel­ tangible personal property used in connection with an advanced clean ing, or restoration; maintenance; or the sale and installation of qualify­ energy project or a clean energy project are exempted from sales and ing components of tangible personal property. use tax if: (4) Components of tangible personal property--For the pur­ (A) the components are installed on the project, either poses of this section, the term shall have the meaning given to the term to become annexed to realty or to retain their identity as tangible per­ "tangible personal property" as defined in Tax Code, §151.009 and in­ sonal property, are necessary and essential, and are used in this state cludes tubing, pipe, valves, tanks, machinery and equipment, includ­ directly: ing replacement parts for such items, used specifically to capture car­ bon dioxide from an anthropogenic emission source, to transport or (i) to capture carbon dioxide from an anthropogenic inject carbon dioxide from such a source, or to prepare carbon diox­ emission source; ide from such a source for transportation or injection. The term also (ii) to transport or inject carbon dioxide from such a includes actuators, generators, transformers (and the switches, break­ source; or ers, capacitor banks, regulators, relays, reclosers, fuses, interruptors, reactors, arrestors, resistors, insulators, instrument transformers, and (iii) to prepare carbon dioxide from such a source telemetry units that are related to the transformers), electronic control for transportation or injection; and room equipment, computerized control units, pumps, hydraulic units, (B) the carbon dioxide is sequestered in this state. and related accessories that are used to power, supply, support, or con­ trol such components. (2) Items that are merely useful or incidental to the project, such as office machines, office supplies, maintenance supplies, clean­ (5) Install--To attach or incorporate components of tangi­ ing supplies, lubricants, consumables and similar items are taxable. ble personal property that either retain their identity as tangible per­ sonal property or become improvements to realty. (c) Records required. A qualifying project must maintain records that support the exemption and are verifiable by audit. (6) Maintenance on real property--For operational and See §3.281 of this title (relating to Records Required; Information functional improvements to realty, maintenance means scheduled, Required) and §3.282 of this title (relating to Auditing Taxpayer periodic work that is necessary to sustain or support safe, efficient, Records). The records must include copies of invoices showing the continuous operations, or to prevent the decline, failure, lapse, or item purchased, the date of purchase, the amount of purchase and deterioration of the improvement. Taxable real property services that the identity of the seller. Records must also reflect the exempt nature are described by §3.356 of this title (relating to Real Property Service) of the component of tangible personal property purchased under an do not qualify as maintenance. Maintenance does not include work to exemption certificate, and must also substantiate at the conclusion of remodel, modify, upgrade, perform major repair, or restore, even if the the project that: work is scheduled or periodic. (1) in the case of a clean energy project, the project is cer­ (A) As it relates to maintenance, the term "scheduled" tified by the Railroad Commission of Texas as provided by Natural means anticipated and designated to occur within a given time period Resources Code, §120.004;or or production level. (2) in the case of an advanced clean energy project, the (B) As it relates to maintenance, the term "periodic" Texas Commission on Environmental Quality has received an applica­ means ongoing or continual or at least occurring at intervals of time tion for a permit or for an authorization to use a standard permit under or production that are reasonably predictable. Health and Safety Code Chapter 382 on or after January 1, 2008, and (7) Modification--The alteration or upgrade of an existing before January 1, 2020, and the project: improvement to real property by repair, remodeling, or restoration (see (A) involves the energy sourcing types and related elec­ §3.357 of this title (relating to Nonresidential Real Property Repair, tricity generation or co-generation methods set forth in Health and Remodeling, and Restoration; Real Property Maintenance)) or the al­ Safety Code, §382.003(1-a)(A); teration or upgrade of existing components of tangible personal prop­ erty that have maintained their identity as tangible personal property (B) meets the emissions level standards set forth in after installation. Partial demolition of existing nonresidential realty Health and Safety Code, §382.003(1-a)(B); and is taxable modification. The complete demolition of an existing non­ (C) captures and sequesters carbon dioxide in ac­ residential improvement to real property is not modification and is not cordance with the standards set forth in Health and Safety Code, taxable. §382.003(1-a)(C). (8) Replacement part--Any part attached to an installed (d) Contracts to improve realty. component of tangible personal property to repair or upgrade the component. (1) A contractor who incorporates components of tangible personal property into realty as covered in §3.291 of this title (relating (9) Sequester--To inject carbon dioxide into a geological to Contractors) may accept an exemption certificate in lieu of tax for formation: any components of tangible personal property that qualify for exemp­ (A) as part of an enhanced oil recovery project that tion under subsection (b) of this section sold under a separated con­ qualifies for a tax rate reduction under Tax Code, §202.0545(c); or tract. Taxable materials, such as foundation materials, must be sepa­ rately stated from qualifying components of tangible personal property. (B) in a manner and under conditions that create a rea­ A single charge for qualifying and nonqualifying materials will be pre­ sonable expectation that at least 99% of the carbon dioxide will remain sumed taxable. separated from the earth’s atmosphere for at least 1,000 years.

ADOPTED RULES July 30, 2010 35 TexReg 6695 (2) The services of a contractor who incorporates compo­ TRD-201003950 nents of tangible personal property into realty under a lump-sum con­ Ashley Harden tract as part of new construction as covered in §3.291 of this title are General Counsel not taxable. Although a contractor is the consumer of all the materials Comptroller of Public Accounts the contractor uses in the performance of a lump-sum contract, the con­ Effective date: August 5, 2010 tractor may issue an exemption certificate to a vendor of components Proposal publication date: January 22, 2010 of tangible personal property when the components will be installed on a project qualifying for exemption under subsection (b) of this section. For further information, please call: (512) 475-0387 (3) When components of tangible personal property are in­ ♦ ♦ ♦ corporated into realty as part of a qualifying repair, remodeling, or TITLE 37. PUBLIC SAFETY AND CORREC- restoration project as described in subsection (b) of this section, the components will be exempt and should be separately stated from both TIONS nonqualifying materials and taxable labor. A lump-sum charge to re­ pair, remodel, or restore nonresidential realty is presumed taxable. The PART 13. TEXAS COMMISSION ON presumption may be overcome by the service provider at the time the FIRE PROTECTION transaction occurs by separately stating to the customer a reasonable charge for the taxable services. If, however, the charge for the qualify­ CHAPTER 429. MINIMUM STANDARDS FOR ing components of tangible personal property is not separately stated at the time of the transaction, the service provider or the purchaser may FIRE INSPECTORS later establish for the comptroller, through documentary evidence, the SUBCHAPTER B. MINIMUM STANDARDS percentage of the total charge that relates to exempt qualifying com­ ponents. Examples of acceptable documentation include purchase in­ FOR FIRE INSPECTOR CERTIFICATION voices, bid sheets, or schedules of values. See §3.357 of this title. 37 TAC §429.203 (e) Sale and Installation. The sale and installation of compo­ The Texas Commission on Fire Protection (the Commission) nents of tangible personal property on a qualifying project, as described adopts an amendment to Chapter 429, Minimum Standards in subsection (b) of this section, are exempt when the items retain their for Fire Inspectors, Subchapter B, Minimum Standards for Fire identity as tangible personal property. Inspector Certification, §429.203, Minimum Standards for Basic (f) Taxable services performed on exempt items. A person Fire Inspector Certification--New Track. This amendment is who performs repair, restoration, remodeling or maintenance services adopted without changes to the proposed text as published on exempt components of tangible personal property, which, after in­ in the May 14, 2010, issue of the Texas Register (35 TexReg stallation, retain their identity as tangible personal property, is not re­ 3800) and will not be republished. quired to collect sales tax on that service if the customer provides a The reason for the adoption of this amendment to this rule is to properly completed exemption certificate. eliminate specifically named courses offered by the National Fire (g) Maintenance on real property. Components of tangible Academy (NFA) as a means to qualify to take the State Inspector personal property installed as part of maintenance on real property are examination. The NFA has, over the years, changed the names exempt when the installation is performed on a clean energy project of some of the original courses and eliminated others. When a or an advanced clean energy project. Persons performing real prop­ particular course is specifically designated to meet the training erty maintenance under separated contracts should refer to subsection requirements, any changes to the course name or availability of (d)(1) of this section. Persons performing real property maintenance thecoursewouldpreclude someone from using that option to under lump-sum contracts should refer to subsection (d)(2) of this sec­ qualify to take the state certification test. tion. The purpose of adopting this rule is to allow the Commission to (h) Divergent use. A person who claims a valid exemption or evaluate all relevant material offered by the NFA to determine refund on the purchase of a component of tangible personal property if it meets the curriculum requirements set forth in the Inspec­ under the provisions of subsection (b) of this section, but who then uses tor Curriculum adopted by the Commission, thus eliminating the the item in a taxable manner, is required to report and pay sales tax to requirement to only allow specifically named courses. The Com­ the comptroller based on the fair market rental value of the component mission would then be able to evaluate each course the same of tangible personal for the period of time that the item is used in a as any other out of jurisdictional programs. taxable manner. At any time, a purchaser may elect to pay sales tax on No comments were received from the public regarding the pro­ the purchase price of the item, but no credit is allowed for taxes that posed amendment. were previously paid based on fair market value. See §3.287 of this title (relating to Exemption Certificates). This amendment is adopted under Government Code, Title 4, Subtitle B, Chapter 419, Subchapter B, Regulation and Assisting (i) Effective date. The provisions of this section are effective Fire Fighters and Fire Departments, §419.041, Individual Certifi­ September 1, 2009. A purchaser who claims an exemption under this cate Holder; Certificate Renewal. section must give the seller a properly completed exemption certificate. The sale, use, storage or consumption of such items prior to September This agency hereby certifies that the adoption has been reviewed 1, 2009, is taxable unless otherwise exempt. by legal counsel and found to be a valid exercise of the agency’s legal authority. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency’s Filed with the Office of the Secretary of State on July 12, 2010. legal authority. TRD-201003860 Filed with the Office of the Secretary of State on July 16, 2010.

35 TexReg 6696 July 30, 2010 Texas Register Gary L. Warren, Sr. The purpose of adopting this rule is to allow the Commission to Executive Director evaluate all relevant material offered by the NFA to determine if it Texas Commission on Fire Protection meets the curriculum requirements set forth in the Fire Investiga­ Effective date: August 1, 2010 tor Curriculum adopted by the Commission, thus eliminating the Proposal publication date: May 14, 2010 requirement to only allow specifically named courses. The Com­ mission would then be able to evaluate each course the same For further information, please call: (512) 936-3813 as any other out of jurisdictional programs. ♦ ♦ ♦ No comments were received from the public regarding the pro­ CHAPTER 431. FIRE INVESTIGATION posed amendment. This amendment is adopted under Government Code, Title 4, SUBCHAPTER A. MINIMUM STANDARDS Subtitle B, Chapter 419, Subchapter B, Regulation and Assisting FOR ARSON INVESTIGATOR CERTIFICATION Fire Fighters and Fire Departments, §419.041, Individual Certifi­ cate Holder; Certificate Renewal. 37 TAC §431.3 This agency hereby certifies that the adoption has been reviewed The Texas Commission on Fire Protection (the Commission) by legal counsel and found to be a valid exercise of the agency’s adopts an amendment to Chapter 431, Fire Investigation, legal authority. Subchapter A, Minimum Standards for Arson Investigator Certifi­ cation, §431.3, Minimum Standards for Basic Arson Investigator Filed with the Office of the Secretary of State on July 12, 2010. Certification. This amendment is adopted without changes to the proposed text as published in the May 14, 2010, issue of the TRD-201003861 Texas Register (35 TexReg 3801) and will not be republished. Gary L. Warren, Sr. Executive Director The reason for the adoption of this amendment to this rule is to eliminate specifically named courses offered by the National Fire Texas Commission on Fire Protection Academy (NFA) as a means to qualify to take the State Fire In­ Effective date: August 1, 2010 vestigator examination. The NFA has, over the years, changed Proposal publication date: May 14, 2010 the names of some of the original courses and eliminated oth­ For further information, please call: (512) 936-3813 ers. When a particular course is specifically designated to meet the training requirements, any changes to the course name or ♦ ♦ ♦ availability of the course would preclude someone from using that option to qualify to take the state certification test.

ADOPTED RULES July 30, 2010 35 TexReg 6697 Proposed Rule Reviews The committee conducted a preliminary review and determined that the reasons for the rules in Chapter 601 continue to exist. Chapter 601 is Texas Groundwater Protection Committee necessary because TWC, §26.406 specifically provides that the com­ Title 31, Part 18 mittee shall adopt rules defining the conditions that constitute ground­ water contamination for purposes of inclusion of cases in the public The Texas Groundwater Protection Committee (TGPC or committee) files and the joint report required by this section, and TWC, §26.408 files this notice of intention to review and proposes the readoption of specifically directs the committee to designate the form and content Chapter 601, Groundwater Contamination Report. of the notice of groundwater contamination mailed to owners of pri­ This review of Chapter 601 is proposed in accordance with the require­ vate drinking water wells and to groundwater conservation districts. ments of Texas Government Code, §2001.039, which requires state To meet these statutory requirements, the rules provide the definitions agencies to review and consider for readoption each of their rules ev­ and applicability for maintaining public files on groundwater contami­ ery four years. The review must include an assessment of whether the nation cases and contents of the annual Joint Groundwater Monitoring reasons for the rules continue to exist. and Contamination Report required by TWC, §26.406(d) and the form and content of the mailed notice required by TWC, §26.408(c). CHAPTER SUMMARY PUBLIC COMMENT The TGPC was created by the 71st Legislature in 1989 to bridge gaps between existing state groundwater programs and to optimize water This proposal is limited to the review in accordance with the require­ quality protection by improving coordination among agencies involved ments of Texas Government Code, §2001.039. The committee in­ in groundwater activities. The committee’s rules in Chapter 601 define vites public comment on whether the reasons for the rules in Chap­ the conditions that constitute groundwater contamination for the pur­ ter 601 continue to exist. Comments may be submitted to Kathleen pose of inclusion of cases in the public files for each state agency having McCormack, Groundwater Planning and Assessment, MC 147, Texas responsibilities related to the protection of groundwater. These rules Commission on Environmental Quality, P.O. Box 13087, Austin, Texas also describe the contents of the committee’s Joint Groundwater Mon­ 78711-3087 or faxed to (512) 239-4450. All comments should refer­ itoring and Contamination Report required under Texas Water Code ence TGPC-Groundwater Contamination Report Quadrennial Review. (TWC), §26.406. The report describes the current status of ground­ Comments must be received by 5:00 p.m., August 30, 2010. For fur­ water monitoring activities conducted by or required by each agency ther information or questions concerning this proposal, please contact at regulated facilities or associated with regulated activities; contains Cary Betz, Designated Chairman, Texas Groundwater Protection Com­ a description of each case of groundwater contamination documented mittee, at (512) 239-4506. during the previous calendar year; contains a description of each case TRD-201003964 of contamination documented during the previous year for which en­ Cary Betz, P.G. forcement action was incomplete at the time of issuance of the preced­ Designated Chairman ing report; and indicates the status of enforcement action for each case of contamination which is listed. The rules also specify the form and Texas Groundwater Protection Committee content of notices of groundwater contamination that must be mailed Filed: July 20, 2010 to each owner of a private drinking water well that may be affected by ♦ ♦ ♦ documented cases of groundwater contamination and to each applica­ ble groundwater conservation district as directed by TWC, §26.408. PRELIMINARY ASSESSMENT OF WHETHER THE REASONS FOR THE RULES CONTINUE TO EXIST

RULE REVIEW July 30, 2010 35 TexReg 6699 TABLES AND GRAPHICS July 30, 2010 35 TexReg 6701 Comptroller of Public Accounts is based on a percentage of commissions generated, recaptured, and reimbursed back to the Comptroller and the Board. The term of the Certification of the Average Taxable Price of Gas and Oil contract was March 2, 2006 through August 31, 2010. The amendment The Comptroller of Public Accounts, administering agency for the col­ extends the term of the contract through August 31, 2011. lection of the Crude Oil Production Tax, has determined that the av­ TRD-201003952 erage taxable price of crude oil for reporting period June 2010, as re­ Pamela Smith quired by Tax Code, §202.058, is $64.52 per barrel for the three-month Deputy General Counsel for Contracts period beginning on March 1, 2010, and ending May 31, 2010. There­ fore, pursuant to Tax Code, §202.058, crude oil produced during the Comptroller of Public Accounts month of June 2010, from a qualified Low-Producing Oil Lease, is not Filed: July 16, 2010 eligible for exemption from the crude oil production tax imposed by ♦ ♦ ♦ Tax Code, Chapter 202. Notice of Contract Award The Comptroller of Public Accounts, administering agency for the col­ lection of the Natural Gas Production Tax, has determined that the av­ Pursuant to Chapter 2254, Subchapter B, Texas Government Code; and erage taxable price of gas for reporting period June 2010, as required Chapters 403 and 404, Subchapter H, Texas Government Code, the by Tax Code, §201.059, is $3.29 per mcf for the three-month period Comptroller of Public Accounts (Comptroller) announces the award of beginning on March 1, 2010, and ending May 31, 2010. Therefore, the following contract: pursuant to Tax Code, §201.059, gas produced during the month of A contract is awarded to JPMorgan Chase Bank, N.A., 221 W. Sixth June 2010, from a qualified Low-Producing Well, is eligible for 25% Street, Floor 2, Austin, TX 78701-3400. The total contract amount credit on the natural gas production tax imposed by Tax Code, Chapter for the contract is dependent upon usage of automated clearinghouse 201. services by state agencies. The term of the contract is July 12, 2010 Inquiries should be directed to Bryant K. Lomax, Manager, Tax Policy through August 31, 2013. Division, P.O. Box 13528, Austin, Texas 78711-3528. The Comptroller’s Request for Proposals 196e (RFP) related to this TRD-201003908 contract award was published in the March 12, 2010, issue of the Texas Ashley Harden Register (35 TexReg 2215). General Counsel TRD-201003918 Comptroller of Public Accounts Pamela G. Smith Filed: July 14, 2010 Deputy General Counsel for Contracts ♦ ♦ ♦ Comptroller of Public Accounts Filed: July 15, 2010 Notice of Contract Amendment ♦ ♦ ♦ The Comptroller of Public Accounts (Comptroller) announces the amendment of the following contracts: Notice of Intent to Amend Consulting Contract The notice of request for proposals was published in the May 6, 2005, Pursuant to Chapter 2254, Subchapter B, Texas Government Code, the issue of the Texas Register (30 TexReg 2784) (RFP #172e). The No­ Comptroller of Public Accounts (Comptroller) announces this notice of tice of Award was published in the March 17, 2006, issue of the Texas intent to amend and renew the statistician consulting services contract Register (31 TexReg 2291). with Analytical Systems, Inc. The Consultant will advise the Comp­ troller on statistical issues and provide other related services in con­ The contractors provide institutional commission recapture brokerage nection with the Comptroller’s Annual Property Value Study (Study). services to the Comptroller and the Texas Prepaid Higher Education The successful respondent will be expected to begin the performance Tuition Board (Board). of the contract on or about September 1, 2010, or as soon thereafter as Thecontractswereawarded to: practical. 1. Abel Noser Corporation, One Battery Park Plaza, Sixth Floor, New Background: The Comptroller requires highly specialized statistical York, NY 10004. The total amount of the contract is based on a per­ consulting expertise and experience for the services to be provided un­ centage of commissions generated, recaptured, and reimbursed back to der the contract. The Consultant will advise the Comptroller period­ the Comptroller and the Board. The term of the contract was January ically during the year regarding complex statistical and other issues 26, 2006 through August 31, 2010. The amendment extends the term relating to the Study and provide all other reasonably-related services. of the contract through August 31, 2011; and The amended contract amount is not to exceed $45,000.00. The term of the amended contract will be September 1, 2010, through August 2. LJR Recapture Services, a division of BNY ConvergEx Execution 31, 2011. The report will be due on or about August 31, 2011. Solutions LLC, (f/k/a Lynch, Jones & Ryan, Inc.), 1633 Broadway, 48th Floor, New York, NY 10019. The total amount of the contract Current Contract: The current consultant is Analytical Systems, Inc., located at: P.O. Box 656, Castroville, Texas 78009. The total amount

IN ADDITION July 30, 2010 35 TexReg 6703 of this contract is not to exceed $45,000.00. The term of the contract Harold E. Feeney is October 15, 2008 through August 31, 2011. The reports submitted Commissioner under this contract were due on or before August 31, 2011. Credit Union Department Award Procedure: The notice of request for proposals (RFP #189a) Filed: July 21, 2010 was published in the August 1, 2008, issue of the Texas Register (33 ♦ ♦ ♦ TexReg 6185). TRD-201003976 Application to Expand Field of Membership Pamela Smith Notice is given that the following application has been filed with the Deputy General Counsel for Contracts Credit Union Department (Department) and is under consideration: Comptroller of Public Accounts An application was received from First Central Credit Union, Waco, Filed: July 20, 2010 Texas to expand its field of membership. The proposal would permit ♦ ♦ ♦ members of Friends of Consumer Freedom who live, work, worship or attend school in Taylor, Callahan, Eastland, Erath, Hood, Somervell, Office of Consumer Credit Commissioner Johnson, Ellis, Navarro, Limestone, Falls, Bell, Coryell, Lampasas, Notice of Rate Ceilings San Saba, McCulloch, Mills, Comanche, Hamilton, and Bosque Coun­ ties, Texas, to be eligible for membership in the credit union. The Consumer Credit Commissioner of Texas has ascertained the fol­ lowing rate ceilings by use of the formulas and methods described in Comments or a request for a meeting by any interested party relating §§303.003, 303.009, and 304.003, Texas Finance Code. to an application must be submitted in writing within 30 days from the date of this publication. Credit unions that wish to comment on any The weekly ceiling as prescribed by §303.003 and §303.009 application must also complete a Notice of Protest form. The form for the period of 07/26/10 - 08/01/10 is 18% for Con- may be obtained by contacting the Department at (512) 837-9236 or sumer1/Agricultural/Commercial2/credit through $250,000. downloading the form at http://www.tcud.state.tx.us/applications.html. The weekly ceiling as prescribed by §303.003 and §303.009 for the Any written comments must provide all information that the interested period of 07/26/10 - 08/01/10 is 18% for Commercial over $250,000. party wishes the Department to consider in evaluating the application. All information received will be weighed during consideration of the The judgment ceiling as prescribed by §304.003 for the period of merits of an application. Comments or a request for a meeting should 08/01/10 - 08/31/10 is 5.00% for Consumer/Agricultural/Commer­ be addressed to the Credit Union Department, 914 East Anderson Lane, cial/credit through $250,000. Austin, Texas 78752-1699. The judgment ceiling as prescribed by §304.003 for the period of TRD-201003984 08/01/10 - 08/31/10 is 5.00% for Commercial over $250,000. Harold E. Feeney 1Credit for personal, family or household use. Commissioner Credit Union Department 2 Credit for business, commercial, investment or other similar purpose. Filed: July 21, 2010 TRD-201003965 Leslie L. Pettijohn ♦ ♦ ♦ Commissioner Notice of Final Action Taken Office of Consumer Credit Commissioner In accordance with the provisions of 7 TAC §91.103, the Credit Union Filed: July 20, 2010 Department provides notice of the final action taken on the following ♦ ♦ ♦ applications: Credit Union Department Applications to Expand Field of Membership - Approved Application to Amend Articles of Incorporation Baptist Credit Union, San Antonio, Texas - See Texas Register issue dated April 30, 2010. Notice is given that the following application has been filedwiththe Credit Union Department (Department) and is under consideration: The Education Credit Union, Amarillo, Texas - See Texas Register is­ sue dated February 26, 2010. An application for a name change was received from NCI Commu­ nity Development Credit Union, Houston, Texas. The credit union is The Education Credit Union, Amarillo, Texas (#2) - See Texas Register proposing to change its name to Promise Credit Union. issue dated May 28, 2010. Comments or a request for a meeting by any interested party relating Application for a Merger or Consolidation - Approved to an application must be submittedinwritingwithin30daysfromthe CAM Federal Credit Union (Dallas) and America’s Credit Union (Gar­ date of this publication. Any written comments must provide all infor­ land) - See Texas Register issue dated March 26, 2010. mation that the interested party wishes the Department to consider in evaluating the application. All information received will be weighed Application to Amend Articles of Incorporation - Approved during consideration of the merits of an application. Comments or a Winkler County Credit Union, Kermit, Texas - See Texas Register issue request for a meeting should be addressed to the Credit Union Depart­ dated May 28, 2010. ment, 914 East Anderson Lane, Austin, Texas 78752-1699. TRD-201003985 TRD-201003986

35 TexReg 6704 July 30, 2010 Texas Register Harold E. Feeney to comment must be published in the Texas Register no later than the Commissioner 30th day before the date on which the public comment period closes, Credit Union Department which in this case is August 30, 2010. Section 7.075 also requires that Filed: July 21, 2010 the commission promptly consider any written comments received and that the commission may withdraw or withhold approval of an AO if a ♦ ♦ ♦ comment discloses facts or considerations that indicate that consent is Texas Education Agency inappropriate, improper, inadequate, or inconsistent with the require­ ments of the statutes and rules within the commission’s jurisdiction Request for Personal Financial Literacy Materials - High or the commission’s orders and permits issued in accordance with the School Level for the 2010-2011 School Year commission’s regulatory authority. Additional notice of changes to a proposed AO is not required to be published if those changes are made Description. The Texas Education Agency (TEA) is notifying organi­ in response to written comments. zations that personal financial literacy materials for use in high school economics courses may be submitted for review. Approved materials A copy of each proposed AO is available for public inspection at both will be added to the List of Approved Personal Financial Literacy Ma- the commission’s central office, located at 12100 Park 35 Circle, Build­ terials. Personal financial literacy materials previously selected for the ing C, 1st Floor, Austin, Texas 78753, (512) 239-2545 and at the ap­ List of Approved Personal Financial Literacy Materials do not need to plicable regional office listed as follows. Written comments about an be resubmitted for approval. Texas Education Code (TEC), §28.002, AO should be sent to the enforcement coordinator designated for each authorizes the State Board of Education to approve materials for use AO at the commission’s central office at P.O. Box 13087, Austin, Texas in courses meeting a requirement for an economics credit under TEC, 78711-3087 and must be received by 5:00 p.m. on August 30, 2010. §28.025. Written comments may also be sent by facsimile machine to the en­ forcement coordinator at (512) 239-2550. The commission enforce­ Program Requirements. Materials submitted for review may include ment coordinators are available to discuss the AOs and/or the comment any of the following areas of instruction: understanding interest; avoid­ procedure at the listed phone numbers; however, §7.075 provides that ing and eliminating credit card debt; understanding the rights and re­ comments on the AOs shall be submitted to the commission in writing. sponsibilities of renting or buying a home; managing money to make the transition from renting a home to home ownership; starting a small (1) COMPANY: 7-ELEVEN, INC. dba 7-Eleven 26381; DOCKET business; being a prudent investor in the stock market and using other NUMBER: 2010-0727-PST-E; IDENTIFIER: RN102646387; LOCA­ investment options; beginning a savings program and planning for re­ TION: Fort Worth, Tarrant County; TYPE OF FACILITY: convenience tirement; bankruptcy; the types of bank accounts available to con­ store with retail sales of gasoline; RULE VIOLATED: 30 Texas Ad­ sumers and the benefits of maintaining a bank account; balancing a ministrative Code (TAC) §115.245(2) and Texas Health and Safety checkbook; the types of loans available to consumers and becoming a Code (THSC), §382.085(b), by failing to verify proper operation of the low-risk borrower; understanding insurance; and/or charitable giving. Stage II equipment; and 30 TAC §115.245(6) and THSC, §382.085(b), by failing to submit the Stage II vapor recovery system (VRS) test re­ Selection Criteria. Organizations will be responsible for submitting sults; PENALTY: $3,301; ENFORCEMENT COORDINATOR: An­ materials that they wish to be reviewed for consideration for inclusion drea Park, (512) 239-4575; REGIONAL OFFICE: 2309 Gravel Drive, on the List of Approved Personal Financial Literacy Materials.All Fort Worth, Texas 76118-6951, (817) 588-5800. materials submitted for review must satisfy at least one of the areas of instruction in the preceding list and must be submitted with a ver­ (2) COMPANY: Steven M. Sluder dba "A" Affordable Land­ ification of the extent to which the areas are covered in the materials. scaping; DOCKET NUMBER: 2010-0665-LII-E; IDENTIFIER: The verification form may be downloaded from the TEA website at RN105210652; LOCATION: Troup, Smith County; TYPE OF FA­ http://www.tea.state.tx.us/curriculum/social/verify.doc. CILITY: landscaping business; RULE VIOLATED: 30 TAC §30.5(b) and §344.30(a)(2) and the Code, §37.003, by failing to refrain from Materials must be submitted to Rosemary Morrow, Director, Social advertising or representing himself to the public as a holder of a license Studies, Texas Education Agency, Room 3-121, 1701 North Congress or registration unless he possesses a current license or registration; Avenue, Austin, Texas 78701 by 5:00 p.m. (Central Time), Friday, PENALTY: $450; ENFORCEMENT COORDINATOR: Miriam Hall, August 27, 2010, to be considered for inclusion on the List of Approved (512) 239-1044; REGIONAL OFFICE: 2916 Teague Drive, Tyler, Personal Financial Literacy Materials. Texas 75701-3434, (903) 535-5100. TRD-201004002 (3) COMPANY: A-Affordable Vacuum Services and Disposal Site, Cristina De La Fuente-Valadez Inc.; DOCKET NUMBER: 2009-1320-MSW-E; IDENTIFIER: Director, Policy Coordination RN104370440; LOCATION: Houston, Harris County; TYPE OF Texas Education Agency FACILITY: grease trap processing; RULE VIOLATED: 30 TAC Filed: July 21, 2010 §330.203(a) and (b), by failing to meet the conditions regarding the ♦ ♦ ♦ receiving and processing of waste materials; PENALTY: $1,300; ENFORCEMENT COORDINATOR: Keith Frank, (512) 239-1203; Texas Commission on Environmental Quality REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas Agreed Orders 77023-1452, (713) 767-3500. The Texas Commission on Environmental Quality (TCEQ or commis­ (4) COMPANY: Army & Air Force Exchange Service; DOCKET sion) staff is providing an opportunity for written public comment on NUMBER: 2010-0622-PST-E; IDENTIFIER: RN103139325; LO­ the listed Agreed Orders (AOs) in accordance with Texas Water Code CATION: Dallas, Dallas County; TYPE OF FACILITY: data (the Code), §7.075. Section 7.075 requires that before the commission center with emergency generators; RULE VIOLATED: 30 TAC may approve the AOs, the commission shall allow the public an op­ §334.8(c)(4)(A)(vii) and (5)(B)(ii), by failing to renew a delivery portunity to submit written comments on the proposed AOs. Section certificate by submitting a properly completed underground storage 7.075 requires that notice of the proposed orders and the opportunity tank (UST) registration and self-certificationform; and 30TAC §334.8(c)(5)(A)(i) and the Code, §26.3467(a), by failing to make

IN ADDITION July 30, 2010 35 TexReg 6705 available to a common carrier a valid, current delivery certificate; (10) COMPANY: Brownsville Public Utilities Board; DOCKET PENALTY: $8,000; ENFORCEMENT COORDINATOR: Philip NUMBER: 2010-0777-MWD-E; IDENTIFIER: RN102179926; Aldridge, (512) 239-0855; REGIONAL OFFICE: 2309 Gravel Drive, LOCATION: Brownsville, Cameron County; TYPE OF FACILITY: Fort Worth, Texas 76118-6951, (817) 588-5800. wastewater treatment; RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit Number WQ0010397003, Effluent Limitations and (5) COMPANY: Bui Hieu dba Ball Park Shell; DOCKET NUM­ Monitoring Requirements Number 1, and the Code, §26.121(a)(1), by BER: 2010-0637-PST-E; IDENTIFIER: RN104533989; LOCATION: failing to comply with permitted effluent limitations for CBOD, flow, Houston, Harris County; TYPE OF FACILITY: convenience store and TSS; PENALTY: $7,850; ENFORCEMENT COORDINATOR: with retail sales of gasoline; RULE VIOLATED: 30 TAC §115.245(2) Martha Hott, (512) 239-2587; REGIONAL OFFICE: 1804 West and THSC, §382.085(b), by failing to verify proper operation of the Jefferson Avenue, Harlingen, Texas 78550-5247, (956) 425-6010. Stage II equipment, vapor space manifolding, and dynamic back pressure; PENALTY: $4,658; ENFORCEMENT COORDINATOR: (11) COMPANY: Citgo Refining and Chemicals Company, Clinton Sims, (512) 239-6933; REGIONAL OFFICE: 5425 Polk L.P.; DOCKET NUMBER: 2010-0644-AIR-E; IDENTIFIER: Avenue, Suite H, Houston, Texas 77023-1452, (713) 767-0335. RN100238799; LOCATION: Corpus Christi, Nueces County; TYPE OF FACILITY: petroleum refinery; RULE VIOLATED: 30 TAC (6) COMPANY: BOPCO, L.P.; DOCKET NUMBER: 2010-0536­ §101.20(3) and §116.115(b)(2)(F) and (c), Air Permit Number 8778A AIR-E; IDENTIFIER: RN105891543 and RN105892251; LOCA­ and PSD-TX-408M3, Special Condition(SC)Number1, and THSC, TION: Sundown, Hockley County; TYPE OF FACILITY: tank §382.085(b), by failing to prevent unauthorized emissions; PENALTY: batteries; RULE VIOLATED: 30 TAC §116.110(a) and THSC, $7,500; ENFORCEMENT COORDINATOR: Rebecca Johnson, (361) §382.0518(a) and §382.085(b), by failing to obtain authorization 825-3100; REGIONAL OFFICE: 6300 Ocean Drive, Suite 1200, prior to the operation of the AE COE Battery and Waterflood Three Corpus Christi, Texas 78412-5839, (361) 825-3100. Unit and Sun Denton Unit; PENALTY: $2,000; ENFORCEMENT COORDINATOR: John Muennink, (361) 825-3100; REGIONAL (12) COMPANY: Rodney Wayne Winters dba Craftsman Mar­ OFFICE: 5012 50th Street, Suite 100, Lubbock, Texas 79414-3426, ble; DOCKET NUMBER: 2010-0488-AIR-E; IDENTIFIER: (806) 796-7092. RN102561289; LOCATION: Rhome, Wise County; TYPE OF FA­ CILITY: thermoset resin and marble operation; RULE VIOLATED: (7) COMPANY: Brazoria County; DOCKET NUMBER: 2010-0762­ 30 TAC §116.110(a) and THSC, §382.0518(a) and §382.085(b), by PST-E; IDENTIFIER: RN102217312; LOCATION: Angleton, Brazo­ failing to submit an application for renewal prior to the expiration of a ria County; TYPE OF FACILITY: fleet refueling; RULE VIOLATED: New Source Review (NSR) permit and by continuing to operate after 30 TAC §115.245(2) and THSC, §382.085(b), by failing to verify the permit expired; PENALTY: $6,000; ENFORCEMENT COORDI­ proper operation of the Stage II equipment; 30 TAC §115.246(5) NATOR: Heather Podlipny, (512) 239-2603; REGIONAL OFFICE: and THSC, §382.085(b), by failing to maintain Stage II records at 2309 Gravel Drive, Fort Worth, Texas 76118-6951, (817) 588-5800. the station and make them immediately available for inspection; and 30 TAC §115.242(3) and THSC, §382.085(b), by failing to maintain (13) COMPANY: ESSA, INC. dba East Freeway Chevron; DOCKET the Stage II VRS in proper operating condition; PENALTY: $4,425; NUMBER: 2010-0692-PST-E; IDENTIFIER: RN102890324; LOCA­ ENFORCEMENT COORDINATOR: Andrea Park, (512) 239-4575; TION: Houston, Harris County; TYPE OF FACILITY: convenience REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas store with retail sales of gasoline; RULE VIOLATED: 30 TAC 77023-1452, (713) 767-0335. §115.245(2) and THSC, §382.085(b), by failing to verify proper operation of the Stage II equipment; PENALTY: $2,897; ENFORCE­ (8) COMPANY: Bridgestone Municipal Utility District; DOCKET MENT COORDINATOR: Mike Pace, (817) 588-5800; REGIONAL NUMBER: 2010-0248-MWD-E; IDENTIFIER: RN101918001; LO­ OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1452, CATION: Harris County; TYPE OF FACILITY: wastewater treatment; (713) 767-0335. RULE VIOLATED: 30 TAC §305.125(1), Texas Pollutant Discharge Elimination System (TPDES) Permit Number WQ0011835001, In­ (14) COMPANY: Exxon Mobil Corporation; DOCKET NUMBER: terim Effluent Limitations and Monitoring Requirements Number 1, 2010-0448-AIR-E; IDENTIFIER: RN102579307; LOCATION: Bay­ and the Code, §26.121(a)(1), by failing to comply with permitted town, Harris County; TYPE OF FACILITY: petroleum refinery; RULE effluent limits for ammonia-nitrogen (NH3N), carbonaceous biochem­ VIOLATED: 30 TAC §101.20(3) and §116.715(a), NSR Flexible Air ical oxygen demand (CBOD), total suspended solids (TSS), and flow; Permit Number 18287/PSD-TX-730M4, SC Number 1, and THSC, 30 TAC §305.125(17) and TPDES Permit Number WQ0011835001, §382.085(b), by failing to comply with permitted emissions limits; Sludge Provisions, by failing to timely submit the annual sludge report; PENALTY: $40,000; Supplemental Environmental Project (SEP) off­ and 30 TAC §305.125(17) and §319.1 and TPDES Permit Number set amount of $20,000 applied to Houston Regional Monitoring Cor­ WQ0011835001, Monitoring and Reporting Requirements Number 1, poration - HRMC Houston Area Air Monitoring; ENFORCEMENT by failing to timely submit monitoring results at the intervals specified COORDINATOR: Gena Hawkins, (512) 239-2583; REGIONAL OF­ in the permit; PENALTY: $18,340; ENFORCEMENT COORDINA­ FICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1452, (713) TOR: Steve Villatoro, (512) 239-4930; REGIONAL OFFICE: 5425 767-0335. Polk Avenue, Suite H, Houston, Texas 77023-1452, (713) 767-0335. (15) COMPANY: Exxon Mobil Corporation; DOCKET NUMBER: (9) COMPANY:Brownfield Farmers, L.L.C.; DOCKET NUMBER: 2010-0586-AIR-E; IDENTIFIER: RN102450756; LOCATION: 2009-2000-AIR-E; IDENTIFIER: RN104320023; LOCATION: Beaumont, Jefferson County; TYPE OF FACILITY: petroleum re­ Levelland, Hockley County; TYPE OF FACILITY: portable fertilizer finery; RULE VIOLATED: 30 TAC §116.115(b)(2)(F) and (c) and manufacturing plant; RULE VIOLATED: 30 TAC §106.302(5) and §122.143(4), NSR Permit Number 19566, SC Number 1, Federal THSC, §382.085(b), by failing to operate the portable pipe reactor Operating Permit (FOP) Number O-02048, General Terms and Con­ in compliance with permit by rule Registration Number 72949L008; ditions and Special Terms and Conditions Number 11, and THSC, PENALTY: $1,160; ENFORCEMENT COORDINATOR: Todd Hud­ §382.085(b), by failing to comply with permitted emissions limits; dleson, (512) 239-2541; REGIONAL OFFICE: 5012 50th Street, PENALTY: $10,000; SEP offset amount of $5,000 applied to Texas Suite 100, Lubbock, Texas 79414-3426, (806) 796-7092. Air Quality Research Center at Lamar University - Flare Speciation and Air Quality Modeling; ENFORCEMENT COORDINATOR:

35 TexReg 6706 July 30, 2010 Texas Register James Nolan, (512) 239-6634; REGIONAL OFFICE: 3870 Eastex permitted effluent limits for TSS; and 30 TAC §305.125(1) and TPDES Freeway, Beaumont, Texas 77703-1830, (409) 898-3838. General Permit Number TXG110238 Part III Permit Requirements, Section I, General Requirements 7(b), by failing to submit notification (16) COMPANY: Fatima Enterprises, Inc. dba HWY 6 Valero; of effluent violations that deviated from permitted effluent limits by DOCKET NUMBER: 2009-1800-PST-E; IDENTIFIER: more than 40%; PENALTY: $4,550; ENFORCEMENT COORDINA­ RN101850931; LOCATION: Sugar Land, Fort Bend County; TYPE TOR: Jeremy Escobar, (361) 825-3100; REGIONAL OFFICE: 3918 OF FACILITY: convenience store with retail sales of gasoline; RULE Canyon Drive, Amarillo, Texas 79109-4933, (806) 353-9251. VIOLATED: 30 TAC §334.8(c)(4)(A)(vii) and (5)(B)(ii), by failing to timely renew a previously issued delivery certificate by submitting (20) COMPANY: City of Henderson; DOCKET NUMBER: a properly completed UST registration and self-certification form; 2010-0674-MWD-E; IDENTIFIER: RN101612588; LOCATION: 30 TAC §334.8(c)(5)(A)(i) and the Code, §26.3467(a), by failing Rusk County; TYPE OF FACILITY: wastewater treatment; to make available to a common carrier a valid, current delivery RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit Number certificate; 30 TAC §37.815(a) and (b), by failing to demonstrate WQ0010187002, Effluent Limitations and Monitoring Requirements acceptable financial assurance; 30 TAC §334.50(b)(1)(A) and the Number 1, and the Code, §26.121(a), by failing to comply with per­

Code, §26.3475(c)(1), by failing to monitor the USTs for releases; 30 mitted effluent limits for NH3; PENALTY: $4,600; ENFORCEMENT TAC §334.50(b)(2)(A)(i)(III) and the Code, §26.3475(a), by failing COORDINATOR: Samuel Short, (512) 239-5363; REGIONAL OF­ to test the line leak detectors at least once per year for performance FICE: 2916 Teague Drive, Tyler, Texas 75701-3734, (903) 535-5100. and operational reliability; 30 TAC §334.50(d)(1)(B)(ii) and the (21) COMPANY: Knife River Corporation - South; DOCKET Code, §26.3475(c)(1), by failing to conduct reconciliation of detailed NUMBER: 2010-0687-IWD-E; IDENTIFIER: RN102163128; LO­ inventory control records; 30 TAC §334.50(d)(1)(B)(iii)(I) and the CATION: Beaumont, Jefferson County; TYPE OF FACILITY: Code, §26.3475(c)(1), by failing to record the inventory volume ready-mixed concrete plant; RULE VIOLATED: 30 TAC §305.125(1), measurement for regulated substance inputs, withdrawals, and the TPDES General Permit Number TXG110868, Part III, Permit Re­ amount still remaining in the tank each operating day; 30 TAC quirements, Section A, by failing to comply with permit effluent §334.48(c), by failing to conduct effective manual or automatic limits for pH and TSS; and 30 TAC §305.125(1) and (17) and TPDES inventory control procedures for all USTs; 30 TAC §334.8(c)(5)(C), Permit Number TPDES General Permit Number TXG110868, Part by failing to ensure that a legible tag, label, or marking with the UST IV, Standard Permit Conditions 7(f), by failing to timely submit the identification number is permanently applied upon or affixed to either discharge monitoring report; PENALTY: $4,092; ENFORCEMENT the top of the fill tube or to a nonremovable point in the immediate COORDINATOR: Merrilee Hupp, (512) 239-4490; REGIONAL area of the fill tube; 30 TAC §115.245(2) and THSC, §382.085(b), OFFICE: 3870 Eastex Freeway, Beaumont, Texas 77703-1830, (409) by failing to verify proper operation of the Stage II vapor space 898-3838. manifolding and dynamic back pressure; and 30 TAC §115.242(3) and THSC, §382.085(b), by failing to maintain the Stage II VRS in (22) COMPANY: Lake Forest Falls, Inc.; DOCKET NUMBER: proper operating condition; PENALTY: $16,403; ENFORCEMENT 2010-0698-MLM-E; IDENTIFIER: RN101207900; LOCATION: COORDINATOR: Rajesh Acharya, (512) 239-0577; REGIONAL Montgomery County; TYPE OF FACILITY: public water supply OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1452, (PWS); RULE VIOLATED: 30 TAC §291.93(3) and the Code, (713) 767-0335. §13.139(d), by failing to provide a written planning report for a utility possessing a certificate of convenience and necessity that clearly ex­ (17) COMPANY: Federico Mendez, LLC; DOCKET NUMBER: plains how a retail public utility that has exceeded 85% of its capacity 2010-0610-PST-E; IDENTIFIER: RN102783818; LOCATION: will provide the expected service demands to the remaining areas Beeville, Bee County; TYPE OF FACILITY: USTs; RULE VIO­ within the boundaries of its certificated area; 30 TAC §290.42(l), by LATED: 30 TAC §334.7(d)(3), by failing to notify the agency of failingtocompile and maintain a thorough plant operations manual for any change or additional information regarding the UST system; 30 operator review and reference; and 30 TAC §290.39(j), by failing to TAC §334.49(c)(2)(C) and §334.54(c)(1) and the Code, §26.3475(d), notify the executive director prior to making any significant change or by failing to inspect the impressed current cathodic protection sys­ addition to the facility’s production, treatment, storage, pressure main­ tem at least once every 60 days; and 30 TAC §334.49(c)(4)(C) and tenance, or distribution facilities; PENALTY: $269; ENFORCEMENT §334.54(c)(1) and the Code, §26.3475(d), by failing to inspect and COORDINATOR: Stephen Thompson, (512) 239-2558; REGIONAL test the cathodic protection system for operability and adequacy of OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1452, protection; PENALTY: $4,976; ENFORCEMENT COORDINATOR: (713) 767-0335. Philip Aldridge, (512) 239-0855; REGIONAL OFFICE: 6300 Ocean Drive, Suite 1200, Corpus Christi, Texas 78412-5839, (361) 825-3100. (23) COMPANY: Lake Municipal Utility District; DOCKET NUM­ BER: 2010-0643-MWD-E; IDENTIFIER: RN104529615; LOCA­ (18) COMPANY: Dr. Alejandro Garcia II; DOCKET NUMBER: TION: Harris County; TYPE OF FACILITY: wastewater treatment; 2010-0425-EAQ-E; IDENTIFIER: RN105874242; LOCATION: San RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit Number Antonio, Bexar County; TYPE OF FACILITY: proposed medical WQ0014598001, Interim Effluent Limitations and Monitoring Re­ clinic; RULE VIOLATED: 30 TAC §213.4(a)(1), by failing to obtain quirements Numbers 1 and 3, and the Code, §26.121(a)(1), by failing approval of a Water Pollution Abatement Plan; PENALTY: $6,000; to comply with permitted effluent limits for pH and TSS; PENALTY: ENFORCEMENT COORDINATOR: Martha Hott, (512) 239-2587; $3,300; ENFORCEMENT COORDINATOR: Lanae Foard, (512) REGIONAL OFFICE: 14250 Judson Road, San Antonio, Texas 239-2554; REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Hous­ 78233-4480, (210) 490-3096. ton, Texas 77023-1452, (713) 767-0335. (19) COMPANY: GOLDEN SPREAD REDI-MIX, INC.; DOCKET (24) DOCKET NUMBER: 2010-0285-PST-E; IDENTIFIER: NUMBER: 2010-0761-IWD-E; IDENTIFIER: RN100242114; RN102283009; LOCATION: Waxahachie, Ellis County; TYPE OF LOCATION: Amarillo, Potter County; TYPE OF FACILITY: FACILITY: convenience store with retail sales of gasoline; RULE ready-mixed concrete; RULE VIOLATED: 30 TAC §305.125(1), VIOLATED: 30 TAC §334.7(d)(3), by failing to provide an amended TPDES General Permit Number TXG110238 Part III Permit Require­ registration for any change or additional information regarding the ments, Section A, and the Code, §26.121(a), by failing to comply with USTs; 30 TAC §334.49(a) and the Code, §26.3475(d), by failing to

IN ADDITION July 30, 2010 35 TexReg 6707 provide corrosion protection to all underground components of an UST deliver one copy of the consumer confidence report (CCR) to each bill system; 30 TAC §334.8(c)(5)(C), by failing to ensure that a legible paying customer by July 1 of each year and by failing to submit to the tag, label, or marking with the tank number is permanently applied TCEQ by July 1 of each year a copy of the annual CCR and certifica­ upon or affixed to either the top of the fill tube or to a nonremovable tion that the CCR has been distributed to the customers of the facility point in the immediate area of the fill tube for each regulated UST; 30 and that the information in the CCR is correct and consistent with com­ TAC §334.42(i), by failing to inspect all sumps including the dispenser pliance monitoring data; PENALTY: $296; ENFORCEMENT COOR­ sumps, manways, overspill containers, or catchment basins associated DINATOR: Andrea Linson-Mgbeoduru, (512) 239-1482; REGIONAL with the UST system; 30 TAC §§334.10(b), 334.43(3), and 334.52(d), OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1452, by failing to maintain the required UST records and make them imme­ (713) 767-3500. diately available for the inspection; 30 TAC §334.54(b)(2), by failing (29) COMPANY: TOTAL PETROCHEMICALSUSA,INC.; to maintain all piping, pumps, manways, and ancillary equipment in a DOCKET NUMBER: 2010-0525-AIR-E; IDENTIFIER: capped, plugged, locked, and/or otherwise secured manner to prevent RN100212109; LOCATION: La Porte, Harris County; TYPE OF access, tampering, or vandalism; 30 TAC §334.54(d)(2), by failing FACILITY: chemical manufacturing plant; RULE VIOLATED: 30 to ensure that any residue from stored regulated substances which TAC §116.115(c), Air Permit Number 3908B, SC Number 1, and remained in the system did not exceed a depth of 2.5 centimeters at THSC, §382.085(b), by failing to prevent unauthorized emissions; the deepest point and did not exceed 0.3% by weight of the system PENALTY: $10,000; ENFORCEMENT COORDINATOR: Roshon­ at full capacity; and 30 TAC §334.50(b)(2)(A)(i)(III) and the Code, dra Lowe, (713) 767-3500; REGIONAL OFFICE: 5425 Polk Avenue, §26.3475(a), by failing to test the line leak detectors at least once Suite H, Houston, Texas 77023-1452, (713) 767-3500. per year for performance and operational reliability; PENALTY: $14,326; ENFORCEMENT COORDINATOR: Judy Kluge, (817) (30) COMPANY: Valero Refining-Texas, L.P.; DOCKET NUMBER: 588-5800; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, 2010-0390-AIR-E; IDENTIFIER: RN100238385; LOCATION: Texas Texas 76118-6951, (817) 588-5800. City, Galveston County; TYPE OF FACILITY: petroleum refinery; RULE VIOLATED: 30 TAC §115.729(a) and §122.143(4), FOP (25) COMPANY: Natural Gas Pipeline Company of America, Number O-01253, SC Number 1.H.ii., and THSC, §382.085(b), by LLC; DOCKET NUMBER: 2010-0357-AIR-E; IDENTIFIER: failing to operate combustion sources within the firing rates established RN100222736; LOCATION: Chico, Wise County; TYPE OF FA­ during the highly reactive volatile organic compound emission testing; CILITY: natural gas compressor station; RULE VIOLATED: 30 TAC 30 TAC §§101.20(2) and (3), 115.126(1)(B), and 116.715(a), 40 Code §§122.121, 122,133(4), and 122.241(b) and THSC, §382.054 and of Federal Regulations §63.11(b)(6)(ii), Flexible NSR Permit Number §382.085(b), by failing to submit a renewal application at least six 39142 and PSD-TX-822M2, SC Number 12.A. (formerly 13.A.), FOP months prior to the expiration of FOP Number O-00798 and obtain Number O-01253, SC Numbers 1.A. and 30 (formerly 28), and THSC, authorization to operate the emissions sources at the plant; and 30 TAC §382.085(b), by failing to operate flares with a minimum of 300 §122.145(2) and THSC, §382.085(b), by failing to submit a deviation British thermal units per standard cubic feet net heating value for the report; PENALTY: $9,375; ENFORCEMENT COORDINATOR: Re­ gas being combusted by assisted flares; 30 TAC §§101.20(2) and (3), becca Johnson, (361) 825-3100; REGIONAL OFFICE: 2309 Gravel 115.126(1)(B), 116.715(a), and 122.143(4), 40 CFR §63.11(b)(7)(i), Drive, Fort Worth, Texas 76118-6951, (817) 588-5800. Flexible NSR Permit Number 39142 and PSD-TX-822M2, SC Num­ (26) COMPANY: City of Pearsall; DOCKET NUMBER: 2010­ ber 12.A. (formerly 13.A.), FOP Number O-01253, SC Numbers 1.A. 0343-MWD-E; IDENTIFIER: RN103016275; LOCATION: Frio and 30 (formerly 28), and THSC, §382.085(b), by failing to operate County; TYPE OF FACILITY: wastewater treatment plant; RULE Flare FL-1 with a maximum exit velocity of 60 feet per second; 30 VIOLATED: 30 TAC §305.125(1), TPDES Permit Number TAC §§101.20(1) and (2), 111.111(a)(4)(A), and 122.143(4), 40 CFR WQ0010360001, Effluent Limitations and Monitoring Requirements §60.18(c)(1) and §63.11(b)(4), FOP Number O-01253, SC Number Number 1, and the Code, §26.121(a)(1), by failing to comply with 1.A., and THSC, §382.085(b), by failing to operate flares without the permitted effluent limitations for NH3N; PENALTY: $3,025; SEP visible emissions; and 30 TAC §§101.20(2) and (3), 115.112(a)(2)(B), offset amount of $2,420 applied to Texas Association of Resource 116.715(a), and 122.143(4), 40 CFR §63.119(c)(2)(iii), Flexible Conservation and Development Areas, Inc. - Water or Wastewater NSR Permit Number 39142 and PSD-TX-822M2, SC Number Treatment Assistance; ENFORCEMENT COORDINATOR: Martha 4.B., FOP Number O-01253, SC Numbers 1.A. and 30, and THSC, Hott, (512) 239-2587; REGIONAL OFFICE: 14250 Judson Road, §382.085(b), by failing to maintain Group One storage tanks free of San Antonio, Texas 78233-4480, (210) 490-3096. leaks; PENALTY: $233,000; SEP offset amount of $93,200 applied to Houston-Galveston AERCO’s Clean Cities/Clean Vehicles Program; (27) COMPANY: Praxair, Inc.; DOCKET NUMBER: 2010-0743­ ENFORCEMENT COORDINATOR: Trina Grieco, (210) 490-3096; IWD-E; IDENTIFIER: RN102684974; LOCATION: Harris County; REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas TYPE OF FACILITY: air separation plantwithanassociatedwaste­ 77023-1452, (713) 767-3500. water treatment; RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit Number WQ0001173000, Effluent Limitations and Monitoring TRD-201003962 Requirements Number 1, and the Code, §26.121(a), by failing to Kathleen C. Decker comply with permitted effluent limits for total copper; and 30 TAC Director, Litigation Division §205.6 and the Code, §5.702, by failing to pay outstanding general Texas Commission on Environmental Quality permits storm water fees and associated late fees; PENALTY: $1,250; Filed: July 20, 2010 ENFORCEMENT COORDINATOR: Samuel Short, (512) 239-5363; REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas ♦ ♦ ♦ 77023-1452, (713) 767-3500. Notice of Opportunity to Request a Public Meeting for a (28) COMPANY: City of Southside Place; DOCKET NUMBER: 2010­ New Municipal Solid Waste Liquid Waste Processing Facility 0716-PWS-E; IDENTIFIER: RN101178978; LOCATION: Houston, Registration Application Harris County; TYPE OF FACILITY: PWS; RULE VIOLATED: 30 TAC §290.271(b) and §290.274(a) and (c), by failing to mail or directly

35 TexReg 6708 July 30, 2010 Texas Register APPLICATION. City of Fort Stockton, P.O. Box 1000, Fort Stockton, LaDonna Castañuela Texas 79735, has applied to the Texas Commission on Environmental Chief Clerk Quality (TCEQ) for proposed Registration (No. 43028), to operate a Texas Commission on Environmental Quality MSW Type V liquid waste processing facility. The proposed facility, Filed: July 21, 2010 City of Fort Stockton Type V Liquid Waste Processing Facility will be located at 1.5 miles east of FM 1053, 1.7 miles north of I-10, southeast ♦ ♦ ♦ of Santa Fe Railroad and 2 miles northeast of Fort Stockton City Lim­ Notice of Water Quality Applications its within the permit boundary of the City of Fort Stockton Wastewa­ ter Treatment Facility (Texas Pollutant Discharge Elimination System The following notice was issued on July 9, 2010 through July 16, 2010. (TPDES) Permit No. WQ0010708001) in Pecos County, 79735. This The following require the applicants to publish notice in a newspaper. facility is requesting authorization to continue processing liquid waste Public comments, requests for public meetings, or requests for a con­ which includes septage from municipal, commercial institutional and tested case hearing may be submitted to the Office of the Chief Clerk, industrial (personnel domestic sources, grit trap waste and grease trap Mail Code 105, P.O. Box 13087, Austin, Texas 78711-3087, WITHIN waste from municipal, commercial and institutional sources. The reg­ 30 DAYS OF THE DATE OF NEWSPAPER PUBLICATION OF THE istration application is available for viewing and copying at the City of NOTICE. Fort Stockton City Hall, 121 W. 2nd Street, Fort Stockton, Texas 79735 and may be viewed online at http://www.cityfs.net/Home.html. INFORMATION SECTION PUBLIC COMMENT/PUBLIC MEETING. Written public comments DUVAL COUNTY CONSERVATION AND RECLAMATION or written requests for a public meeting must be submitted to the Office DISTRICT has applied for a renewal of TPDES Permit No. of Chief Clerk at the address included in the information section below. WQ0010067001, which authorizes in the Interim phase the disposal Comments may also be received if a public meeting is held on the facil­ of treated wastewater via surface irrigation of 80 acres of non-public ity. A public meeting will be held by the executive director if requested access grassland at a daily average flow not to exceed 200,000 gallons by a member of the legislature who represents the general area where per day and a Final phase discharge of treated domestic wastewater the development is to be located, or if there is a substantial public in­ at a daily average flow not to exceed 250,000 gallons per day. No terest in the proposed development. The purpose of the public meeting discharge of pollutants into waters in the State is authorized in the is for the public to provide input for consideration by the commission, Interim phase. The facility is located approximately 1.5 miles east of and for the applicant and the commission staff to provide information the City of Benavides on the north side of Farm-to-Market Road 2298 to the public. A public meeting is not a contested case hearing. The in Duval County, Texas 78341. executive director will review and consider public comments and writ­ CITY OF DALHART has applied for a renewal of TPDES Permit No. ten requests for a public meeting submitted prior to the notice of final WQ0010099001 which authorizes the discharge of treated domestic determination. The executive director is not required to file a response wastewater at an annual average flow not to exceed 1,500,000 gal­ to comments. lons per day. The facility is located approximately 0.5 mile west of EXECUTIVE DIRECTOR ACTION. The executive director shall, af­ U.S. Highway 87, approximately 2.5 miles southeast of the intersec­ ter review of an application for registration, determine if the applica­ tion of U.S. Highway 54 and U.S. Highway 87 in Hartley County, Texas tion will be approved or denied in whole or in part. If the executive 79022. director acts on an application, the chief clerk shall mail or otherwise LOWER COLORADO RIVER AUTHORITY (LCRA), which oper­ transmit notice of the action and an explanation of the opportunity to ates the LCRA Fayette Power Plant, has applied for a major amendment fileamotiontoreconsider the executive director’s decision. The chief to TPDES Permit No. WQ0002105000 to authorize an increase in the clerk shall mail this notice to the owner and operator, the public interest daily average flow at Phase I from 1,165,000,000 gallons per day to a counsel, to adjacent landowners as shown on the required land owner­ volume not to exceed 1,561,000,000 gallons per day via Outfall 001; ship map and landowners list, and to other persons who timely filed increase in the daily average flow at Phase II from 1,509,000,000 gal­ public comment in response to public notice. Not all persons on the lons per day to a volume not to exceed 1,905,000,000 gallons per day mailing list for this notice will receive the notice letter from the Office via Outfall 001; removal of a technology based limit for selenium at of the Chief Clerk. Outfalls 003 and 301, and removal of Other Requirements, Item No. INFORMATION. Written public comments or requests to be placed 11. The current permit authorizes the discharge of once-through cool­ on the permanent mailing list for this application should be sub­ ing water and previously monitored effluent (PME) (low volume waste mitted to the Office of the Chief Clerk, MC 105, TCEQ, P.O. Box sources, coal pile runoff, truck wash water, storm water from coal pile 13087, Austin, TX 78711-30887 or electronically submitted to runoff pond) at a daily average flow not to exceed 1,165,000,000 gal­ http://www10.tceq.state.tx.us/epic/ecmnts/. Individual members of lons per day during Phase I, and 1,509,000,000 gallons per day during the general public may contact the Office of Public Assistance at Phase II via Outfall 001; cooling water drained from condensers and 1-800-687-4040. General information regarding the TCEQ can be other equipment at a daily average flow not to exceed 2,500,000 gal­ found at our web site at www.tceq.state.tx.us. Further information may lons per day via Outfall 002; low volume waste, coal pile runoff, truck also be obtained from the City of Fort Stockton at the address stated wash water, and storm wastewater from the Coal Pile Runoff Pond on above or by calling Rafael Castillo, City Manager at (432) 336-8525. an intermittent and flow variable basis via Outfall 003; and the low volume waste, truck wash water, and storm water from the Combustion If you need more information about these permit applications or the Byproducts Landfill Pond on an intermittent and flow variable basis via permitting process, please call the TCEQ Office of Public Assistance, Outfall 004. The facility is located adjacent to the south shore of Cedar Toll Free, at 1-800-687-4040. General information about the TCEQ Creek Reservoir, approximately two miles north of State Highway 71, can be found at our web site at www.tceq.state.tx.us. Si desea informa­ and seven miles east of the City of La Grange, Fayette County, Texas ción en Español, puede llamar al 1-800-687-4040. 78945. TRD-201003990 MALIN INTERNATIONAL SHIP REPAIR AND DRYDOCK INC which operates the Malin International Ship Repair and Drydock Plant,

IN ADDITION July 30, 2010 35 TexReg 6709 has applied for a new permit, proposed Texas Pollutant Discharge Elim­ authorizes discharge of settled and equalized wastewater at a daily av­ ination System (TPDES) Permit No. WQ0004902000, to authorize the erage flow not to exceed 3,000 gallons per day via Outfall 001. The discharge of truck and equipment wash rack treated wastewater at a facility is located at 1956 North Park Drive (in the rear of the King- daily average flow not to exceed 140 gallons per day. The facility is wood subdivision) which is about 1.5 miles east of U.S. Highway 59 located 1.3 miles northeast of the intersection of Old Highway 75 and in the City of Kingwood, Montgomery County, Texas 77389. Harborside Drive, Galveston County, Texas 77554. CORPUS CHRISTI COGENERATION LP AND CALPINE OPER­ CITY OF MEMPHIS has applied for a renewal of TPDES Permit No. ATING SERVICES COMPANY INC which own and operate the Cor­ WQ0010220001 which authorizes the discharge of treated domestic pus Christi Cogeneration Plant, have applied for a major amendment to wastewater at a daily average flow not to exceed 326,000 gallons per TPDES Permit No. WQ0004158000 to authorize a revision of Other day. The current permit also authorizes the disposal of treated domestic Requirement No. 10 to authorize continuous chlorination prior to dis­ wastewater via irrigation of 120 acres of non-public access grassland charge via Outfall 001; the removal of Other Requirement No. 2 that adjacent to the plant site. The facility is located approximately one mile requires reporting of daily maximum effluent limitation violations; and southeast of the intersection of State Highway 256 and U.S. Highway the addition of storm water from chemical storage containment areas 287 in Hall County, Texas 79245. to the definition of "low volume waste sources". The current per­ mit authorizes the discharge of low volume waste sources, cooling LOWER COLORADO RIVER AUTHORITY has applied for a re­ tower blowdown, and storm water at a daily average flow not to ex­ newal of TPDES Permit No. WQ0013548001 which authorizes the ceed 11,000,000 gallons per day. The facility is located at 3952 Buddy discharge of treated domestic wastewater at a daily average flow not to Lawrence Drive, approximately 0.75-mile north of Interstate Highway exceed 400,000 gallons per day via irrigation of 130 acres of non-pub­ 37, at the northern end of Buddy Lawrence Drive, in the City of Corpus lic access pastureland from Outfall 001 and the discharge of treated Christi, Nueces County, Texas 78407. wastewater at a volume not to exceed a daily average flow of 350,000 gallons per day from Outfall 002. The combined daily average flow KINDER MORGAN PETCOKE LP which operates the Beaumont Ter­ from both Outfalls shall not exceed 700,000 gallons per day. No dis­ minal, a storage and transfer facility for various bulk commodities, has charge into water in the state is authorized from Outfall 001. The fa­ applied for a new permit, proposed Texas Pollutant Discharge Elim­ cility and disposal site are located at 101 Cool Water Drive, approxi­ ination System (TPDES) Permit No. WQ0004919000, to authorize mately 1.2 miles east-northeast of the intersection of State Highway 95 the discharge of wash water (railcar, truck and other equipment) and and Farm-to-Market Road 1441, and approximately 6 miles north of storm water on an intermittent and flow variable basis via Outfall 001. the City of Bastrop in Bastrop County, Texas 78602. The facility is located at 1399 Carroll Street approximately 1.5 miles southwest of the intersection of U.S. Highway 380 and Washington RHODIA INC which operates an inorganic chemicals plant which pro­ Boulevard in Beaumont, Jefferson County, Texas 77704. The TCEQ duces sulfuric acid and operates a hazardous waste incinerator, has ap­ Executive Director has reviewed this action for consistency with the plied for a major amendment without renewal to TPDES Permit No. Texas Coastal Management Program goals and policies in accordance WQ0000542000 to clarify the compliance period for the attainment of with the regulations of the Coastal Coordination Council, and has de­ water quality-based effluent limitations for cyanide, total lead, and total termined that the action is consistent with the applicable CMP goals zinc to be a total of three-years from the current permit issuance date. and policies. The current permit authorizes the discharge of treated process waste­ water, previously monitored effluent (PME; treated process, inciner­ CITY OF ELECTRA has applied for a renewal of TPDES Permit No. ator scrubber, and gas cooler wastewaters via internal Outfall 101), WQ0010020001, which authorizes the discharge of treated domestic utility wastewater (consisting of equipment and pad washdowns, cool­ wastewater at a daily average flow not to exceed 640,000 gallons per ing tower and boiler blowdown, laboratory sinks and hoods wastewa­ day. The facility is located approximately 2 miles southeast of the in­ ter, and water treatment clarifier sludge), and contaminated storm wa­ tersection of Farm-to-Market Road 1739 and State Highway Loop 477 ter runoff at a daily average flow not to exceed 1,400,000 gallons per in Wichita County, Texas 76360. day in the Current (1st) Phase; and treated process wastewater, PMEs, CITY OF GRAPELAND has applied for a renewal of TPDES Permit utility wastewater, sulfur dioxide (SO2) scrubber blowdown, and con­ No. WQ0010181002, which authorizes the discharge of treated domes­ taminated storm water runoff at a daily average flow not to exceed tic wastewater at a daily average flow not to exceed 300,000 gallons 1,440,000 gallons per day in the Final Phase via Outfall 001. The facil­ per day. The facility is located east of U.S. Highway 287, approxi­ ity is located at 8615 Manchester Street, approximately one-half mile mately 1,000 feet north of the intersection of U.S. Highway 287 and west of the intersection of Manchester Street and Interstate Loop 610, Farm-to-Market Road 2423 in Houston County, Texas 75844. in the City of Houston, Harris County, Texas 77012. BRAZORIA COUNTY MUNICIPAL UTILITY DISTRICT NO. 3 has E.I. DU PONT DE NEMOURS AND COMPANY which operates the applied for a renewal of TPDES Permit No. WQ0012332001, which Corpus Christi Plant, which manufactures industrial organic and in­ authorizes the discharge of treated domestic wastewater at an annual organic chemicals, has applied for a renewal of TPDES Permit No. average flow not to exceed 2,400,000 gallons per day. The facility WQ0001651000, which authorizes the discharge of process wastewa­ is located at 3015 County Road 89A (Old Chocolate Bayou Road), ter, treated domestic wastewater, utility water, treated groundwater, approximately 0.6 mile south of intersection of Rite Road and County laboratory wastewater, dismantling operation wastewater, equipment Road 89A (Old Chocolate Bayou Road), in Pearland, Brazoria County, wash water, and storm water via Outfall 001 at a daily average flow Texas 77584. not to exceed 4,610,000 gallons per day; and hydrostatic test water, noncontact steam condensates, and storm water runoff via Outfall 002 BIG BEND RESORT AND ADVENTURES LLC applied for a re­ on an intermittent and flow variable basis. The facility is located on the newal of TCEQ Permit No. WQ0013652001, which authorizes the south side of State Highway 361, approximately 1.25 miles east of the disposal of treated domestic wastewater at a daily average flow not to intersection of State Highway 361 and State Highway 35, southeast of exceed 80,000 gallons per day via surface irrigation of 75 acres of a the City of Gregory, San Patricio County, Texas 78362. golf course and reclaimed land with provisions to land apply Class A sewage sludge. This permit will not authorize a discharge of pollutants PWT ENTERPRISES INC which operates King Kleen Car Wash, has into waters in the State. The wastewater treatment facility and disposal applied for a renewal of TPDES Permit No. WQ0002642000, which

35 TexReg 6710 July 30, 2010 Texas Register site are located 1/4 mile east of the intersection of State Highway 118 for a group or association, an official representative), mailing address, and State Highway 170 in Brewster County, Texas 79852. daytime phone number, and fax number, if any: (2) applicant’s name and permit number; (3) the statement "[I/we] request a contested case HUDSPETH COUNTY WATER CONTROL AND IMPROVE­ hearing"; and (4) a brief and specific description of how you would be MENT NO. 1 has applied for a renewal of TPDES Permit No. affected by the application in a way not common to the general public. WQ0013858001, which authorizes the discharge of treated domestic You may also submit any proposed conditions to the requested applica­ wastewater at a daily average flow not to exceed 160,000 gallons per tion which would satisfy your concerns. Requests for a contested case day. The facility is located north of and adjacent to the Union Pacific hearing must be submitted in writing to the TCEQ Office of the Chief Right-of-Way, approximately 2.1 miles from its intersection with Clerk at the address provided in the information section below. Ranch Road 1111 in Hudspeth County, Texas 79851. If a hearing request is filed, the Executive Director will not issue the re­ BOSQUE UTILITIES CORPORATION has applied for a renewal of quested permit and may forward the application and hearing request to TPDES Permit No. WQ0014634001 which authorizes the discharge the TCEQ Commissioners for their consideration at a scheduled Com­ of treated domestic wastewater at a daily average flow not to exceed mission meeting. 300,000 gallons per day. The facility will be located approximately one mile south-southeast of the intersection of County Road 1641 and Written hearing requests, public comments or requests for a public County Road 148 in Kaufman County, Texas 75126. meeting should be submitted to the Office of the Chief Clerk, MC 105, TCEQ, P.O. Box 13087, Austin, TX 78711-3087. For information con­ If you need more information about these permit applications or the cerning the hearing process, please contact the Public Interest Counsel, permitting process, please call the TCEQ Office of Public Assistance, MC 103, at the same address. For additional information, individual Toll Free, at 1-800-687-4040. General information about the TCEQ members of the general public may contact the Office of Public As­ can be found at our web site at www.tceq.state.tx.us. Si desea informa­ sistance at 1-800-687-4040. General information regarding the TCEQ ción en Español, puede llamar al 1-800-687-4040. can be found at our web site at www.tceq.state.tx.us. Si desea informa­ TRD-201003989 ción en Español, puede llamar al 1-800-687-4040. LaDonna Castañuela TRD-201003991 Chief Clerk LaDonna Castañuela Texas Commission on Environmental Quality Chief Clerk Filed: July 21, 2010 Texas Commission on Environmental Quality ♦ ♦ ♦ Filed: July 21, 2010 Notice of Water Rights Application ♦ ♦ ♦ Notices issued July 13, 2010 Proposal for Decision APPLICATION NO. 23-986C; Lajitas Capital Partners, LLC, HC 70 The State Office of Administrative Hearings issued a Proposal for De­ Box 400, Lajitas, Texas 79852, Applicant, has applied to amend Cer­ cision and Order to the Texas Commission on Environmental Qual­ tificate of Adjudication No. 23-986 to add a diversion point from a ity on July 16, 2010, in the matter of the Executive Director of the wetwell on Lajitas Island to capture underflow of the Rio Grande, Rio Texas Commission on Environmental Quality, Petitioner v. Clarence Grande Basin, Brewster County. The application and partial fees were Lee Nolan; SOAH Docket No. 582-10-3327; TCEQ Docket No. 2009­ received on May 8, 2008. Additional information and fees were re­ 1347-MLM-E. The commission will consider the Administrative Law ceived on July 9 and October 28, 2009 and February 8 and 19, and Judge’s Proposal for Decision and Order regarding the enforcement ac­ April 29, 2010. The application was declared administratively com­ tion against Clarence Lee Nolan on a date and time to be determined plete and accepted for filing on March 19, 2010. The Executive Di­ by the Office of the Chief Clerk in Room 201S of Building E, 12100 N. rector completed the technical review of the application and prepared Interstate 35, Austin, Texas. This posting is Notice of Opportunity to a draft permit. The draft permit, if granted, would include special con­ Comment on the Proposal for Decision and Order. The comment pe­ ditions including, but not limited to water metering, and notification riod will end 30 days from date of this publication. Written public com­ of Watermaster prior to diversion. The application, technical memo­ ments should be submitted to the Office of the Chief Clerk, MC-105, randa, and Executive Director’s draft permit are available for viewing TCEQ, P.O. Box 13087, Austin, Texas 78711-3087. If you have any and copying at the Office of the Chief Clerk, 12100 Park 35 Circle, questions or need assistance, please contact Melissa Chao, Office of Bldg. F., Austin, TX 78711-3087. Written public comments and re­ the Chief Clerk, (512) 239-3300. quests for a public meeting should be submitted to the Office of the TRD-201003992 Chief Clerk, at the address provided in the information section below LaDonna Castañuela by July 30, 2010. Chief Clerk INFORMATION SECTION Texas Commission on Environmental Quality To view the complete issued notice, view the notice on our web site at Filed: July 21, 2010 www.tceq.state.tx.us/comm_exec/cc/pub_notice.html or call the Office ♦ ♦ ♦ of the Chief Clerk at 512-239-3300 to obtain a copy of the complete notice. When searching the web site, type in the issued date range Texas Health and Human Services Commission shown at the top of this document to obtain search results. Notice of Adopted Nursing Facility Payment Rates for State A public meeting is intended for the taking of public comment, and is Veterans Homes not a contested case hearing. Adopted Rates. As the single state agency for the state Medicaid The Executive Director can consider approval of an application unless program, the Texas Health and Human Services Commission (HHSC) a written request for a contested case hearing is filed. To request a con­ adopts the following per day payment rates for the state-owned veter­ tested case hearing, you must submit the following: (1) your name (or ans nursing facilities for fiscal year (FY) 2010 effective September 1,

IN ADDITION July 30, 2010 35 TexReg 6711 2009: Big Spring, $136.00; Bonham, $136.00; Floresville, $136.00; ♦ ♦ ♦ Temple, $136.00: McAllen, $136.00, El Paso, $136.00 and Amarillo, $136.00. Effective March 1, 2010 the rates adopted are: Big Spring, Notice of Adopted Reimbursement Rates for Non-State $141.00; Bonham, $141.00; Floresville, $141.00; Temple, $141.00: Operated Intermediate Care Facilities for Persons with Mental McAllen, $141.00, El Paso, $141.00 and Amarillo, $141.00. Retardation HHSC conducted a public hearing to receive public comment on the Adopted Rates. Asthesinglestateagency f or the state Medicaid pro­ proposed payment rates for state-owned veterans homes in the nursing gram, the Texas Health and Human Services Commission (HHSC) has facility program operated by the Texas Department of Aging and Dis­ adopted the following per diem reimbursement rates for the non-state ability Services. There were no comments received during this hearing. operated Intermediate Care Facilities for Persons with Mental Retar­ The hearing was held in compliance with Texas Administrative Code dation (ICF/MR) program operated by the Texas Department of Aging Title 1, §355.105(g), which requires public hearings on proposed pay­ and Disability Services (DADS). The public hearing notice was pub­ ment rates. The public hearing was held on June 15, 2010, at 1:00 p.m. lished in the June 4, 2010, issue of the Texas Register (35 TexReg 4745) in the Permian Basin Conference Room of Building H, Braker Center, and the proposed rates were published in the June 25, 2010, issue of the at 11209 Metric Boulevard, Austin, Texas 78758-4021. Texas Register (35 TexReg 5616) Methodology and Justification. The adopted rates were determined Reimbursement rates for the non-state operated ICF/MR program are in accordance with the rate reimbursement setting methodology at 1 adopted to be effective September 1, 2010, as follows: TAC §355.311. TRD-201004006 Steve Aragon Chief Counsel Texas Health and Human Services Commission Filed: July 21, 2010

Methodology and Justification. The adopted rates were deter­ Steve Aragon mined in accordance with the rate setting methodologies codified at Chief Counsel Texas Administrative Code (TAC) Title 1, Chapter 355, Subchap­ Texas Health and Human Services Commission ter A, §355.112, Attendant Compensation Rate Enhancement; and Filed: July 21, 2010 Subchapter D, §355.456, Rate Setting Methodology. These rates were subsequently adjusted in accordance with 1 TAC Chapter 355, ♦ ♦ ♦ Subchapter A, §355.101, Introduction; §355.109, Adjusting Reim­ Notice of Adopted Reimbursement Rates for Nursing Facilities bursement When New Legislation, Regulations or Economic Factors Affect Costs; and Subchapter B, §355.201, Establishment and Ad­ Adopted Rates. As the single state agency for the state Medicaid justment of Reimbursement Rates by the Health and Human Services program, the Texas Health and Human Services Commission (HHSC) Commission. These changes are being made in accordance with a has adopted new diem payment rates for the Nursing Facility program May 17, 2010 letter from the Legislative Budget Board (LBB) and the operated by the Texas Department of Aging and Disability Services Governor’s Office, which informed HHSC of the LBB and Governor’s (DADS). These payment rates were determined in accordance with the revision to the "Spending Reduction Plan for the 2010-2011 Bien­ rate setting methodologies listed below under "Methodology and Justi­ nium" submitted by HHSC in response to the January 15, 2010 letter fication." The public hearing notice was published in the June 4, 2010, from the Governor, Lieutenant Governor, and Speaker requesting a issue of the Texas Register (35 TexReg 4746) and the proposed rates spending reduction proposal. The result of the May 17, 2010 revision were published in the June 25, 2010, issue of the Texas Register (35 is that the rates for the non-state operated ICF/MR program are being TexReg 5617). reduced by one percent effective September 1, 2010. The adopted payment rates, to be effective September 1, 2010, are as TRD-201004004 follows:

35 TexReg 6712 July 30, 2010 Texas Register Facilities participating in the Enhanced Direct Care Staff Rate will re- hanced Direct Care Staff Rate. Enrollment levels are indicated by the ceive one of the following payment rates per day in addition to the number of Licensed Vocational Nurse (LVN) equivalent minutes a fa- above payment rates based upon their level of enrollment in the En- cility is required to provide to avoid recoupment of enhanced funds.

IN ADDITION July 30, 2010 35 TexReg 6713 LVN-equivalent minutes can be provided by Registered Nurses (RNs), LVNs, Medication Aides and/or Certified Nurse Aides.

Facilities that verify liability insurance coverage acceptable to HHSC to the above payment rates based upon the type of liability insurance will receive one of the following payment rates per day in addition coverage they maintain:

Methodology and Justification. The adopted rates were determined in Board (LBB) and the Governor’s Office, which informed HHSC of the accordance with the rate setting methodology at Texas Administrative LBB and Governor’s revision to the "Spending Reduction Plan for the Code (TAC) Title 1, Chapter 355, Subchapter A, §355.307, Reimburse­ 2010-2011 Biennium" submitted by HHSC in response to the January ment Setting Methodology; §355.308, Direct Care Staff Rate Compo­ 15, 2010 letter from the Governor, Lieutenant Governor, and Speaker nent; and §355.312, Reimbursement Setting Methodology - Liability requesting a spending reduction proposal. The result of the May 17, Insurance Costs. These rates were subsequently adjusted in accor­ 2010 revision is that the rates for the Nursing Facility program are be­ dance with 1 TAC Chapter 355, Subchapter A, §355.101, Introduction; ing reduced by one percent effective September 1, 2010. §355.109, Adjusting Reimbursement When New Legislation, Regula­ TRD-201004005 tions or Economic Factors Affect Costs; and Subchapter B, §355.201, Steve Aragon Establishment and Adjustment of Reimbursement Rates by the Health and Human Services Commission. These changes are being made in Chief Counsel accordance with a May 17, 2010 letter from the Legislative Budget Texas Health and Human Services Commission Filed: July 21, 2010

35 TexReg 6714 July 30, 2010 Texas Register ♦ ♦ ♦ 1445 at least 72 hours in advance, so appropriate arrangements can be made. Notice of Award of a Major Consulting Contract TRD-201003996 Pursuant to Chapter 2254, Subchapter B, Texas Government Code, Steve Aragon the Health and Human Services Commission (HHSC) announces the Chief Counsel award of contract 529-06-0425-00043 to Public Consulting Group, an entity with a principal place of business at 148 State Street, 10th Texas Health and Human Services Commission Floor, Boston, Massachusetts 02109. The contractor will provide Rev­ Filed: July 21, 2010 enue Maximization for TANF Emergency Contingency Funds. ♦ ♦ ♦ The total value of the contract with Public Consulting Group is $50,000 Notice of Public Hearing on Proposed Medicaid Payment Rates plus contingency fee. The contract was executed on July 10, 2010 and will expire on April 30, 2011 unless extended or terminated sooner by Hearing. The Texas Health and Human Services Commission (HHSC) the parties. Public Consulting Group will produce numerous docu­ will conduct a public hearing on August 17, 2010, at 1:30 p.m., to re­ ments and reports during the term of the contract, with the final report­ ceive comment on proposed Medicaid payment rates for family plan­ ing due by April 30, 2011. ning providers. The public hearing will be held in the Lone Star Con­ ference Room of HHSC, Braker Center, Building H, located at 11209 TRD-201003948 Metric Boulevard, Austin, Texas. Entry is through Security at the main Steve Aragon entrance of the building, which faces Metric Boulevard. The hearing Chief Counsel will be held in compliance with Human Resources Code §32.0282 and Texas Health and Human Services Commission Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which Filed: July 15, 2010 require public notice of and hearings on proposed Medicaid reimburse­ ♦ ♦ ♦ ments. Proposal. The proposed payment rates for family planning providers Notice of Public Hearing on Proposed Medicaid Payment Rate are proposed to be effective October 1, 2010. Hearing. The Texas Health and Human Services Commission (HHSC) Methodology and Justification. The proposed payment rates were will conduct a public hearing on August 17, 2010, at 1:30 p.m., to re­ calculated in accordance with 1 TAC: ceive comment on proposed Medicaid payment rate for Indian Health Services. The public hearing will be held in the Lone Star Conference §355.8021, which addresses the reimbursement methodology for Room of HHSC, Braker Center, Building H, located at 11209 Met­ durable medical equipment and expendable supplies in home health ric Boulevard, Austin, Texas. Entry is through Security at the main services, entrance of the building, which faces Metric Boulevard. The hearing §355.8085, which addresses the reimbursement methodology for will be held in compliance with Human Resources Code §32.0282 and physicians and certain other practitioners, Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which require public notice of and hearings on proposed Medicaid reimburse­ §355.8093, which addresses the reimbursement methodology for ments. physician assistants, Proposal. The proposed payment rate for Indian Health Services is §355.8121, which addresses the reimbursement methodology for am­ proposed to be effective January 1, 2010. bulatory surgical centers, Methodology and Justification. The proposed payment rate was cal­ §355.8281, which addresses the reimbursement methodology for nurse culated in accordance with 1 TAC §355.8620, which addresses the re­ practitioners and clinical nurse specialists, imbursement methodology for outpatient services provided in Indian §355.8581, which addresses purchased counseling and educational ser­ health services facilities operating under the authority of Public Law vices, 93-638 (Indian Self-Determination and Education Assistance Act). §355.8582, which addresses medical services, Briefing Package. Abriefing package describing the proposed pay­ ment rate will be available on or after August 2, 2010. Interested parties §355.8583, which addresses elective sterilization, and may obtain a copy of the briefing package prior to the hearing by con­ §355.8584, which addresses maximum rates and specific codes. tacting Rate Analysis by telephone at (512) 491-1445; by fax at (512) 491-1998; or by e-mail at [email protected]. The briefing The Legislative Budget Board and the Governor’s Office informed package also will be available at the public hearing. HHSC in a letter dated May 17, 2010, of their revision to the Spending Reduction Plan for the 2010-11 Biennium submitted by HHSC in Written Comments. Written comments regarding the proposed response to the January 15, 2010 letter from the Governor, Lieutenant payment rate may be submitted in lieu of, or in addition to, oral Governor, and Speaker requesting a spending reduction proposal. The testimony until 5:00 p.m. the day of the hearing. Written comments result of this revision is that the reimbursements for these services will may besentbyU.S.mailtothe attentionofRateAnalysis, HHSC, be reduced by one percent for reimbursements on or after September Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas 1, 2010. 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to [email protected]. In addition, written comments may be Briefing Package. Abriefing package describing the proposed pay­ sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail ment rates will be available on or after August 2, 2010. Interested par­ Code H-400, Braker Center, Building H, 11209 Metric Boulevard, ties may obtain a copy of the briefing package prior to the hearing by Austin, Texas 78758-4021. contacting Rate Analysis by telephone at (512) 491-1445; by fax at (512) 491-1998; or by e-mail at [email protected]. The Persons with disabilities who wish to attend the hearing and require briefing package also will be available at the public hearing. auxiliary aids or services should contact Rate Analysis at (512) 491­

IN ADDITION July 30, 2010 35 TexReg 6715 Written Comments. Written comments regarding the proposed result of this revision is that the reimbursements for these services will payment rates may be submitted in lieu of, or in addition to, oral be reduced by one percent for reimbursements on or after September testimony until 5:00 p.m. the day of the hearing. Written comments 1, 2010. may be sent by U.S. mail to the attention of Rate Analysis, HHSC, Briefing Package. Abriefing package describing the proposed pay­ Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas ment rates will be available on or after August 2, 2010. Interested par­ 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to ties may obtain a copy of the briefing package prior to the hearing by [email protected]. In addition, written comments may be contacting Rate Analysis by telephone at (512) 491-1445; by fax at sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail (512) 491-1998; or by e-mail at [email protected]. The Code H-400, Braker Center, Building H, 11209 Metric Boulevard, briefing package also will be available at the public hearing. Austin, Texas 78758-4021. Written Comments. Written comments regarding the proposed Persons with disabilities who wish to attend the hearing and require payment rates may be submitted in lieu of, or in addition to, oral auxiliary aids or services should contact Rate Analysis at (512) 491­ testimony until 5:00 p.m. the day of the hearing. Written comments 1445 at least 72 hours in advance, so appropriate arrangements can be maybesentbyU.S.mailtothe attentionof RateAnalysis, HHSC, made. Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas TRD-201003993 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to Steve Aragon [email protected]. In addition, written comments may be Chief Counsel sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail Texas Health and Human Services Commission Code H-400, Braker Center, Building H, 11209 Metric Boulevard, Filed: July 21, 2010 Austin, Texas 78758-4021. ♦ ♦ ♦ Persons with disabilities who wish to attend the hearing and require auxiliary aids or services should contact Rate Analysis at (512) 491­ Notice of Public Hearing on Proposed Medicaid Payment Rates 1445 at least 72 hours in advance, so appropriate arrangements can be Hearing. The Texas Health and Human Services Commission (HHSC) made. will conduct a public hearing on August 17, 2010, at 1:30 p.m., to TRD-201003994 receive comment on proposed Medicaid payment rates for quarterly Steve Aragon Medicaid fee reviews. The public hearing will be held in the Lone Chief Counsel Star Conference Room of HHSC, Braker Center, Building H, located Texas Health and Human Services Commission at 11209 Metric Boulevard, Austin, Texas. Entry is through Security Filed: July 21, 2010 at the main entrance of the building, which faces Metric Boulevard. The hearing will be held in compliance with Human Resources Code ♦ ♦ ♦ §32.0282 and Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which require public notice of and hearings on proposed Medicaid Notice of Public Hearing on Proposed Medicaid Payment Rates reimbursements. Hearing. The Texas Health and Human Services Commission (HHSC) Proposal. The proposed payment rates for quarterly Medicaid fee re­ will conduct a public hearing on August 17, 2010, at 1:30 p.m., to re­ views are proposed to be effective October 1, 2010. ceive comment on proposed Medicaid payment rates for 1st and 2nd Quarter Healthcare Common Procedure Coding System (HCPCS) up­ Methodology and Justification. The proposed payment rates were dates. The public hearing will be held in the Lone Star Conference calculated in accordance with 1 TAC: Room of HHSC, Braker Center, Building H, located at 11209 Met­ §355.8081, which addresses payments for laboratory and x-ray ser­ ric Boulevard, Austin, Texas. Entry is through Security at the main vices, radiation therapy, physical therapists’ services, physician ser­ entrance of the building, which faces Metric Boulevard. The hearing vices, podiatry services, chiropractic services, optometric services, am­ will be held in compliance with Human Resources Code §32.0282 and bulance services, dentists’ services, psychologists’ services, licensed Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which psychological associates’ services, maternity clinic services, and tu­ require public notice of and hearings on proposed Medicaid reimburse­ berculosis clinic services, ments. §355.8085, which addresses the reimbursement methodology for Proposal. The proposed payment rates for 1st and 2nd Quarter HCPCS physicians and certain other practitioners, updates are proposed to be effective October 1, 2010. §355.8093, which addresses the reimbursement methodology for Methodology and Justification. The proposed payment rates were physician assistants, calculated in accordance with 1 TAC §355.8085, which addresses the reimbursement methodology for physicians and certain other practi­ §355.8281, which addresses the reimbursement methodology for nurse tioners. practitioners and clinical nurse specialists, and The Legislative Budget Board and the Governor’s Office informed §355.8441, which addresses the reimbursement methodology for HHSC in a letter dated May 17, 2010, of their revision to the Spending durable medical equipment and expendable supplies in Early and Reduction Plan for the 2010-2011 Biennium submitted by HHSC in Periodic Screening, Diagnosis, and Treatment (EPSDT) Program response to the January 15, 2010 letter from the Governor, Lieutenant (known in Texas as Texas Health Steps). Governor, and Speaker requesting a spending reduction proposal. The The Legislative Budget Board and the Governor’s Office informed result of this revision is that the reimbursements for these services will HHSC in a letter dated May 17, 2010, of their revision to the Spending be reduced by one percent for reimbursements on or after September Reduction Plan for the 2010-11 Biennium submitted by HHSC in 1, 2010. response to the January 15, 2010 letter from the Governor, Lieutenant Briefing Package. Abriefing package describing the proposed pay­ Governor, and Speaker requesting a spending reduction proposal. The ment rates will be available on or after August 2, 2010. Interested par­

35 TexReg 6716 July 30, 2010 Texas Register ties may obtain a copy of the briefing package prior to the hearing by be reduced by one percent for reimbursements on or after September contacting Rate Analysis by telephone at (512) 491-1445; by fax at 1, 2010. (512) 491-1998; or by e-mail at [email protected]. The Briefing Package. Abriefing package describing the proposed pay­ briefing package also will be available at the public hearing. ment rates will be available on or after August 2, 2010. Interested par­ Written Comments. Written comments regarding the proposed ties may obtain a copy of the briefing package prior to the hearing by payment rates may be submitted in lieu of, or in addition to, oral contacting Rate Analysis by telephone at (512) 491-1445; by fax at testimony until 5:00 p.m. the day of the hearing. Written comments (512) 491-1998; or by e-mail at [email protected]. The may besentbyU.S.mailtothe attentionofRateAnalysis, HHSC, briefing package also will be available at the public hearing. Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas Written Comments. Written comments regarding the proposed 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to payment rates may be submitted in lieu of, or in addition to, oral [email protected]. In addition, written comments may be testimony until 5:00 p.m. the day of the hearing. Written comments sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail maybesentbyU.S.mailto the attentionofRateAnalysis, HHSC, Code H-400, Braker Center, Building H, 11209 Metric Boulevard, Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas Austin, Texas 78758-4021. 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to Persons with disabilities who wish to attend the hearing and require [email protected]. In addition, written comments may be auxiliary aids or services should contact Rate Analysis at (512) 491­ sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail 1445 at least 72 hours in advance, so appropriate arrangements can be Code H-400, Braker Center, Building H, 11209 Metric Boulevard, made. Austin, Texas 78758-4021. TRD-201003995 Persons with disabilities who wish to attend the hearing and require Steve Aragon auxiliary aids or services should contact Rate Analysis at (512) 491­ Chief Counsel 1445 at least 72 hours in advance, so appropriate arrangements can be Texas Health and Human Services Commission made. Filed: July 21, 2010 TRD-201003997 ♦ ♦ ♦ Steve Aragon Chief Counsel Notice of Public Hearing on Proposed Medicaid Payment Rates Texas Health and Human Services Commission Hearing. The Texas Health and Human Services Commission (HHSC) Filed: July 21, 2010 will conduct a public hearing on August 17, 2010, at 1:30 p.m., to ♦ ♦ ♦ receive comment on proposed Medicaid payment rates for nutritional (enteral) products, supplies, and equipment - comprehensive care pro­ Notice of Public Hearing on Proposed Medicaid Payment Rates gram (CCP). The public hearing will be held in the Lone Star Con­ Hearing. The Texas Health and Human Services Commission (HHSC) ference Room of HHSC, Braker Center, Building H, located at 11209 will conduct a public hearing on August 17, 2010, at 1:30 p.m., to re­ Metric Boulevard, Austin, Texas. Entry is through Security at the main ceive comment on proposed Medicaid payment rates for nutritional entrance of the building, which faces Metric Boulevard. The hearing (enteral) products, equipment and supplies - home health. The pub­ will be held in compliance with Human Resources Code §32.0282 and lic hearing will be held in the Lone Star Conference Room of HHSC, Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which Braker Center, Building H, located at 11209 Metric Boulevard, Austin, require public notice of and hearings on proposed Medicaid reimburse­ Texas. Entry is through Security at the main entrance of the building, ments. which faces Metric Boulevard. The hearing will be held in compliance Proposal. The proposed payment rates for nutritional (enteral) prod­ with Human Resources Code §32.0282 and Texas Administrative Code ucts, supplies, and equipment - CCP are proposed to be effective Oc­ Title 1 (1 TAC), §355.201(e) - (f), which require public notice of and tober 1, 2010. hearings on proposed Medicaid reimbursements. Methodology and Justification. The proposed payment rates were Proposal. The proposed payment rates for nutritional (enteral) prod­ calculated in accordance with 1 TAC: ucts, equipment and supplies - home health are proposed to be effective October 1, 2010. Section 355.8021, which addresses the reimbursement methodology for durable medical equipment and expendable supplies in home health Methodology and Justification. The proposed payment rates were services, calculated in accordance with: Section 355.8087, which addresses the reimbursement methodology 1 TAC §355.8021, which addresses the reimbursement methodology for In-Home Total Parenteral Hyperalimentation Services, and for durable medical equipment and expendable supplies in home health services; Section 355.8441, which addresses the reimbursement methodology for durable medical equipment and expendable supplies in Early and 1 TAC §355.8087, which addresses the reimbursement methodology Periodic Screening, Diagnosis, and Treatment (EPSDT) Program for In-Home Total Parenteral Hyperalimentation Services; and (known in Texas as Texas Health Steps). 1 TAC §355.8441, which addresses the reimbursement methodology The Legislative Budget Board and the Governor’s Office informed for durable medical equipment and expendable supplies in Early and HHSC in a letter dated May 17, 2010, of their revision to the Spending Periodic Screening, Diagnosis, and Treatment (EPSDT) Program Reduction Plan for the 2010-11 Biennium submitted by HHSC in (known in Texas as Texas Health Steps). response to the January 15, 2010 letter from the Governor, Lieutenant The Legislative Budget Board and the Governor’s Office informed Governor, and Speaker requesting a spending reduction proposal. The HHSC in a letter dated May 17, 2010, of their revision to the Spending result of this revision is that the reimbursements for these services will Reduction Plan for the 2010-2011 Biennium submitted by HHSC in

IN ADDITION July 30, 2010 35 TexReg 6717 response to the January 15, 2010 letter from the Governor, Lieutenant The Legislative Budget Board and the Governor’s Office informed Governor, and Speaker requesting a spending reduction proposal. The HHSC in a letter dated May 17, 2010, of their revision to the Spending result of this revision is that the reimbursements for these services will Reduction Plan for the 2010-2011 Biennium submitted by HHSC in be reduced by one percent for reimbursements on or after September response to the January 15, 2010 letter from the Governor, Lieutenant 1, 2010. Governor, and Speaker requesting a spending reduction proposal. The result of this revision is that the reimbursements for these services will Briefing Package. Abriefing package describing the proposed pay­ be reduced by one percent for reimbursements on or after September ment rates will be available on or after August 2, 2010. Interested par­ 1, 2010. ties may obtain a copy of the briefing package prior to the hearing by contacting Rate Analysis by telephone at (512) 491-1445; by fax at Briefing Package. Abriefing package describing the proposed pay­ (512) 491-1998; or by e-mail at [email protected]. The ment rates will be available on or after August 2, 2010. Interested par­ briefing package also will be available at the public hearing. ties may obtain a copy of the briefing package prior to the hearing by contacting Rate Analysis by telephone at (512) 491-1445; by fax at Written Comments. Written comments regarding the proposed (512) 491-1998; or by e-mail at [email protected]. The payment rates may be submitted in lieu of, or in addition to, oral briefing package also will be available at the public hearing. testimony until 5:00 p.m. the day of the hearing. Written comments may be sent by U.S. mail to the attention of Rate Analysis, HHSC, Written Comments. Written comments regarding the proposed Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas payment rates may be submitted in lieu of, or in addition to, oral 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to testimony until 5:00 p.m. the day of the hearing. Written comments [email protected]. In addition, written comments may be maybesentbyU.S.mailtothe attentionof RateAnalysis, HHSC, sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas Code H-400, Braker Center, Building H, 11209 Metric Boulevard, 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to Austin, Texas 78758-4021. [email protected]. In addition, written comments may be sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail Persons with disabilities who wish to attend the hearing and require Code H-400, Braker Center, Building H, 11209 Metric Boulevard, auxiliary aids or services should contact Rate Analysis at (512) 491­ Austin, Texas 78758-4021. 1445 at least 72 hours in advance, so appropriate arrangements can be made. Persons with disabilities who wish to attend the hearing and require TRD-201003998 auxiliary aids or services should contact Rate Analysis at (512) 491­ 1445 at least 72 hours in advance, so appropriate arrangements can be Steve Aragon made. Chief Counsel Texas Health and Human Services Commission TRD-201003999 Filed: July 21, 2010 Steve Aragon Chief Counsel ♦ ♦ ♦ Texas Health and Human Services Commission Notice of Public Hearing on Proposed Medicaid Payment Rates Filed: July 21, 2010 Hearing. The Texas Health and Human Services Commission (HHSC) ♦ ♦ ♦ will conduct a public hearing on August 17, 2010, at 1:30 p.m., to Notice of Public Hearing on Proposed Medicaid Payment Rates receive comment on proposed Medicaid payment rates for Total Par­ enteral Nutrition (TPN). The public hearing will be held in the Lone Hearing. The Texas Health and Human Services Commission (HHSC) Star Conference Room of HHSC, Braker Center, Building H, located will conduct a public hearing on August 17, 2010, at 1:30 p.m., to re­ at 11209 Metric Boulevard, Austin, Texas. Entry is through Security ceive comment on proposed Medicaid payment rates for birthing center at the main entrance of the building, which faces Metric Boulevard. services. The public hearing will be held in the Lone Star Conference The hearing will be held in compliance with Human Resources Code Room of HHSC, Braker Center, Building H, located at 11209 Met­ §32.0282 and Texas Administrative Code Title 1 (1 TAC), §355.201(e) ric Boulevard, Austin, Texas. Entry is through Security at the main - (f), which require public notice of and hearings on proposed Medicaid entrance of the building, which faces Metric Boulevard. The hearing reimbursements. will be held in compliance with Human Resources Code §32.0282 and Texas Administrative Code Title 1 (1 TAC), §355.201(e) - (f), which Proposal. The proposed payment rates for TPN are proposed to be require public notice of and hearings on proposed Medicaid reimburse­ effective October 1, 2010. ments. Methodology and Justification. The proposed payment rates were Proposal. The proposed payment rates for birthing center services are calculated in accordance with: proposed to be effective September 1, 2010. 1 TAC §355.8021, which addresses the reimbursement methodology Methodology and Justification. The proposed payment rates were for durable medical equipment and expendable supplies in home health calculated in accordance with: services; 1 TAC §355.8081, which addresses payments for laboratory and x-ray 1 TAC §355.8087, which addresses the reimbursement methodology services, radiation therapy, physical therapists’ services, physician ser­ for In-Home Total Parenteral Hyperalimentation Services; and vices, podiatry services, chiropractic services, optometric services, am­ 1 TAC §355.8441, which addresses the reimbursement methodology bulance services, dentists’ services, psychologists’ services, licensed for durable medical equipment and expendable supplies in Early and psychological associates’ services, maternity clinic services, and tu­ Periodic Screening, Diagnosis, and Treatment (EPSDT) Program berculosis clinic services; and (known in Texas as Texas Health Steps). 1 TAC §355.8085, which addresses the reimbursement methodology for physicians and certain other practitioners.

35 TexReg 6718 July 30, 2010 Texas Register Briefing Package. Abriefing package describing the proposed pay­ no-cost rebasing) will be reduced by one percent effective September ment rates will be available on or after August 2, 2010. Interested par­ 1, 2010, consistent with the May 17, 2010, direction from the LBB and ties may obtain a copy of the briefing package prior to the hearing by the Governor’s Office. The rates are proposedtobeeffectiveSeptem­ contacting Rate Analysis by telephone at (512) 491-1445; by fax at ber 1, 2010. (512) 491-1998; or by e-mail at [email protected]. The Methodology and Justification. The payment rates were calculated briefing package also will be available at the public hearing. in accordance with 1 TAC §355.8052, which addresses the reimburse­ Written Comments. Written comments regarding the proposed ment methodology for Medicaid Inpatient Hospital Services. These payment rates may be submitted in lieu of, or in addition to, oral rates will be reduced one percent on September 1, 2010. testimony until 5:00 p.m. the day of the hearing. Written comments Briefing Package. Abriefing package describing the proposed may be sent by U.S. mail to the attention of Rate Analysis, HHSC, payment rates will be available at http://www.hhsc.state.tx.us/Med­ Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas icaid/programs/rad/RatePackets.html on or after August 11, 2010. 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to Interested parties may obtain a copy of the briefing package [email protected]. In addition, written comments may be prior to the hearing by contacting Rate Analysis by telephone at sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail (512) 491-1445; by fax at (512) 491-1998; or by e-mail at es­ Code H-400, Braker Center, Building H, 11209 Metric Boulevard, [email protected]. The briefing package also will be Austin, Texas 78758-4021. available at the public hearing. Persons with disabilities who wish to attend the hearing and require Written Comments. Written comments regarding the proposed auxiliary aids or services should contact Rate Analysis at (512) 491­ payment rates may be submitted in lieu of, or in addition to, oral 1445 at least 72 hours in advance, so appropriate arrangements can be testimony until 5:00 p.m. the day of the hearing. Written comments made. maybesentbyU.S.mailto the attentionofRateAnalysis, HHSC, TRD-201004000 Rate Analysis, Mail Code H-400, P.O. Box 85200, Austin, Texas Steve Aragon 78708-5200; by fax to Rate Analysis at (512) 491-1998; or by e-mail to Chief Counsel [email protected]. In addition, written comments may be Texas Health and Human Services Commission sent by overnight mail or hand delivered to HHSC Rate Analysis, Mail Filed: July 21, 2010 Code H-400, Braker Center, Building H, 11209 Metric Boulevard, Austin, Texas 78758-4021. ♦ ♦ ♦ Persons with disabilities who wish to attend the hearing and require Notice of Public Hearing on Proposed Medicaid Rate auxiliary aids or services should contact Rate Analysis at (512) 491­ Reductions 1445 at least 72 hours in advance, so appropriate arrangements can be made. Hearing. The Texas Health and Human Services Commission (HHSC) will conduct a public hearing on August 18, 2010, at 1:00 p.m. to re­ TRD-201004003 ceive public comment regarding proposed updates to the reimburse­ Steve Aragon ment methodology for State Fiscal Year 2011 inpatient acute care hos­ Chief Counsel pital reimbursement rates. The two proposed updates to the rates relate Texas Health and Human Services Commission to the no-cost rebasing initiative as well as a one percent reduction to Filed: July 21, 2010 the rebased rates. The public hearing will be held in the Lone Star Con­ ference Room of HHSC, Braker Center, Building H, located at 11209 ♦ ♦ ♦ Metric Boulevard, Austin, Texas. Entry is through Security at the main Public Notice entrance of the building, which faces Metric Boulevard. The hearing will be held in compliance with Human Resources Code §32.0282 and The Texas Health and Human Services Commission (HHSC) an­ the Texas Administrative Code Title 1 (1 TAC), §355.105(g), which nounces its intent to submit Amendment 944, Transmittal Number TX require public notice of and hearings on proposed Medicaid reimburse­ 10-051, to the Texas State Plan for Medical Assistance, under Title ments. XIX of the Social Security Act. The proposed amendment is effective November 1, 2010. Proposal. The first adjustment to the proposed rates relate to the no-cost inpatient hospital rebasing initiative which complies with the The proposed amendment covers certain pharmacy supplies as part of 2010-2011 General Appropriations Act (Article II, HHSC, Rider 68, the home health benefit that may be provided by a licensed pharmacy SB 1, 81st Legislature, Regular Session, 2009). This rider requires provider. These items are associated with chronic conditions, and their HHSC to rebase acute care hospital rates within available funds (at long-term use is medically necessary for the recipient’s health. The no additional cost). Specifically, the legislation requires HHSC to proposed amendment will have no impact on state or federal budgets. update the payment division standard dollar amounts (PDSDAs) and Interested parties may obtain copies of the proposed amendment diagnosis related group (DRG) factors with more recent cost data and or submit written comments by contacting Barbara Dean, Policy to proportionately reduce the PDSDAs within available funds. Analyst, by mail at the Texas Health and Human Services Commis­ In addition, the Legislative Budget Board (LBB) and the Governor’s sion, P.O. Box 13257, H-600, Austin, Texas 78711; by telephone Office informed HHSC in a letter dated May 17, 2010, of their revision at (512) 491-1101; by facsimile at (512) 491-1953; or by e-mail at to the Spending Reduction Plan for the 2010-2011 Biennium submitted [email protected]. Copies of the proposal will also be by HHSC in response to the January 15, 2010 letter from the Gover­ made available for public review at the local offices of the Texas nor, Lieutenant Governor, and Speaker requesting a spending reduc­ Department of Aging and Disability Services. tion proposal. In response to this direction, HHSC proposes to adjust TRD-201003913 payments for inpatient hospital services. The result of this revision is that the payment rates for inpatient hospital services reimbursed un­ der DRG prospective payment system (with the adjustments for the

IN ADDITION July 30, 2010 35 TexReg 6719 Steve Aragon This amendment clarifies that inpatient psychiatric services may be Chief Counsel provided in chemical dependency treatment facilities, in addition to Texas Health and Human Services Commission free standing psychiatric facilities, as substitutes for inpatient acute Filed: July 14, 2010 care services. The Managed Care Organization may provide these ser­ vices in residential settings in lieu of acute care inpatient hospital set­ ♦ ♦ ♦ tings when such services are cost-effective and medically appropriate Public Notice response to the needs of the member. HHSC is requesting that the waiver amendment be approved for the The Texas Health and Human Services Commission (HHSC) in­ period beginning January 1, 2011, and ending August 31, 2012. This tends to submit to the Centers for Medicare and Medicaid Services waiver amendment is expected to result in cost savings for the State for a waiver amendment for the State of Texas Access Reform PLUS each year in the two-year period covering 2011 through 2012. (STAR+PLUS) program, which is a Managed Care waiver program under the authority of §1915(b) of the Social Security Act. The To obtain copies of the proposed waiver application, interested par­ STAR+PLUS waiver renewal has been submitted to CMS and HHSC ties may contact Christine Longoria by mail at Texas Health and Hu­ expects CMS will approve the new two-year period beginning Septem­ man Services Commission, P.O. Box 85200, Mail Code H-620, Austin, ber 1, 2010, and ending August 31, 2012. This amendment will be Texas 78708-5200, phone (512) 491-1152, fax (512) 491-1953, or by submitted following the approved renewal by CMS. e-mail at [email protected]. The program is designed for Texans who are elderly or who have TRD-201004011 a physical or mental disability and qualify for Medicaid due to low Steve Aragon income or Social Security Income eligibility. The purpose of the Chief Counsel waiver is to integrate delivery of acute and long-term care services Texas Health and Human Services Commission through a managed care system. The program serves approximately Filed: July 21, 2010 165,244 aged and disabled Medicaid recipients in Atascosa, Bexar, Comal, Guadalupe, Kendall, Medina, and Wilson Counties (Bexar ♦ ♦ ♦ Service Area); Brazoria, Fort Bend, Galveston, Harris, Montgomery, Department of State Health Services and Waller counties (Harris/Harris Expansion Service Area); Aransas, Bee, Calhoun, Jim Wells, Kleberg, Nueces, Refugio, San Patricio, Licensing Actions for Radioactive Materials and Victoria counties (Nueces Service Area); and Bastrop, Burnet, Caldwell, Hays, Lee, Travis and Williamson counties (Travis Service Area).

35 TexReg 6720 July 30, 2010 Texas Register IN ADDITION July 30, 2010 35 TexReg 6721 35 TexReg 6722 July 30, 2010 Texas Register TRD-201003983 Austin, Texas 78701 Linda Wiegman A representative from TDHCA will explain the planning process and Acting General Counsel receive comments from stakeholders and the general public regard­ Department of State Health Services ing the proposed plan for LIHEAP. A copy of the Draft LIHEAP Filed: July 21, 2010 Plan may be obtained after June 18, 2010, through TDHCA’s web site, http://www.tdhca.state.tx.us/ea.htm or by contacting the Texas ♦ ♦ ♦ Department of Housing and Community Affairs, Community Affairs Texas Department of Housing and Community Division, Energy Assistance Section, P.O. Box 13941, Austin, Texas Affairs 78711-3941, or by phone at (512) 475-1435. NoticeofPublicHearingfortheLow-IncomeHome Energy Anyone may submit comments on the draft plan in written form or Assistance Program State Plan oral testimony at the public hearing. TDHCA must receive written comments no later than 5:00 p.m., Friday, August 13, 2010. Com­ For the Federal Fiscal Year (FFY) beginning October 1, 2010; the Texas ments concerning the draft plan may be submitted via the Internet to: Department of Housing and Community Affairs (TDHCA) anticipates [email protected] or by fax (512) 475-3935 or by mail to receiving federal funds to continue the operation of programs that assist the Texas Department of Housing and Community Affairs, Commu­ very low-income Texans with home energy. In the process of deciding nity Affairs Division, Energy Assistance Section, Attention Cate Tay­ how to use Low-Income Home Energy Assistance Program (LIHEAP) lor, at TDHCA, P.O. Box 13941, Austin, TX 78711-3941. If you have funds, TDHCA solicits public input on the details of the plan. questions regarding the public hearing process or any of the programs As part of the public information, consultation, and public hearing re­ referenced above, please contact TDHCA, Community Affairs Divi­ quirements for LIHEAP, the Community Affairs Division of TDHCA sion, Energy Assistance Section. has posted the proposed plan on the TDHCA internet site and will con­ Individuals who require auxiliary aids or services for this meeting duct a public hearing. In addition to the annual LIHEAP plan, the should contact Ms. Gina Esteves at (512) 475-3943 or Relay Texas at U.S. Department of Health and Human Services (HHS) has recently re­ 1-800-735-2989 at least two days before the meeting so that appropri­ quired all states to submit a Supplement to the state plan which details ate arrangements can be made. how states plan to establish systems and procedures to prevent, detect and correct waste, fraud and abuse. The Supplement will be posted to Non-English speaking individuals who require interpreters for this the TDHCA internet site after Board approval on July 29, 2010. Pri­ meeting should contact Cate Taylor, (512) 475-1435 at least three days marily, the hearing solicits comments on the proposed use and distribu­ before the meeting so that appropriate arrangements can be made. tion of federal fiscal year (FFY) 2011 funds provided under LIHEAP. Personas que hablan español y requieren un intérprete, favor de llamar LIHEAP provides funding for the Weatherization Assistance Program a Jorge Reyes al siguiente número (512) 475-4577 por lo menos tres (WAP) and utility assistance - known as "Comprehensive Energy As­ días antes de la junta para hacer los preparativos apropiados. sistance Program (CEAP)." TRD-201004007 The public hearing has been scheduled as follows: Michael Gerber Executive Director Monday, August 9, 2010, 2:00 p.m. Texas Department of Housing and Community Affairs Room #116, Insurance Annex Building, Filed: July 21, 2010 221 East 11th St. ♦ ♦ ♦

IN ADDITION July 30, 2010 35 TexReg 6723 Notice of Public Hearing on the Section 8 PY 2011 Annual Any objections must be filed with the Texas Department of Insurance, Plan within twenty (20) calendar days from the date of the Texas Regis- ter publication, addressed to the attention of Godwin Ohaechesi, 333 Section 511 of Title V of the Quality Housing and Work Responsibil­ Guadalupe Street, M/C 305-2C, Austin, Texas 78701. ity Act of 1998 (P.L. 205-276) requires the Texas Department of Hous­ ing and Community Affairs (the "Department") to prepare a Plan Year TRD-201003988 (PY) 2011 Annual Plan covering operations of the Section 8 Program. Gene C. Jarmon The Code of Federal Regulations, 24 CFR §903.17, requires that the General Counsel and Chief Clerk Department conduct a public hearing regarding that plan. The Depart­ Texas Department of Insurance ment will hold a public hearing to receive written comments for the Filed: July 21, 2010 development of the Department’s PY 2011 Annual Plan. The hearing will take place at the following time and location: ♦ ♦ ♦ September 15, 2010 Notice of Application by a Small Employer Health Benefit Plan Issuer to be a Risk-Assuming Health BenefitPlanIssuer Texas Department of Housing and Community Affairs Notice is given to the public of the application of the listed small em­ 221 East 11th Street, Room 116 ployer health benefit plan issuer to be a risk-assuming health benefit Austin, Texas 78701 plan issuer under Insurance Code §1501.312. A small employer health benefitplanissuer isdefined by Insurance Code §1501.002(16) as a 1:30 p.m. - 4:30 p.m. health benefit plan issuer offering, delivering, issuing for delivery, or The proposed PY 2011 Annual Plan and all supporting documentation renewing health benefit plans subject to the Insurance Code, Chapter are available to the public for viewing at the Department’s main office, 1501, Subchapters C - H. A risk-assuming health benefit plan issuer 221 East 11th Street, Section 8 Program, Austin, Texas, on weekdays is defined by Insurance Code §1501.301(4) as a small employer health during the hours of 8:00 a.m. until 4:30 p.m. The proposed plan will benefit plan issuer that does not participate in the Texas Health Reinsur­ also be available for viewing on the Department’s website at www.td­ ance System. The following small employer health benefit plan issuer hca.state.tx.us/sec8.htm. has applied to be a risk-assuming health benefitplan issuer: Questions or requests for additional information may be directed to Celtic Insurance Company Willie Faye Hurd, Section 8 Program Manager, Community Affairs The application is subject to public inspection at the offices of the Division at [email protected] or by mail at Section 8 Program, Texas Department of Insurance, Legal Division - Nick Hoelscher, 333 P.O. Box 13941, Austin, Texas 78711-3941, (512) 475-3892. Com­ Guadalupe, Tower I, Room 920, and Austin, Texas. ments must be received by 5:00 p.m. Friday, September 17, 2010. If you wish to comment on the application of Celtic Insurance Com­ Any interested persons unable to attend the hearing may submit their pany to be a risk-assuming health benefit plan issuer, you must submit comments in writing to WillieFayeHurdpriorto thedatescheduled your written comments within 60 days after publication of this notice for the hearing. Individuals who require a language interpreter for the in the Texas Register to Gene C. Jarmon, General Counsel and Chief hearing should contact Willie Faye Hurd at least three (3) days prior to Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box the hearing date. Personas que hablan español y requieren un intérprete, 149104, Austin, Texas 78714-91204. Upon consideration of the ap­ favor de llamar a Jorge Reyes al siguiente número (512) 475-4577 por plication and comments, and a determination that all requirements of lo menos tres días antes de la junta para hacer los preparativos apropi­ law have been met, the Commissioner or his designee may take final ados. action on the applicant’s election to be a risk-assuming health benefit Individuals who require auxiliary aids or services for this hearing plan issuer. should contact Gina Esteves at (512) 475-3943 or Relay Texas at TRD-201003953 1-800-735-2989 at least two (2) days before the scheduled hearing so Gene C. Jarmon that appropriate arrangements can be made. General Counsel and Chief Clerk TRD-201003963 Texas Department of Insurance Michael Gerber Filed: July 19, 2010 Executive Director Texas Department of Housing and Community Affairs ♦ ♦ ♦ Filed: July 20, 2010 Notice of Request for Qualifications for Special Deputy ♦ ♦ ♦ Receivers RFQ-SDR-2010-1 Texas Department of Insurance Purpose of RFQ Company Licensing On or after August 1, 2010, the Texas Department of Insurance ("TDI") will issue RFQ-SDR-2010-1 (the "RFQ") for individuals or legal en­ Application to change the name of BCS LIFE INSURANCE COM­ tities to qualify as "Eligible Applicants", eligible to serve as a Spe­ PANY to 4 EVER LIFE INSURANCE COMPANY, a foreign life, ac­ cial Deputy Receiver ("SDR") for receiverships under Texas Insurance cident and/or health company. The home office is in Oakbrook Terrace, Code Chapter 443. As described in the RFQ, an SDR performs duties Illinois. assigned by the Commissioner of Insurance ("Commissioner"), in his Application to change the name of CATHOLIC KNIGHTS to capacity as Receiver. CATHOLIC FINANCIAL LIFE, a foreign fraternal benefitsociety. Application Form The home office is in Milwaukee, Wisconsin. The RFQ and application forms will be published on the TDI website on or about August 1, 2010 at: http://www.tdi.state.tx.us/lorc/sdrcon­

35 TexReg 6724 July 30, 2010 Texas Register tractadmn.html. Further information regarding the RFQ will be avail­ announcement is for a qualified polygraph examiner in the commercial able on TDI’s website at this address. field. Approval Process Interested persons may download the application from the Department website at: www.license.state.tx.us. Applicants may also request an Applications must meet all requirements of the RFQ to be considered. application from the Texas Department of Licensing and Regulation Applications will be reviewed by the Commissioner’s staff, and evalu­ by telephone (512) 463-6599, FAX (512) 475-2874 or email advi­ ated on the basis of the criteria in the RFQ. Once approved, an Eligible [email protected]. Applicants may be asked to appear Applicant may be eligible to submit bids in the event that one or more for an interview; however any required travel for an interview would Requests for Proposals for an SDR are issued during the term of the be at the applicant’s expense. RFQ. The term of the RFQ will end August 31, 2013, unless extended by the Commissioner. All approvals of Eligible Applicants under the TRD-201004009 RFQ will terminate on August 31, 2013, unless the term is extended by William H. Kuntz, Jr. the Commissioner. Executive Director Rights and Obligations Texas Department of Licensing and Regulation Filed: July 21, 2010 TDI is not responsible for any costs incurred in responding to this RFQ, and reserves the right to accept or reject any or all applications. TDI ♦ ♦ ♦ is under no obligation to award a contract on the basis of the RFQ. Texas Department of Motor Vehicles TDI reserves the right to issue other RFQs for SDRs, or for any other services in connection with insurance receiverships, at the Commis­ Request for Proposal - Professional Services sioner’s discretion. The issuance of the RFQ does not limit any of the The Texas Department of Motor Vehicles (TxDMV) announces a Re­ Commissioner’s rights under the Texas Insurance Code in connection quest for Proposal (RFP) for professional services pursuant to Govern­ with the selection and appointment of any SDR. ment Code, Chapter 2254, Subchapter A. The TxDMV will administer Contact Information the contract, and the contract term will be from contract execution to November 30, 2010, with an option to renew for two additional six Any requests for information should be directed to Lewis Wright, Fi­ (6)-month periods. The RFP will be released on July 30, 2010. nancial Program - SDR Process, Texas Department of Insurance, P.O. Box 149104, Mail Code 305-2A, Austin TX 78714, telephone (512) Purpose: The TxDMV is seeking a qualified Certified Public Ac­ 322-3463, e-mail [email protected]. counting (CPA) firm to provide accounting services in preparing the agency’s Annual Financial Statements for the year ending August 31, TRD-201004001 2010. Government Code, §2101.011 requires that state agencies file all Gene C. Jarmon annual financial reports no later than November 20 of each year. General Counsel and Chief Clerk Texas Department of Insurance The Annual Financial Report shall be prepared in accordance with Filed: July 21, 2010 Government Code, §2101.011 and the requirements of the Texas Comptroller of Public Accounts’ (Comptroller’s) "Reporting Re­ ♦ ♦ ♦ quirements for Annual Financial Reports of State Agencies and Texas Department of Licensing and Regulation Universities" at https://fmx.cpa.state.tx.us/fmx/pubs/afrrptreq/09/afr­ rptreq_2009_complete.pdf. This manual is available in July 2010 to Vacancy on the Polygraph Advisory Committee facilitate statewide reporting and to assist agencies in posting year-end adjusting entries for reconciling their annual financial data to the The Texas Department of Licensing and Regulation (Department) an­ Uniform Statewide Accounting System (USAS) and to each agency’s nounces a vacancy on the Polygraph Advisory Committee established accounting system. by Texas Occupations Code, Chapter 1701. The purpose of the Poly­ graph Advisory Committee (Committee) is to advise the Texas Com­ Additionally, the awarded firm shall prepare and submit an Annual Re­ mission of Licensing and Regulation (Commission) and the Depart­ port of Nonfinancial Data, which includes nonfinancial schedules pre­ ment on: educational requirements for a polygraph examiner; the con­ viously included in the Annual Financial Report, in accordance with tent of licensing examination; technical issues related to a polygraph Government Code, §2101.0115 and the Comptroller’s "Instructions for examination; the specific offenses for which a conviction would con­ Completing the Annual Report of Nonfinancial Data," published by the stitute grounds for the department to take action under Section 53.021; Governor’s Office, at http://www.governor.state.tx.us/files/bpp/Nonfi­ and administering and enforcing Chapter 1701. nancial_Data_Report_Instructions-12-7.pdf. The Committee is composed of five members appointed by the pre­ Eligible Applicants: Eligible applicants include, but are not limited siding officer of the Commission, with the Commission’s approval. to, qualified Certified Public Accounting (CPA) firms with the demon­ The advisory board consists of the following members: two polygraph strated ability and legal standing to practice in Texas. examiner members who are qualified polygraph examiners for a gov­ Review and Award Criteria: Each proposal will first be screened for ernmental law enforcement agency; two polygraph examiner members completeness and timeliness. Proposals that are deemed incomplete or who are qualified polygraph examiners in the commercial field; and one arrive after the deadline will not be reviewed. A team of TxDMV re­ member who represents the public. A member must have been a United viewers will evaluate the proposals as to each accounting firm’s compe­ States citizen and a resident of this state for at least two years before the tence, knowledge, qualifications, and reasonableness of the proposed date of appointment. A polygraph examiner member must be actively fee for the services. The criteria and review process are further de­ engaged as a polygraph examiner on the date of appointment. Two scribedinthe RFP. committee members may not be employed by the same person. Mem­ bers serve terms of six years, with the terms of one or two members, as Deadlines: The TxDMV must receive proposals prepared according to appropriate, expiring on February 1 of each odd-numbered year. This instructions in the RFP package on or before August 16, 2010 at 3:00 p.m., Central Time.

IN ADDITION July 30, 2010 35 TexReg 6725 To ObtainaCopyofthe RFP: Submit requests for a copy of the phone at (512) 936-7120 or toll-free at 1-888-782-8477. Hearing and RFP to Nancy McCallum, Purchasing, Texas Department of Motor speech-impaired individuals with text telephone (TTY) may contact Vehicles, 4000 Jackson Avenue, Austin, Texas 78731. Alternately, the commission at (512) 936-7136 or use Relay Texas (toll-free) 1-800­ please contact Nancy McCallum by e-mail [email protected], 735-2989. All comments should reference Docket Number 38465. telephone (512) 467-3973 or fax (512) 302-2040. Copies will also TRD-201003959 be available on the Electronic State Business Daily (ESBD) at Adriana A. Gonzales http://esbd.cpa.state.tx.us/. Rules Coordinator TRD-201003979 Public Utility Commission of Texas Brett Bray Filed: July 19, 2010 General Counsel Texas Department of Motor Vehicles ♦ ♦ ♦ Filed: July 20, 2010 Notice of Application for Service Provider Certificate of ♦ ♦ ♦ Operating Authority Public Utility Commission of Texas Notice is given to the public of the filing with the Public Utility Commission of Texas of an application on July 16, 2010, for a service Notice of Application for Amendment to Service Provider provider certificate of operating authority (SPCOA), pursuant to Certificate of Operating Authority §§54.151 - 54.156 of the Public Utility Regulatory Act (PURA). Notice is given to the public of the filing with the Public Utility Com­ Docket Title and Number: Application of 1st Choice Communications mission of Texas of an application on July 20, 2010, for amendment to for a Service Provider Certificate of Operating Authority, Docket Num­ service provider certificates of operating authority (SPCOAs), pursuant ber 38466. to §§54.151 - 54.155 of the Public Utility Regulatory Act (PURA). Applicant intends to provide resale-only telecommunications services. Docket Title and Number: Application of Birch Telecom of Texas, Ltd. LLP d/b/a Birch Communications and Ionex Communications South, Applicant’s requested SPCOA geographic area includes the entire state Inc. d/b/a Birch Communications for Amendment to Service Provider of Texas. Certificates of Operating Authority, Docket Number 38473. Persons who wish to comment upon the action sought should contact Applicants seek to amend SPCOA Numbers 60400 and 60008 to reflect the Public Utility Commission of Texas by mail at P.O. Box 13326, a pro forma internal corporate reorganization. Austin, Texas 78711-3326, or by phone at (512) 936-7120 or toll free at 1-888-782-8477 no later than August 6, 2010. Hearing and speech- Persons who wish to comment upon the action sought should contact impaired individuals with text telephone (TTY) may contact the com­ the Public Utility Commission of Texas by mail at P.O. Box 13326, mission at (512) 936-7136 or toll free at 1-800-735-2989. All com­ Austin, Texas 78711-3326, or by phone at (512) 936-7120 or toll free at ments should reference Docket Number 38466. 1-888-782-8477 no later than August 6, 2010. Hearing and speech-im­ TRD-201003960 paired individuals with text telephone (TTY) may contact the commis­ sion at (512) 936-7136 or toll free at 1-800-735-2989. All comments Adriana A. Gonzales should reference Docket Number 38473. Rules Coordinator Public Utility Commission of Texas TRD-201004008 Filed: July 19, 2010 Adriana A. Gonzales Rules Coordinator ♦ ♦ ♦ Public Utility Commission of Texas Notice of Application for Service Provider Certificate of Filed: July 21, 2010 Operating Authority ♦ ♦ ♦ Notice is given to the public of the filing with the Public Utility Notice of Application for Service Area Exception Commission of Texas of an application on July 16, 2010, for a service provider certificate of operating authority (SPCOA), pursuant to Notice is given to the public of the filing with the Public Utility Com­ §§54.151 - 54.156 of the Public Utility Regulatory Act (PURA). mission of Texas of an application on July 15, 2010, for an amendment to certificated service area for a service area exception within Houston Docket Title and Number: Application of WiMacTel, Inc. for a Service County, Texas. Provider Certificate of Operating Authority, Docket Number 38467. Docket Style and Number: Application of Houston County Electric Applicant intends to provide facilities-based and resold telecommuni­ Cooperative, Inc. to Amend a Certificate of Convenience and Ne­ cations services. cessity for Electric Service Area Exception within Houston County. Applicant’s requested SPCOA geographic area includes the entire state Docket Number 38465. of Texas. The Application: Houston County Electric Cooperative, Inc. (HCEC) Persons who wish to comment upon the action sought should contact filed an application for a service area boundary exception to allow the Public Utility Commission of Texas by mail at P.O. Box 13326, HCEC to provide service to a specific customer located within the cer­ Austin, Texas 78711-3326, or by phone at (512) 936-7120 or toll free at tificated service area of Oncor Electric Delivery Co., LLC (Oncor). 1-888-782-8477 no later than August 6, 2010. Hearing and speech-im­ Oncor has provided a letter of concurrence for the proposed change. paired individuals with text telephone (TTY) may contact the commis­ Persons wishing to comment on the action sought or intervene should sion at (512) 936-7136 or toll free at 1-800-735-2989. All comments contact the Public Utility Commission of Texas no later than August should reference Docket Number 38467. 6, 2010 by mail at P.O. Box 13326, Austin, Texas 78711-3326, or by TRD-201003961

35 TexReg 6726 July 30, 2010 Texas Register Adriana A. Gonzales Texas Department of Transportation Rules Coordinator Public Notice - Disadvantaged Business Enterprise Goals Public Utility Commission of Texas Fiscal Year 2011 Filed: July 19, 2010 ♦ ♦ ♦ Date of Notice: July 30, 2010 In accordance with Title 49, Code of Federal Regulations, Part 26, re­ Notice of Application for Waiver of P.U.C. Substantive Rule cipients of federal-aid funds authorized by the Transportation Equity §25.107 Act for the 21st Century (TEA 21) are required to establish Disadvan­ Notice is given to the public of an application filed with the Public taged Business Enterprise (DBE) programs. Title 49, C.F.R. §26.45 re­ Utility Commission of Texas (commission) on July 13, 2010 for waiver quires the recipients of federal funds, including the Texas Department of the requirements of P.U.C. Substantive Rule §25.107(f) and (k). of Transportation (department), to set overall goals for DBE participa­ tion in U.S. Department of Transportation assisted contracts. As part Docket Style and Number: Application of Clearview Electric Inc. for of this goal-setting process, the department is publishing this notice to Waiver of P.U.C. Substantive Rule §25.107, Docket Number 38446. inform the public of the proposed overall goals, and to provide instruc­ The Application: On July 13, 2010, Clearview Electric, Inc. tions on how to obtain copies of documents explaining the rationale for (Clearview) filed a request with the commission for waiver of the each goal. requirements of P.U.C. Substantive Rule §25.107(f) and (k). New The proposed Fiscal Year 2011 DBE goals are 12.2% for highway de­ P.U.C. Substantive Rule §25.107, Certification of Retail Electric sign and construction, 11.7% for aviation design and construction, and Providers (REPs), which became effective on May 21, 2009, estab­ 1.57% for public transportation. The proposed goals and goal-setting lished additional financial, technical and managerial requirements for methodology for each is available for inspection between the hours of REPs. 8:00 a.m. and 5:00 p.m., Monday through Friday, for thirty (30) days Specifically, Clearview requests a waiver of both P.U.C. Substantive following the date of this notice. The information may be viewed in Rule §25.107(f) and (k) so that it may continue to operate although the office of the Texas Department of Transportation, Office of Civil it cannot at this time meet the new financial requirements as required Rights, 200 East Riverside Drive, Austin, Texas 78704. under P.U.C. Substantive Rule §25.107(f). In addition, Clearview re­ Office of Civil Rights staff will also be available at a public comment quests administrative processing of its application. meeting on August 17, 2010, from 1:00 p.m. to 3:00 p.m. at the Persons who wish to intervene in the proceeding or comment upon the Texas Department of Transportation, Office of Civil Rights, 200 East action sought should contact the Public Utility Commission of Texas, Riverside Drive, Austin, Texas 78704. Department staff will provide P.O. Box 13326, Austin, Texas 78711-3326, or call the Commission’s an overview of the goal-setting process and the FY 2011 DBE Goal Office of Customer Protection at (512) 936-7120 or (888) 782-8477. Methodology. The public is invited to present oral or written comments Hearing and speech-impaired individuals with text telephones (TTY) at the meeting. Oral comments will be limited to two (2) minutes for may contact the commission at (512) 936-7136 or use Relay Texas each person who comments. This comment time may be extended if (toll-free) 1-800-735-2989. All correspondence should refer to Docket the number of persons who wish to comment can do so within the time Number 38446. allowed for this meeting. TRD-201003958 The department will accept written comments on the DBE goals at the Adriana A. Gonzales meeting and for forty five (45) days from the date of this notice. Com­ ments may be sent to Eli Lopez, Office of Civil Rights, 125 East 11th Rules Coordinator Street, Austin, Texas 78701; (512) 486-5511; Fax: (512) 486-5509; Public Utility Commission of Texas email: [email protected]. Filed: July 19, 2010 TRD-201004010 ♦ ♦ ♦ Leonard Reese South East Texas Regional Planning Commission Associate General Counsel Texas Department of Transportation Air Quality Analysis - Request for Proposals Rescinded Filed: July 21, 2010 The Request for Proposal (RFP) notification as published in the July 23, 2010, issue of the Texas Register (35 TexReg 6590) is hereby rescinded. ♦ ♦ ♦ The South East Texas Regional Planning Commission (SETRPC) pre­ Texas Water Development Board viously issued the RFP in the June 4, 2010, issue of the Texas Register Request for StatementofQualifications for Brackish Resources (35 TexReg 4763) and the proposals received on or before 12:00 p.m. Aquifer Characterization System Projects on July 9, 2010 will be evaluated for the selection of the consultant. Pursuant to 31 Texas Administrative Code §355.3, the Texas Water If any questions arise concerning this matter, please feel free to contact Development Board (TWDB) requests the submission of Statement of Bob Dickinson, Director, Transportation and Environmental Resources Qualifications leading to the possible award of contracts for research Division, at (409) 899-8444 ext. 7520. on Brackish Resources Aquifer Characterization System (BRACS) TRD-201003987 projects. Guidelines for Statement of Qualifications, which include an Bob Dickinson application form and more detailed research topic information, will be Director supplied by the TWDB upon request. South East Texas Regional Planning Commission BACKGROUND. Filed: July 21, 2010 Texas has a wealth of brackish groundwater in its 30 designated ♦ ♦ ♦ aquifers. However, one of the more challenging issues--and a potential

IN ADDITION July 30, 2010 35 TexReg 6727 roadblock to the development of brackish groundwater desalination * Provide a digital copy of the populated database to TWDB on com­ in the state--is the lack of detailed information on aquifer sections pact disc (CD) or digital video disc (DVD). containing brackish water. Project 2: Locate and Acquire Digital Geophysical Well Logs and To address this information gap, TWDB requested and re­ Conduct Data Entry of Attributes (up to $300,000). ceived funding from the 81st Texas Legislature in 2009 to im­ The basis for mapping and characterizing the brackish aquifers will be plement a program to systematically map and characterize the existing geophysical well logs and water quality information. TWDB brackish sections of the aquifers on a statewide basis (BRACS; requires a statewide coverage of at least 30,000 digital geophysical well http:www.twdb.state.tx.us/iwt/bracs.asp). logs for the purpose of defining brackish aquifer characteristics. For BRACS seeks to build on and extend TWDB’s 2003 study by mapping this project, TWDB will provide the Contractor with: and characterizing the major and minor brackish aquifers in greater * a list of prioritized counties in the state for the acquisition of the detail; building replicable numerical groundwater flow models to es­ geophysical data and timate aquifer productivity and study aquifer behavior under pumping conditions; and developing parameter-screening tools to help commu­ * a fully developed Microsoft Access relational database into which nities assess the viability of brackish groundwater as a source of water geophysical log attribute information will be entered. supply for desalination. For this project, the Contractor will: PROJECTS. 1. Select and provide geophysical well logs that meet the project cri­ As part of the effort to better characterize brackish aquifers in Texas, teria listed below. TWDB is soliciting Statements of Qualifications for the following * Well density: Approximately one geophysical well log per grid cell. projects. A grid cell equals 2.5 minutes of latitude and longitude and is the same Project 1: Develop a bibliography of existing literature relevant as the state well numbering system defined by TWDB for water wells. to the Brackish Resources Aquifer Characterization System Approximately 30,000 grid cells in the state contain at least one oil, (BRACS) program (up to $100,000). gas, or Class II injection well. The foundation of any scientific project is a thorough literature review. * Log type: Geophysical well logs with resistivity tools (induction, However, before a literature review can be conducted, a comprehensive laterolog, spontaneous potential, etc.) are preferred. In some areas of survey of publications and information related to the research topic--a the state, these log types are not available for the depth range needed literature search--needs to be undertaken and a bibliography developed. for the project. In such instances, with the prior approval of TWDB, This is the goal of the proposed project. other types of geophysical well logs may be substituted for resistivity logs. For BRACS, the primary reason for conducting a literature review is to identify data sources that researchers have used in the past and to * Start depth: To allow TWDB staff to characterize the shallow use relevant information in the published literature to better map and aquifers, geophysical well logs starting at depths of 200 feet or less, characterize the brackish aquifers. below ground surface, are preferred. Extensive lists of aquifer-related literature have already been compiled * Well location information: Preference should be given to wells with by TWDB (groundwater study reports and the Groundwater Availabil­ a full 10 digit American Petroleum Institute (API) number, wells with ity Modeling (GAM) program) and by other entities (for example, the latitude and longitude coordinates, or wells with a full location de­ U.S. Geological Survey and the Bureau of Economic Geology). Many scription that includes abstract, block, section, and feet measurements of these bibliographies are typically limited to studies on the fresh water within a section. sections of the aquifers. For BRACS, these bibliographies are inade­ * Confidentiality: State law requires that data gathered for this project quate because of the scope of the program which extends beyond the cannot be confidential and must be made available for use in the pub­ fresh water limits of aquifers to areas containing brackish water. lic domain. Accordingly, the geophysical well logs acquired must not A key benefit of this project will be the compilation of all available have a confidentiality clause. information into one searchable data set. 2. Provide digital TIFF (Tagged Image File Format) image files for The goal of the BRACS bibliography project is to compile a compre­ each geophysical well log. hensive list of references for the major and minor aquifers in the state * Geophysical well logs will be scanned in black and white if the orig­ from which a literature review for an aquifer can be developed as work inal paper log is black and white. Color logs will be scanned in color. on the aquifer is initiated. * All scanned digital images provided to TWDB must be legible. For the BRACS bibliography, the Contractor will: * At a minimum, geophysical well logs will be scanned at a resolution * Compile a comprehensive list of references for the major and mi­ of 400 dpi (dots per inch). nor aquifers in the state using existing bibliographies developed for the GAM projects and other relevant literature published in journals, * The entire paper well log document shall be scanned and converted books, conference proceedings, government agency reports, theses and into a TIFF image. dissertations, electronic journals and databases, scientific magazines, * The digital file must be named in accordance with specifications pro­ and indexes and abstracts. The bibliography will, among other things, vided by TWDB. Typically, the name will be the 10 digit API number include references to works on geology, geophysics, geochemistry, hy­ for the well. drology, and other pertinent topics that may be of relevance to the major and minor aquifers in Texas and to the goals of BRACS. * The digital data will be copied to media suitable to the TWDB such as compact disc or digital video disc. * Enter the information into a digital database such as a bibliographic management software system (for example, EndNote, ProCite, or Ref­ erence Manager) that will be assessed and acquired by the Contractor.

35 TexReg 6728 July 30, 2010 Texas Register 3. Enter geophysical well log attributes into a Microsoft Access rela­ qualification review. However, invitation for oral presentation is not tional database that will be provided to the contractor by TWDB for an indication of probable selection. Up to 100 percent funding may be the project. The attributes to be entered may include: provided to individual applicants; however, applicants are encouraged to contribute matching funds or services. In the event that acceptable * well identification information (generally the 10 digit API number); Statements of Qualifications are not submitted, the TWDB retains the * each type of geophysical log recording (for example, caliper, spectral right to not award funds for the contracts. gamma ray, dual induction, compensated neutron, spontaneous poten­ DEADLINE, REVIEW CRITERIA, AND CONTACT PERSON tial, etc.) included in the well log suite; FOR ADDITIONAL INFORMATION. * the top and bottom depths of the logging interval for each geophysical One electronic copy in Portable Document Format (PDF) and six dou­ tool, as indicated by the depth scale on the well log; ble-sided copies of a complete Statement of Qualifications, including * the height of the top of the kelly bushing (or derrick floor), in feet, the required attachments (see Attachment for Texas Water Develop­ above ground surface; ment Board Guidelines for the Statement of Qualifications), must be filed with the TWDB prior to 12:00 noon on Friday, September 17, * the source (agency or company name) that produced the geophysical 2010. log; and Statements of Qualifications must be directed either in person to Mr. * the digital file name assigned to the scanned geophysical well log. David Carter, Texas Water Development Board, Stephen F. Austin Project 3: Assessment of Groundwater Modeling Approaches to Building, 1700 North Congress Avenue, Austin, Texas 78701; or by Brackish Aquifers (up to $50,000). mail to Mr. David Carter, Texas Water Development Board, P.O. Box 13231 - Capitol Station, Austin, Texas 78711-3231. Successful long-term pumping from brackish water aquifers requires knowledge of their behavior under stress. Consequently, there is a need Statements of Qualifications will be evaluated in accordance with 31 for practical tools to predict the performance of these aquifers, the tem­ Texas Administrative Code §355.5 and may include the following fac­ poral changes in water quality in response to stress on the aquifer, and tors: the potential impacts to associated fresh water supply sources. Aquifer * Overall approach and organization; modeling can provide this information. However, since the aquifers in question are brackish (total dissolved solids of up to 10,000 parts per * Methodology; million), models with a variable density code that can process waters *Qualifications and resources; of different salinity may be needed. * Organization and management; The goal of the project will be to (1) assess, through a literature re­ view, existing information on the status and applicability of various * Reports and deliverables; and types of groundwater flow models for brackish aquifers and the influ­ * Assessment of proposer’s ability to perform this research and com­ ence of aquifer geometry and geological structure on salinity distribu­ plete the project. tion and brackish groundwater movement, (2) recommend conditions under which a specific type of groundwater flow model or models might Requests for information, the TWDB’s rules covering the Research be applicable, and (3) develop a screening procedure or decision-mak­ and Planning Fund, detailed evaluation criteria, more detailed research ing process that will enable the user to determine the most appropriate topic information, and the guidelines may be directed to Mr. David groundwater flow model for an aquifer. Carter at the preceding address or by calling (512) 936-6079. DESCRIPTION OF FUNDING CONSIDERATION. All technical questions including requests for a copy of the database referred to in Project 2 (Locate and Acquire Digital Geophysical Well Following the receipt and evaluation of all Statements of Qualifica­ Logs and Conduct Data Entry of Attributes) should be directed to San­ tions, the TWDB may adjust the amount of funding initially authorized jeev Kalaswad at (512) 936-0838 or Jorge Arroyo at (512) 475-3003. for the BRACS projects. Oral presentations may be required as part of

IN ADDITION July 30, 2010 35 TexReg 6729 TRD-201003975

35 TexReg 6730 July 30, 2010 Texas Register Kenneth L. Petersen Friday, 8:00 a.m. to 5:00 p.m.) except for holidays. A copy of General Counsel the RFQ may also be requested via e-mail by sending a request to Texas Water Development Board [email protected] with the following information: name of Filed: July 20, 2010 organization, contact person, completed physical address, phone and fax numbers, and e-mail address. You may also download the RFQ ♦ ♦ ♦ from our website www.wfscapitalarea.com. Workforce Solutions Capital Area Proposals must be received by Workforce Solutions Capital Area no Request for Quotes for Legal Services later than 12:00 p.m. (noon, CST) on August 9, 2010. TRD-201003957 The Workforce Solutions Capital Area Workforce Board ("Board" or "WFSCA") is soliciting proposals from qualified individuals or firms Niki Sanders to provide professional legal services. Executive Assistant/HR Workforce Solutions Capital Area The Request for Qualifications (RFQ) is available beginning Wednes­ Filed: July 19, 2010 day, July 21, 10:00 a.m. (CST). Copies of the RFQ are available at the Board office located at 6505 Airport Boulevard, Suite 101E, ♦ ♦ ♦ Austin, Texas 78752, during normal business hours (Monday ­

IN ADDITION July 30, 2010 35 TexReg 6731 How to Use the Texas Register format) version through the internet. For website information, call Information Available: The 14 sections of the Texas the Texas Register at (512) 463-5561. Register represent various facets of state government. Documents contained within them include: Texas Administrative Code Governor - Appointments, executive orders, and The Texas Administrative Code (TAC) is the compilation of proclamations. all final state agency rules published in the Texas Register. Attorney General - summaries of requests for opinions, Following its effective date, a rule is entered into the Texas opinions, and open records decisions. Administrative Code. Emergency rules, which may be adopted by Secretary of State - opinions based on the election laws. an agency on an interim basis, are not codified within the TAC. Texas Ethics Commission - summaries of requests for opinions and opinions. The TAC volumes are arranged into Titles and Parts (using Emergency Rules- sections adopted by state agencies on an Arabic numerals). The Titles are broad subject categories into emergency basis. which the agencies are grouped as a matter of convenience. Each Proposed Rules - sections proposed for adoption. Part represents an individual state agency. Withdrawn Rules - sections withdrawn by state agencies from consideration for adoption, or automatically withdrawn by The complete TAC is available through the Secretary of the Texas Register six months after the proposal publication date. State’s website at http://www.sos.state.tx.us/tac. Adopted Rules - sections adopted following public comment period. The following companies also provide complete copies of the Texas Department of Insurance Exempt Filings - notices of TAC: Lexis-Nexis (800-356-6548), and West Publishing Company actions taken by the Texas Department of Insurance pursuant to (800-328-9352). Chapter 5, Subchapter L of the Insurance Code. Texas Department of Banking - opinions and exempt rules The Titles of the TAC, and their respective Title numbers are: filed by the Texas Department of Banking. Tables and Graphics - graphic material from the proposed, 1. Administration emergency and adopted sections. 4. Agriculture Transferred Rules- notice that the Legislature has 7. Banking and Securities transferred rules within the Texas Administrative Code from one 10. Community Development state agency to another, or directed the Secretary of State to 13. Cultural Resources remove the rules of an abolished agency. 16. Economic Regulation In Addition - miscellaneous information required to be 19. Education published by statute or provided as a public service. 22. Examining Boards Review of Agency Rules - notices of state agency rules 25. Health Services review. 28. Insurance 30. Environmental Quality Specific explanation on the contents of each section can be 31. Natural Resources and Conservation found on the beginning page of the section. The division also 34. Public Finance publishes cumulative quarterly and annual indexes to aid in 37. Public Safety and Corrections researching material published. 40. Social Services and Assistance 43. Transportation How to Cite: Material published in the Texas Register is referenced by citing the volume in which the document appears, How to Cite: Under the TAC scheme, each section is designated the words “TexReg” and the beginning page number on which that by a TAC number. For example in the citation 1 TAC §27.15: 1 document was published. For example, a document published on indicates the title under which the agency appears in the Texas page 2402 of Volume 35 (2010) is cited as follows: 35 TexReg Administrative Code; TAC stands for the Texas Administrative 2402. 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If a rule has changed during the time period information of interest between 8 a.m. and 5 p.m. weekdays at the covered by the table, the rule’s TAC number will be printed with Texas Register office, Room 245, James Earl Rudder Building, the Texas Register page number and a notation indicating the type 1019 Brazos, Austin. Material can be found using Texas Register of filing (emergency, proposed, withdrawn, or adopted) as shown indexes, the Texas Administrative Code, section numbers, or TRD in the following example. number. TITLE 1. ADMINISTRATION Both the Texas Register and the Texas Administrative Code are Part 4. Office of the Secretary of State available online at: http://www.sos.state.tx.us. The Register is Chapter 91. Texas Register available in an .html version as well as a .pdf (portable document 40 TAC §3.704...... 950 (P)