PROPOSED 
 RULES 
 
 Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the  
Texas Register at least 30 days before action is taken. The 30-day time period 
gives interested persons an opportunity to review and make oral or written 
comments on the section. Also, in the case of substantive action, a public 
hearing must be granted if requested by at least 25 persons, a governmental 
subdivision or agency, or an association having at least 25 members. 
  Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of  bold text. [Brackets] indicate deletion of existing 
material within a section. 
 
   
  TITLE 7. BANKING AND SECURITIES 
 Part II. Banking Department of Texas 
  Chapter 10. Trust Companies 
  
  7 TAC sec.10.1 
 
  The Finance Commission of Texas (the commission) proposes new sec.10.1, 
regarding transition standards for trust companies required to increase paid-in 
capital under recent changes in law. 
 Texas Civil Statutes, Article 342-1101, sec.2(b), and Article 342-1108(a), are 
amended by Act of May 18, 1995, House Bill 1543, sec.2(a) and sec.2(g), 74th 
Legislature (the "Act") (sec.1 of which is the Texas Banking Act), to require a 
trust company to have paid-in capital of "not less than $1 million." Prior to 
amendment, the minimum paid-in capital was $500,000. Under the Act, sec.2(j), an 
existing trust company must achieve the new required level of paid-in capital, 
referred to in more modern parlance as capital and surplus, by September 1, 
2000, and the commission "may adopt rules specifying procedures for ratable 
increases in capital and surplus ... and for deferrals and extensions of time 
for a trust company acting in good faith to achieve minimum required capital and 
surplus." 
 The proposed section is designed to implement the Act,  s2(j). A trust company 
is required to achieve a proportionate increase in capital and surplus each year 
over the five-year period. Under the proposed rule, each year becomes the "first 
year" for purposes of determining proportionality. In other words, a trust 
company must by September 1, 1996, increase its capital and surplus by one-fifth 
of the difference between $1 million and its capital and surplus (if a lower 
amount) on September 1, 1995, since the trust company has five years to complete 
the transition to higher capital. In similar fashion, a trust company must by 
September 1, 1997, increase its capital and surplus by one-fourth of the 
difference between $1 million and its capital and surplus (if a lower amount) on 
September 1, 1996, since the trust company has only four years remaining to 
complete the transition to higher capital. The fractions in succeeding years are 
one-third, one-half, and finally all of the difference between $1 million and 
capital and surplus at the beginning of the relevant period. 
 While the Act requires $1 million in capital and surplus by September 1, 2000, 
measurement at each preceding September 1st is problematic, and the commission 
has chosen the third quarter call report date as the measurement date in the 
proposed section, technically September 30th of each year. 
 Finally, the proposed section allows the banking commissioner to accept an 
alternate capital accumulation plan on application by a trust company if the 
plan satisfies the objectives of the Act and this proposed section, and permits 
the banking commissioner to grant limited extensions of time to a trust company 
that in good faith is attempting to achieve the higher capital level. 
 The new capital standard applies to 39 trust companies. Based on trust company 
equity capital and fiduciary assets under management as of September 30, 1994, 
13 trust companies already have capital and surplus in excess of the proposed 
requirement. The remaining 26 trust companies would have deficiencies in capital 
ranging from $129,000 to $500,000, with an average deficiency of $300,000. 
 Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. While trust companies both large and small will be 
required to raise capital either through retained earnings or contributions by 
shareholders, the Act rather than the proposed section imposes the obligation. 
Further, the increase in capital is not an expense or cost, but rather remains 
the property of the trust company. 
 Mr. Jobe also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section is the diffused impact over at least five years of the statutorily 
imposed capital increase. There will be no effect on small businesses. There is 
no anticipated economic cost to persons who are required to comply with the 
section as proposed. An economic cost will accrue to the shareholders of each 
affected trust company as a result of the statutory increase in required 
capital, as dividends may be restricted for a period of years or capital calls 
may have to be made in order to increase capital. 
 Comments on the proposal may be submitted in writing to Everette D. Jobe, 
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard, 
Austin, Texas 78705-4294. 
 The new section is proposed under Act of May 18, 1995, House Bill 1543, 
sec.2(j), 74th Legislature, which provides the commission with the authority to 
adopt rules requiring ratable increases in capital and surplus and permitting 
deferrals and extensions of time for a trust company to achieve minimum required 
capital and surplus. 
 The following are the articles and sections that are affected by the proposed 
new sec.10.1: Texas Civil Statutes, Article 342-1101, sec.2(b), and Article 342-
1108(a). 
 
 
  sec.10.1. Ratable Increases in Required Capital. 
 
  (a) Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
 
  (1) Act of May 18, 1995-The Act of May 18, 1995, House Bill 1543, 74th 
Legislature. 
   
  (2) Beginning restricted capital-At any time, the level of restricted capital 
of a trust company as determined by the immediately preceding third quarter call 
report filed by the trust company, subject to correction or restatement as a 
result of examination. 
   
  (3) Capital-An amount determined as: 
 
  (A) the sum of: 
 
  (i) the par value of all shares or participation shares of the trust company 
having a par value that have been issued; 
   
  (ii) the consideration fixed by the board in the manner provided by the Texas 
Business Corporation Act for all shares or participation shares of the trust 
company without par value that have been issued, except a part of that 
consideration that: 
 
  (I) has been actually received; 
   
  (II) is less than all of that consideration; and 
   
  (III) the board, by resolution adopted not later than the 60th day after the 
date of issuance of those shares, has allocated to surplus with the prior 
approval of the banking commissioner; and 
     
  (iii) an amount not included in clauses (i) and (ii) of this subparagraph that 
has been transferred to capital of the trust company, on the payment of a share 
dividend or on adoption by the board of a resolution directing that all or part 
of surplus be transferred to capital, minus each reduction made as permitted by 
law; less 
     
  (B) all amounts otherwise included in subparagraph (A)(i) and (ii) of this 
definition that are attributable to the issuance of securities by the trust 
company and that the commissioner determines, after notice and an opportunity 
for hearing, should be classified as debt rather than equity securities. 
     
  (4) Certified Surplus-The part of surplus designated by a vote of the board of 
a trust company under the Texas Banking Act, sec.4.104(b) as added by the Act of 
May 18, 1995, sec.1, applicable to a trust company by virtue of Texas Civil 
Statutes, Article 342-1102, as amended by the Act of May 18, 1995, sec.2(b), and 
recorded in the board minutes as certified. 
   
  (5) Commissioner-The banking commissioner of Texas. 
   
  (6) Surplus-The amount by which the assets of a trust company exceed its 
liabilities, capital, and undivided profits. 
   
  (7) Trust company-A corporate entity that possesses a Texas charter to do 
business as a trust company, issued pursuant to Texas Civil Statutes, Article 
342-1101, sec.1(b), or Article 342-1101, sec.4, and is not exempt from capital 
standards pursuant to sec.10.10 and sec.10.11 of this title (relating to Trust 
Companies). 
   
  (8) Undivided profits-The part of equity capital of a trust company equal to 
the balance of its net profits, income, gains, and losses since the date of its 
formation, minus subsequent distributions to shareholders and transfers to 
surplus or capital under share dividends or appropriate board resolutions. The 
term includes amounts allocated to undivided profits as a result of a merger. 
     
  (b) Purpose. Under Texas Civil Statutes, Article 342-1101, sec.2(b), and 
Article 342-1108(a), as amended by the Act of May 18, 1995, sec.2(a) and 
sec.2(g) , a trust company is required to possess minimum capital and surplus of 
not less than $1 million or a higher amount set by the commissioner under Texas 
Civil Statutes, Article 342-1101, sec.2(b), or Article 342-1108(b), as amended. 
Minimum capital and surplus may be reduced by the commissioner under Texas Civil 
Statutes, Article 342-1108(c), as amended. Prior to amendment, the minimum 
capital was $500,000. Under the Act of May 18, 1995, sec.2(j), an existing trust 
company must achieve the new required level of capital and surplus by September 
1, 2000. This section provides for ratable increases in capital and surplus and 
for deferrals and extensions of time for a trust company acting in good faith to 
achieve minimum required capital and surplus, and further provides standards for 
the commissioner to alter the minimum capital standard applicable to a 
particular trust company. 
   
  (c) Minimum Restricted Capital. Except as otherwise provided in this section, 
the minimum restricted capital of a trust company must be not less than $1 
million. 
   
  (d) Transition for Under-Capitalized Trust Company. 
 
  (1) A trust company with restricted capital as of September 1, 1995, that is 
less than the minimum restricted capital required by subsection (c) or (g) of 
this section must increase its restricted capital annually thereafter, by the 
end of the third quarter of each calendar year, according to the following 
schedule. 
 
  (A) Third Quarter 1996-By a sufficient amount to cause restricted capital to 
equal such company's beginning restricted capital plus at least 20% of the 
difference between the minimum restricted capital required at that time and such 
company's restricted capital as of the preceding third quarter. 
   
  (B) Third Quarter 1997-By a sufficient amount to cause restricted capital to 
equal such company's beginning restricted capital plus at least 25% of the 
difference between the minimum restricted capital required at that time and such 
company's restricted capital as of the preceding third quarter. 
   
  (C) Third Quarter 1998-By a sufficient amount to cause restricted capital to 
equal such company's beginning restricted capital plus at least 33% of the 
difference between the minimum restricted capital required at that time and such 
company's restricted capital as of the preceding third quarter. 
   
  (D) Third Quarter 1999-By a sufficient amount to cause restricted capital to 
equal such company's beginning restricted capital plus at least 50% of the 
difference between the minimum restricted capital required at that time and such 
company's restricted capital as of the preceding third quarter. 
   
  (E) Third Quarter 2000-By a sufficient amount to cause restricted capital to 
equal at least the minimum restricted capital required at that time. Thereafter, 
the trust company shall have and maintain at least the minimum restricted 
capital required by subsection (c) or (g) of this section. 
     
  (2) The implementation schedule set forth in paragraph (1) of this subsection 
is a minimal requirement, and does not authorize a reduction of capital and 
surplus for a trust company that has more capital and surplus than is required 
for restricted capital under the implementation schedule but less than is 
required under subsection (c) or (g) of this section. Any trust company that 
possesses restricted capital in excess of minimal requirements or that achieves 
the minimum transition level of restricted capital prior to the required 
deadlines in the transition schedule may not reduce its restricted capital 
without the express written consent of the commissioner. 
     
  (e) Certified Surplus. Except to absorb losses in excess of undivided profits 
and uncertified surplus, certified surplus may not be reduced without the prior 
written consent of the Commissioner. An increase in certified surplus is 
effective immediately upon the approval of an appropriate resolution by the 
board of directors. 
   
  (f) Extensions of Time. Upon application by a trust company subject to 
subsection (d) of this section, the Commissioner, in the exercise of discretion, 
may grant one or more extensions to a trust company to permit additional time to 
achieve the required restricted capital levels if, in the Commissioner's 
opinion, the trust company has made a good faith effort to achieve such 
restricted capital levels. 
   
  (g) Modifications in Minimum Restricted Capital. Notwithstanding subsection 
(c) of this section, the Commissioner may, on a case by case basis and in the 
exercise of discretion consistent with protecting safety and soundness, reduce 
or increase the amount of minimum restricted capital, or may grant extensions of 
time to achieve required, periodic adjustments in the minimum restricted capital 
for such trust company. Among the safety and soundness factors to be considered 
by the Commissioner in the exercise of discretion are the nature and type of 
business conducted; the nature and degree of liquidity in assets held in a 
corporate capacity; the amount of fiduciary assets under management; the type of 
fiduciary assets held and the depository of such assets; the complexity of 
fiduciary duties and degree of discretion undertaken; the competence and 
experience of management; the extent and adequacy of internal controls; the 
presence or absence of annual unqualified audits by an independent certified 
public accountant; the reasonableness of business plans for retaining or 
acquiring additional restricted capital; and the existence and adequacy of 
insurance obtained or held by the trust company for the purpose of protecting 
its customers, beneficiaries and grantors. 
   
  (h) This section does not create any presumption regarding the adequacy of the 
capital structure proposed for a new trust company in a charter application to 
the commissioner. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509573 
  Everette D. Jobe 
 General Counsel 
 Banking Department of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 475-1300 
         
           
  7 TAC sec.10.5 
 
  (Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Finance 
Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.) 
   
  The Finance Commission of Texas (the commission) proposes the repeal of 
sec.10.5, regarding authorized investments of trust companies. A new sec.10.5 is 
proposed in this issue of the Texas Register. 
 Existing sec.10.5 is outdated and ambiguous regarding permissible investments 
of trust companies. The new proposed section is directly in response to a 
petition for rulemaking filed by a regulated trust company seeking clarification 
of existing sec.10.5 and the meaning of "readily marketable investments." Other 
flaws were noted in existing sec.10.5 and the section is therefore proposed for 
repeal and replacement. 
 Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the repeal as proposed is in effect there 
will be no fiscal implications for state or local government or small businesses 
as a result of adopting this repeal. 
 Mr. Jobe also has determined that for each year of the first five-year period 
the repeal as proposed will be in effect the public benefit anticipated as a 
result of its adoption will be increased certainty of compliance in the trust 
company industry as well as greater investment flexibility for trust companies. 
 Comments on the proposal to be considered by the commission should be submitted 
in writing within 30 days after publication of the proposed section in the Texas 
Register  to Everette D. Jobe, General Counsel, Texas Department of Banking, 
2601 North Lamar Boulevard, Austin, Texas 78705-4294. 
 The repeal is proposed under Texas Civil Statutes, Article 342-1106(b), which 
authorize the commission to adopt general rules and regulations as may be 
necessary to accomplish the purposes of trust company regulation, and sec.1. 
012(a)(2), the Texas Banking Act, enacted by Act of May 18, 1995, House Bill 
1543, sec.1, 74th Legislature, which authorizes the commission to adopt rules to 
preserve the safety and soundness of trust companies. Section 1.012 of the Texas 
Banking Act is applicable to trust companies by virtue of Texas Civil Statutes, 
Article 342-1102, sec.1, as amended by the Act of May 18, 1995, House Bill 1543, 
sec.2(b), 74th Legislature. 
 The following are the articles and sections that are affected by the proposed 
repeal sec.10.5: Texas Civil Statutes, Article 342-1101, sec.2(a), 
 The Texas Banking Act, sec.5.001 and sec.5.101, enacted by Act of May 18, 1995, 
House Bill 1543, sec.1, 74th Legislature. 
 
 
  sec.10.5. Authorized Investments. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509574 
  Everette D. Jobe 
 General Counsel 
 Banking Department of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 475-1300 
         
       
  The Finance Commission of Texas (the commission) proposes new sec.10. 5, 
regarding the investment of corporate assets of trust companies. Former sec.10.5 
is proposed for repeal in this issue of the Texas Register . 
 The proposed rule is directly in response to a petition for rulemaking filed by 
a regulated trust company seeking clarification of existing sec.10.5 and the 
meaning of "readily marketable investments." Other flaws were noted in existing 
sec.10.5 and the section is therefore proposed for repeal and replacement. 
 Under the proposed section, a trust company is required to maintain a measure 
of liquidity by maintaining an amount at least equal to 40% of its capital and 
certified surplus in readily marketable investments, defined to include insured 
certificates of deposit, investment securities in which state banks can invest 
without limitation, publicly traded corporate debt or equity securities, or 
another investment that can be converted to cash within four business days. The 
remainder of a trust company's corporate assets may be invested at the 
discretion of the trust company except that a trust company may not invest an 
amount in excess of 15% of its capital and certified surplus in the securities 
of a single issuer without the prior written consent of the banking 
commissioner. 
 Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the section as proposed is in effect there 
will be no fiscal implications for state or local government or small businesses 
as a result of adopting this section. 
 Mr. Jobe also has determined that for each year of the first five-year period 
the section as proposed is in effect the public benefit anticipated as a result 
of its adoption will be increased certainty of compliance in the trust company 
industry as well as greater investment flexibility for trust companies. 
 Comments on the proposal to be considered by the commission should be submitted 
in writing within 30 days after publication of the proposed section in the Texas 
Register  to Everette D. Jobe, General Counsel, Texas Department of Banking, 
2601 North Lamar Boulevard, Austin, Texas 78705-4294. 
 The new section is proposed under Texas Civil Statutes, Article 342-1106(b), 
which authorize the commission to adopt general rules and regulations as may be 
necessary to accomplish the purposes of trust company regulation, and the Texas 
Banking Act, sec.1.012(a)(2), enacted by Act of May 18, 1995, House Bill 1543, 
sec.1, 74th Legislature, which authorizes the commission to adopt rules to 
preserve the safety and soundness of trust companies. The Texas Banking Act, 
sec.1.012 is applicable to trust companies by virtue of Texas Civil Statutes, 
Article 342-1102, sec.1, as amended by the Act of May 18, 1995, House Bill 1543, 
sec.2(b), 74th Legislature. 
 The following are the articles and sections that are affected by the proposed 
new sec.10.5: Texas Civil Statutes, Article 342-1101, sec.2(a). The Texas 
Banking Act, sec.5.001 and sec.5.101, enacted by Act of May 18, 1995, House Bill 
1543, sec.1, 74th Legislature. 
 
 
  sec.10.5. Authorized Investments. 
 
  (a) A trust company shall maintain an amount equal to 40% of its capital and 
surplus as defined in sec.10.1 of this title (relating to Ratable Increases in 
Required Capital) in investments that are readily marketable and can be 
converted to cash within four business days, including: 
 
  (1) federally insured certificates of deposit issued by a depository 
institution; 
   
  (2) securities in which state banks can invest without limitation under the 
Texas Banking Act, sec.5.101 (as added by Act of May 18, 1995, House Bill 1543, 
sec.2(g), 74th Legislature); or 
   
  (3) corporate debt or equity securities registered or approved for 
registration and traded on a national securities exchange or authorized for 
quotation on an automated quotation system sponsored by a registered securities 
association. 
     
  (b) Subject to subsection (a) of this section, a trust company may invest its 
corporate assets in any investment permitted by law. Without the prior written 
consent of the banking commissioner, a trust company may not invest an amount in 
excess of 15% of its capital and certified surplus in the securities of a single 
issuer except as otherwise provided in the Texas Banking Act. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509575 
  Everette D. Jobe 
 General Counsel 
 Banking Department of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 475-1300 
         
             Chapter 25. Prepaid Funeral Contracts 
  
  Subchapter C. Conversion From Trust to Insurance Funded Benefits 
 
  7 TAC sec.sec.25.51-25.59 
 
  The Texas Department of Banking (the Department) proposes new sec.sec.25. 51-
25.59, concerning guidelines for investment of prepaid funeral benefits trust 
funds pursuant to Texas Civil Statutes, Article 548b (the Act), sec.1(h) and 
sec.5A. 
 The Act, sec.5A, as added in 1993, generally provides requirements and 
limitations with respect to the types of investments and percentage of trust 
funds that may be invested in certain types of investments by trustees of 
prepaid funeral benefits trust funds. In addition, sec.5A grants a grace period 
until September 1, 1996, for trustees to dispose of all investments made before 
the effective date of sec.5A that are not in compliance with sec.5A with respect 
to the type of investment or the percentage of trust funds that may be invested 
in certain types of investments. The proposed new Subchapter C is intended to 
clarify specific applications of the Act, sec.5A, eliminate certain ambiguities 
which have the potential to frustrate the intent of the Legislature, and 
authorize certain investments not specifically mentioned in sec.5A. 
 While the Act, sec.5A, specifies percentage limitations applicable to trust 
account investments, further detail is required to provide for investment 
situations or decisions within the intent of the statute but not specifically 
addressed and to provide for an effective and orderly transition to conforming 
investments. The new sections as proposed clearly set out permitted and 
prohibited investments and authorized percentages in various types of 
investments, and clarifies the application of the "prudent person rule" in the 
context of statutory percentage caps. The proposal also details the type of 
investment-related information which must be filed with a permit holder's annual 
report and made available during examinations. 
 With respect to investment in mutual funds, the proposed subchapter specifies 
that no limits apply if the portfolio of the mutual fund contains only 
investments that the trust fund could directly make without limits. If any 
investment in the mutual fund portfolio is subject to limits under the Act, two 
alternate methods are available for measuring investment limits. First, the 
trust fund can limit its investment in the mutual fund to 20% of the trust fund. 
This method is easy to apply and does not require the trustee to maintain 
extensive documentation. Second, the trustee can keep adequate records of the 
mutual fund portfolio, updated quarterly, and combine those holdings with other 
trust fund holdings for purposes of applying the percentage investment limits. 
 Finally, the proposal contains time periods for complying with the investment 
guidelines and specifically prohibits any non-conforming investment prior to 
expiration of the statutory grace period on September 1, 1996. 
 Sammie Glasco, Assistant General Counsel, Texas Department of Banking, has 
determined that, for the first five-year period the new sections as proposed 
will be in effect, there will be no fiscal implications for state or local 
government or for small businesses as a result of enforcing or administering 
these sections. 
 Ms. Glasco also has determined that for each year of the first five years the 
proposed sections are in effect the public benefit anticipated as a result of 
enforcing or administering these sections is the protection of purchasers of 
prepaid funeral benefits contracts. No economic cost will result to entities as 
a result of complying with the proposed sections. 
 Comments on the proposal to be considered by the Department may be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register  to Sammie Glasco, Assistant General Counsel, Texas Department of 
Banking, 2601 North Lamar Boulevard, Austin, Texas 78705. 
 The new sections are proposed under the Act, sec.2, which provides the 
Department with the authority to prescribe reasonable rules and regulations for 
all matters incidental to the enforcement and orderly administration of the Act. 
 The following are the articles and sections that are affected by the proposed 
new Subchapter C: Texas Civil Statutes, Article 548b, sec.1(h) and sec.5A. 
 
 
  sec.25.51. Definitions.  The following words and terms, when used in this 
subchapter, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   Act-Texas Civil Statutes, Article 548b. 
   
   Affiliate-A person or entity directly or indirectly controlling, controlled 
by, or under common control with a permit holder or the funeral provider. 
   
   Commissioner-The Banking Commissioner of Texas. 
   
   Department-The Texas Department of Banking. 
   
   Foreign security -A bond, evidence of indebtedness or obligation that would 
meet the requirements of the Act, sec.5A(d)(5), but for the fact that it is 
issued by a foreign country or a corporation organized under the laws of a 
foreign country, or a common or preferred stock that is publicly trading on a 
stock exchange located within the United States and would be described by the 
Act, sec.5A(d)(7) or sec.5A(d)(8), but for the fact that it is issued by a 
corporation organized under the laws of a foreign country. 
   
   Funeral provider -The funeral home designated in a prepaid funeral benefits 
contract that has agreed and obligated itself to provide the specified prepaid 
funeral benefits. 
   
   Government security -A security that is a permissible investment under the 
Act, sec.5A(d)(2) or  s5A(d)(3), but not including a municipal security under 
the Act, sec.5A(d)(4). 
   
   Insured deposit -An investment authorized under the Act, sec.5A(d)(1). 
   
   Mutual fund-A mutual fund, collective investment fund, or similar 
participative investment fund. 
   
   Permit holder-A person having a valid permit to sell prepaid funeral 
benefits. 
   
   Trustee-The person or entity named as trustee in the instruments creating or 
amending a prepaid funeral trust, including a trust department in a state or 
national bank in this state or a trust company authorized to do business in this 
state, with which prepaid funeral benefits funds have been placed under the Act, 
sec.5(a)(2). 
   
   Trust fund or trust funds-The total prepaid funeral benefits funds related to 
a single permit holder. 
 
   
  sec.25.52. Prudent Person Rule. Notwithstanding any investment authorization 
contained in the Act or this section, the "prudent person rule" of the Act,  
s5A(c), requires the trustee of a prepaid funeral benefits trust to exercise the 
judgment and care under the circumstances then prevailing that a person of 
ordinary prudence, discretion, and intelligence would exercise in the management 
of that person's own affairs, not in regard to speculation but in regard to the 
permanent disposition of that person's funds, by: 
 
  (1) considering the probable income from as well as the probable increase in 
value and safety of the trust funds as a whole; 
   
  (2) diversifying the investment of all the assets of the trust so as to 
minimize the risk of material losses, unless under the circumstances it is 
clearly prudent not to do so; 
   
  (3) providing for liquidity to adequately fund funeral costs as may be needed 
from time to time as prepaid funeral benefits contracts mature, except that this 
provision may not be construed to require a trustee to employ the services of an 
actuary; and 
   
  (4) complying with the documents and instruments governing the trust insofar 
as the documents and instruments are consistent with the Act and regulations 
related to the Act. 
 
     
  sec.25.53. Permitted Investments. 
 
  (a) A trustee shall invest trust funds only in the types of investments 
permitted under the Act, sec.5A(d), in rules adopted by the department, or as 
otherwise permitted under  s25.57 of this title (relating to Other Investments). 
   
  (b) Subject to sec.25.52 of this title (relating to Prudent Person Rule), a 
trustee may invest trust funds without limit in insured deposits, government 
securities, and/or a mutual fund the portfolio of which consists wholly of 
investments in insured deposits and/or government securities. 
   
  (c) As provided by the Act, sec.5A(d)(4), a trustee may invest in debt 
instruments of any state or local government that have been given federal income 
tax exempt status only if the debt instruments are rated "Aa" or better by 
Moody's bond rating service or "AA" or better by Standard and Poor's bond rating 
service. These debt instruments are not government securities as that term is 
used in the Act, sec.5A(g). 
   
  (d) As provided by the Act, sec.5A(d)(5), a trustee may invest in bonds, 
evidences of indebtedness, or obligations of corporations organized under the 
laws of the United States or of a state, only if the corporate bonds, evidences 
of indebtedness, or obligations are rated "A" or better by Moody's bond rating 
service or by Standard and Poor's bond rating service. 
   
  (e) As provided by the Act, sec.5A(d)(6), a trustee may invest in notes, 
evidences of indebtedness, or participations in notes or evidences of 
indebtedness, secured by a valid first lien on real property located in the 
United States, the amount of which obligations may not exceed 90 percent of the 
value of the respective parcels of real property securing them. The value of 
collateral underlying permissible first lien mortgages must be determined by 
independent appraisal at initial funding or purchase of the mortgage and 
independently reappraised at least once every three years to determine 
continuing compliance with the Act, sec.5A(d)(6). 
   
  (f) As provided by the Act, sec.5A(d)(7), a trustee may invest in common stock 
of a corporation organized under the laws of the United States or of a state 
only if the corporation has and maintains at least $1 million of net worth or 
will have at least $1 million of net worth after completion of a securities 
offering to which the trust is subscribing. However, a trustee that invests 
trust funds in common stock of a corporation that is not publicly traded on a 
national securities exchange or through a national automated quotation system 
must maintain adequate, written documentation to justify the prudence of the 
investment under sec.25.52 of this title. 
   
  (g) As provided by the Act, sec.5A(d)(8), a trustee may invest in preferred 
stock of a corporation organized under the laws of the United States or of a 
state only if the stock is rated "BAA" or better by Moody's bond rating service 
or "BBB" or better by Standard and Poor's bond rating service. 
 
     
  sec.25.54. Investment Limitations. 
 
  (a) Subject to this section, no more than 70% of trust funds may be invested 
in any combination of the following: 
 
  (1) bonds, evidences of indebtedness, or obligations of corporations organized 
under the laws of the United States or of a state; 
   
  (2) notes, evidences of indebtedness, or participations in notes or evidences 
of indebtedness, secured by a valid first lien on real property located in the 
United States; 
   
  (3) common stock of a corporation organized under the laws of the United 
States or of a state; and/or 
   
  (4) preferred stock of a corporation organized under the laws of the United 
States or of a state. 
     
  (b) No more than 10% of total trust funds may be invested in any combination 
of real estate, oil and gas interests, limited partnerships, foreign securities, 
and any other investments not specifically authorized by the Act or this 
subchapter. 
   
  (c) Except as provided in sec.25.53 and sec.25.55 of this title (relating to 
Permitted Investments and Mutual Funds) no more than 20% of trust funds may be 
invested in a single issue of any investment. 
 
     
  sec.25.55. Mutual Funds. 
 
  (a) For purposes of applying the investment limitations of the Act and this 
subchapter, the investment of trust funds in a mutual fund is generally 
considered to be transparent, i.e., an investment in the underlying assets of 
the mutual fund. Section 25.53(b) of this title (relating to Permitted 
Investments) governs investment in mutual funds that hold only securities for 
which the Act imposes no limit. 
   
  (b) A trustee may measure permissible investments under either paragraph (1) 
or (2) of this subsection. However, a trustee is required to use paragraph (2) 
of this subsection for all mutual funds if more than 10% of the investments in 
the portfolio of any mutual fund is comprised of real estate, oil and gas 
interests, limited partnerships, foreign securities, or any other investments 
not specifically authorized by the Act or this subchapter. 
 
  (1) If the portfolio of a mutual fund contains any investment that is subject 
to limits under the Act or this subchapter, no more than 20% of trust funds may 
be invested in the mutual fund unless the trustee evaluates the investment in 
the mutual fund under paragraph (2) of this subsection. In evaluating investment 
limits under this paragraph, a trustee is not required to treat the mutual fund 
as transparent except for the limited purpose of identifying whether the portion 
of portfolio of the mutual fund in real estate, oil and gas interests, limited 
partnerships, foreign securities, or any other investments not specifically 
authorized by the Act or this subchapter exceeds 10% of the total portfolio. 
   
  (2) At the election of the trustee or if required in lieu of the method 
permitted by paragraph (1) of this subsection, a trustee shall determine at 
least quarterly that the trust fund's pro rata share of any type of investment 
or a particular issue of an investment in the portfolio of the mutual fund is 
not in excess of applicable investment limits by reason of being combined with 
the trust fund's pro rata share of that type of investment or particular issue 
of an investment held by all other mutual funds in which the trust funds are 
invested and with the trust fund's own direct investment holdings. The trustee 
must maintain written documentation adequate to demonstrate compliance with this 
subsection. 
 
       
  sec.25.56. Repurchase Agreements. <ol> For the purposes of applying the 
investment limitations of the Act and this subchapter, the investment of trust 
funds in a repurchase agreement is considered to be an investment in the 
underlying security collateralizing the repurchase agreement. Any securities 
held by the trust fund that are subject to repurchase by another party must have 
a fair market value that equals or exceeds 102% of the repurchase price, and the 
ratio of market value to repurchase price must be evaluated no less often than 
quarterly. 
 
   
  sec.25.57. Other Investments Permitted by the Department.  Pursuant to the 
Act, sec.5A(d)(11), the department may in the exercise of discretion approve an 
investment for trust funds other than as provided in the Act or this subchapter. 
An application for approval of an investment under this section must: 
 
  (1) be in writing; 
   
  (2) describe the investment in detail, which may be by reference to an 
offering circular or prospectus attached as an exhibit; and 
   
  (3) evaluate the investment in comparison with the standards set forth in 
sec.25.52 of this title (relating to Prudent Person Rule). 
 
     
  sec.25.58. Reporting Requirements. 
 
  (a) A permit holder must provide the department with the following as a part 
of the permit holder's annual report: 
 
  (1) a written investment plan as required by the Act, sec.5A(a)(1); and 
   
  (2) a written statement from the trustee detailing all investments not in 
compliance with this section. 
     
  (b) A permit holder must notify the commissioner in writing of all prohibited 
investments of trust funds under the Act,  s1(h), within 60 days of the 
effective date of this section. The notification must include a plan for 
removing prohibited investments within 60 days of the date of notification to 
the commissioner. 
 
     
  sec.25.59. Transition Provisions. 
 
  (a) A permit holder or trustee may not make an investment after the effective 
date of this subchapter that is not in compliance with the Act, sec.5A, or this 
subchapter or that would cause a trust fund investment portfolio currently not 
in compliance with the Act, sec.5A, or this subchapter to become further out of 
compliance. 
   
  (b) Subject to subsection (c) of this section, a trustee shall dispose of all 
investments made before September 1, 1993, that are not in compliance with this 
subchapter by September 1, 1996, unless the commissioner grants an extension in 
writing with respect to a particular investment as permitted by the Act, 
sec.5A(h). Extensions of time for disposition of a non-conforming investment 
(other than a prohibited investment under subsection (c) of this section) may be 
granted for periods of one year or more. A request for extension must be in 
writing and must set out the reasons for the extension. The commissioner may 
grant an extension, in the exercise of discretion, if the commissioner finds 
that the trustee has made a good faith effort to dispose of the non-conforming 
investment or finds that disposal of the non-conforming investment would be 
materially detrimental to the best interest of the purchasers of prepaid funeral 
benefits contracts. 
   
  (c) An investment prohibited under the Act, sec.1(h), may not be made or 
retained and is not subject to any grace period or extension of time for 
disposing of the investment. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509572 
  Everette D. Jobe 
 General Counsel 
 Banking Department of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 475-1300 
         
                   
  TITLE 13. CULTURAL RESOURCES 
 Part III. Texas Commission on the Arts 
  Chapter 31. Agency Procedures 
  
  13 TAC sec.31.10 
 
  The Texas Commission on the Arts proposes to adopt by reference an amendment 
to sec.31.10 concerning the Applications Forms and Instructions for the 
Financial Assistance Application. The purpose of this amendment is to better 
assist applicants in completing the application form for financial assistance. 
 Rhonda Hill, Director of Finance and Administration, Texas Commission on the 
Arts, has determined that for the first five-year period the section is in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the section. 
 Ms. Hill also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that the commission will be able to utilize federal and state 
financial assistance funds in a more effective manner, thereby allowing more 
Texas organizations, communities, and citizens to participate in agency 
programs. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. 
 Comments on the proposal may be submitted to Ricardo Hernandez, Assistant 
Director, Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 The amendment is proposed under Texas Civil Statutes, Government Code, 
sec.444.009, which provide the Texas Commission on the Arts with the authority 
to make rules and regulations for its government and that of its officers and 
committees. 
 No other article or code is effected by this amendment. 
 
 
  sec.31.10. Financial Assistance Application Form. The commission adopts by 
reference the application form and instructions for Financial Assistance as 
outlined in the Texas Arts Plan as amended September 1993. This document is 
published by and available from the Texas Commission on the Arts, P.O. Box 
13406, Austin, Texas 78711. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509611 
  Rhonda L. Hill 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-5535 
         
           Chapter 35. Texas Arts Plan 
  
  13 TAC sec.35.2 
 
  The Texas Commission on the Arts proposes to adopt by reference new sec.35. 2, 
concerning the Addendum to the Texas Arts Plan which outlines the activities of 
the Commission. This section is being proposed to inform the public of changes 
to select programs and procedures in the Texas Arts Plan. 
 Rhonda Hill, Director of Finance and Administration, Texas Commission on the 
Arts, has determined that for the first five-year period the section is in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the section. 
 Ms. Hill also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that the commission will be able to utilize federal and state 
financial assistance funds in a more effective manner, thereby allowing more 
Texas organizations, communities, and citizens to participate in agency 
programs. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. 
 Comments on the proposal may be submitted to Ricardo Hernandez, Assistant 
Director, Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 The new section is proposed under Texas Civil Statutes, Government Code, 
sec.444.009, which provide the Texas Commission on the Arts with the authority 
to make rules and regulations for its government and that of its officers and 
committees. 
 No other article or code is effected by this proposed new rule. 
 
 
  sec.35.2. Addendum to the Texas Arts Plan.  The commission adopts by reference 
the Addendum to the Texas Arts Plan. This document is published by and available 
from the Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509610 
  Rhonda L. Hill 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-5535 
         
           Chapter 37. Application Forms and Instructions for Financial 
Assistance 
  
  13 TAC sec.37.23, sec.37.24 
 
  The Texas Commission on the Arts proposes to adopt by reference amendments to 
sec.37.23 and sec.37.24, concerning the Applications Forms and Instructions for 
the Arts In Education Program-Sponsors and the Texas Touring Arts Program-
Company/Artist. The purpose of these amendments is to better assist applicants 
in completing the financial assistance application forms. 
 Rhonda Hill, Director of Finance and Administration, Texas Commission on the 
Arts, has determined that for the first five-year period the sections are in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the sections. 
 Ms. Hill also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be that the commission will be able to utilize federal and 
state financial assistance funds in a more effective manner, thereby allowing 
more Texas organizations, communities, and citizens to participate in agency 
programs. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the sections as 
proposed. 
 Comments on the proposal may be submitted to Ricardo Hernandez, Assistant 
Director, Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 The amendments are proposed under Texas Civil Statutes, Government Code, 
sec.444.009, which provide the Texas Commission on the Arts with the authority 
to make rules and regulations for its government and that of its officers and 
committees. 
 No other article or code is effected by this amendment 
 
 
  sec.37.23. Application Form and Instructions for Arts In Education Program-
Sponsors.  The commission adopts by reference the application form and 
instructions for the Arts In Education Program-Sponsors as outlined in the Texas 
Arts Plan as amended September 1993. This document is published by and available 
from the Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 
   
  sec.37.24. Application Form and Instructions for the Texas Touring Arts 
Program- 23>Company/Artist [Performing Arts]. The commission adopts by reference 
the application form and instructions for the Texas Touring Arts Program-
<nl>Company/Artist<ol> [Performing Arts] as outlined in the Texas Arts Plan as 
amended September 1993. This document is published by and available from the 
Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509609 
  Rhonda L. Hill 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-5535 
         
         
  13 TAC sec.37.25 
 
  (Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Commission 
on the Arts or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.) 
   
  The Texas Commission on the Arts proposes the repeal of  s37.25, concerning 
the Applications Forms and Instructions for the Texas Touring Arts Program-
Visual Arts. The purpose of this repeal is that this category is available under 
sec.31.10 of this title (relating to Financial Assistance Application Form). 
 Rhonda Hill, Director of Finance and Administration, Texas Commission on the 
Arts, has determined that for the first five-year period the repeal is in effect 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the repeal. 
 Ms. Hill also has determined that for each year of the first five years the 
repeal is in effect the public benefit anticipated as a result of enforcing the 
repeal will be that the commission will be able to utilize federal and state 
financial assistance funds in a more effective manner, thereby allowing more 
Texas organizations, communities, and citizens to participate in agency 
programs. There will be no effect on small businesses. There is no anticipated 
substantial economic cost to persons who are required to comply with the repeal 
as proposed. 
 Comments on the proposal may be submitted to Ricardo Hernandez, Assistant 
Director, Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 The repeal is proposed under Texas Civil Statutes, Government Code, sec.444. 
009, which provide the Texas Commission on the Arts with the authority to make 
rules and regulations for its government and that of its officers and 
committees. 
 No other article or code is affected by this repeal. 
 
 
  sec.37.25. Application Form and Instructions for Texas Touring Arts Program-
Visual Arts. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509607 
  Rhonda L. Hill 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-5535 
         
         
  13 TAC sec.37.26 
 
  The Texas Commission on the Arts proposes to adopt by reference an amendment 
to sec.37.26, concerning the Applications Forms and Instructions for the Texas 
Touring Arts Program-Fee Support. The purpose of the amendment is for the 
application form to conform with the new application procedures for the Touring 
Arts Program as reflected in the Addendum to the Texas Arts Plan. 
 Rhonda Hill, Director of Finance and Administration, Texas Commission on the 
Arts, has determined that for the first five-year period the section is in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the section. 
 Ms. Hill also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that the commission will be able to utilize federal and state 
financial assistance funds in a more effective manner, thereby allowing more 
Texas organizations, communities, and citizens to participate in agency 
programs. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. 
 Comments on the proposal may be submitted to Ricardo Hernandez, Assistant 
Director, Texas Commission on the Arts, P.O. Box 13406, Austin, Texas 78711. 
 The amendment is proposed under Texas Civil Statutes, Government Code, 
sec.444.009, which provide the Texas Commission on the Arts with the authority 
to make rules and regulations for its government and that of its officers and 
committees. 
 No other article or code is effected by this amendment. 
 
 
  sec.37.26. Application Form and Instructions for Texas Touring Arts Program-
<nl>Fee Support [Sponsors].  The commission adopts by reference the application 
form and instructions for the Texas Touring Arts Program- <nl>Fee Support<ol> 
[Sponsors] as outlined in the Texas Arts Plan as amended September 1993. This 
document is published by and available from the Texas Commission on the Arts, 
P.O. Box 13406, Austin, Texas 78711. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509608 
  Rhonda L. Hill 
 Director of Finance and Administration 
 Texas Commission on the Arts 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-5535 
         
               
  TITLE 16. ECONOMIC REGULATION 
 Part I. Railroad Commission of Texas 
  Chapter 9. Liquefied Petroleum Gas Division 
  
  The Railroad Commission of Texas proposes amendments to  s9.184, relating to 
uniform safety requirements; sec.9.231, relating to approved appliances; 
sec.9.462, relating to containers installed underground; sec.9.771, relating to 
identifications labels; and sec.9.952, relating to piping installation 
identification tag. Section 9.184 describes safety requirements for 
installations, including how containers shall be identified. Section 9.231 
requires that LP-gas appliances shall be certified and allows appliances to be 
converted to LP-gas; the section also lists the information to be included on 
the identification tag or decal. Section 9.462 specifies how underground 
containers shall be installed and identified. Section 9.771 describes the 
identification requirements for vehicles powered by LP-gas, including the 
location and contents of the tag or decal. Section 9.952 specifies the 
identification requirements for piping systems, including the location and 
contents of the tag or decal. 
 The proposed amendments make identification requirements consistent, allow the 
use of either a metal tag or a decal, and allow one tag or decal to serve as the 
identification required by all five sections. Four sections have been retitled 
for clarity. Other proposed nonsubstantive amendments include some changes in 
wording, punctuation, or organization to provide clearer language or sequence. 
 Thomas D. Petru, director, Liquefied Petroleum Gas Division, has determined 
that for each year of the first five years the sections are in effect there will 
be no fiscal implications for state and local governments as a result of 
enforcing or administering the sections. 
 Mr. Petru also has determined that the public benefit anticipated as a result 
of enforcing the sections will be more practical and flexible requirements for 
the LP-gas industry. There is no anticipated economic cost to small businesses 
or to persons; in fact, the proposed amendments may result in a reduction in 
cost since the amendments as proposed will allow licensees to use only one tag 
or decal to satisfy the identification requirements described in these sections. 
Licensees therefore will not be required to stock and use several forms of 
identification. 
 Comments on the proposals may be submitted to Kellie Martinec, Rules 
Coordinator, Legal Division, Railroad Commission of Texas, P.O. Box 12967, 
Austin, Texas 78711-2967. Comments will be accepted for 30 days after 
publication in the Texas Register. 
   
  Subchapter B. Basic Rules 
 
  16 TAC sec.9.184 
 
  The amendment is proposed under the Texas Natural Resources Code, sec.113. 
051, which authorizes the commission to adopt rules relating to any and all 
aspects or phases of the LP-gas industry that will protect or tend to protect 
the health, welfare, and safety of the general public. 
 The following is the statute, article, or code affected by the proposed 
amendment: Texas Natural Resources Code, sec.113.051. 
 
 
  sec.9.184. Uniform Safety Requirements. 
 
  (a) General. 
 
  (1)-(16) (No change.) 
   
  (17) Identification of installations. Upon completing the installation of an 
LP-gas container, except those used for bulk storage or retail DOT container 
filling/service station installations, the licensee making the installation 
shall attach to the container a <nl>decal or<ol> tag of metal or other permanent 
material indicating  <nl>the following information:<ol> [the name of the LP-gas 
licensee, current LP-gas license number, and the year installed. For 
requirements regarding identification of conversions of motor vehicles, see 
sec.9.771 of this title (relating to Identification Labels).] 
 
  <nl>(A) the licensee's name; 
   
  <nl>(B) the LP-gas license number; and 
   
  <nl>(C) the year the container was installed. 
     
  <nl>(18) A single identification decal or tag may be used to satisfy the 
requirements in sec.sec.9.231, 9.462, 9.771, and 9.952 of this title (relating 
to identification of approved appliances, containers manufactured for 
underground installation, vehicle identification labels, and piping installation 
identification, respectively) provided the decal or tag meets all the 
requirements of those sections. 
     
  (b)-(c) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509564 
  Mary Ross McDonald 
 Assistant Director, Legal Division, Gas Utilities/LP Gas 
 Railroad Commission of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7008 
         
             
  Subchapter D. LP-Gas Appliances and Appurtenant Equipment 
 
  16 TAC sec.9.231 
 
  The amendment is proposed under the Texas Natural Resources Code, sec.113. 
051, which authorizes the commission to adopt rules relating to any and all 
aspects or phases of the LP-gas industry that will protect or tend to protect 
the health, welfare, and safety of the general public. 
 The following is the statute, article, or code affected by the proposed 
amendment: Texas Natural Resources Code, sec.113.051. 
 
 
  sec.9.231. <nl>Identification of Approved Appliances. 
 
  (a) [All] LP-gas appliances shall be approved by the <nl>commission<ol> 
[Railroad Commission of Texas] or certified by a nationally recognized testing 
laboratory[, such as American Gas Association, Inc., or Underwriters 
Laboratories, Inc]. If [such] gas appliances are not certified for use with LP-
gas, <nl>a licensee <ol> [they] may <nl>convert the appliances<ol> [be 
converted] to use LP-gas as a fuel [by a licensee], provided the licensee tests 
such appliances for proper operation before placing them in service. 
   
  (b) Upon completion of the conversion and testing of LP-gas appliances, the 
licensee shall attach to each such appliance a <nl>decal or tag of metal or 
other permanent material indicating the following information:<ol> [metal tag 
bearing the words: "converted to LP-gas", the licensee's name and LP-gas license 
number, and the year the appliance is converted.] 
 
  <nl>(1) the licensee's name; 
   
  <nl>(2) the LP-gas license number; 
   
  <nl>(3) the year the appliance was converted; and 
   
  <nl>(4) the wording, "Converted to LP-Gas." 
     
  <nl>(c) A single identification decal or tag may be used to satisfy the 
requirements in sec.sec.9.184, 9.462, 9.771, and 9.952 of this title (relating 
to uniform protection standards, containers manufactured for underground 
installation, vehicle identification labels, and piping installation 
identification, respectively) provided the decal or tag meets all the 
requirements of those sections. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509565 
  Mary Ross McDonald 
 Assistant Director, Legal Division, Gas Utilities/LP Gas 
 Railroad Commission of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7008 
         
             
  Subchapter F. Consumer LP-Gas Systems 
 
  16 TAC sec.9.462 
 
  The amendment is proposed under the Texas Natural Resources Code, sec.113. 
051, which authorizes the commission to adopt rules relating to any and all 
aspects or phases of the LP-gas industry that will protect or tend to protect 
the health, welfare, and safety of the general public. 
 The following is the statute, article, or code affected by the proposed 
amendment: Texas Natural Resources Code, sec.113.051. 
 
 
  sec.9.462. Containers  23>Manufactured for [Installed] Underground 
<nl>Installation<ol>. 
 
  (a) Containers <nl>shall be<ol> installed underground [shall be so placed] so 
that the top of the container is <nl>at least<ol> [not less than] two feet below 
the normal surface of the ground, except for approved underground/aboveground 
(UG/AG) containers marked as <nl>specified in sec.9. 160<ol> [such in accordance 
with sec.9.60] of this title (relating to manufacturer's nameplate and markings 
on containers)<nl>.<ol> [, which may be installed not less than] <nl>UG/AG 
containers<ol> may be installed <nl>at least <ol> [not less than] six inches 
below grade from the top of the UG/AG container. All containers referred to in 
this subsection shall be protected against <nl>damage<ol> [mechanical injury] if 
<nl>they are <ol> [the container is] subject to vehicular traffic by a system of 
guardrails in accordance with sec.9.183 of this title (relating to uniform 
protection standards). 
   
  (b) Underground containers shall be set on a firm foundation <nl>such as firm 
earth <ol> [(firm earth may be used)] and surrounded with soft earth or sand, 
well tamped into place. 
   
  (c) (No change.) 
   
  (d) Upon completion of the consumer container installation, the licensee 
making the installation shall attach to one of the container valves a <nl>decal 
or tag of metal or other permanent material indicating the following 
information:<ol> [metal tag bearing the firm name of the licensee making the 
installation, the licensee's current license number, and the year installed.] 
 
  <nl>(1) the licensee's name; 
   
  <nl>(2) the LP-gas license number; and 
   
  <nl>(3) the year installed. 
   
  <nl>(e) A single identification decal or tag may be used to satisfy the 
requirements in sec.sec.9.184, 9.231, 9.771, and 9.952 of this title (relating 
to uniform protection standards, identification of approved appliances, vehicle 
identification labels, and piping installation identification, respectively) 
provided the decal or tag meets all the requirements of those sections. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509566 
  Mary Ross McDonald 
 Assistant Director, Legal Division, Gas Utilities/LP Gas 
 Railroad Commission of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7008 
         
               
  Subchapter I. LP-Gas Motor Fuel and Mobile Fuel Containers 
 
  16 TAC sec.9.771 
 
  The amendment is proposed under the Texas Natural Resources Code, sec.113. 
051, which authorizes the commission to adopt rules relating to any and all 
aspects or phases of the LP-gas industry that will protect or tend to protect 
the health, welfare, and safety of the general public. 
 The following is the statute, article, or code affected by the proposed 
amendment: Texas Natural Resources Code, sec.113.051. 
 
 
  sec.9.771. <nl>Vehicle  Identification Labels. 
 
  <nl>(a) LP-gas shall not be introduced into any vehicle powered by LP-gas and 
designed for regular use on public roadways unless the vehicle is properly 
identified by a weather-resistant diamond-shaped label located on a readily 
visible exterior vertical or near-vertical surface on the lower right rear of 
the vehicle. When LP-gas mobile fuel containers are located in a compartment or 
cabinet which obstructs the view of said containers, the label shall be placed 
on the access door of the compartment or cabinet. 
   
  [(a) LP-gas may not be introduced into any vehicle powered by LP-gas and 
designed for regular use on public roadways unless the vehicle is properly 
identified pursuant to this section. Such vehicles shall be identified by a 
weather-resistant diamond-shaped label located on an exterior vertical or near-
vertical surface on the lower right rear of the vehicle in a manner so as to be 
readily visible. When LP-gas mobile fuel containers are located in compartments 
or cabinets which obstruct the view of said containers, such a label shall be 
placed on the access door of the compartments or cabinets. The label shall be 
approximately 4 3/4 inches (120 millimeters) long by 3 1/4 inches (83 
millimeters) high. The markings shall consist of a border and letters "PROPANE" 
(letters one inch minimum height centered in the diamond) of silver or white 
reflective luminous material on a Pantone 2945 C Royal Blue or equivalent 
background as follows: Note: This section shall not be applicable to any LP-Gas 
Transport.] 
   
  <nl>(b) Labels shall be at least 4 3/4 inches long by 3 1/4 inches high. The 
markings shall consist of a border and the word, "PROPANE," in letters at least 
one inch tall, centered in the diamond, and of silver or white reflective 
luminous material on a Pantone 2945 C Royal Blue or equivalent background as 
shown in Figure 1: 
     
  <ol>Figure 1: 16 TAC sec.9.771(b) 
 
  <nl>(c) Supplies of labels printed with a black background may be exhausted 
prior to complying with this section. However, in no case shall labels printed 
with a black background be installed after November 1, 1994. 
   
  <nl>(d)<ol>[(b)] Upon completion of a vehicle conversion, the licensee making 
the conversion shall affix to the vehicle <nl>a decal or tag of metal or other 
permanent material<ol> [an identification tag or decal] in a <nl>readily 
visible<ol> location <nl>indicating the following information:<ol> [so as to be 
readily readable. The tag or decal shall contain letters that indicate the 
licensee's name, current license number, and the year and month the conversion 
was done.] 
 
  <nl>(1) the licensee's name; 
   
  <nl>(2) the LP-gas license number; and 
   
  <nl>(3) the year and month the vehicle was converted. 
     
  <nl>(e) A single identification decal or tag may be used to satisfy the 
requirements in sec.sec.9.184, 9.231, 9.462, and 9.952 of this title (relating 
to uniform protection standards, identification of approved appliances, 
containers manufactured for underground installation, and piping installation 
identification, respectively) provided the decal or tag meets all the 
requirements of those sections. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509567 
  Mary Ross McDonald 
 Assistant Director, Legal Division, Gas Utilities/LP Gas 
 Railroad Commission of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7008 
         
             
  Subchapter L. LP-Gas Piping and Piping Systems 
 
  16 TAC sec.9.952 
 
  The amendment is proposed under the Texas Natural Resources Code, sec.113. 
051, which authorizes the commission to adopt rules relating to any and all 
aspects or phases of the LP-gas industry that will protect or tend to protect 
the health, welfare, and safety of the general public. 
 The following is the statute, article, or code affected by the proposed 
amendment: Texas Natural Resources Code, sec.113.051. 
 
 
  sec.9.952. Piping Installation Identification [Tag]. 
 
  (a) LP-gas piping shall be installed, altered, [or] repaired <nl>,<ol> and 
tested only by <nl>persons issued a valid license by the LP-Gas Division<ol> 
[those persons, firms, corporations, or associations that have been licensed in 
accordance with the provisions of the Texas Natural Resources Code, Chapter 
113]. 
   
  (b) Upon completion of the installation, alteration, [or] repair<nl>, or<ol> 
[and] testing of an LP-gas piping system, the licensee shall attach to the end 
of the piping nearest the container a <nl>decal or tag of metal or other 
permanent material indicating the following information:<ol> [metal tag bearing 
the firm name of the licensee, the current license number, and the year the 
piping is installed, altered, or repaired.] 
 
  <nl>(1) the licensee's name; 
   
  <nl>(2) the LP-gas license number; and 
   
  <nl>(3) the year the piping was installed, altered, repaired, or tested. 
     
  <nl>(c) A single identification decal or tag may be used to satisfy the 
requirements in sec.sec.9.184, 9.231, 9.462, and 9.771 of this title (relating 
to uniform protection standards, identification of approved appliances, 
containers manufactured for underground installation, and vehicle identification 
labels, respectively) provided the decal or tag meets all the requirements of 
those sections. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509568 
  Mary Ross McDonald 
 Assistant Director, Legal Division, Gas Utilities/LP Gas 
 Railroad Commission of Texas 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7008 
         
                 Part IV. Texas Department of Licensing and Regulation 
  Chapter 67. Auctioneers 
  
  16 TAC sec.67.84 
 
  The Texas Department of Licensing and Regulation proposes new sec.67.84, 
concerning Auctioneers. The new section adds a fee to issue good standing 
letters. 
 James D. Brush, II, Director, Policies and Standards Division of the Texas 
Department of Licensing and Regulation, has determined that for the first five-
year period the section is in effect state government revenue will increase 
approximately $2,000 each year and that there will be no effect on local 
government. 
 Mr. Brush also has determined that for each of the first five years the section 
is in effect the public benefit anticipated as a result of enforcing it will be 
that the cost of enforcing the statute will continue to be covered by fees. 
Costs to small business and individuals will be $10 each time an auctioneer 
wishes to hold an auction in another state and requires a letter of good 
standing. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, Austin, Texas 78711. 
 The new section is proposed under Texas Civil Statutes, Article 8700, which 
authorize the department to license and regulate auctioneers. 
 The following is the Article that is affected by this rule: Article 8700, 
sec.9. 
 
 
  sec.67.84. Fees-Good Standing Letters. A $10 fee will be charged for good 
standing letters. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509560 
  Jack W. Garrison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7357 
         
           Chapter 70. Industrialized Housing and Buildings 
  
  16 TAC sec.70.80 
 
  The Texas Department of Licensing and Regulation proposes an amendment to 
sec.70.80, concerning Industrialized Housing and Buildings. The amendment 
increases third party agency registration fees, on-site inspection fees, 
standardizes the monitoring fee, and adds team leader as an alternative for an 
engineer for inspections requiring a team. The justification for the fee 
increase is that the current fees do not cover department cost for that task. 
The department is required to establish a fee schedule for each statute that 
will pay its administration cost. 
 James D. Brush, II, Director, Policies and Standards Division of the Texas 
Department of Licensing and Regulation has determined that for the first five-
year period the section is in effect there will be fiscal implications for state 
government as a result of enforcing or administering the section. State revenue 
will increase approximately $3,183 each year. There will be no effect on local 
government. 
 Mr. Brush also has determined that for each of the first five years the section 
is in effect the public benefit anticipated will be that the revenue collected 
will pay for its administration. Costs to small business will be increased by 
$100 each year for those registered as third parties and builders requiring on-
site inspections will pay $100 more for each inspection. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, Austin, Texas, 78711. 
 The amendment is proposed under Texas Civil Statutes, Article 5221f-1, which 
authorize the department to regulate industrialized housing and buildings. 
 The following is the Article that is affected by this rule: Article 5221f-1, 
sec.7. 
 
 
  sec.70.80. Commission Fees. 
 
  (a)-(b) (No change.) 
   
  (c) The design review agency's registration fee is  <nl>$300<ol> [$200] 
annually. 
   
  (d) The third party inspection agency's registration fee is <nl>$150<ol> 
[$100] per firm and $100 per inspector annually. 
   
  (e) (No change.) 
   
  (f) The fee for department personnel for in-plant inspections at a 
manufacturing facility shall be $30 per inspector hour and $40 per engineer 
<nl>or team leader <ol> hour plus travel and per diem in accordance with the 
current rate as established in the current Appropriations Act for all 
inspections, including plant certification inspections, varying interval 
inspections to monitor the manufacturer's compliance control program, and for 
increased frequency inspections. The inspector will give a statement to the 
manufacturer and it must be paid to the inspector by either a company check, 
cashiers check, or money order at the completion of the inspection. 
   
  (g) When the department acts as a design review agency, the fee for such 
services is $40 per [engineer] hour plus travel and per diem in accordance with 
the current rate as established in the current Appropriations Act. The 
manufacturer for whom the services are performed shall pay the fee before 
approval of the designs, plans, specifications, compliance control documents, 
and installation manuals and before the release of the documents to the 
manufacturer. 
   
  (h) (No change.) 
   
  (i) The fee for department personnel for on-site inspections is as follows and 
shall be submitted with the on-site inspection request by either a company check 
reflecting the name of the industrialized builder, cashier's check, or money 
order: 
 
  (1) <nl>$250<ol> [$150] for residential structures designed for one to four 
families, plus $25 for each dwelling unit in excess of two; or 
   
  (2) <nl>$850<ol> [$750] for those residential structures which exceed two 
stories in height or which are designed for separate living use of more than 
four families, plus $25 for each additional family dwelling unit in excess of 
four; or 
   
  (3) <nl>$250<ol> [$150] for commercial structures up to 800 square feet of 
floor space, plus $0.10 per additional square foot over 800; and 
   
  (4) <nl>$100<ol> [$60] for each reinspection not to exceed two inspector hours 
and $30 for each additional inspector hour in excess of two hours. Reinspection 
fees will be paid to the inspector by either a company check reflecting the name 
of the industrialized builder, cashiers check, or a money order at the 
completion of the inspection. 
     
  (j) The fee for department monitoring of design review agencies and third 
party inspection agencies outside headquarters shall be [$30 per inspector hour 
and] $40 per <nl>monitor <ol> [engineer] hour plus travel and per diem in 
accordance with the current rate as established in the current Appropriations 
Act. The department will present the agency a statement at the conclusion of the 
monitoring trip, and it is payable upon receipt. 
   
  (k) The fee for department personnel for inspection of approved alterations to 
industrialized housing and buildings and for special inspections shall be $30 
per inspector hour and $40 per engineer <nl>or team leader <ol> hour plus travel 
and per diem in accordance with the current rate as established in the current 
Appropriations Act. The department will present a billing statement at the 
conclusion of the inspection that is payable upon receipt. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509561 
  Jack W. Garrison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7357 
         
             Chapter 75. Air Conditioning and Refrigeration Contractors License 
Law 
  
  16 TAC sec.75.65, sec.75.80 
 
  The Texas Department of Licensing and Regulation proposes amendments to 
sec.75.65 and sec.75.80, concerning licensing for air conditioning and 
refrigeration contractors. The change in sec.75.65 adds a statement that 
advisory board members may be reimbursed for expenses only when money has been 
appropriated for that purpose. The change in sec.75.80 changes new and renewal 
license fees so that all license issuance fees are the same. The justification 
for the statement on reimbursement of board members is that board members will 
understand that reimbursement authority rests with the legislature. The 
justification for the fee changes is that the cost to the department to issue a 
license is the same for either class and for new and renewal licenses, and that 
there is no justifiable reason to charge more for Class A than for Class B, or 
for new licenses than for renewal licenses. 
 James D. Brush, II, Director, Policies and Standards Division, Texas Department 
of Licensing and Regulation, has determined that for the first five-year period 
the sections are in effect there will be no fiscal effect for state or local 
government. 
 Mr. Brush also has determined that for each of the first five years the 
sections are in effect the public benefit anticipated will be increased program 
integrity. Costs to small businesses that are doing Class A work that are 
obtaining a new license will decrease by $150, and those with an existing 
license will decrease $25 every three years. Small businesses that are doing 
Class B work that are obtaining a new license will have a decrease of $25, and 
those with an existing license will have an increase every three years of $50. 
The economic cost to persons who would be affected is the same as the cost to 
small businesses if an individual is operating as a contractor. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, Austin, Texas, 78711. 
 The amendments are proposed under Texas Civil Statutes, Article 8861, which 
authorize the department to license and regulate air conditioning and 
refrigeration contractors. 
 The following is the Article that is affected by this rule: Article 8861, 
sec.3A, Article 8861, sec.3A. 
 
 
  sec.75.65. Advisory Boards. 
 
  (a)-(f) (No change.) 
   
  <nl>(g) Expenses can be reimbursed to board members only when the legislature 
has specifically appropriated money for that purpose. 
 
     
  sec.75.80. Fees. 
 
  (a) (No change.) 
   
  (b) License Fees. License fees are: 
 
  (1) class A <nl>or B<ol> license for three years <nl>$125<ol> [$300; renewal 
every three years $150]; 
   
  (2) class <nl>A or<ol> B [license for three years $150;] renewal every three 
years <nl>$125<ol> [$75]; 
   
  (3) (No change.) 
     
  (c)-(e) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509559 
  Jack W. Garrison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7357 
         
             Chapter 78. Talent Agencies 
  
  16 TAC sec.sec.78.80-78.82 
 
  The Texas Department of Licensing and Regulation proposes amendments to 
sec.sec.78.80-78.82, concerning talent agencies. The amendments add fees for 
registration and administration and for filing an updated certificate of 
registration. The justification for the additional fees is that the fees 
currently in place are far below the amount required by the department to cover 
the cost of registration and enforcement of the Act. Since the department is 
required to structure fees for each statute to pay for its own regulation, fees 
must be increased dramatically. The proposed fees will bring the projected 
revenue closer to covering the administration and enforcement costs. 
 James D. Brush, II, Director, Policies and Standards Division of the Texas 
Department of Licensing and Regulation, has determined that for the first five-
year period the sections are in effect there will be fiscal implications for 
state government as a result of enforcing or administering the sections. State 
government revenue will increase approximately $45,400 each year. There will be 
no effect on local government. 
 Mr. Brush also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
them will be that more of the cost of enforcing the statute will be covered by 
fees. The cost for compliance for small businesses and individuals will be 
increased by $500 each year, and individuals and small business that have a 
change in registration information will increase by $100. The fee for updating a 
registration filing, while specified in the statute, has not been charged 
before. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, Austin, Texas 78711. 
 The amendments are proposed under Texas Civil Statutes, Article 5221a-9, which 
authorize the department to register and regulate talent agencies. 
 The following is the Article that is affected by this rule: Article 5221a-9, 
sec.6; Article 5221a-9, sec.6; Article 5221a-9, sec.6. 
 
 
  sec.78.80. Fees-Original Registration. 
 
  <nl>(a) The fee for <nl>filing<ol> an original talent agency certificate of 
registration is $100. 
   
  <nl>(b) The fee for registration and administration is $500. 
 
     
  sec.78.81. Fees-Renewal Registration. 
 
  (a) The annual <nl>filing<ol> [renewal] fee for <nl>renewing <ol> a talent 
agency certificate of registration is $100. 
   
  <nl>(b) The annual renewal fee for registration and administration is $500. 
   
  <nl>(c)<ol>[(b)] A late fee of $50 will be charged for renewal applications 
postmarked between midnight of the day the current certificate of registration 
expires and midnight of the 30th day after the expiration. 
 
     
  sec.78.82. Fees-<nl>Updated  [Revised] or Duplicate Registration. 
 
  <nl>(a) A $100 fee will be charged for filing an updated certificate of 
registration. 
   
  <nl>(b)  A $25 fee will be charged for <nl>printing<ol> [issuing] a revised or 
duplicate certificate of registration. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509562 
  Jack W. Garrison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-7357 
         
                 
  TITLE 22. EXAMINING BOARDS 
 Part IV. Texas Cosmetology Commission 
  Chapter 89. General Rules and Regulations 
  
  22 TAC sec.sec.89.4, 89.6, 89.11, 89.14, 89.20, 89.34, 89.41, 89. 53, 89.54, 
89.56, 89.72, 89.75, 89.76 
 
  The Texas Cosmetology Commission proposes amendments to  s89.4, concerning 
cosmetology instructor on duty; sec.89.6, concerning new location or change in 
floor plan of school;  s89.11, concerning daily attendance register; sec.89.14, 
concerning concurrent enrollments and make-up hours; sec.89.20, concerning 
length of courses; sec.89.34, concerning applicants for licensure through 
reciprocity; sec.89.41, concerning change of location of a salon or independent 
contractor; sec.89.53, concerning minimum requirements for both private and 
public cosmetology schools; sec.89.54, concerning independent contractor/booth 
rental license; sec.89.72, concerning curriculum; sec.89.75, concerning field 
trips; and sec.89.76, concerning minimum requirements for cosmetology school 
separate facility; and new sec.89.56, concerning administrative processing fees. 
The amendments and new section are proposed to comply with Senate Bill 1502 and 
House Bill 1, 74th Texas Legislature, Regular Session. 
 Dick Strader, executive director, Texas Cosmetology Commission, has determined 
that for the first five-year period the sections are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. 
 Mr. Strader also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to ensure that all certificate holders and licensees comply 
with the requirements of the rules of the commission. There will be no effect on 
small businesses. There is no anticipated economic cost to persons who are 
required to comply with the sections as proposed. 
 Comments on the proposal may be submitted to Dick Strader, Texas Cosmetology 
Commission, P.O. Box 26700, Austin, Texas 78755-0700. 
 The amendments and new section are proposed under Texas Civil Statutes, Article 
8451a, sec.4(a), which provide the Texas Cosmetology Commission with the 
authority to "issue rules consistent with this Act after a public hearing", to 
protect the public's health and welfare. 
 Texas Civil Statutes, Article 8451a, is affected by these proposed amendments 
and new section. 
 
 
  sec.89.4. [Cosmetology] Instructor on Duty. 
 
  [(a) Public school cosmetology programs must have one licensed instructor on 
duty for each 25 students, or part thereof, in attendance at a given time.] 
   
  <nl>(a) <ol>[(b)] Private cosmetology schools <nl>and public cosmetology 
school programs <ol> shall maintain on staff and on duty during normal business 
hours, not less than <nl>one<ol> [two] full-time <nl>instructor for each 25<ol> 
[instructors to a maximum of 50] students in attendance. [One instructor is 
sufficient whenever student enrollment drops below 15. One instructor will be 
required for each additional 25 students, or part thereof, in attendance over 
50.] Speciality licensed instructors can only teach the subject matter in which 
they are licensed. 
 
  [(1) The speciality licensed instructor shall be considered when determining 
the student teacher ratio in this section. 
   
  [(2) When enrollment in the operator course exceeds 25 students there must be 
two cosmetology instructors. 
 
  [(A) Enrollment 0-14, one cosmetology instructor required. 
   
  [(B) Enrollment 15-25, one cosmetology instructor and one full-time licensed 
instructor in any speciality area required. 
   
  [(C) Enrollment 26-50, two cosmetology instructors required. 
   
  [(D) 51 or above, one cosmetology instructor for each 25 students or part 
thereof (cosmetology instructor as defined in sec.89.15(b) of this title 
(relating to Definition of License Authorizations)).] 
       
  <nl>(b) <ol>[(c)] Schools conducting evening classes for students other than 
those enrolled during normal business hours, shall maintain the instructor-
student ratio described in subsection (a) [or (b)] of this section. The evening 
class instructor-student ratio is based on actual attendance [without regard to 
actual enrollments]. 
   
  <nl>(c)<ol>[(d)] No credit for instructional hours can be granted to a 
cosmetology student unless such hours are accrued under the supervision of a 
licensed instructor. 
   
  <nl>(d)<ol>[(e)]  Private cosmetology schools that contract with public 
schools for the purpose of providing opportunities for public school students to 
become licensed cosmetologists must comply with sec.89.2 of this title (relating 
to Public School Cosmetology Programs). 
   
  <nl>(e)<ol>[(f)] Private cosmetology schools that provide regularly scheduled 
instruction on Mondays, for public school contracted instruction students only, 
are required to meet the instructor-ratio prescribed in subsection (a) of this 
section on such days. If private cosmetology students are in attendance, on such 
days, to make up hours they must be included in the student count to determine 
the appropriate instructor-student ratio. 
   
  <nl>(f)<ol>[(g)] Public school contracted instruction students in attendance 
to make up hours on Saturdays shall be included in the student count to 
determine the appropriate instructor-student ration in accordance with 
subsection <nl>(a)<ol> [(b)] of this subsection. 
   
  <nl>(g)<ol>[(h)] Private cosmetology schools <nl>and public school cosmetology 
programs<ol> may utilize their licensed cosmetology instructors to instruct in 
the areas of the Manicure Speciality course or Facial Speciality course [without 
violating sec.89.5(a)(1) or (2) and (b)(1) or (2) of this title (relating to 
Speciality Instructor on Duty.)]. 
 
     
  sec.89.6. New Location or Change in Floor Plan of School. 
 
  (a)  To be approved for continued operation on a current license, facilities 
shall be inspected and approved. A private cosmetology school moving to a new 
location or altering floor plan will submit the following: 
 
  (1)  detailed floor plan showing not less than 3,500 square feet, <nl>and 
shall contain the following:<ol> [,separate restrooms for male and female, and 
divided into three areas: classroom, junior department, and senior department;] 
 
  <nl>(A) the area shall be divided into two areas: one for theory and one 
clinic work area; and 
   
  <nl>(B) separate restrooms for male and female. 
     
  (2)-(4) (No change.) 
     
  (b) (No change.) 
 
     
  sec.89.11. Daily Attendance Register. 
 
  (a) Each cosmetology school or program shall maintain a daily record of 
attendance with each student personally punching the time clock. Attendance 
records will be maintained in the school and available to authorized personnel 
of the Texas Cosmetology Commission, for a period of 48 months after the student 
completes or terminates attendance. All schools will be required to use a time 
clock to track student hours. All schools shall be required to post a sign at 
the time clock which states: 
 
  (1)-(3) (No change.) 
   
  (4) <nl>students leaving the facility for any reason must clock out, except if 
an instructional area on a campus is located outside the approved facility, 
those areas must be approved by the commission and the students must be under 
the supervision of an instructor [any student leaving the facility for any 
reason must clock out]. 
 
  <nl>(A) Private schools can utilize locations away from the building for 
instruction in the approved cosmetology school curriculum. The instruction at 
these location must be identified as a field trip. If, the private school is 
located in facilities that consist of more than one building the public rule 
shall apply. 
   
  <nl>(B) Public schools, all areas of the school or campus are acceptable as 
instructional areas; if, the instructor is teaching content approved in the 
cosmetology curriculum. 
   
  <nl>(C) A licensed instructor must be physically present during all activities 
included in this rule. 
       
  (b) (No change.) 
 
     
  sec.89.14. Concurrent Enrollments and Make-Up Hours. 
 
  (a) (No change.) 
   
  (b) For purposes of making-up hours, a student may receive instruction in a 
second school without being concurrently enrolled. Upon completion of this 
instruction, the time card used at the second school and a notarized statement 
from the school official certifying the approvable activities engaged in by the 
student will be submitted to the student's primary school and be attached to the 
monthly hour report for audit by the commission inspector. The total number of 
hours earned by a student in any manner cannot exceed [eight hours in any one 
day or more than] 48 hours in any one calendar week. 
   
  (c) (No change.) 
 
     
  sec.89.20. Length of Courses. 
 
  (a)-(h) (No change.) 
   
  (i)  Manicurist: The manicuring course shall be for  <nl>600<ol> [250] hours 
in an approved school. 
   
  (j)-(k) (No change.) 
   
  (l) Recommendations for approving validation of hours: 
 
  (1)-(7) (No change.) 
   
  <nl>(8)  the guidelines recommended above will be pro-rated based upon the 
number of hours required for the speciality license or instructor license 
sought. Required course hours for licensure are based on current hour 
requirements at the time of reinstatement. 
 
       
  sec.89.34. Applicants for Licensure through Reciprocity. 
 
  (a)  Any person who seeks licensure in the State of Texas through reciprocity 
from any other state shall: 
 
  (1)-(3) (No change.) 
   
  (4) <nl>the applicant must present the same number of hours as required by the 
State of Texas for the applied license; <ol> [furnish notarized letters of 
employment from past employers or employment records to prove work experience if 
applicant does not have required number of hours for license he is applying for. 
One year of work experience will equal 250 hours of training.] 
     
  (b)  Any person who seeks licensure in the State of Texas through reciprocity 
from another nation shall: 
 
  (1)-(3) (No change.) 
   
  (4) <nl>the applicant must present the same number of hours as required by the 
State of Texas for the applied license; <ol> [furnish notarized letters of 
employment from past employers (one year of work experience will equal 250 hours 
of training)]; and 
   
  (5) (No change.) 
     
  (c) (No change.) 
 
     
  sec.89.41. Change of Location of a Salon [or Independent Contractor].   A 
salon[,] <nl>or<ol> school[, or independent contractor] may move and continue to 
operate with the current license, but must be inspected and approved under the 
current requirements in the new location. The salon[,] <nl>or<ol> school[, or 
independent contractor] must notify the commission office in writing of the 
change of address as soon as the change of address becomes available. 
 
   
  sec.89.53. Minimum Requirements for Both Private and Public Cosmetology 
Schools. 
 
  (a) The following are the requirements for a private cosmetology school as 
authorized by the Texas Cosmetology Commission <nl>:<ol> [as approved on June 1, 
1985.] 
 
  (1) A building to house a cosmetology school must be fireproof and of 
permanent type of construction, and contain a minimum of 3,500 square feet of 
floor space, with separate restrooms for male and female students. The building 
must be divided into <nl>two<ol> [three] separate areas: one for instruction of 
theory  <nl>and one clinic work area<ol>[, one for practice work of seniors, and 
one for practice work of juniors]. 
   
  (2)-(15) (No change.) 
     
  (b) (No change.) 
 
     
  sec.89.54. Independent Contractor/Booth Rental License. 
 
  (a)-(d)  (No change.) 
   
  (e) The original and renewal booth rental license fee shall be <nl>$50<ol> 
[$25] and shall be valid for two years from date of issue. If a booth rental 
license is delinquent for less than 30 days, the delinquency fee shall be $10, 
over 30 days the delinquency fee shall be $25. 
   
  (f) <nl>Independent Contractors practicing cosmetology in more than one 
location must exhibit an original a booth rental license at each location. 
   
  <nl>(g)<ol>[(f)] Independent Contractors must post in a location visible at 
all times the following information.  <nl>It must be posted on the outside of 
the booth or the door where it can be read by visitors or prospective clients 
<ol>: 
 
  (1) operator's name; 
   
  (2) operator's license number; 
   
  (3) hour of business. 
     
  <nl>(h)<ol>[(g)] The lessor to an independent contractor must maintain a list 
of all renters that includes: 
 
  (1) name of the renter; 
   
  (2) cosmetology license number of the renter; 
   
  (3) hours of business of the renter. 
     
  <nl>(i)<ol>[(h)] The lessor must supply the inspector with a list of renters 
upon request. Failure to provide the list can result in a violation of such 
significance ti require a hearing. 
 
     
  sec.89.56. Administrative Processing Fees. All schools, salons, independent 
contractors, and licensees will be held responsible for the following: 
 
  (1) Submitting incorrect material will result in a $10 processing fee per 
submittal. 
   
  (2) The commission does not accept personal checks. Personal checks sent to 
the commission will be returned and a $10 processing fee will be charged. 
   
  (3) School business checks, money orders, and cashier's checks are acceptable. 
Insufficient fund school checks will result in a $30 return check fee being 
charged to the school. The second check sent to the commission must be for the 
correct amount, with a $25 money order, cashier's check, or bank check. If a 
second check is returned insufficient an additional $25 insufficient charge will 
be assessed. No services will be performed until the required fees are paid and 
in good standing. 
   
  (4) If personal checks are returned to the sender resulting in acceptable 
payment being after the deadline the license will be assessed the late charge 
fee. Acceptable payment procedure must be completed before the published 
deadline for the license. 
 
     
  sec.89.72. Curriculum.  The curriculum listed has been established by the 
Texas Cosmetology Commission and must be followed by all cosmetology schools. 
The curriculum shall be posted in a conspicuous place in the school. A current 
syllabus and lesson plans for each course shall be maintained by the school and 
be available for inspection. 
 
  (1)  Operator curriculum. 
 
  (A)-(C) (No change.) 
   
  (D) Manicure curriculum [(total [250] hours)]: 
 
  (i)-(iv) (No change.) 
   
  (v)  procedures, <nl>220 <ol> [175] hours; 
 
  (I)-(IX) (No change.) 
   
  (X) application of nail extensions; 
 
  (-a-)-(-d-) (No change.) 
   
  <nl>(-e-) Odorless product; 
       
  (vi) arms and hands; 
 
  (I)  (No change.) 
   
  (II) muscles-<nl>ten<ol> [five] hours: 
 
  (-a-)-(-b-) (No change.) 
     
  (III) (No change.) 
   
  (IV)  skin-<nl>ten<ol> [five] hours; 
 
  (-a-)-(-e-) (No change.) 
     
  (V) nails-<nl>100<ol> [ten] hours; 
 
  (-a-)-(-d-) (No change.) 
       
  (vii) bacteriology, sanitation and safety measures-<nl>150 <ol> [15] hours; 
 
  (I)-(IV) (No change.) 
     
  (viii) professional practices -<nl>80<ol> [ten] hours; 
 
  (I) -(II) (No change.) 
     
  <nl>(ix)<nl> total, 600 hours. 
   
  <nl>(x) <nl> Theory is construed to mean any topic of instruction (see listed 
in this subparagraph) in the classroom or practical area. 
     
  (E)-(I)  (No change.) 
 
       
  sec.89.75. Field Trips. <ol> Field trips are permitted under the following 
conditions for students enrolled in the following courses. The following 
guidelines are to be strictly adhered to: 
 
  (1) A maximum of 40 hours out of the 1,500 hours permitted per student. 
 
  (A) a maximum of <nl>20<ol> [eight] hours for the manicure course; 
   
  (B)-(E) (No change.) 
     
  (2)-(6) (No change.) 
 
     
  sec.89.76. Minimum Requirements for Cosmetology School Separate Facility. 
 
  (a) (No change.) 
   
  (b) A building to house a separate facility must be fireproof and of permanent 
type construction, and contain a minimum of 1,000 square feet of floor space, 
with separate restrooms for male and female students. The building must be 
divided into two separate areas: one for instruction of theory; and one for  
<nl>clinic<ol> [practice] work. 
   
  (c)-(r) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509578 
  Dick G. Strader 
 Executive Director 
 Texas Cosmetology Commission 
    Proposed date of adoption: September 9, 1995 
 For further information, please call: (512) 454-4674 
         
               Part XVI. Texas Board of Physical Therapy Examiners 
  Chapter 321. Definitions 
  
  22 TAC sec.321.1 
 
  The Texas Board of Physical Therapy Examiners proposes an amendment to 
sec.321.1, concerning Definitions. This proposed amendment clarifies the 
procedure by which a physical therapist assigns responsibilities to a physical 
therapist assistant. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be proper supervision of physical therapist assistants. There will 
be no effect on small businesses. There is no anticipated economic costs to 
persons who are required to comply with the section as proposed. 
 Comments on the proposal may be submitted to Gerard Swain, PT Coordinator, 
Texas Board of Physical Therapy Examiners, 3001 South Lamar Boulevard, Suite 
101, Austin, Texas 78704. 
 The amendment is proposed under the Physical Therapy Practice Act, Texas Civil 
Statutes, Article 4512e, which provides the Texas Board of Physical Therapy 
Examiners with the authority to adopt rules consistent with this Act to carry 
out its duties in administering this Act. 
 Texas Civil Statutes, Article 4512e is affected by the amendment. 
 
 
  sec.321.1. Definitions.  The following words, terms, and phrases, when used in 
the rules of the Texas [State] Board of Physical Therapy Examiners, shall have 
the following meanings, unless the context clearly indicates otherwise. 
   
   Physical therapist assistant-The supervision of the physical therapist 
assistant shall include the following: 
 
  (A)-(D) (No change.) 
   
  (E) The physical therapist may assign responsibilities to the physical 
therapist assistant to: 
 
  (i) provide physical therapy services as specified in the <nl>written<ol> plan 
of care developed by the physical therapist  <nl>prior to treatment by a 
physical therapist assistant <ol> which includes: 
 
  (I)-(III) (No change.) 
     
  (ii)-(x) (No change.) 
     
  (F) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509513 
  John Maline 
 Executive Director 
 Texas Board of Physical Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
             Chapter 329. Licensing Procedure 
  
  22 TAC sec.329.5 
 
  The Texas Board of Physical Therapy Examiners proposes an amendment to 
sec.329.5, concerning Licensing Procedures for Foreign-Trained Applicants. This 
proposed amendment identifies how laboratory hours are converted into semester 
hours and sets the maximum number of hours allowed in clinical education. The 
amended section also requires all applicants to pass all courses in professional 
education with a grade of C or above. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be a potential increase in the availability of licensees, and 
increased assurance of quality physical therapy services. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the section as proposed. 
 Comments on the proposal may be submitted to Gerard Swain, PT Coordinator, 
Texas Board of Physical Therapy Examiners, 3001 South Lamar, Suite 101, Austin, 
Texas 78704. 
 The amendment is proposed under the Physical Therapy Practice Act, Texas Civil 
Statutes, Article 4512e, which provides the Texas Board of Physical Therapy 
Examiners with the authority to adopt rules consistent with this Act to carry 
out its duties in administering this Act. 
 Texas Civil Statutes, Article 4512e is affected by the amendment. 
 
 
  sec.329.5 Licensing Procedures for Foreign-Trained Applicants. 
 
  (a)-(f) (No change.) 
   
  (g) Guidelines for board-approved education credentialing agencies. 
 
  (1)-(4) (No change.) 
   
  (5) The credentialing agency must use a method to convert classroom hours to 
semester units which has a ratio no greater than the following: 15 contact 
lecture hours = one semester unit/hour; <nl>55<ol> [45] contact laboratory hours 
= one semester unit/hour. When lecture/lab hours are not delineated on the 
transcript, the evaluator may use an appropriate ratio and indicate the ratio 
used in the evaluation. 
   
  (6) The credentialing agency must list and assign a grade for each course 
taken by the applicant, by assigning the grade of A, B, C, D, F, Pass, Fail, 
Credit or No Credit. Those grades assigned by the credentialing agency must be 
the grades that are converted to the U.S. equivalent, in accordance with the 
most current version of the National Association for Foreign Student Affairs 
Handbook on the Placement of Foreign Graduate Students. <nl>The credentialing 
agency must identify and list those courses which would not transfer to the U.S. 
as a C or above or Pass or Credit in accordance with the most current version of 
the National Association for Foreign Student Affairs Handbook on the Placement 
of Foreign Graduate Students. An applicant must earn a grade of A, B, C, or Pass 
or Credit in any professional physical therapy education courses. An applicant 
with a grade of D, F, Fail, or no credit appearing for a professional physical 
therapy education course on his/her evaluation who has not successfully retaken 
the course with a grade of A, B, C, Pass or Credit is not eligible for licensure 
in Texas.<ol> [Only those courses which receive a grade of C or above, or pass 
or credit may be counted toward the requirement that the applicant complete a 
minimum of 72 hours in professional physical therapy education.] 
   
  (7) The agency must attest that the applicant has successfully completed an 
educational program equivalent to U.S. programs accredited by the Commission on 
Accreditation of Physical Therapy Education (CAPTE) and has earned the 
equivalent of a minimum of 72 semester hours of professional physical therapy 
education. The applicant must have completed courses in each of the following 
areas: basic sciences, clinical science, and physical therapy theory and 
procedures. The applicant must have also successfully completed United States 
required equivalent courses/hours (no less than eight <nl>and no more than 
15<ol> U.S. semester credit hours at the Upper Division Level) in clinical 
education. 
   
  (8)-(10) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509512 
  John Maline 
 Executive Director 
 Texas Board of Physical Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
               Chapter 341. License Renewal 
  
  22 TAC sec.341.8 
 
  The Texas Board of Physical Therapy Examiners proposes new sec.341.8, 
concerning Inactive Status. This new section will create a mechanism to allow 
licensed physical therapists or physical therapist assistants to choose to 
become inactive rather than let their license expire when not renewing their 
license in Texas. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be the availability of licensees properly trained to practice 
physical therapy. There will be no effect on small businesses. There is no 
anticipated economic costs to persons who are required to comply with the 
section as proposed. 
 Comments on the proposal may be submitted to Gerard Swain, PT Coordinator, 
Texas Board of Physical Therapy Examiners, 3001 South Lamar Boulevard, Suite 
101, Austin, Texas 78704. 
 The new section is proposed under the Physical Therapy Practice Act, Texas 
Civil Statutes, Article 4512e, which provides the Texas Board of Physical 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 4512e is affected by this new section. 
 
 
  sec.341.8. Inactive Status. <ol> Inactive status shall mean the voluntary 
termination of the right or privilege to practice physical therapy in Texas. The 
licensee retains the right or privilege to represent himself/herself as having 
an inactive license. An inactive status will be limited to three renewal 
periods. A licensee may petition the board to extend the inactive period to a 
maximum of two renewal periods. Any person who has been licensed in the state 
and is not actively engaged in the practice of physical therapy in the state 
may, at his/her request, be placed on the inactive status. The board shall keep 
an inactive register. A person whose license has been placed on inactive status 
may be reinstated by the board. An applicant must do one of the following: 
 
  (1) take and pass the PES examination; 
   
  (2) attend a university review course approved by the board 
   
  (3) have the required number of CEUs as an active licensee renewing their 
license; or 
   
  (4) complete an internship approved by the board which is equal to 150 hours. 
The inactive licensee must submit to the board a notarized, completed 
application on a form provided by the board. The renewal fee must be included 
with application. The board shall act after receipt of the application for 
reinstatement from inactive status and shall send to the applicant written 
notification of its decision to reinstate the license. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509514 
  John Maline 
 Executive Director 
 Texas Board of Physical Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
             Chapter 346. Practice Setting for Physical Therapy 
  
  22 TAC sec.346.1 
 
  The Texas Board of Physical Therapy Examiners proposes an amendment to 
sec.346.1, concerning Educational Settings. This proposed amendment defines the 
role of a physical therapist working in an educational setting. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be the availability of licensees properly informed to practice 
physical therapy in an educational setting. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the section as proposed. 
 Comments on the proposal may be submitted to Gerard Swain, PT Coordinator, 
Texas Board of Physical Therapy Examiners, 3001 Sourth Lamar Boulevard, Suite 
101, Austin, Texas 78704. 
 The amendment is proposed under the Physical Therapy Practice Act, Texas Civil 
Statutes, Article 4512e, which provides the Texas Board of Physical Therapy 
Examiners with the authority to adopt rules consistent with this Act to carry 
out its duties in administering this Act. 
 Texas Civil Statutes, Article 4512e is affected by the amendment. 
 
 
  sec.346.1. Educational Settings. 
 
  (a) <nl>In the educational setting, the physical therapist conducts 
appropriate screenings, evaluations, and assessments to determine needed 
services to fulfill educational goals. When a student is determined by the 
physical therapist to be eligible for physical therapy as a related service 
defined by Special Education Law, the physical therapist provides written 
recommendations to the Admissions Review and Dismissal Committee as to the 
amount of specific services needed by the student (i.e. consultation or direct 
services and the frequency and duration of services.)<ol> [The primary role of 
the physical therapist is to implement services as identified in the student's 
individual educational plan (IEP).] 
   
  (b) <nl>The physical therapist implements physical therapy services in 
accordance with the recommendations accepted by the school committee members and 
as reflected in the student's Admission Review and Dismissal Committee 
reports.<ol> [The physical therapist generally acts as a consultant in the 
educational setting by instructing teachers, instructional aides, and parents in 
student-centered, classroom-centered, and/or program-centered services. If the 
physical therapist determines that a student needs direct or individual 
treatment, the student must be referred by a physician before treatment is 
instituted.] 
   
  (c) <nl>The physical therapist may provide general consultation or other 
physical therapy program services for school administrators, educators, 
assistants, parents and others to address district, campus, classroom or 
student-centered issues. For the student who is eligible to receive physical 
therapy as a related service in accordance with the student's Admission Review 
and Dismissal Committee reports, the physical therapist will also provide the 
consultation and direct types of specific services needed to implement specially 
designed goals and objectives included in the student's Individualized Education 
Program.<ol> [In the educational setting, when a student has an acute problem, a 
referral from a physician must be obtained and treatment is provided only with 
the on-site supervision of a physical therapist or a physical therapist 
assistant.] 
   
  <nl>(d) The types of services which require a physician's referral in the 
educational setting include the provision of individualized specially designed 
instructions and the direct physical modeling or hands-on demonstration of 
educational activities with a student who has been determined eligible to 
receive physical therapy as a related service. Additionally, it includes the 
direct provision of activities which are of such a nature that they should only 
be conducted with the eligible student by a physical therapist or physical 
therapist assistant. The physical therapist should refer to sec.343.3 of this 
title (relating to Referral Requirement and Exceptions to Referral Requirement) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on July 31, 1995. 
 TRD-9509515 
  John Maline 
 Executive Director 
 Texas Board of Physical Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
                 
  TITLE 25. HEALTH SERVICES 
 Part I. Texas Department of Health 
  Chapter 3. Memorandums of Understanding With Other State Agencies 
  
  25 TAC sec.3.31 
 
  The Texas Department of Health (department) proposes new  s3.31, concerning 
the memorandum of understanding (MOU) between the department, Texas Department 
of Criminal Justice (TDCJ), Texas Rehabilitation Commission, Texas Commission 
for the Blind, Texas Commission for Deaf and Hearing Impaired, and Texas 
Department of Human Services. This MOU addresses the responsibilities of each 
agency to institute a continuity of care and service for offenders in the 
criminal justice system who are physically disabled, terminally ill, or 
significantly ill. This MOU is required by Texas Health and Safety Code, 
sec.614.015. 
 This memorandum was adopted by the TDCJ in the May 16, 1995, issue of the Texas 
Register (20 TexReg 3672). The rule was proposed in 37 Texas Administrative 
Code, sec.159.5(a) in the April 4, 1995, issue of the Texas Register (20 TexReg 
2523). The MOU was proposed as Figure 1: 37 Texas Administrative Code 
sec.159.5(a) in the Tables and Graphics Section of the April 4, 1995, issue of 
the Texas Register (20 TexReg 2532). 
 Carol S. Daniels, Deputy Commissioner for Programs, has determined that for the 
first five-year period the section is in effect there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the section. 
 Ms. Daniels also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be better continuity of care for those in the criminal justice 
system who are physically disabled, terminally ill, or significantly ill. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. There will be 
no effect on local employment. 
 Comments may be submitted to Carol S. Daniels, Deputy Commissioner for 
Programs, 1100 West 49th Street, Austin, Texas 78756, (512) 458-7378. Comments 
on the proposed rule will be accepted for 30 days following publication in the 
Texas Register. 
 The new section is proposed under the Texas Health and Safety Code, Chapter 
614, "Texas Council on Offenders with Mental Impairments," sec.614.015, 
"Continuity of Care for Physically Disabled, Terminally Ill, or Significantly 
Ill Offenders," which requires the department to adopt an MOU by rule; and 
sec.12.001, which provides the board with the authority to adopt rules for the 
performance of every duty imposed by law on the board, the department, and the 
commissioner of health. 
 Texas Health and Safety Code, sec.614.015 is affected by the new section. 
 
 
  sec.3.31. Memorandum of Understanding Between the Texas Department of Criminal 
Justice, Texas Commission for the Blind, Texas Commission for the Deaf and 
Hearing Impaired, Texas Rehabilitation Commission, Texas Department of Human 
Services, and the Texas Department of Health. 
 
  (a) The Texas Department of Health (department) adopts by reference a 
memorandum of understanding (MOU) between the Texas Department of Criminal 
Justice, Texas Commission for the Blind, Texas Commission for the Deaf and 
Hearing Impaired, Texas Rehabilitation Commission, and Texas Department of Human 
Services. The MOU contains the agreement required by Texas Health and Safety 
Code, Chapter 614, sec.614.015 to establish the respective responsibilities of 
these agencies to institute a continuity of care and service program for 
offenders in the criminal justice system who are physically disabled, terminally 
ill, or significantly ill. 
   
  (b) The MOU is adopted by rule in 37 Texas Administrative Code, Chapter 159, 
sec.159.5(a). 
   
  (c) The effective date of the MOU, with respect to the department, is the same 
as the effective date of this section. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509598 
  Susan K. Steeg 
 General Counsel 
 Texas Department of Health 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 458-7236 
         
             Chapter 119. Health Maintenance Organizations 
  
  The Texas Department of Health (department) proposes the repeal of existing 
sec.sec.119.1-119.15 and proposes new sec. s119.1-119.14, concerning health 
maintenance organizations (HMOs). Specifically, the new sections cover 
definitions, examinations prior to issuance of a certificate of authority, on-
site examinations, organization, geographic service area, ambulatory health care 
services, emergency care, inpatient hospital and medical service, diagnostic and 
therapeutic services, optional services, continuous quality improvement, 
enforcement, single health care service, and fees and assessments. The 
department and the Texas Department of Insurance work together in regulating 
HMOs under authority of the Health Maintenance Organization Act, Insurance Code, 
Chapter 20A (HMO Act). 
 The repeal of existing sec.sec.119.1-119.15 will allow for the proposal of the 
new sections. The new sections include language which clarifies the department's 
examination procedures of HMOs both prior to and subsequent to the Texas 
Department of Insurance issuance of a certificate of authority to an HMO; 
language which clarifies the authority of the department to examine the quality 
of health care services offered by an HMO; expanded provisions requiring 
availability, accessibility, and continuity of health care services, including 
expanded emergency care provisions; expanded provisions requiring each HMO to 
have a continuous quality improvement plan; clearer provisions regarding the 
department's role in enforcement actions against HMOs; and an application fee 
increase for new HMOs. The new language will address concerns related to the 
quality of heath care services furnished by HMOs to its enrollees and will more 
fully implement the regulatory authority over HMOs assigned to the department in 
the HMO act. 
 Bernie Underwood, Chief of Staff Services, Health Care Quality and Standards, 
has determined that for the first five-year period the sections are in effect 
there will be no additional fiscal implications for state or local government as 
a result of enforcing or administering the sections. 
 Ms. Underwood also has determined that for each year of the first five years 
the sections are in effect the public benefit anticipated as a result of 
enforcing the sections will be increased protection for members of HMOs by 
expanded provisions related to the quality of health care services to be 
furnished by HMOs to its enrollees, and by expanded provisions requiring HMOs to 
submit continuous quality improvement data, related to analysis of health care 
processes and outcomes. The new provisions require that continuous quality 
improvement function in order to identify areas where improvements in the 
quality of health care services are possible and for the purpose of assuring 
high quality patient care and protection from harm for HMO enrollees. The 
application fee for new HMOs will increase from $850 to $3,000, due to increases 
in staff and travel costs. There will be costs associated with the submittal of 
continuous quality improvement data, to small businesses, and persons who are 
required to comply with the sections as proposed. However, since the department 
is unable to determine the extent to which HMOs currently collect the data, 
required by these sections as proposed, the department is unable to estimate the 
cost at this time. 
 Comments on the proposal may be submitted to Julia R. Beechinor, Director, 
Health Facility Licensing Division, Texas Department of Health, 1100 West 49th 
Street, Austin, Texas 78756-3199, (512) 834-6647. Comments will be accepted for 
a period of 30 days after publication of the proposal in the Texas Register. 
   
  25 TAC sec.sec.119.1-119.15 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Health or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed under the Health Maintenance Organization Act, 
Insurance Code, Chapter 20A, which provides the Texas Board of Health with 
authority to adopt rules to establish minimum standards regarding the quality of 
health care services, including availability, accessibility and continuity of 
services, to be furnished by an HMO to its enrollees; and under Health and 
Safety Code, sec.12.001 which provides the board with the authority to adopt 
rules for the performance of every duty imposed by law upon the board, the 
department and the commissioner of health. 
 The repeals affect the Health Maintenance Organization Act, Insurance Code, 
Article 20A, and Health and Safety Code, Chapter 12. 
 
 
  sec.119.1. Definitions. 
 
   
  sec.119.2. The Certification Procedures. 
 
   
  sec.119.3. Organization. 
 
   
  sec.119.4. Geographic Service Area. 
 
   
  sec.119.5. Ambulatory Health Care Service. 
 
   
  sec.119.6. Emergency Services. 
 
   
  sec.119.7. Inpatient Hospital and Medical Services. 
 
   
  sec.119.8. Diagnostic and Therapeutic Services. 
 
   
  sec.119.9. Optional Services. 
 
   
  sec.119.10. Statistical Information. 
 
   
  sec.119.11. Quality Assurance. 
 
   
  sec.119.12. Texas Department of Health On-Site Review. 
 
   
  sec.119.13. Compliance with Texas Department of Health Rules. 
 
   
  sec.119.14. Single Health Care Service. 
 
   
  sec.119.15. Fees and Assessments. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509602 
  Susan K. Steeg 
 General Counsel 
 Texas Department of Health 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 458-7236 
         
         
  25 TAC sec.sec.119.1-119.14 
 
  The new sections are proposed under the Health Maintenance Organization Act, 
Insurance Code, Chapter 20A, which provides the Texas Board of Health with 
authority to adopt rules to establish minimum standards regarding the quality of 
health care services, including availability, accessibility and continuity of 
services, to be furnished by an HMO to its enrollees; and under Health and 
Safety Code, sec.12.001, which provides the board with the authority to adopt 
rules for the performance of every duty imposed by law upon the board, the 
department and the commissioner of health. 
 The new sections affect the Health Maintenance Organization Act, Insurance 
Code, Article 20A, and Health and Safety Code, Chapter 12. 
 
 
  sec.119.1. Definitions.  The following words and terms, when used in these 
sections, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   Basic health care services-Health care services which an enrolled population 
might reasonably require in order to be maintained in good health, including, as 
a minimum, emergency care, inpatient hospital and medical services, and 
outpatient medical services. 
   
   Board-The Texas Board of Health. 
   
   Certified facility -A health care facility which is certified by the federal 
government for participation in rendering care to Medicare or Medicaid 
beneficiaries. 
   
   Commissioner-The commissioner of insurance. 
   
   Credentials-Certificates, diplomas, licenses or other written documentation 
which establishes proof of training, education, and experience in a field of 
expertise. 
   
   Department-Texas Department of Health, 1100 West 49th Street, Austin, Texas 
78756. 
   
   Emergency care -Bona fide emergency services provided after the sudden onset 
of a medical condition manifesting itself by acute symptoms of sufficient 
severity, including severe pain, such that the absence of immediate medical 
attention could reasonably be expected to result in: 
 
  (A) placing the patient's health in serious jeopardy; 
   
  (B)  serious impairment to bodily functions; or 
   
  (C) serious dysfunction of any bodily organ or part. 
     
   Enrollee-An individual who is enrolled in a health care plan, including 
covered dependents. 
   
   Evidence of coverage-Any certificate, agreement, or contract issued to an 
enrollee setting out the coverage to which the enrollee is entitled. 
   
   Group hospital service corporation-A nonprofit corporation organized and 
operating under the Insurance Code, Chapter 20. 
   
   Health care-Prevention, maintenance, rehabilitation, pharmaceutical, and 
chiropractic services provided by qualified persons other than medical care. 
   
   Health care plan-Any plan whereby any person undertakes to provide, arrange 
for, pay for, or reimburse any part of the cost of any health care services; 
provided, however, a part of such plan consists of arranging for or the 
provision of health care services, as distinguished from indemnification against 
the cost of such service, on a pre-paid basis through insurance or otherwise. 
   
   Health care services-Any services, including the furnishing to any individual 
of pharmaceutical services, medical, chiropractic, or dental care, or 
hospitalization or incident to the furnishing of such services, care, or 
hospitalization, as well as the furnishing to any person of any and all other 
services for the purpose of preventing, alleviating, curing or healing human 
illness or injury or a single health care plan. 
   
   Health maintenance organization (HMO)-Any person who arranges for or provides 
a health care plan or single health care service plan to enrollees on a prepaid 
basis. 
   
   Inpatient medical care-Includes, but is not limited to, medical and surgical 
care received in a hospital or skilled nursing home environment. 
   
   Medical care-Furnishing those services defined as practicing medicine under 
the medical Practice Act, sec.1.03(8), Texas Civil Statutes, Article 4495b. 
   
   Outpatient services -Services which may be rendered in, but are not limited 
to, clinics, private offices, hospital based outpatient departments, home health 
services, ambulatory surgical centers, hospices and kidney dialysis centers. 
   
   Person-A natural or artificial person, including, but not limited to, 
individuals, partnerships, associations, organizations, trusts, hospital 
districts or corporations. 
   
   Physician-An individual who is licensed to practice medicine in the State of 
Texas. 
   
   Primary hospitals -General hospitals which are equipped and staffed to handle 
the medical needs of an HMO's enrolled population. 
   
   Provider-Any practitioner other than a physician, such as a licensed doctor 
of chiropractic, registered nurse, pharmacist, optometrist, pharmacy, hospital, 
or other institution or organization or person that furnishes health care 
services, who is licensed or otherwise authorized to practice in this state. 
   
   Referral hospitals -Referral hospitals are primary hospitals which also are 
equipped and staffed to provide intensive medical and surgical care. 
   
   Referral specialists (other than primary care) -Specialists who set 
themselves apart from the primary care physician or primary single service 
provider through specialized training and education in a health care discipline. 
   
   Single health care service-A health care service that an enrolled population 
may reasonably require in order to be maintained in good health with respect to 
a particular health care need for the purpose of preventing, alleviating, 
curing, or healing human illness or injury of a single specified nature and that 
is to be provided by one or more persons each of whom is licensed by the state 
to provide that specific health care service. 
   
   Single health care service plan-A plan under which any person undertakes to 
provide, arrange for, pay for, or reimburse any part of the cost of a single 
health care service, provided, that a part of the plan consists of arranging for 
or the provision of the single health care service, as distinguished from an 
indemnification against the cost of the service, on a prepaid basis through 
insurance or otherwise and that no part of that plan consists of arranging for 
the provision of more than one health care need of a single specified nature. 
   
   Sponsoring organization -A person who guarantees the uncovered expenses of 
the health maintenance organization and who is financially capable, as 
determined by the commissioner, of meeting obligations resulting from those 
guarantees. 
   
   Uncovered expenses -The estimated administrative expenses and the estimated 
cost of health care services that are not guaranteed, insured, or assumed by a 
person other than the health maintenance organization. Health care services may 
be considered covered if the physician or provider agrees in writing that 
enrollees shall in no way be liable, assessable, or in any way subject to 
payment for services except as described in the evidence of coverage issued to 
the enrollee under the Texas Civil Statutes, Insurance Code, Article 20A, sec.9. 
The amount due on loans in the next calendar year will be considered uncovered 
expenses unless specifically subordinated to uncovered medical and health care 
expenses or unless guaranteed by the sponsoring organization. 
   
   Uncovered liabilities -Obligations resulting from unpaid uncovered expenses, 
the outstanding indebtedness of loans that are not specifically subordinated to 
uncovered medical and health care expenses or guaranteed by the sponsoring 
organization, and all other monetary obligations that are not similarly 
subordinated or guaranteed. 
 
   
  sec.119.2. Examinations Prior to Issuance of Certificate of Authority.  The 
Texas Department of Health (department) shall conduct a qualifying examination 
of an applicant prior to the issuance of a certificate of authority by the Texas 
Department of Insurance in accordance with Title 28, Texas Administrative Code,  
ssec.11.201-11.208. The qualifying examination shall include a review of the 
following documents which shall be available to the department at the 
applicant's administrative offices: 
 
  (1) the minutes of the applicant's organizational meetings, indicating the 
type of each meeting and the date. The minutes must designate the officer or 
officers who are responsible for the handling of the funds of the applicant; 
   
  (2) a copy of the complaint procedure and samples of the forms to be used in 
the complaint resolution procedure for both informal and formal complaints; 
   
  (3) a copy of the enrollee satisfaction survey; 
   
  (4) a map which includes the location of sufficient hospitals, primary care 
physicians, and other health care delivery sites that will provide care; 
   
  (5)  lists of primary care and specialty physicians, hospitals, laboratories, 
diagnostic imaging providers, radiologic oncology providers, and other providers 
to be used by the applicant inside the service area: 
 
  (A)  the list of physicians must include: 
 
  (i) each physician's medical specialty; 
   
  (ii) board certification, if any; 
   
  (iii)  Texas license number; 
   
  (iv) federal and state permits relating to registration of controlled 
substances, if applicable; 
   
  (v)  business address; and 
   
  (vi) hospitals at which the physician has staff privileges; 
     
  (B) the list of hospitals must include: 
 
  (i) each hospital's address; 
   
  (ii) license number, unless exempt from licensure requirements; 
   
  (iii) letter of accreditation issued by the Joint Commission on Accreditation 
of Healthcare Organizations (JCAHO) or the American Osteopathic Association 
(AOA), if applicable; 
   
  (iv) evidence of Medicare certification (Title XVIII, Social Security Act), if 
applicable; 
   
  (v) the number of beds in the hospital; and 
   
  (vi) the hospital's current occupancy rate; and 
     
  (C) the list of laboratories, diagnostic imaging providers, radiologic 
oncology providers, and other providers must include each provider's address and 
license, accreditation, registration or certification, if applicable; 
     
  (6) a copy of the contract or letter of intent with each provider; 
   
  (7) evidence that the applicant has a mechanism for maintaining, monitoring 
and implementing the continuous quality improvement plan, as required by 
sec.119.11 of this title (relating to Continuous Quality Improvement), including 
procedures for data collection, analysis and reporting, for all physicians and 
providers, including pharmacy or drug utilization review format, if applicable; 
utilization management; and a complaint system, as required by sec.119.11 of 
this title; and 
   
  (8) an example of a member handbook and evidence of coverage and provider 
manual. 
 
     
  sec.119.3. On-site Examinations. 
 
  (a) On-site quality of care examination. 
 
  (1) Subsequent to the issuance of the certificate of authority, the Texas 
Department of Health (department) shall conduct on-site quality of care 
examinations of a health maintenance organization (HMO) to review the quality, 
availability and accessibility of health care services. The department may make 
an examination concerning the quality of health care services as often as it 
deems necessary, but not less than once every three years. 
   
  (2) Every HMO shall make its books and records relating to its operation 
available for such examinations and in every way facilitate the examinations. 
Every physician and provider with whom an HMO has a contract, agreement, or 
other arrangement need only make available for examination that portion of its 
books and records relevant to its relationship with the HMO. 
   
  (3) Medical, hospital and health records of all enrollees and records of all 
physicians and providers providing service under independent contract with an 
HMO shall be subject to such examination as is necessary for an ongoing 
examination of the approved continuous quality improvement plan, as required in 
sec.119.11 of this title (relating to continuous quality improvement). The plan 
shall provide for adequate protection of confidentiality of medical information 
and shall only be disclosed in accordance with applicable law and the HMO Act 
and shall only be subject to subpoena upon a showing of good cause. 
   
  (4) For the purpose of examinations, official representatives of the Texas 
Department of Insurance and the department, may administer oaths to and examine 
the officers and agents of the HMO and the principals of such physicians and 
providers concerning their business. 
   
  (5) If any person refuses to appear or testify or to give information 
requested pursuant to an official examination, the commissioner may file a sworn 
application with any district judge or district court within this state, where 
said witness is summoned to appear and said judge shall summon said witness and 
require answers to such questions. 
   
  (6) Complaints about the quality of care which, in the judgment of the 
department, represent a threat to the health and safety of HMO members will be 
investigated without notice to the HMO. Complaints determined to be valid will 
require a full examination, which may be unannounced. 
   
  (7)  Requirements concerning a statement of deficiencies on examinations and 
complaint investigations are as follows. 
 
  (A) The department will provide the HMO with a written statement of the 
examination outcome. 
   
  (B)  If deficiencies are cited, a written plan to correct the deficiencies 
will be returned to the department within 30 days of the date appearing on the 
statement of deficiencies. 
   
  (C) Deficiencies which represent a threat to the health and safety of 
enrollees will be corrected within 30 days of the date of receipt by the HMO. 
   
  (D) Other deficiencies will be corrected within 90 days of the date appearing 
on the statement of deficiencies. 
       
  (b) On-site examination of HMO administrative office. 
 
  (1)  During an on-site examination of the HMO administrative office, 
department surveyors may review the following documents: 
 
  (A) the minutes of meetings of the HMO board of directors, management 
committee minutes, administrative policy manuals, physician and provider 
manuals, enrollee information, enrollee newsletters, personnel manuals, 
organizational charts, provider contracts, and other items as required; 
   
  (B) the quality improvement review standards, quality improvement committee 
meeting minutes, quality review audits, and utilization management system data; 
   
  (C)  the complaint log and individual complaints; 
   
  (D) the accessibility monitoring data; 
   
  (E) the enrollee satisfaction surveys, disenrollment logs; and 
   
  (F) the complete and current listing of physicians and providers of care. 
     
  (2) During an on-site review at the HMO's administrative office, department 
surveyors may conduct interviews with: 
 
  (A) administrative personnel, including the HMO president or chief executive 
officer; 
   
  (B) operations manager, medical, dental, vision, and mental health directors 
or continuous quality improvement committee chairman; 
   
  (C) utilization management personnel; 
   
  (D)  membership services officer; 
   
  (E) grievance officer; and 
   
  (F)  physician and provider relations officer. 
 
         
  sec.119.4. Organization. 
 
  (a) There shall be a governing body, person or persons legally responsible for 
the operation of the health maintenance organization (HMO). 
   
  (b) There shall be a physically identifiable administrative headquarters 
office located within the State of Texas. 
   
  (c) The HMO shall ensure that current files are maintained on contracts for 
all participating physicians and providers of care, and that all information is 
updated on an ongoing basis. 
   
  (d) The HMO shall ensure that files are maintained on subcontracting providers 
and physicians and contain sufficient information to assure current licensure or 
other authorizations to practice in the State of Texas. 
   
  (e) There shall be a full-time chief executive officer or operations officer 
for each service area of the HMO available on-site. 
   
  (f) There shall be a medical director or single service director for each 
service area of the HMO. 
   
  (g)  Individual service areas shall maintain continuous quality improvement 
and utilization management plans. 
   
  (h) An current list of all participating physicians and providers of care in 
each service area shall be maintained by the HMO for review by the Texas 
Department of Health. 
   
  (i)  A current physician and provider manual shall be provided to each health 
care facility which details the requirements by which the provider or physician 
will be governed. 
   
  (j) The HMO shall systematically and regularly verify that support services 
and supplies are furnished to physicians and providers of care, to assure that 
health care services are available to enrollees without unreasonable periods of 
delay. 
 
     
  sec.119.5. Geographic Service Area. 
 
  (a) Enrollees shall not be required to travel in excess of 50 miles to reach a 
source of primary physician health care and acute hospital care except as 
provided in subsection (b) of this section. 
   
  (b) Other locations may be included in the geographic service area upon 
providing the Texas Department of Health (department) with documentation which 
provides support for traveling acceptable longer distances, for example, 
marketing data which indicates a normal pattern for securing health care 
services in the extended area. 
   
  (c) Enrollees shall not be required to travel in excess of 100 miles to secure 
initial contact with single service providers of care, referral physicians, 
referral single service providers of care, and specialty hospital care except as 
provided in subsection (b) of this section. 
   
  (d) The HMO shall provide enrollees with a map of the location of providers 
within the geographic service area. 
 
     
  sec.119.6. Ambulatory Health Care Services. 
 
  (a) Primary care physician services. 
 
  (1) Primary care physician services shall be available and accessible 24 hours 
per day, seven days per week within the health maintenance organization's 
(HMO's) geographic service area. 
 
  (A)  Participating primary care physicians shall be available for emergency 
and urgent care after normal business hours. 
   
  (B) There shall be barrier-free telephone access to participating primary care 
physicians at all times. 
   
  (C) The method by which enrollees may secure health care services after hours 
shall be clearly communicated in writing to enrollees, in the languages 
predominantly spoken by the enrolled population. 
     
  (2) An adequate number of participating primary care physicians shall have 
admitting privileges at one or more participating general hospitals located 
within the HMO's geographic service area to assure that necessary admissions are 
made. 
   
  (3) There shall be a sufficient number of participating primary care 
physicians to meet the needs of the enrolled membership. 
     
  (b) Referral (specialty) physician services. 
 
  (1) Referral physician services shall be available and accessible 24 hours per 
day, seven days per week, within the HMO's geographic service area. 
   
  (2) There shall be sufficient number of referral physicians with appropriate 
hospital admitting privileges to meet the needs of the enrolled membership. 
 
       
  sec.119.7. Emergency Care. 
 
  (a) Emergency care shall be available and accessible 24 hours per day, seven 
days per week, without restrictions as to where the services are rendered. 
   
  (b) The health maintenance organization (HMO) shall have documentation that 
the health care plan contains the following provisions for coverage of emergency 
care: 
 
  (1) provide that any initial medical screening examination to determine 
whether an emergency medical condition exists or other evaluation required by 
state or federal law will be provided; 
   
  (2) provide that for services originating in a hospital emergency department 
following treatment or stabilization of an emergency medical condition, the HMO 
must respond to inquiries of a treating physician or provider within the time 
appropriate to the circumstances relating to the delivery of the services and 
the condition of the patient, but in no case to exceed three hours. The HMO must 
respond to inquiries from the treating physician or provider in compliance with 
this provision in the HMO's health care plan; 
   
  (3)  provide that medically necessary emergency care services will be provided 
to covered enrollees, without regard to whether the physician or provider 
furnishing the services has a contractual or other arrangement with the entity 
to provide items or services to covered individuals, including the treatment and 
stabilization of an emergency medical condition; and 
   
  (4) cover services provided in a hospital emergency department pursuant to 
referral to a hospital emergency department, made by an HMO physician or 
provider of care. 
     
  (c) HMO physicians and providers of care who employ triage nurses or 
practitioners other than physicians to assess the health care needs of HMO 
enrolled members shall have policies in effect which describe the exact duties 
of all such providers and practitioners. 
 
     
  sec.119.8. Inpatient Hospital and Medical Service. 
 
  (a)  Primary hospital care shall be available and accessible 24 hours per day, 
seven days per week, within the health maintenance organization's (HMO) defined 
geographical service area. 
   
  (b) Referral hospital care shall be available and accessible 24 hours per day, 
seven days per week, within the HMO's defined geographical service area. 
   
  (c) Specialty hospital care shall be available and accessible within the HMO's 
defined geographical service area. 
   
  (d) Hospitals which provide services to HMO enrollees shall have current 
licenses by the State of Texas, unless exempt from licensure requirements. 
 
     
  sec.119.9. Diagnostic And Therapeutic Services. 
 
  (a)  Laboratories must meet the requirements of Federal Public Law 100-578, 
Clinical Laboratory Improvement Amendments of 1988 (CLIA 1988). CLIA 1988 
applies to all laboratories that examine human specimens for the diagnosis, 
prevention, or treatment of any disease or impairment of, or the assessment of 
the health of, human beings. 
 
  (1) Reference laboratory services shall meet the non-emergent, urgent and 
emergency needs of the enrolled population. 
   
  (2) The reference laboratory specimen services shall be convenient to provider 
physicians through the strategic location of drawing stations, or through a 
courier service which is under the management of the reference laboratories. 
   
  (3) Pathology laboratory services shall be available and accessible. 
     
  (b) Diagnostic imaging services shall be available and accessible to all 
enrolled members. 
 
  (1) Diagnostic imaging procedures that require the injection or ingestion of 
radiopaque chemicals shall be performed only under the direction of physicians 
qualified to perform those procedures. 
   
  (2) Diagnostic imaging machines shall be registered and inspected according to 
state law. 
   
  (3) Technicians, physicians, and other personnel who work with imaging 
machines shall comply with state law regarding monitoring. 
     
  (c) Services involving therapeutic/oncological radiology shall be available 
and accessible to all enrolled members. 
 
     
  sec.119.10. Optional Services. 
 
  (a) The provisions in this section apply to categories of other health care 
services which a health maintenance organization (HMO) may offer in a basic 
health care plan pursuant to any service agreement. The other services are 
listed in subsection (f) of this section, but this is not intended to be a 
complete list of all possible benefit additions. 
   
  (b) Inpatient skilled nursing care shall be available and accessible within 
the service area to the enrolled population by one or a combination of the 
following: 
 
  (1) a skilled nursing facility that is licensed by the state, unless exempt 
from licensure requirements; 
   
  (2) a swing-bed hospital that is licensed by the state, unless exempt from 
licensure requirements; 
   
  (3) a general hospital licensed by the state, unless exempt from licensure 
requirements, a distinct part of which is a skilled nursing facility; and 
   
  (4) facilities directly owned and operated by the HMO or by contract. 
     
  (c) Home health care services, including skilled nursing services, shall be 
available and accessible within the geographic service area to the enrolled 
population, through home and community support services agencies, or their 
branches, licensed by the state to provide home health care services; home 
health care services may be offered either directly by the HMO, or through 
contracts. 
   
  (d) Hospice care services shall be available and accessible with the 
geographic service area to the enrolled population, through hospices licensed by 
the state; hospice care may be offered directly by the HMO, or through 
contracts. 
   
  (e)  Pharmacy services shall be available and accessible within the service 
area for the enrolled population through pharmacies licensed by the Texas State 
Board of Pharmacy. 
 
  (1) Pharmacy services shall be offered directly by the HMO or through 
contracts. 
   
  (2) The quality of pharmacy services shall be regularly reviewed by a 
committee composed of physicians, pharmacists and other professionals as needed. 
 
  (A) The committee shall be responsible for assuring that drug utilization 
review is performed on a regular basis, but not less than quarterly. 
   
  (B) The committee shall assure that contracting pharmacies maintain drug 
profiles on the enrollees population and make use of such profiles to detect 
inappropriate drug use. 
   
  (C) The committee shall make recommendations on policies under which 
pharmacists provide patient instruction and education on correct use of 
medications. 
       
  (f) Other services may be offered by the HMO. 
 
  (1)  If health care services such as dental, podiatric, nutrition or dietary, 
vision, hearing, speech, durable medical equipment, mental health, drug 
dependency, chiropractic care, or any other health care services are offered, 
they shall be offered by the HMO or through contracts with providers or 
physicians who are licensed or otherwise authorized to practice in this state. 
   
  (2) Such services shall be of sufficient number and location as to be readily 
available and accessible within the service area to the enrolled population. 
 
       
  sec.119.11. Continuous Quality Improvement. 
 
  (a) The health maintenance organization (HMO) shall develop and implement a 
written continuous quality improvement plan, which covers all services to be 
furnished by the HMO to its enrollees, and the HMO shall maintain an effective 
information management system. 
   
  (b) The written continuous quality improvement plan shall provide for 
continuity of treatment consistent with prevailing professionally recognized 
standards of medical practice, including: 
 
  (1) making available to enrollees a current list of physicians and providers; 
   
  (2) allowing continuity of ongoing treatment by the treating physician or 
provider who is treating an enrollee of special circumstance, such as an 
enrollee who has a disability, a life threatening illness, complex illness or is 
in the third trimester of pregnancy, and receiving medically necessary and 
appropriate treatment in accordance with the dictates of medical prudence upon 
termination of the contract between the HMO and treating physician or provider; 
however, the HMO shall not be required to assure ongoing treatment of an 
enrollee any more than 90 days from the effective date of termination of the 
treating physician or provider; and 
   
  (3) the HMO shall assist the enrollee in selecting or changing his physician 
or provider, as needed; 
     
  (c) Continuous quality improvement may be accomplished by a committee, or 
structure of committees, which shall be composed of physicians, dentists, and 
other providers, as applicable, appointed to collaborate and coordinate efforts 
to improve the quality, availability, accessibility and continuity of health 
care services to be furnished by the HMO to its enrollees. The continuous 
quality improvement committee or structure of committees shall: 
 
  (1) meet regularly; and 
   
  (2) report regularly in writing to the HMO management, information which shall 
include recommendations concerning improvement of quality, availability and 
continuity of health care services offered to its enrollees. 
     
  (d) If the continuous quality improvement committee, or committee structure, 
delegates any quality improvement or utilization management activity, then the 
committee must establish, implement, and enforce a policy to address effective 
methods of accomplishing oversight of each delegated activity. 
   
  (e) Continuous quality improvement shall function in order to accomplish the 
following minimum requirements: 
 
  (1) establishment and implementation of an ongoing written program to analyze 
health care processes and patient outcomes which functions, at a minimum: 
 
  (A) to assess both quality of clinical care and quality of non-clinical 
aspects of service, by individual case review, specifically analyzing: 
 
  (i)  availability and accessibility of care; 
   
  (ii) continuity of health care and related services; and 
   
  (iii) patterns of clinical care rendered; 
     
  (B) to review the entire range of health care and services provided by the 
HMO, by including all demographic groups, care settings, and types of services 
in the scope of review; 
   
  (C) to identify and implement written procedures, in the continuous quality 
improvement plan, to improve the total system of care delivery and services to 
enrollees by: 
 
  (i) identifying areas of needed improvement; and 
   
  (ii) effectively addressing each area of needed improvement; 
     
  (D) to identify specific instances of substandard care where availability, 
accessibility or continuity of services need improvement: 
 
  (i) to document the action taken, in those specific instances, to improve the 
care and services furnished; and 
   
  (ii) to assess effectiveness of action taken to improve the quality of care 
and service rendered, and verify follow-up to resolution of identified areas of 
needed improvement; 
     
  (E) to establish, implement and maintain a complaint system to provide 
reasonable procedures for the resolution of complaints, both oral and written, 
initiated by enrollees, physicians or providers concerning care or services, 
which shall function to: 
 
  (i) maintain documentation of the investigation and analysis of each complaint 
received, including documentation of all action taken to resolve each complaint; 
   
  (ii) identify and remove communication barriers which may impede enrollees 
from effectively making complaints against the HMO; 
   
  (iii)  establish, implement and maintain a mechanism for systematically 
surveying enrollee care and service satisfaction, by written survey; and 
   
  (iv) allow the commissioner or the department to examine the complaint system 
and the survey mechanism; 
     
  (F) to annually identify continuous quality improvement goals and objectives, 
defined in the written plan, including time frames for implementation and 
accomplishment established in the written plan; 
   
  (G) to conduct quality of care studies over a period of time, prescribed in 
the continuous quality improvement plan, which shall specify methodologies, 
organizational arrangements to be used to accomplish them, and individuals 
responsible for the studies; 
   
  (H) to systematically collect and analyze data, and to maintain records of raw 
data collected, needed to measure on a continuing basis, the following 
indicators, which shall be specifically defined in the written continuous 
quality improvement plan: 
 
  (i) health care processes and patient outcomes, including those that: 
 
  (I) affect a large percentage of enrollees; 
   
  (II) place patients at serious risk if not performed well, or performed when 
not indicated, or not performed when indicated; 
   
  (III)  have been or are likely to be problem prone; 
   
  (IV) are related to determining the appropriateness of admissions and 
continued hospitalizations; and 
   
  (V) reflects the population served by the HMO in terms of age groups, disease 
categories, and special risk status; 
     
  (ii) data related to the provision of care and services, as follows, and which 
shall be submitted to the department annually by January 31 for the previous 
calendar year: 
 
  (I) number and frequency of visits related to prenatal care for all HMO 
enrollees, who were enrolled in the HMO from January 1-December 31, and 
delivered single or multiple live or stillborn fetuses of greater than or equal 
to 20 weeks gestation; 
   
  (II) childhood immunizations rates for children who were or had attained two 
years of age from January 1, through December 31, and were enrolled in the HMO 
continuously between the ages of 18 months to two years; 
   
  (III) occurrence of adverse events, as follows, related to asthma for children 
ages three to 18 years of age who were enrolled in the HMO for at least six 
consecutive months between January 1 and December 31: 
 
  (-a-) emergency department visits; 
   
  (-b-) observation bed days; 
   
  (-c-) hospital admissions; and 
   
  (-d-) patient length of stay; 
     
  (IV) occurrence of adverse events, as follows, for asthma-related conditions, 
as defined the written continuous quality improvement plan, for children ages 
three to 18 years of age, and who were enrolled in the HMO for at least six 
consecutive months during the time period of January 1-December 31: 
 
  (-a-) emergency department visits; 
   
  (-b-) observation bed days; 
   
  (-c-) hospital admissions; and 
   
  (-d-) patient length of stay; 
     
  (V) denials of covered health care services, including documentation 
reflecting analysis of reasons for each denial of covered health care services; 
   
  (VI) mortality; 
   
  (VII)  co-morbidity; 
   
  (VIII) complications; and 
     
  (iii) additionally, data related to utilization management activities, which 
shall be submitted to the department annually by January 31 for the previous 
calendar year; utilization management activities shall be performed as part of 
and in accordance with the written continuous quality improvement plan, and 
which shall include written procedures to develop, compile, maintain and analyze 
raw data, and to report analysis of the data collected, relating to the 
following: 
 
  (I) cost of operation, by reporting the ratio of operating expense to 
operating profit; 
   
  (II) the pattern of utilization of health care services actually furnished by 
the HMO to its enrollees, by reviewing patterns of clinical care and services 
rendered; 
   
  (III) analysis of criteria, set out in the written continuous quality 
improvement plan, related to availability, accessibility, and continuity of 
health care and non-clinical services offered to and furnished by the HMO to its 
enrollees; 
   
  (IV) analysis of referral trends; 
   
  (V) analysis of the pre-hospitalization admission program; 
   
  (VI) analysis of the hospital inpatient monitoring program; 
   
  (VII) analysis of the discharge planning procedure; and 
   
  (VIII) analysis of enrollee participation in HMO programs, as defined in the 
health care plan, which are designed to prevent disease and to promote wellness, 
including analysis of effectiveness of HMO efforts to promote enrollee 
participation in preventive medicine programs; 
         
  (2)  definition of clinical quality indicators, and indicators related to 
health services delivery, in the written continuous quality improvement plan and 
documentation reflecting monitoring of those indicators over a period of time, 
to assess the health care processes and outcomes of care delivered; 
   
  (3) use of clinical care standards or practice guidelines, as specified in the 
written continuous quality improvement plan, to assess the quality of health 
care services rendered by each physician and each provider in the HMO, provided 
however, that such clinical care standards or practice guidelines: 
 
  (A) are based on scientific evidence and are developed or reviewed by plan 
physicians and providers; 
   
  (B) focus on the processes and outcomes of health care delivery, as well as 
access to care; 
   
  (C)  are updated continuously; 
   
  (D) contain quality improvement plan studies and other activities which 
monitor quality of care against clinical care and health care service delivery 
standards or practice guidelines specified for age groups, disease categories, 
and special risk status; 
   
  (E) are included in physician and provider manuals; and 
   
  (F)  include preventive health services; and 
     
  (4) maintain documentation reflecting: 
 
  (A) the credentialing and recredentialing of all contracting physicians and 
providers of care, including an application which contains information on 
education, professional background, board certification, evidence of current 
hospital privileges, current relevant permit to practice in the State of Texas, 
a current Drug Enforcement Agency certificate and Texas Controlled Substance 
certificate, if applicable; and 
   
  (B) effective peer review procedure. 
 
         
  sec.119.12. Enforcement. 
 
  (a) The Texas Department of Health (department) or the commissioner may 
examine and use all information required by this chapter for any purpose 
consistent with the Health Maintenance Organization Act, Insurance Code, Chapter 
20A (HMO Act) or any rule or regulation adopted thereunder. 
   
  (b) The department may certify to the commissioner of insurance that any of 
the following conditions exist: 
 
  (1)  the health maintenance organization (HMO) does not meet the requirements 
as specified in the HMO Act, sec.20A.05(a)(2), or as specified in any rule or 
regulation adopted thereunder; or 
   
  (2) the HMO is unable to fulfill, or is not fulfilling, its obligation to 
furnish health care services as required under its health care plan or to 
furnish a single health care service as required under its single health care 
service plan. 
     
  (c) Such certification notice may constitute grounds for suspension or 
revocation of the HMO certificate of authority by the commissioner. 
   
  (d) The department shall send a copy of such certification notice to the 
affected HMO. 
 
     
  sec.119.13. Single Health Care Service. 
 
  (a) The provisions in this section apply to categories of service which a 
basic health care plan may choose to offer, as defined in sec.119.10 of this 
title (relating to Optional Services), and which the single health care service 
plan may offer to an enrolled population. The single health care service, except 
the service specifically excluded by law, shall be offered directly by the 
health maintenance organization (HMO) or by contract. 
   
  (b) This subsection applies to the single health care services which deal with 
specific health care situations which may require emergency intervention, as 
described in sec.119.7 of this title (relating to Emergency Medical Care). 
Emergency care shall be available and accessible 24 hours per day, seven days a 
week. 
   
  (c) This subsection applies to covered single health care services which 
require hospital inpatient status for the management of the single health care 
problem. 
 
  (1) Primary hospital care shall be available and accessible 24 hours per day, 
seven days a week, within the single service HMO's defined geographical service 
area. 
   
  (2) Specialty hospital care may be used when such a facility is available. 
   
  (3) Hospitals contracting with single health care service HMOs shall be 
currently licensed by the State of Texas, unless exempt from licensure 
requirements. 
   
  (4)  An adequate number of participating single health care providers shall 
have admitting privileges at one or more general or specialty hospitals located 
within the HMO's service area to ensure that necessary admissions are made. 
     
  (d) The following requirements apply to outpatient single health care 
services. 
 
  (1) A sufficient number of single health care service physicians and providers 
(initial contact and specialists, as appropriate or required) shall be available 
and accessible to meet the single health care needs of enrollees. Participating 
initial contact (primary care) physicians and providers shall be available for 
emergency and urgent care after normal business hours. 
   
  (2) The method by which enrollees may secure single health care services, 
which require after hours or urgent response by physicians and providers, shall 
be clearly communicated in writing to enrollees, in the languages predominantly 
spoken by the enrolled population. 
     
  (e) The following requirements apply to diagnostic and therapeutic services. 
 
  (1) The single health care service which uses reference and pathological 
laboratory technologies in the care of patients shall provide those technologies 
in accordance with to sec.119.9 of this title (relating to Diagnostic and 
Therapeutic Services). 
   
  (2) The single health care service which uses diagnostic imaging or 
therapeutic radiology in the care of patients shall provide those procedures 
according to sec.119.9 of this title (relating to Diagnostic and Therapeutic 
Services). 
   
  (3) The single health care service which uses the expertise of an ancillary 
health care facility or service to fulfill its obligations to enrollees shall 
have in effect a written contract with each facility and shall comply with all 
other applicable provisions in accordance with sec.119.10 of this title 
(relating to Optional Services). 
     
  (f) Other services. The following shall apply to single health care service 
plans: 
 
  (1) sec.119.1 of this title (relating to Definitions); 
   
  (2) sec.119.2 of this title (relating to Examinations Prior to Issuance of 
Certificate of Authority); 
   
  (3)  sec.119.3 of this title (relating to On-site Examinations); 
   
  (4)  sec.119.4 of this title (relating to Organization); 
   
  (5) sec.119.5 of this title (relating to Geographic Service Area); 
   
  (6) sec.119.10 of this title (relating to Optional Services); and 
   
  (7) sec.119.11 of this title (relating to Continuous Quality Improvement). 
 
       
  sec.119.14. Fees and Assessments. 
 
  (a) Original application. 
 
  (1) The Texas Department of Health (department) will notify the applicant in 
writing within ten working days of receipt from the Texas Department of 
Insurance of an original application for a certificate of authority. 
   
  (2) The applicant shall pay to the department an application fee in the amount 
of $3,000 within ten working days of the applicant's receipt of the notice. 
   
  (3) The application fee is inclusive of all normal expenses of the department 
including application review, examination, travel, and administrative costs. 
   
  (4) The department shall give written notification to the Texas Department of 
Insurance whether the proposed HMO meets the requirements of this chapter within 
45 days of receipt of the completed application. 
     
  (b)  Examination expenses and assessments. 
 
  (1) An HMO shall pay to the department the assessments described in this 
subsection for the examination expense incurred under the Health Maintenance 
Organization Act, Insurance Code, Chapter 20A (HMO act). Examinations include 
on-site visits for complaint investigations, amendments to a certificate of 
authority which affect quality of health care services including service area 
expansion, and quality of care examinations under sec.119.2 of this title 
(relating to Examinations Prior to Issuance of a Certificate of Authority) and 
sec.119.3 of this title (relating to On-site Examinations). 
   
  (2) The HMO shall pay examination expenses, which are all the expenses 
attributable directly to a specific examination, including the actual salaries 
and expenses of the examiners plus the cost of administrative departmental 
expenses, directly attributable to that examination. 
   
  (3) The administrative expenses directly attributable to the specific 
examination shall be paid at the same time as payment for the expenses described 
in paragraph (5) of this subsection. 
   
  (4) The examination expenses and assessments for a foreign HMO and a domestic 
HMO shall be calculated in the same manner. 
   
  (5) The department shall give written notice to the HMO examined of the amount 
due after completion of an examination. The HMO shall pay the amount within 30 
days of receipt of the notice. 
     
  (c) Payment of fees. 
 
  (1) Any remittance submitted to the department in payment for a required fee 
or assessment must be in the form of a certified check, money order, or personal 
or business check made out to the Texas Department of Health. 
   
  (2) All fees and assessments received by the department are non-refundable. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509603 
  Susan K. Steeg 
 General Counsel 
 Texas Department of Health 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 458-7236 
         
                 Part II. Texas Department of Mental Health and Mental 
Retardation 
  Chapter 402. Client Assignment and Continuity of Services 
  
  Subchapter C. Transfer to Vernon Maximum Security Unit 
 
  25 TAC sec.sec.402.71-402.86 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) 
   
  The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
the repeal of sec.sec.402.71-402.86, relating to Transfer to Vernon Maximum 
Security Unit. The repeal of the sections are proposed contemporaneously with 
the proposal of the new sections that would replace them, sec.sec.402.71-402.83, 
relating to Determination of Manifest Dangerousness. 
 The new sections update procedures to be followed in conducting hearings to 
determine whether or not an individual is manifestly dangerous. The new sections 
reflect enhanced emphasis on continuity of care for the individual found to be 
manifestly dangerous, providing for identifying factors which cause an 
individual to act in a dangerous way, focusing treatment on those factors, and 
ensuring that treatment is continued upon the individual's transfer to a less 
secure facility. The new sections update membership requirements for both the 
TDMHMR Review Board and the facility review boards. In addition, the new 
sections include a number of new provisions ensuring due process for the 
individual being reviewed. 
 Don Green, Chief Financial Officer, has determined that for each year of the 
first five years the sections as proposed will be in effect, there will be no 
additional fiscal cost to state or local government or small businesses as a 
result of administering the amendments as proposed. There will be no significant 
local economic impact. There is no anticipated cost to persons required to 
comply with the proposed new sections and repeals. 
 Dr. Steven Shon, M.D., deputy commissioner for mental health services, has 
determined that the public benefit of the repeal is the adoption of new sections 
enhancing emphasis on treatment of the factors that cause individuals to exhibit 
dangerous behaviors. The new sections provide procedures for ensuring that 
individuals receive this treatment in the most appropriate environment. 
 Comments on the proposed repeals may be submitted to Linda Logan, director, 
Policy Development, Texas Department Mental Health and Mental Retardation, P.O. 
Box 12668, Austin, Texas 78711-2668. 
 The repeals are proposed under the Texas Health and Safety Code, Title 7, 
sec.532.015, which provides the Texas Board of Mental Health and Mental 
Retardation with rulemaking powers. 
 The proposal would affect the Texas Code of Criminal Procedure, Articles 46. 02 
and 46.03. 
 
 
  sec.402.71. Purpose. 
 
   
  sec.402.72. Application. 
 
   
  sec.402.73. Definitions. 
 
   
  sec.402.74. Membership and Meetings of Review Boards. 
 
   
  sec.402.75. Information and Records to be Furnished to the Review Board by the 
Superintendent. 
 
   
  sec.402.76. Procedures for the Determination of Manifest Dangerousness by 
Facility Review Boards. 
 
   
  sec.402.77. Transfer of Clients Who are Determined to be Manifestly 
Dangerousness to the Maximum Security Unit at the Vernon State Hospital. 
 
   
  sec.402.78. Procedure of Determination of Manifest Dangerousness by a Review 
Board at the Maximum Security Unit at Vernon State Hospital. 
 
   
  sec.402.79. Notice of Hearing. 
 
   
  sec.402.80. Conduct and Decorum. 
 
   
  sec.402.81. Right to Present Evidence and Argument; Swearing of Witnesses and 
Testimony Under Oath; Assistance of Counsel. 
 
   
  sec.402.82. Decision and Request for New Hearing by Superintendent or Client. 
 
   
  sec.402.83. Research Concerning Standards for Manifest Dangerousness. 
 
   
  sec.402.84. Memorandum of Understanding. 
 
   
  sec.402.85. Distribution. 
 
   
  sec.402.86. References. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509546 
  Ann Utley 
 Chair, Texas MHMR Board 
 Texas Department of Mental Health and Mental Retardation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 206-4516 
         
           
  Subchapter C. Determination of Manifest Dangerousness 
 
  25 TAC sec.sec.402.71-402.83 
 
  The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
new sec.sec.402.71-402.83, relating to determination of manifest dangerousness. 
The new sections are proposed contemporaneously with the repeal of the sections 
that they would replace, sec.402.71-402.86, relating to Transfer to Vernon 
Maximum Security Unit. 
 The new sections update procedures to be followed in conducting hearings to 
determine whether or not an individual is manifestly dangerous. The new sections 
reflect enhanced emphasis on continuity of care for the individual found to be 
manifestly dangerous, providing for identifying factors which cause an 
individual to act in a dangerous way, focusing treatment on those factors, and 
ensuring that treatment is continued upon the individual's transfer to a less 
secure facility. The new sections update membership requirements for both the 
TDMHMR Review Board and the facility review boards. In addition, the new 
sections include a number of new provisions ensuring due process for the 
individual being reviewed. 
 Don Green, Chief Financial Officer, has determined that for each year of the 
first five years the sections as proposed will be in effect, there will be no 
additional fiscal cost to state or local government or small businesses as a 
result of administering the amendments as proposed. There will be no significant 
local economic impact. There is no anticipated cost to persons required to 
comply with the proposed new sections. 
 Dr. Steven Shon, M.D., deputy commissioner for mental health services, has 
determined that for the first five years the sections are in effect the public 
benefit of the new sections is enhanced emphasis on treatment of the factors 
that cause individuals to exhibit dangerous behaviors. The sections provide 
procedures for ensuring that individuals receive this treatment in the most 
appropriate environment. 
 Comments on the proposed new sections may be submitted to Linda Logan, 
director, Policy Development, Texas Department Mental Health and Mental 
Retardation, P.O. Box 12668, Austin, Texas 78711-2668. 
 The new sections are proposed under the Texas Health and Safety Code, Title 7, 
sec.532.015, which provides the Texas Board of Mental Health and Mental 
Retardation with rulemaking powers. 
 The proposal would affect the Texas Code of Criminal Procedure, Article 46. 02 
and 46.03. 
 
 
  sec.402.71. Purpose.  The purpose of this subchapter is to: 
 
  (1) establish the TDMHMR Dangerousness Review Board and facility review boards 
at mental health facilities for the purpose of determining whether an individual 
is manifestly dangerous; 
   
  (2) provide procedures for the transfer of an individual determined to be 
manifestly dangerous to the Maximum Security Unit at Vernon State Hospital; 
   
  (3) enumerate the rights of individuals with respect to the determination of 
manifest dangerousness process and transfer to the Maximum Security Unit at 
Vernon State Hospital; and 
   
  (4) provide procedures for the transfer of an individual served at Vernon 
State Hospital to a less secured mental health facility. 
 
     
  sec.402.72. Application.  The provisions of this subchapter apply to the 
mental health facilities of the Texas Department of Mental Health and Mental 
Retardation, with the exception of Waco Center for Youth. 
 
   
  sec.402.73. Definitions.  The following words and terms, when used in this 
subchapter, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   Commissioner-The commissioner of the Texas Department of Mental Health and 
Mental Retardation, or his or her designee. 
   
   Department-The Texas Department of Mental Health and Mental Retardation. 
   
   Facility chief executive officer (CEO)-The superintendent or director of a 
state hospital or state center or his or her designee. 
   
   Facility review board-A group of mental health professionals at each facility 
with responsibility for reviewing individuals believed to be manifestly 
dangerous for possible transfer to Vernon State Hospital. 
   
   Independent evaluator -An independent physician who conducts an evaluation or 
examination of an individual at the individual's own expense. 
   
   Individual-A person involuntarily committed to a mental health facility who 
is being reviewed, scheduled to be reviewed, or has been reviewed for manifest 
dangerousness. 
   
   Manifestly dangerous -The term used to describe an individual who, despite 
having appropriate treatment, remains likely to endanger others, and requires a 
maximum security environment in order to continue treatment and protect public 
safety. 
   
   Mental health facility-State hospitals and state centers providing mental 
health services under the jurisdiction of the Texas Department of Mental Health 
and Mental Retardation, with the exception of Waco Center for Youth. 
   
   Mental health professional-Professional staff attending to the needs of 
persons receiving mental health services who have provided direct contact 
services to individuals within the last five years and who have at least one 
year experience in mental health. Categories of mental health professionals 
include: 
 
  (1) licensed physicians; 
   
  (2) licensed psychologists and licensed psychological associates; 
   
  (3) licensed master social workers with orders of recognition as advanced 
clinical practitioners; and 
   
  (4) master's level registered nurses. 
     
   Psychiatrist-A physician licensed to practice medicine in Texas who has 
successfully completed an approved psychiatric residency. 
   
   Representative-A lawyer or another person representing the individual at his 
or her request. 
   
   TDMHMR Dangerousness Review Board-The board established to review individuals 
served at Vernon State Hospital to determine whether they are manifestly 
dangerous or can be transferred to a less secure mental health facility. 
 
   
  sec.402.74. Review Boards. 
 
  (a) Facility review board. A facility review board will be appointed at each 
mental health facility to review individuals believed to be manifestly dangerous 
for possible transfer to Vernon State Hospital. 
 
  (1) Membership. Members of facility review boards will be appointed by the 
commissioner, who will announce appointments for each facility in the form of a 
letter to the person appointed, the facility CEO, and the respective facility 
review board chair. 
 
  (A) Each board will include five mental health professionals, with the 
following requirements: 
 
  (i) at least one member must be a psychiatrist, preferably with expertise in 
forensic psychiatry; 
   
  (ii) at least two members must be currently engaged in direct care of persons 
with mental illness; and 
   
  (iii) if a single portal authority (SPA) has been designated for the area, at 
least one member must be a mental health professional from the SPA. 
     
  (B) The commissioner will designate one member to serve as chair. 
 
  (i) If the chair is unable to serve on the facility review board for any 
reason, he or she will designate another member of the board to act as chair. 
   
  (ii) If the chair is unable to make such an appointment, the commissioner will 
make the appointment. 
       
  (2) Alternates. The commissioner will appoint two mental health professionals 
at each facility as alternates, who will serve at the request of the facility 
review board chair if a facility review board member is not able to attend a 
meeting. To ensure that a psychiatrist is always part of the facility review 
board, at least one of the alternates must be a psychiatrist. 
   
  (3) Terms. Members and alternates are appointed for a two-year term and may be 
reappointed. If a vacancy occurs, the commissioner will appoint another mental 
health professional to serve the remainder of the vacating member's term. 
   
  (4) Conflict-of-interest. A member of the facility review board is 
disqualified from participating in a determination if the member has provided 
mental health services to the individual within one year of the review, has 
personal or professional involvement with the behavior or incident which 
precipitated the review, or has been a member of the individual's treatment team 
within the current admission. The chair must appoint an alternate to serve 
during that hearing. 
   
  (5) Quorum. Facility review board members may occasionally need to remove 
themselves from a hearing in the event of an emergency or if a member determines 
that a conflict-of-interest exists after a hearing has begun. In no case may 
action be taken or a determination made by a facility review board unless at 
least four members are participating and voting. 
   
  (6) Evaluation of members. The commissioner will evaluate each facility review 
board member's performance on an annual basis. 
   
  (7) Legal assistance. The attorney assigned to the facility from the 
department's Legal Services Division will provide legal assistance to the review 
board as needed. 
     
  (b) TDMHMR Dangerousness Review Board. The TDMHMR Dangerousness Review Board 
reviews individuals served at Vernon State Hospital to determine whether or not 
they are manifestly dangerous or must be transferred to a less secure mental 
health facility. Reviews are conducted in accordance with a statutorily mandated 
schedule. 
 
  (1) Membership. The TDMHMR Dangerousness Review Board membership consists of 
five mental health professionals. 
 
  (A) At least one member must be a psychiatrist with experience in forensic 
psychiatry. 
   
  (B) At least two members must be currently engaged in direct care of persons 
with mental illness. 
   
  (C) At least one member must have experience evaluating and treating persons 
with mental retardation. 
     
  (2) Member appointments or contracts. The commissioner will appoint or 
contract with a sufficient number of individuals to comprise a board which is 
able to meet the statutorily mandated review schedules. Contracts must include 
provisions which: 
 
  (A) ensure that reviews are conducted in accordance with this subchapter; 
   
  (B) allow sufficient time to meet the review schedules; and 
   
  (C) specify a mechanism for evaluating each board member's performance on an 
annual basis. 
     
  (3) Terms. Board member appointments or contracts will be for two-year terms. 
If vacancies occur, the commissioner will replace members as needed to maintain 
a sufficient number of qualified members necessary to accommodate the 
statutorily mandated review schedule. 
   
  (4) Chair. The commissioner will designate the chair of the board, who is 
responsible for ensuring that appropriate members and alternates to meet 
membership requirements outlined in paragraph (1) of this subsection are 
participating in each meeting. 
 
  (A) If the chair is unable to serve on the TDMHMR Dangerousness Review Board 
for any reason, he or she will designate another member of the board to act as 
chair. 
   
  (B) If the chair is unable to make such an appointment, then the commissioner 
will make the appointment. 
     
  (5) Conflict-of-interest. A member of the TDMHMR Dangerousness Review Board is 
disqualified from participating in a determination if the board member has 
provided mental health services to the individual being reviewed, has personal 
or professional involvement with the behavior or incident which precipitated the 
transfer of the individual to the Maximum Security Unit at Vernon State 
Hospital, or has been a member of the individual's treatment team within the 
current admission. 
   
  (6) Quorum. TDMHMR Dangerousness Review Board members may occasionally need to 
remove themselves from a hearing in the event of an emergency or if a member 
determines that a conflict-of-interest exists after a hearing has begun. In no 
case may action be taken or a determination made by the Review Board unless at 
least four members are participating and voting. 
   
  (7) Legal assistance. An attorney assigned from the department's Legal 
Services Division will provide legal assistance to the board as needed. 
     
  (c) Orientation and training. The department will provide a uniform 
orientation for new members and alternates of all review boards and annual 
relevant training for all members and alternates. 
 
  (1) Training will utilize current professional literature and knowledge and 
the current "Clinical Guidelines for Assessing Individual Risk Factors", which 
is maintained by the CEO and clinical director of Vernon State Hospital and 
periodically updated with relevant clinical information for risk assessment. 
   
  (2) Completion of the orientation and annual training is required for 
continued membership. 
 
       
  sec.402.75. Persons Not Subject to Manifest Dangerousness Hearings by Facility 
Review Boards. A facility review board is prohibited from conducting a review 
for manifest dangerousness on persons who are: 
 
  (1) voluntarily admitted for treatment; or 
   
  (2) under the age of 18, unless adjudicated as an adult. 
 
     
  sec.402.76. Procedures for the Determination of Manifest Dangerousness by 
Facility Review Boards. 
 
  (a) If the facility CEO has reason to believe that an individual is manifestly 
dangerous and in need of transfer to Vernon State Hospital, the facility CEO may 
request that the facility review board convene to consider the question. 
   
  (b) At least two days before the facility review board meets, the chair must 
provide notice of a manifest dangerousness review hearing using the "Facility 
Review Board Notice of Hearing" form, which is herein adopted by reference, 
copies of which are available from the Texas Department of Mental Health and 
Mental Retardation, P.O. Box 12668, Austin, Texas 78711-2668. A copy of the form 
must be filed in the permanent clinical record of the individual. Notice must be 
sent to: 
 
  (1) the individual and/or legal guardian, if any; 
   
  (2) the individual's representative, if any; and 
   
  (3) with the consent of the individual or his or her legal guardian, the 
individual's parents, spouse, or other appropriate relative. 
     
  (c) At least one day before the facility review board meets, board members 
must receive any background information pertinent to the case to be reviewed, 
including: 
 
  (1) a full description of the alleged incident or incidents believed to 
indicate manifest dangerousness, including police and/or witness reports, as 
appropriate and available; 
   
  (2) a statement from the individual and his or her representative concerning 
the alleged incident or incidents believed to indicate manifest dangerousness, 
unless the individual or his or her representative does not wish to submit a 
statement; and 
   
  (3) information relating to the individual's treatment. 
     
  (d) During the hearing, the facility review board must: 
 
  (1) consider all pertinent and relevant information regarding the individual, 
including: 
 
  (A) the information outlined in subsection (c) of this section; and 
   
  (B) a complete clinical history and assessments which: 
 
  (i) identify factors that precipitate or contribute to dangerousness utilizing 
the current "Clinical Guidelines for Assessing Individual Risk Factors", as 
described in sec.402.74 of this title (relating to Membership, Meetings, 
Orientation, and Training of Review Boards); 
   
  (ii) review past and current treatment efforts, including all relevant social 
and legal history, and treatment plan changes that targeted the dangerousness; 
and 
   
  (iii) evaluate the individual's response to treatment efforts to determine 
whether the individual is currently manifestly dangerous; and 
       
  (2) conduct a personal interview of the individual, unless he or she refuses 
to be interviewed. 
     
  (d) Only facility review board members and the individual and his or her 
guardian and/or representative may participate in the hearing or interview, 
except that at the facility review board's request and with the consent of the 
individual or his or her legal guardian, professional trainees may attend the 
hearing or interview as part of their educational training. This does not 
preclude the review board from requesting that persons attend part of the 
proceedings to provide testimony or technical assistance. 
   
  (e) Only facility review board members may participate in its final 
deliberations. 
 
  (1) If during deliberations the review board determines that it requires 
additional information, it may cease deliberating and reopen the hearing. 
   
  (2) The individual and his or her guardian and/or representative must be 
allowed to attend and participate in the reopened hearing. 
     
  (f) An individual may only be transferred to the Maximum Security Unit of 
Vernon State Hospital if the facility review board makes a determination that 
the individual's current behavior is manifestly dangerous. Such a determination 
may only be made if the evidence indicates that: 
 
  (1) the individual is receiving appropriate treatment, including treatment 
targeted to addressing the individual's dangerousness; and 
   
  (2) the individual requires a maximum security environment to continue 
treatment and ensure public safety. 
     
  (g) The facility review board's written report of the determination will be 
submitted to the facility CEO and a copy filed in the permanent clinical record 
of the individual. 
 
  (1) A determination that an individual is manifestly dangerous requires a 
unanimous vote. 
   
  (2) If a decision of the facility review board is not unanimous, any member of 
the facility review board may prepare a written dissent, stating the reason for 
such dissent. Dissents will be filed in the permanent clinical record of the 
individual, and a copy will be provided to the facility CEO, the facility review 
board chair, and the commissioner. 
     
  (h) If, while awaiting transfer, it becomes apparent that the individual is no 
longer manifestly dangerous, the facility review board must be reconvened in 
accordance with the procedures in this section. 
   
  (i) Facility review board hearings, with the exception of final deliberations, 
must be tape-recorded or otherwise recorded, with the recording made a part of 
the individual's medical record. 
 
     
  sec.402.77. Procedures for the Determination of Manifest Dangerousness by the 
TDMHMR Dangerousness Review Board. 
 
  (a) The TDMHMR Dangerousness Review Board must meet at least once each month 
to conduct reviews as mandated by the Texas Code of Criminal Procedure, Article 
46.02, sec.8(a) and Article 46.03, sec.4(b). Additional meetings may be 
requested by the facility CEO. 
 
  (1) Within 60 days of admission or transfer to the Maximum Security Unit of 
Vernon State Hospital, each individual must be reviewed by the Review Board for 
the determination of manifest dangerousness as required by the Texas Code of 
Criminal Procedure, Article 46.02, sec.8(a), and Article 46.03, sec.4(b). 
   
  (2) Each individual must be reviewed at least every six months thereafter. 
   
  (3) An individual may be referred for review earlier than that by showing good 
cause, if approved by the CEO of Vernon State Hospital. For the purposes of this 
subsection, good cause is defined as sufficient change in condition to be deemed 
as not manifestly dangerous by the individual's physician and treatment team or 
by an independent evaluator. 
     
  (b) At least fourteen days before a scheduled monthly meeting, the CEO of 
Vernon State Hospital must provide the chair of the TDMHMR Dangerousness Review 
Board with: 
 
  (1) a list of individuals to be reviewed by the board; and 
   
  (2) pertinent clinical, social, and legal data of each individual on the list. 
     
  (c) At least seven days before a scheduled monthly meeting, the appropriate 
physician and treatment team or independent evaluator shall provide to the 
TDMHMR Dangerousness Review Board for each individual being reviewed a 
comprehensive individual assessment of risk for the occurrence of manifestly 
dangerous behaviors utilizing the Directions for Compiling a Comprehensive 
Individual Assessment of Risk for the Occurrence of Manifestly Dangerous 
Behaviors, and other materials as appropriate. 
 
  (1) If the physician and treatment team of an individual or an independent 
evaluator recommend transfer from Vernon State Hospital to a less secure mental 
health facility because the individual's dangerousness is sufficiently in 
remission, then the physician and treatment team or independent evaluator must 
also provide an assessment and attestation of the availability of effective 
treatment in a less secured setting. 
   
  (2) The assessment must include an analysis of the level of external controls 
needed to ensure the continuity of safe and effective treatment and the type of 
mental health commitment needed to support these. 
     
  (d) At least seven days before a hearing is held, the TDMHMR Dangerousness 
Review Board chair must provide notice of a manifest dangerousness review 
hearing using the "TDMHMR Dangerousness Review Board Notice of Hearing" form, 
which is herein adopted by reference, copies of which are available from the 
Texas Department of Mental Health and Mental Retardation, P.O. Box 12668, 
Austin, Texas 78711-2668. A copy of the form must be filed in the permanent 
clinical record of the individual. Notice must be sent to: 
 
  (1) the individual and/or legal guardian, if any; 
   
  (2) the individual's representative, if any; and 
   
  (3) with the consent of the individual or his or her legal guardian, the 
individual's parents, spouse, or other appropriate relative. 
     
  (e) During the hearing, the TDMHMR Dangerousness Review Board must: 
 
  (1) review all pertinent and relevant information provided about the 
individual; and 
   
  (2) conduct a personal interview of the individual, unless the individual 
refuses to be interviewed. 
     
  (f) Only TDMHMR Dangerousness Review Board members and the individual and his 
or her guardian and/or representative may participate in the hearing or 
interview. This does not preclude the Review Board from requesting that persons 
attend part of the proceedings to provide testimony or technical assistance. 
   
  (g) Only TDMHMR Dangerousness Review Board members participate in its final 
deliberations. 
 
  (1) If during deliberations the Review Board determines that it requires 
additional information, it may cease deliberating and reopen the hearing. 
   
  (2) The individual and his or her guardian and/or representative must be 
allowed to attend and participate in the reopened hearing. 
     
  (h) Based upon the information gathered from subsection (e) of this section, 
the TDMHMR Dangerousness Review Board will determine whether or not each 
individual reviewed is manifestly dangerous. A written report of each 
determination, including reasons for the determination, must be submitted to the 
CEO of Vernon State Hospital and a copy filed in the permanent clinical record 
of the individual. 
 
  (1) A determination that an individual is not manifestly dangerous requires a 
unanimous vote. 
   
  (2) If a decision of the board is not unanimous, any member may prepare a 
written dissent, stating the reason for such dissent. The dissent must be filed 
in the permanent clinical record of the individual and a copy provided to the 
CEO of Vernon State Hospital and the Review Board chair. 
 
  (i) If the Review Board determines that an individual is manifestly dangerous, 
then the individual must remain at the Maximum Security Unit at Vernon State 
Hospital for continued treatment. 
       
  (j) If the Review Board determines that an individual is not manifestly 
dangerous, then the individual must, within 30 days of the determination, be 
transferred to a less secure mental health facility recommended by the Review 
Board in accordance with procedures outlined in sec.402.78(b) of this title 
(relating to Transfer of Individuals). 
 
  (1) If the less secure mental health facility serving the individual's county 
of residence is not suitable for the individual's continued treatment needs, 
then the Review Board may recommend another less secure mental health facility. 
   
  (2) In order to establish a new county of residence: 
 
  (A) the individual's physician and treatment team at Vernon State Hospital 
must establish that a facility serving the new county of residence would ensure 
appropriate treatment; 
   
  (B) the individual and/or legal guardian and, with the individual's consent, 
family members must agree with the proposed change; and 
   
  (C) the CEO of Vernon State Hospital must accomplish transfer of residency and 
treatment responsibility by communicating with: 
 
  (i) the mental health authorities of the original county of residence and the 
proposed county of residence; and 
   
  (ii) the CEO of the proposed less secure mental health facility. 
         
  (k) TDMHMR Review Board hearings, with the exception of final deliberations, 
must be tape-recorded or otherwise recorded, with the recording made a part of 
the individual's medical record. 
 
     
  sec.402.78. Transfer of Individuals. 
 
  (a) Transfer to the Maximum Security Unit at Vernon State Hospital. 
 
  (1) When an individual has been determined to be manifestly dangerous by a 
facility review board: 
 
  (A) the clinical findings and security needs of the individual must be 
immediately submitted to the CEO of Vernon State Hospital; and 
   
  (B) the appropriate physician and treatment team at the Maximum Security Unit 
at Vernon State Hospital communicate with the sending physician and treatment 
team regarding the characteristics and treatment needs of the individual in 
order to establish a liaison for ongoing reports and collaboration regarding the 
individual's progress and eligibility for transfer back to the sending facility 
or community setting, as appropriate. 
     
  (2) The sending facility is responsible for the individual's transportation. 
   
  (3) The sending facility must notify the committing court of transfer when it 
occurs. 
     
  (b) Transfer from the Maximum Security Unit at Vernon State Hospital. 
 
  (1) The physician and treatment team of the individual at Vernon State 
Hospital must communicate with the receiving physician and treatment team 
regarding the individual's characteristics and treatment needs to facilitate 
successful transition and continued treatment. The assessment and attestation 
documentation provided to the TDMHMR Dangerousness Review Board as well as the 
board's summary and findings must be included in the individual's permanent 
clinical record, which must be transferred with the individual. 
   
  (2) Staff at Vernon State Hospital must notify the committing court and any 
other persons who need to be informed of the transfer. 
   
  (3) Upon completion of the transfer, the receiving facility must contact the 
committing court to establish communication between the new facility and the 
court (e.g., inform court of new contact concerning the individual). 
   
  (4) If the individual is transferred to a less secure mental health facility 
in accordance with procedures of this subchapter, then the individual may not be 
made subject to another hearing to determine manifest dangerousness unless the 
facility CEO has cause to believe that a change in the individual's condition is 
sufficient to warrant a new hearing. 
     
  (c) Transfer, furlough, or discharge to community setting. Treatment teams 
must include risk assessment in considering the transfer, furlough, or discharge 
to a community setting of each individual who has previously been found 
manifestly dangerous and subsequently received services at the Maximum Security 
Unit at Vernon State Hospital. 
 
  (1) The facility review board must provide consultation, including 
recommendations, as appropriate, to the individual's treatment team utilizing 
procedures outlined in sec.402.76(c) of this title (relating to Procedures for 
the Determination of Manifest Dangerousness by Facility Review Boards). 
   
  (2) Prior to transfer, furlough, or discharge, the requirements for 
attestation of availability of appropriate services must be conducted utilizing 
the "Directions for Compiling a Comprehensive Individual Assessment of Risk for 
the Occurrence of Manifestly Dangerous Behaviors." 
 
       
  sec.402.79. Procedures for Hearings. 
 
  (a) In a review board hearing, the individual is entitled to representation. 
If the individual does not have a representative and requests one, then the 
facility CEO must appoint an individual on the facility's staff who is not 
directly connected with the individual's treatment to assist the individual at 
the hearing. 
 
  (1) The individual may waive representation in writing. 
   
  (2) If the individual does not have the capacity to make this determination, 
representation will automatically be provided. 
     
  (b) The individual and his or her representative, if any, must have the 
opportunity to: 
 
  (1) participate in all stages of the hearing except during final deliberations 
of the review board; 
   
  (2) present witnesses on the individual's behalf; 
   
  (3) respond and present evidence and argument on all issues involved; and 
   
  (4) cross-examine witnesses. 
     
  (c) In connection with any hearing held before a review board, the review 
board may swear or affirm witnesses and take their testimony under oath. 
   
  (d) All parties, witnesses, attorneys, or other representatives must conduct 
themselves in all proceedings governed by this subchapter with proper dignity, 
courtesy, and respect for the department, the review board, and members of the 
review board. Disorderly conduct will not be tolerated. Attorneys and other 
representatives must observe and practice the standards of ethical behavior 
prescribed for attorneys at law by the State Bar of Texas. 
 
     
  sec.402.80. Request and Decision for New Hearing by CEO or Individual. 
 
  (a) Facility review boards. 
 
  (1) If the individual or his or her representative believes that a fair 
hearing did not occur, he or she may request that the facility CEO review the 
issue. If the CEO agrees that a procedural error may have affected the outcome 
of the hearing, the CEO may reconvene the facility review board to hold a new 
hearing. 
   
  (2) If the facility CEO or the individual or his or her representative 
disagrees with the facility review board's determination, he or she may appeal 
the decision to the TDMHMR Review Board by submitting a written notice of the 
matter and other necessary supporting documents to the chair of the TDMHMR 
Review Board. 
 
  (A) The chair of the TDMHMR Review Board will distribute the notice and 
supporting documents to the other members of the Board. Each member will notify 
the chair of his or her recommendation to uphold or overturn the facility review 
board's decision within 30 days of receipt of the information. 
   
  (B) If there is not a unanimous decision, the chair will convene the TDMHMR 
Review Board within 45 days of the chair's receipt of the written notice to 
conclude whether to overturn or uphold the facility review board's decision. The 
meeting may be convened by teleconference. 
   
  (C) Transfer of the individual to Vernon State Hospital, if ordered, does not 
have to be stayed pending appeal. 
       
  (b) TDMHMR Dangerousness Review Board. 
 
  (1) If the CEO of Vernon State Hospital disagrees with the TDMHMR 
Dangerousness Review Board's determination, the CEO may appeal the determination 
to the commissioner by submitting a written notice of the matter and other 
necessary supporting documents. The commissioner must make a decision concerning 
the matter within 45 days. 
   
  (2) The CEO of Vernon State Hospital may request a new hearing by the TDMHMR 
Dangerousness Review Board at any time if there is cause to believe that a 
change in the individual's condition is sufficient to warrant a new hearing. 
   
  (3) The individual or his or her representative may request a new hearing by 
the TDMHMR Dangerousness Review Board and will be granted a new hearing upon 
showing of good cause. For the purposes of this subparagraph, good cause is 
defined as sufficient change in condition to be deemed as not manifestly 
dangerous by the individual's physician and treatment team or by an independent 
evaluator. 
   
  (4) The TDMHMR Dangerousness Review Board may grant a new hearing at any time 
upon request of the CEO of Vernon State Hospital or upon its own motion. 
 
       
  sec.402.81. Research Concerning Standards for Manifest Dangerousness. 
 
  (a) As a service to review board members, the CEO of Vernon State Hospital 
will provide review board members with a non-inclusive compilation of current 
clinical or scientific literature that contain information useful to their 
deliberations. 
   
  (b) Review board members and alternates are expected to be informed of modern 
clinical and scientific information relevant to prediction of violence and 
determination of manifest dangerousness. 
 
     
  sec.402.82. Distribution. 
 
  (a) This subchapter will be distributed to all members of the Texas Board of 
Mental Health and Mental Retardation; the TDMHMR medical director, deputy 
commissioners, associate deputy commissioners, assistant deputy commissioners, 
and directors of central office; CEOs of all department facilities; and members 
of all review boards. 
   
  (b) The facility CEO will be responsible for the distribution of copies of 
this subchapter to all appropriate staff members. 
   
  (c) The CEO of Vernon State Hospital will be responsible for ensuring that 
this subchapter is explained and copies made available upon request to all staff 
members of the Maximum Security Unit of Vernon State Hospital. 
   
  (d) A copy of this subchapter will be provided upon request to individuals 
subject to its provisions and their representatives. 
 
     
  sec.402.83. References.  Reference is made to the following statutes and 
rules: 
 
  (1) Texas Code of Criminal Procedure, Article 46.02; and 
   
  (2) Texas Code of Criminal Procedure, Article 46.03. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509545 
  Ann Utley 
 Chair, Texas MHMR Board 
 Texas Department of Mental Health and Mental Retardation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 206-4516 
         
                   
  TITLE 40. SOCIAL SERVICES AND ASSISTANCE 
 Part I. Texas Department of Human Services 
  Chapter 15. Medicaid Eligibility 
  
  The Texas Department of Human Services (DHS) proposes amendments to 
sec.sec.15.433, 15.435, 15.455, 15.465, 15.500, 15.610, and 15.623, in its 
Medicaid Eligibility rule chapter because federal and state funding for the 
sec.1929(b) program ends, effective October 1, 1995. 
 Burton F. Raiford, commissioner, has determined that for the first five-year 
period the proposed sections will be in effect there will be fiscal implications 
for state government as a result of enforcing or administering the sections. The 
effect on state government for the first five-year period the proposed sections 
will be in effect is an estimated additional cost of $2, 580,339 for fiscal year 
1996; $12,701,929 for fiscal year 1997; $13,479,314 for fiscal year 1998; 
$14,302,200 for fiscal year 1999; and $15,179,785 for fiscal year 2000. 
 Mr. Raiford also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the section will be that DHS will remain within its appropriated budget. Clients 
served by the sec.1929(b) program will be transferred to the Community Based 
Alternatives Waiver or the Family Care program. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the proposed sections. 
 Questions about the content of the proposal may be directed to Judy Coker at 
(512) 450-3227 in DHS's Long Term Care Division. Written comments on the 
proposal may be submitted to Nancy Murphy, Agency Liaison, Media and Policy 
Services-516, Texas Department of Human Services E-205, P.O. Box 149030, Austin, 
Texas 78714-9030, within 30 days of publication in the Texas Register. 
   
  Subchapter D. Resources 
 
  40 TAC sec.15.433, sec.15.435 
 
  The amendments are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 
4413(502), sec.16, which provide the Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
 The amendments implement the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.042. 
 
 
  sec.15.433. Transfer of Resources Penalty Period. 
 
  (a) The penalty period begins with the month the transfer occurred. For 
resources transferred in different months, penalty periods run concurrently. The 
penalty applies only to nursing facility care and home/community-based waiver 
services (Type Program 19). If a transfer occurred with the client's knowledge 
and consent, the department considers the fair market value of the resource at 
the time of transfer in order to determine the penalty period. The client 
remains eligible for all other Medicaid benefits and continues to receive a 
monthly identification form. Both the client and the service provider are 
notified of the penalty period. SSI clients or clients in the community who are 
eligible under Type Program 03, 11, 18, or 22 [or 1929(b)] may transfer 
resources without penalty provided they do not become institutionalized. For 
community-based MAO clients, except Type Program 19, the department gathers 
information about transfers occurring on or after July 1, 1988, and notifies the 
client of potential penalty if he is institutionalized. Type Program 19 clients 
may be ineligible for home/community-based waiver services [for up to 30 months] 
if the transfer results in any uncompensated value. 
   
  (b)  (No change.) 
 
     
  sec.15.435. Liquid Resources. 
 
  (a)-(b) (No change.) 
   
  (c)  Patient trust funds and nursing facility refunds. 
 
  (1) (No change.) 
   
  (2) A nursing facility must refund any advance payments made by the client for 
periods that are also covered by Medicaid following certification. [This refund 
policy also applies to home health agencies for 1929(b) clients.] The refund 
becomes a countable resource as of 12:01 a.m. on the first day of the month 
after the month of receipt. 
     
  (d)-(o) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509612 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
             
  Subchapter E. Income 
 
  40 TAC sec.15.455, sec.15.465 
 
  The amendments are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 
4413(502), sec.16, which provide the Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
 The amendments implement the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.042. 
 
 
  sec.15.455. Unearned Income. 
 
  (a) (No change.) 
   
  (b)  Support and maintenance (S/M). The following requirements apply to 
support and maintenance. 
 
  (1) Support and maintenance not counted as income. Support and maintenance are 
not counted as income if: 
 
  (A) eligibility is being tested for a waiver program; for example, Community 
Living Assistance and Support Services (CLASS), the <nl>Community Based 
Alternative Program <ol>[Nursing Facility Waiver (NFW)], Home and Community-
Based Services (HCS), and Medically Dependent Children's Program (MDCP) [. The 
1929(b) program is not a waiver program]; 
   
  (B)-(I) (No change.) 
     
  (2) (No change.) 
   
  (3) Support and maintenance when the client resides in the household of 
another person. 
 
  (A) (No change.) 
   
  (B) 1/3 FBR plus $20 as S/M. 
 
  (i) (No change.) 
   
  (ii) If the client's eligibility is based on institutional income criteria; 
that is, the client is [1929(b) or] Type Program (TP) 51, Status-in-Group (SIG) 
J, then count 1/3 FBR plus $20 as S/M. If the client is income-eligible, no 
further development is required. If counting 1/3 FBR plus $20 causes 
ineligibility, prior to denial the client must be given an opportunity to rebut 
and show that the actual value is less. 
   
  (iii)-(iv) (No change.) 
       
  (4)-(9) (No change.) 
     
  (c)-(e) (No change.) 
 
     
  sec.15.465. Income Exclusions. 
 
  (a) General exclusion. For each month, the first $20 of unearned or earned 
income is excluded. This exclusion is applied first to unearned income, then to 
earned income if the unearned income is less than $20. If no unearned income 
exists, the entire $20-exclusion is applied to the earned income. Exceptions are 
as follows: 
 
  (1)-(2) (No change.) 
   
  (3) The $20-general exclusion does not apply to Type Program 14 [and 1929(b)] 
cases. 
     
  (b)-(h) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509613 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
             
  Subchapter F. Budgets and Payment Plans 
 
  40 TAC sec.15.500 
 
  The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 
4413(502), sec.16, which provide the Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
 The amendment implements the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.042. 
 
 
  sec.15.500. Nonvendor Living Arrangements. 
 
  (a) The department determines eligibility for individuals and couples (in 
nonvendor living arrangements) who: 
 
  (1) (No change.) 
   
  (2) apply for or have eligibility redetermined under Type Program 03[, the 
Social Security Act, 1929(b)(2)(B)], or TP51J criteria; 
   
  (3)-(5) (No change.) 
     
  (b) The department uses the full SSI-payment standard (in a nonvendor 
individual budget) for a client or the special income limit for [the Social 
Security Act, 1929(b)(2)(B), or] <nl>a <ol>TP51J client and considers only his 
income. The department prepares an individual budget if the client is single, 
widowed, or divorced; or a married person who is: 
 
  (1)-(3) (No change.) 
     
  (c) The department prepares a companion budget, using the full SSI federal 
benefit rate for an individual, if a client lives with his ineligible spouse 
during any part of a calendar month. [The department prepares companion budgets 
for 1929(b) clients using the department's special income limit.] The income of 
the ineligible spouse may be deemed available to the client (except for TP51J 
clients). 
   
  (d) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509614 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
             
  Subchapter G. Application for Medicaid 
 
  40 TAC sec.15.610, sec.15.623 
 
  The amendments are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 
4413(502), sec.16, which provide the Health and Human Services Commission with 
the authority to administer federal medical assistance funds. 
 The amendments implement the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.042. 
 
 
  sec.15.610. Medicaid Coverage. 
 
  (a) For payment purposes, there are four types of Medicaid coverage: 
 
  (1) regular coverage. The department pays a premium to cover the cost of 
services provided by physicians and hospitals. Other services, such as drugs and 
nursing facility care, are paid for directly by the department. 
   
  (2) institutional coverage. The department pays the Department of Mental 
Health and Mental Retardation to provide all Medicaid services to eligible 
individuals in state schools. No premium is paid. 
   
  [(3) 1929(b) coverage. The department pays for primary home care but no other 
Medicaid services are provided to the 1929(b) client.] 
   
  <nl>(3)<ol>[(4)] qualified Medicare beneficiary Coverage. The department pays 
Medicare premiums, deductibles, and coinsurance for individuals who are enrolled 
in Medicare A, have income below the specified percentages of the federal 
poverty level, and have resources no more than twice the limits for the SSI 
program. 
     
  (b)-(c) (No change.) 
   
  (d)  SSI-MAO eligibility requirements. 
 
  (1) General requirements. Although the applicant need not be currently 
eligible, he must prove that SSI-MAO requirements were met in the month of 
requested coverage. [Except for 1929(b) clients, a] <nl>A <ol>client eligible 
for three months prior coverage receives a medical care identification for the 
retroactive period. He presents this information to providers so that claims can 
be filed within 90 days of the Medicaid decision. To meet requirements, the 
individual must have been: 
 
  (A)-(E) (No change.) 
     
  (2)-(4) (No change.) 
 
       
  sec.15.623. Previously Completed Application for Assistance.  A previously 
completed application for assistance may be used in the following situations: 
 
  (1)-(3) (No change.) 
   
  [(4) The application for assistance is referred to the eligibility specialist 
from staff in the Community Care for the Aged and Disabled (CCAD) program for a 
determination of eligibility under 1929(b), regardless of the signature date on 
the form. 
   
  [(5) A program transfer is being accomplished, no annual review is due, and 
computer edits require denial and recertification.] 
   
  <nl>(4)<ol>[(6)]  An application should be accepted to protect the application 
file date for clients entering non-certified facilities pending certification of 
the facility as a Title XIX provider. If a client's application is denied 
because the facility has not been certified by the application due date, the 
previously completed application for assistance should be used whenever the 
facility is certified, and the original application file date is reported on the 
notice of application. Verification must be updated if circumstances have 
changed. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509615 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
               Chapter 47. Primary Home Care 
  
  The Texas Department of Human Services (DHS) proposes amendments to 
sec.sec.47.1901, 47.2902, and 47.2913, concerning definitions, requesting prior 
approval for primary home care, and prior approval renewal for primary home 
care, in its Primary Home Care chapter. The purpose of the amendments is to 
delete references to the sec.1929(b) program. Federal funding for this Medicaid 
program will end October 1, 1995. 
 Burton F. Raiford, commissioner, has determined that for the first five-year 
period the proposed sections will be in effect there will be fiscal implications 
for state government as a result of enforcing or administering the sections. The 
effect on state government for the first five-year period the amendments will be 
in effect is an estimated additional cost of $2,580,339 for fiscal year 1996; 
$12,701,929 for fiscal year 1997; $13,479,314 for fiscal year 1998; $14,302,200 
for fiscal year 1999; and $15,179,785 for fiscal year 2000. 
 Mr. Raiford also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be that DHS will remain within its appropriated budget. 
Clients served by the sec.1929(b) program will be transferred to the Community 
Based Alternatives waiver or the Family Care program. There will be no effect on 
small businesses. There is no anticipated economic cost to persons who are 
required to comply with the proposed sections. 
 Questions about the content of the proposal may be directed to Maria Garcia 
Montoya at (512) 450-3155 in DHS's Community Care Program Services section. 
Written comments on the proposal may be submitted to Nancy Murphy, Agency 
Liaison, Media and Policy Services-537, Texas Department of Human Services E-
205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in 
the Texas Register. 
   
  General Provisions and Services 
 
  40 TAC sec.47.1901 
 
  The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 4413 
(502), sec.16, which provides the Health and Human Services Commission with the 
authority to administer federal medical assistance funds. 
 The amendment implements the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.041. 
 
 
  sec.47.1901. Definitions.  <ol>The following words and terms, when used in 
this chapter, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   [Waiver 5-Federally approved waiver for individuals who meet income and 
resources criteria for Medicaid nursing home placement in Texas and who meet 
functional assessment and medical criteria for primary home care.] 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509552 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
           
  Service Requirements 
 
  40 TAC sec.47.2902, sec.47.2913 
 
  The amendments are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Civil Statutes, Article 4413 
(502), sec.16, which provides the Health and Human Services Commission with the 
authority to administer federal medical assistance funds. 
 The amendments implement the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.041. 
 
 
  sec.47.2902. Requesting Prior Approval for Primary Home Care. 
 
  (a) Provider agencies must obtain, from the regional nurse, prior approval of 
medical need for applicants and renewal of prior approval for certain clients. 
 
  (1) [Except as indicated in paragraph (2) of this subsection, only initial] 
Initial prior approval of medical need by the department regional nurse is 
required for applicants who have a chronic medical condition causing functional 
impairment in personal care that is expected to be long-standing. However, 
annual reauthorization of service by the caseworker is required. 
   
  [(2) Annual renewal of prior approval by the department regional nurse is 
required for clients who are eligible under the provisions of the Social 
Security Act, sec.1929(b).] 
   
  <nl>(2)<ol>[(3)] The department regional nurse gives a time-limited prior 
approval for applicants with a medical need and related functional impairment 
based on an acute medical condition that is expected to improve in less than 12 
months. 
     
  (b)-(g) (No change.) 
 
     
  sec.47.2913. Prior Approval Renewal for Primary Home Care. 
 
  (a) (No change.) 
   
  [(b) For clients who are eligible for primary home care under the provisions 
of the Social Security Act, sec.1929(b), the RN supervisor must send the 
following forms to the regional nurse to obtain renewal of prior approval: 
 
  [(1) summary of client need for service, if provided; 
   
  [(2) approval for CCAD services-referral response, if received from the 
caseworker; and 
   
  [(3) client health assessment/proposed service plan.] 
     
  <nl>(b)<ol>[(c)] The RN supervisor must submit the prior approval material to 
the regional nurse in time for it to be postmarked or date-stamped by the 
department no later than one day after the termination date of the current prior 
approval period. If the required forms are not submitted within this time frame, 
a gap in client coverage occurs. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509553 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
               Chapter 48. Community Care for Aged and Disabled 
  
  Eligibility 
 
  40 TAC sec.48.2918 
 
  The Texas Department of Human Services (DHS) proposes an amendment to 
sec.48.2918, concerning eligibility for primary home care, in its Community Care 
for Aged and Disabled chapter. The purpose of the amendment is to delete 
references to the sec.1929(b) program. Federal funding for this Medicaid program 
will end October 1, 1995. 
 Burton F. Raiford, commissioner, has determined that for the first five-year 
period the proposed section will be in effect there will be fiscal implications 
for state government as a result of enforcing or administering the section. The 
effect on state government for the first five-year period the amendment will be 
in effect is an estimated additional cost of $2,580,339 for fiscal year 1996; 
$12,701,929 for fiscal year 1997; $13,479,314 for fiscal year 1998; $14,302,200 
for fiscal year 1999; and $15,179,785 for fiscal year 2000. 
 Mr. Raiford also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that DHS will remain within its appropriated budget. Clients 
served by the sec.1929(b) program will be transferred to the Community Based 
Alternatives waiver or the Family Care program. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the proposed section. 
 Questions about the content of the proposal may be directed to Armando Delgado 
at (512) 450-3217 in DHS's Long Term Care Services section. Written comments on 
the proposal may be submitted to Nancy Murphy, Agency Liaison, Media and Policy 
Services-527, Texas Department of Human Services E-205, P.O. Box 149030, Austin, 
Texas 78714-9030, within 30 days of publication in the Texas Register. 
 The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provide the department with the authority to administer public and 
medical assistance programs and under Texas Civil Statutes, Article 4413 (502), 
sec.16, which provides the Health and Human Services Commission with the 
authority to administer federal medical assistance funds. 
 The amendment implements the Human Resources Code, sec. s22.001-22.024 and 
sec.sec.32.001-32.041. 
 
 
  sec.48.2918. Eligibility for Primary Home Care. 
 
  (a) Applicants/clients for primary home care services must meet all of the 
following eligibility criteria. The applicant/client must: 
 
  (1) be eligible for Medicaid outside an institution <nl>. <ol>[or be eligible 
under the provisions of the Social Security Act, sec.1929(b)(2)(B);] 
   
  (2)-(5) (No change.) 
     
  (b)-(c) (No change.) 
   
  (d) Applicants must have prior approval of medical need for primary home care 
from the department regional nurse. Only initial prior approval of medical need 
is required for applicants who have a chronic medical condition causing 
functional impairment in personal care that is expected to be long-standing. 
[Annual prior approval by the department regional nurse is required for clients 
who are eligible under the provisions of the Social Security Act, sec.1929(b).] 
Time-limited prior approval is given to applicants with a medical need and 
related functional impairment based on an acute medical condition that is 
expected to improve in less than 12 months. For clients who have time-limited 
prior approval and who request renewal of prior approval, a new physician's 
order is required. 
   
  (e)-(f) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 1, 1995. 
 TRD-9509554 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Proposed date of adoption: October 1, 1995 
 For further information, please call: (512) 450-3765 
         
                 Part XII. Texas Board of Occupational Therapy Examiners 
  Chapter 362. Definitions 
  
  40 TAC sec.362.1 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.362.1, concerning Definitions. The amendment clarifies the definitions of 
two categories of licenses and to whom they may be issued. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be issuance of licenses to qualified occupational therapists and 
occupational therapy assistants. There will be no effect on small businesses. 
There is no anticipated economic cost to persons who are required to comply with 
the section as proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar 
Boulevard, Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provide the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.362.1. Definitions.  The following words and terms, when used in these 
rules, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
   Provisional License -A license issued to  <nl>an applicant holding a valid 
license<ol> [applicants] in good standing from another state, District of 
Columbia, or territory of the United States requesting licensure; [or a license 
issued to an applicant certified by the AOTCB and who has been employed as an 
OTR or COTA within the past six months in a non-licensing state;] or a license 
issued to an applicant certified by the AOTCB [, who has not been licensed in 
Texas, but] <nl>and<ol> who has been employed as an OTR or COTA within five 
years of the <nl>receipt date of current, complete application for licensure 
with TBOTE in Texas or in a non-licensing state or foreign country. <ol> [date 
of application in a non-licensing state.] 
   
   Temporary License -A license issued to an applicant who meets all the 
qualifications for a license except taking the first available AOTCB examination 
after completion of all education requirements; or a license issued to an 
applicant certified by the AOTCB and who has not <nl>been employed as an OTR or 
COTA for five years or more from the receipt date of current, complete 
application for licensure with TBOTE.<ol> [worked as an OTR or COTA in the past 
five years prior to the date of application.] 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509626 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
           Chapter 365. Type of Licenses 
  
  40 TAC sec.365.1 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.365.1, concerning Types of Licenses. The amendment clarifies the 
requirements of two categories of licenses and to whom they may be issued. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be issuance of licenses to qualified occupational therapists and 
occupational therapy assistants. There will be no effect on small businesses. 
There is no anticipated economic cost to persons who are required to comply with 
the section as proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar 
Boulevard, Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provide the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.365.1. Types of Licenses. 
 
  (a)-(b) (No change.) 
   
  (c) There are two types of temporary licenses: 
 
  (1) (No change.) 
   
  (2) Temporary Extended License-The applicant is certified by the AOTCB and has 
not <nl>been employed as an OTR or COTA for five years or more from the receipt 
date of current, complete application for licensure with TBOTE. <ol> [worked as 
an OTR or COTA in the past five years prior to the date of application.] A 
temporary license is issued for a maximum of 12 months, during which time the 
AOTCB examination must be taken. The temporary license will be canceled if the 
applicant fails the certification examination and must be returned to the board. 
The continuing supervision by a licensed OTR is required, and the licensee shall 
complete additional hours of continuing education within a specified period of 
time as determined by the Coordinator of the Occupational Therapy Program. 
     
  (d) Provisional License: 
 
  (1) The applicant for a Provisional License must meet one of the following: 
 
  (A) The applicant <nl>is certified by the AOTCB,<ol> has a valid license to 
practice as an OTR or COTA in another state, the District of Columbia, or a 
territory of the United States that has licensing requirements that are 
substantially equivalent to the requirements of Senate Bill 690<nl>, <ol> and 
has been employed as an OTR or COTA <nl>in that state, District of Columbia, or 
territory within five years from the receipt date of current, complete 
application for licensure with TBOTE;<ol> [within the past five years in that 
state, District of Columbia, or territory;] 
   
  (B) The applicant is certified by the AOTCB and has been employed as an OTR or 
COTA within the past six months <nl>of the receipt date of current, complete 
application for licensure with TBOTE in a non-licensing state, foreign country, 
or state or federal government facility which does not require a license or 
other form of registration. <ol> [in a non-licensing state or state or federal 
government facility which does not require a license or other form of 
registration.] No extra hours of continuing education required; or 
   
  (C) The applicant is certified by the AOTCB [, has not been licensed in Texas, 
but] <nl>and<ol> has been employed as an OTR or COTA within five years of the  
<nl>receipt date of current, complete application for licensure with TBOTE in 
Texas, a non-licensing state, foreign country, or state or federal government 
facility which does not require a license or other form of registration. <ol> 
[date of application in a non-licensing state or state or federal government 
facility which does not require a license or other form of registration.] Such 
provisional licensees shall complete extra hours of continuing education within 
a specified period of time as determined by the Coordinator of the Occupational 
Therapy Program. 
     
  (2)-(3) (No change.) 
     
  (e)-(h) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509627 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
             Chapter 366. Application for License 
  
  40 TAC sec.366.1 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.366.1, concerning Application for License. The amendment modifies which 
documents are included in application packets sent out to qualified occupational 
therapist and occupational therapy assistant applicants. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be a more streamlined procedure for disseminating application 
packets to qualified occupational therapist and occupational therapy assistant 
applicants. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar 
Boulevard, Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provides the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.366.1. Application for License. 
 
  (a) (No change.) 
   
  (b) Upon receipt of a request for application, the applicant will be sent a 
complete application packet containing an instruction sheet, application form, 
[a copy of the Act and rules,] and any other information required by the board. 
   
  (c)-(e) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509628 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
             Chapter 367. Continuing Education 
  
  40 TAC sec.367.1 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.367.1, concerning Continuing Education. The amendment delineates continuing 
education requirements for annual license renewals and biennial license 
renewals. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be clarification of continuing education requirements directly 
related to occupational therapists' and occupational therapy assistants' license 
renewals. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar, 
Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provides the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.367.1. Continuing Education. 
 
  (a) (No change.) 
   
  (b) Licensees must complete 15 contact hours of continuing education each 
renewal year. [(from birth month to birth month)] <nl>Fifteen contact hours of 
continuing education must be obtained in the 12 months immediately preceding the 
renewal month. For example, if the next renewal month is August 1996, the 
continuing education must be earned between August 1, 1995 and July 31, 
1996.<ol> This requirement becomes effective January 1, 1995 for renewals due 
beginning January 1, 1996. 
   
  <nl>(c) Licensees must complete 30 contact hours of continuing education each 
biennial renewal. Thirty contact hours of continuing education must be obtained 
in the 24 months immediately preceding the renewal month. 
   
  <nl>(d)<ol>[(c)] Record of attendance/verification for all continuing 
education must be submitted to the board, on the board approved Continuing 
Education Record Card, with the annual application for license renewal. 
   
  <nl>(e)<ol>[(d)] Continuing education hours may be earned in the following 
manner: 
 
  (1) Attendance at workshops, refresher courses, professional conferences, 
seminars, or facility based continuing education programs. Hour for hour credit 
on program content only. No maximum; 
   
  (2) Presentations by Licensee: 
 
  (A) Professional presentations, e.g. in-services, workshops, institutes (any 
presentation counted only one time). Hour for hour credit. No maximum; 
   
  (B) Community/service organization presentations (any presentation counted 
only one time). Hour for hour credit. Four hours maximum; 
     
  (3) Formal academic coursework: 
 
  (A) 1-2 credit hour class-7.5 contact hours; 
   
  (B) 3-4 credit hour class-15 contact hours; 
     
  (4) AOTA Self Study Series: Hour for hour credit based on the number of hours 
awarded by AOTA for each course. A copy of the self study completion certificate 
must accompany the Continuing Education Record Card at renewal; 
   
  (5) Other continuing education: Publications/Media; or research/grant 
activities. A request to receive credit for this category must be submitted in 
writing for approval to the Coordinator of Occupational Therapy a minimum of 60 
days prior to the expiration of the license. If warranted, the request may be 
reviewed by the Continuing Education Committee for final approval. 
     
  <nl>(f)<ol>[(e)] Any deviation from the above continuing education categories 
will be reviewed on a case by case basis by the Coordinator of Occupational 
Therapy or by the Continuing Education Committee. A request for special 
consideration must be submitted in writing a minimum of 60 days prior to 
expiration of the license. 
   
  <nl>(g)<ol>[(f)] Definitions for continuing education rules. 
 
  (1) Record of Attendance/Verification-actual proof of participation in the 
continuing education activity(ies), shall be by submission of a Continuing 
Education Record Card. 
 
  (A) The Continuing Education Record Card must contain the title of the 
presentation, the presenter(s), the dates attended, the number of contact hours 
received, and a signature by the presenter, workshop coordinator, supervisor, or 
training coordinator verifying attendance at the stated continuing education 
activity(ies) for the renewal year. 
   
  (B) A licensee listing himself/herself as the presenter of a continuing 
education program must obtain the signature of the workshop coordinator, 
supervisor, or training coordinator. 
   
  (C) For formal academic coursework, an official transcript or grade report 
must be submitted at renewal. 
     
  (2) Contact hour-equals one clock hour of attendance. 
   
  (3) CEU-formal Continuing Education Unit. Usually one (1.0) CEU equals ten 
contact hours. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509629 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
               Chapter 369. Display of Licenses 
  
  40 TAC sec.369.2 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.369.2, concerning Changes of Name or Address of Licensees. The amendment 
delineates which documents that licensees and applicants must submit to evidence 
changes in name. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be accurate documentation of legal name changes for all applicants 
and licensees on file with the board. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the section as proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar 
Boulevard, Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provides the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.369.2. Changes of Name or Address of Licensees. 
 
  (a) A licensee <nl>or applicant <ol> shall notify the board in writing of 
changes in name, residential and/or primary business address and/or supervisor 
within 30 days of such change(s). <nl>A copy of a marriage license, court 
decree, or divorce decree evidencing a change in name must be submitted by the 
licensee or applicant with any written notification in a change in name. 
   
  (b) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509630 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
             Chapter 374. Disciplinary Actions 
  
  40 TAC sec.374.1 
 
  The Texas Board of Occupational Therapy Examiners proposes an amendment to 
sec.374.1, concerning Disciplinary Actions. The amendment clarifies remuneration 
as it relates to practicing occupational therapy in a manner detrimental to the 
public health and welfare. 
 John Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Mr. Maline also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be clearer delineation of one area of detrimental practice. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. 
 Comments on the proposal may be submitted to Joy L. Vaughn, Acting OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 3001 South Lamar 
Boulevard, Suite 101, Austin, Texas 78704. 
 The amendment is proposed under the Occupational Therapy Practice Act, Texas 
Civil Statutes, Article 8851, which provides the Texas Board of Occupational 
Therapy Examiners with the authority to adopt rules consistent with this Act to 
carry out its duties in administering this Act. 
 Texas Civil Statutes, Article 8851 is affected by the amendment. 
 
 
  sec.374.1. Disciplinary Actions. 
 
  (a) (No change.) 
   
  (b) The Act, sec.30(b)(6), states "practiced occupational therapy in a manner 
detrimental to the public health and welfare;" which is defined but not limited 
to the following: 
 
  (1)-(5) (No change.) 
   
  (6) <nl>Intentionally or knowingly offering to pay or agreeing to accept any 
remuneration directly or indirectly, overtly or covertly, in cash or in kind, to 
or from any person, firm, association of persons, partnership, or corporation 
for receiving or soliciting patients or patronage, regardless of source of 
reimbursement, unless said business arrangement or payments practice is 
acceptable under the Texas Health and Safety Code, sec.sec.161.091-161. 094, the 
Social Security Act, sec.1128B, 42 United States Code, 1320a-7b, or the Social 
Security Act, sec.1877, 42 United States Code, 1395nn or its regulations. <ol> 
[Appearing to refer or referring a patient to a third person for the purpose of 
receiving a fee or other consideration from the third person;] 
   
  (7)-(14) (No change.) 
     
  (c)-(e) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509632 
  John P. Maline 
 Executive Director 
 Texas Board of Occupational Therapy Examiners 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 443-8202 
         
                 
  TITLE 43. TRANSPORTATION 
 Part I. Texas Department of Transportation 
  Chapter 25. Traffic Operations 
  
  General 
 
  43 TAC sec.25.7 
 
  The Texas Department of Transportation proposes new sec.25.7, concerning 
removal and storage of spilled cargo and personal property. 
 Texas Civil Statutes, Article 6673g, provides authorization for the department 
to remove, store, and dispose of cargo and personal property spilled on the 
state highway system and state right of way. 
 Section 25.7 defines the department's criteria for removal of this property, 
the procedures for contacting the owner of the property, the procedures for 
storage of the property if necessary, and the owner's responsibilities in regard 
to reimbursement for storage and removal costs. 
 Gary K. Trietsch, P.E., Director of Traffic Operations, has determined that for 
each year of the first five-year period the new section is in effect there will 
be no fiscal implications to state or local government as a result of enforcing 
or administering the section. 
 Mr. Trietsch has certified that there will be no significant impact on local 
economies or overall employment as a result of enforcing or administering the 
proposed new section. 
 Mr. Trietsch has also determined for each year of the first five years the new 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be to ensure that roadways on the state highway system are operated 
at maximum efficiency by clearing spilled cargo or personal property that may be 
obstructing the flow of people and goods. There will be no effect on small 
businesses. There may be an economic cost to persons who are required to comply 
with the section as proposed. These individuals will also be expected to 
reimburse the department for costs associated with the removal and storage of 
material removed from the state highway system. The cost of removal and storage 
cannot be determined, because it will be based on the type and amount of cargo. 
 Pursuant to the Administrative Procedure Act, the Government Code, Chapter 
2001, the Texas Department of Transportation will conduct a public hearing to 
receive comments concerning the proposed new section. A public hearing will be 
held at 9:00 a.m. on Wednesday, September 6, 1995, in the first floor hearing 
room of the Dewitt C. Greer, State Highway Building, 125 East 11th Street, 
Austin, Texas, Austin, Texas and will be conducted in accordance with the 
procedures specified in 43 TAC sec.1.5. Those desiring to make comments or 
presentations may register starting at 8:30 a.m. Any interested person may 
appear and offer comments, either orally or in writing; however, questioning of 
those making presentations will be reserved exclusively to the presiding officer 
as may be necessary to ensure a complete record. While any person with pertinent 
comments will be granted an opportunity to present them during the course of the 
hearing, the presiding officer reserves the right to restrict testimony in terms 
of time and repetitive content. Organizations, associations, or groups are 
encouraged to present their commonly held views, and same or similar comments, 
through a representative member where possible. Comments on the proposed text 
should include appropriate citations to sections, subsections, paragraphs, etc., 
for proper reference. Any suggestions or request for alternative language or 
other revisions in the proposed text should be submitted in written form. 
Presentations must remain pertinent to the issue being discussed. A person may 
not assign a portion of his or her time to another speaker. A person who 
disrupts a public hearing must leave the hearing room if ordered to do so by the 
presiding officer. Persons with disabilities who have special communication or 
accommodation needs and who plan to attend the hearing and who may need 
auxiliary aids or services such as interpreters for persons who are deaf or 
hearing impaired, readers, large print or braille, are requested to contact 
Eloise Lundgren, Director of the Public Information Office, at 125 East 11th 
Street, Austin, Texas 78701-2483, (512) 463-8588 at least two days prior to the 
hearing so that appropriate arrangements can be made. 
 Written comments on the proposed new section may be submitted to Gary K. 
Trietsch, P.E., Director of Traffic Operations, Texas Department of 
Transportation, 125 East 11th Street, Austin, Texas 78701-2483. The deadline for 
receipt of written comments will be 5:00 p.m. on September 8, 1995. 
 This new section is proposed under Texas Civil Statutes, Article 6666, which 
provide the Texas Transportation Commission with the authority to promulgate 
rules for the conduct of the work of the Texas Department of Transportation and 
more specifically, Texas Civil Statutes, Article 6673g, which authorize the 
Texas Department of Transportation to remove and dispose of spilled cargo and 
other personal property, on state highways and right of way. 
 Texas Civil Statutes, Article 6673g, is affected by this new section. 
 
 
  sec.25.7. Removal and Storage of Spilled Cargo and Personal Property. 
 
  (a) Purpose. Texas Civil Statutes, Article 6673g, authorizes the Texas 
Department of Transportation to remove and dispose of spilled cargo or other 
personal property on state rights of way or a portion of the roadway of the 
state highway system. This section prescribes the requirements and procedures 
for the removal of spilled cargo or other personal property from the highway 
system. 
   
  (b) Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
 
  (1) Department-The Texas Department of Transportation. 
   
  (2) District-One of the 25 geographical areas managed by a district engineer, 
in which the department conducts its primary work activities. 
   
  (3) Hazardous material-Material as defined by the Hazardous Material 
Transportation Act (49 United States Code, sec.1801). 
   
  (4) Hazardous substance-Material as defined by the Texas Hazardous Substances 
Spill Prevention and Control Act (Water Code, sec.26.263). 
   
  (5)  Spilled cargo or personal property-Material that separates from the 
vehicle in which it is being transported and which comes to rest within state 
right of way or a portion of the roadway of the state highway system. 
     
  (c)  General conditions warranting removal of spilled cargo or personal 
property. 
 
  (1) The department may, without the consent of the owner or carrier, remove 
spilled cargo or other personal property from the state's right of way if the 
department considers this cargo or property to be blocking the roadway or 
endangering public safety. 
   
  (2) For each occurrence, the department will determine whether the removal of 
the cargo or property is warranted based on the following considerations: 
 
  (A) the safety of department employees; 
   
  (B) the safety of the public; 
   
  (C) the operation of the highway facilities; 
   
  (D) the protection of the state investment; 
   
  (E) the availability of resources for removal operations; and 
   
  (F) the availability of storage space at a department facility. 
     
  (3) If the department determines that removal is necessary, it will remove the 
cargo or property with as much care as is practical under the existing 
conditions. 
   
  (4) The department will remove cargo or property that it believes is a 
hazardous material or a hazardous substance in compliance with Government Code, 
sec.411.018, and the Texas Hazardous Substances Spill Prevention and Control 
Act, Water Code, Chapter 26, Subchapter G. 
   
  (5) The department and its employees do not assume responsibility for damage 
to the cargo or property resulting from removal. 
     
  (d) Notification of property owner. 
 
  (1) The department, through its local districts, will attempt to contact the 
owner or carrier of the cargo or property through information obtained from the 
property or through inquiries from the owner or carrier. 
   
  (2) If the department is unable to ascertain the identity of the property 
owner within 30 days of the removal, the department will dispose of the property 
in the manner the department deems most suitable. 
     
  (e) Storage of Cargo and Property. 
 
  (1) Removal of cargo or property may include transportation to and/or storage 
of the property at a site other than the spill location. 
   
  (2)  The owner or carrier is responsible for the security of the cargo or 
property and the integrity of any perishable goods at all times. 
   
  (3)  The owner or carrier will claim and take possession of the cargo or 
property as soon as possible after its relocation from the spill site. The 
department may dispose of the cargo or property if the owner, after 
notification, fails to take possession of the cargo within ten days. 
   
  (4)  The owner or carrier is responsible for the costs of removal and 
disposing of the cargo or property. The department will bill the responsible 
party for all costs and the responsible party shall remit the costs to the 
department within 30 days of the date of billing. If the responsible party fails 
to remit all costs, the department may refer the matter to the Office of the 
Attorney General for collection. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on August 2, 1995. 
 TRD-9509635 
  Robert E. Shaddock 
 General Counsel 
 Texas Department of Transportation 
    Earliest possible date of adoption: September 8, 1995 
 For further information, please call: (512) 463-8630