Volume 42 Number 45 November 10, 2017 Pages

Transcription

1 Volume 42 Number 45 November 10, 2017 Pages

2 School children's artwork is used to decorate the front cover and blank filler pages of the Texas Register. Teachers throughout the state submit the drawings for students in grades K-12. The drawings dress up the otherwise gray pages of the Texas Register and introduce students to this obscure but important facet of state government. The artwork featured on the front cover is chosen at random. Inside each issue, the artwork is published on what would otherwise be blank pages in the Texas Register. These blank pages are caused by the production process used to print the Texas Register. Texas Register, (ISSN , USPS ), is published weekly (52 times per year) for $ ($ for first class mail delivery) by Matthew Bender & Co., Inc., 3 Lear Jet Lane Suite 104, P O Box 1710, Latham, NY Material in the Texas Register is the property of the State of Texas. However, it may be copied, reproduced, or republished by any person without permission of the Texas Register director, provided no such republication shall bear the legend Texas Register or "Official" without the written permission of the director. The Texas Register is published under the Government Code, Title 10, Chapter Periodicals Postage Paid at Albany, N.Y. and at additional mailing offices. POSTMASTER: Send address changes to the Texas Register, 136 Carlin Rd., Conklin, N.Y Secretary of State - Rolando B. Pablos Director - Robert Sumners a section of the Office of the Secretary of State P.O. Box Austin, TX (512) FAX (512) register@sos.texas.gov Staff Leti Benavides Belinda Kirk Deana Lackey Jill S. Ledbetter Cecilia Mena Joy L. Morgan Breanna Mutschler Barbara Strickland Tami Washburn

3 GOVERNOR Appointments ATTORNEY GENERAL Requests for Opinions TEXAS ETHICS COMMISSION Advisory Opinion Requests PROPOSED RULES TEXAS HEALTH AND HUMAN SERVICES COMMISSION REIMBURSEMENT RATES 1 TAC , , TAC TAC , TEXAS DEPARTMENT OF AGRICULTURE FUEL QUALITY 4 TAC 5.1, TAC 5.1, 5.4, PESTICIDES 4 TAC TAC , 7.131, TAC , 7.153, TAC TAC 7.192, TAC TAC TAC , TAC TAC WEIGHTS AND MEASURES 4 TAC TAC CITRUS 4 TAC PUBLIC UTILITY COMMISSION OF TEXAS SUBSTANTIVE RULES APPLICABLE TO WATER AND SEWER SERVICE PROVIDERS 16 TAC , TAC TEXAS EDUCATION AGENCY EDUCATIONAL PROGRAMS 19 TAC DEPARTMENT OF STATE HEALTH SERVICES PRESCRIPTION DRUG DONATION PROGRAM 25 TAC HOSPITAL LICENSING 25 TAC TAC PRIVATE PSYCHIATRIC HOSPITALS AND CRISIS STABILIZATION UNITS 25 TAC TAC BIRTHING CENTERS 25 TAC ABORTION FACILITY REPORTING AND LICENSING 25 TAC FOOD AND DRUG 25 TAC , TAC TAC , , TAC TAC , GENERAL SANITATION 25 TAC OCCUPATIONAL HEALTH 25 TAC TEXAS DEPARTMENT OF INSURANCE GENERAL ADMINISTRATION 28 TAC CORPORATE AND FINANCIAL REGULATION 28 TAC COMPTROLLER OF PUBLIC ACCOUNTS TAX ADMINISTRATION 34 TAC PROPERTY TAX ADMINISTRATION 34 TAC TAC TEACHER RETIREMENT SYSTEM OF TEXAS BENEFITS 34 TAC 29.90, TABLE OF CONTENTS 42 TexReg 6249

4 HEALTH CARE AND INSURANCE PROGRAMS 34 TAC 41.1, 41.5, 41.7, TEXAS DEPARTMENT OF MOTOR VEHICLES FINANCE 43 TAC CONTRACT MANAGEMENT 43 TAC MOTOR VEHICLE DISTRIBUTION 43 TAC VEHICLE TITLES AND REGISTRATION 43 TAC VEHICLE TITLES AND REGISTRATION 43 TAC TAC OVERSIZE AND OVERWEIGHT VEHICLES AND LOADS 43 TAC TAC TAC ADOPTED RULES TEXAS HEALTH AND HUMAN SERVICES COMMISSION MEDICAID MANAGED CARE 1 TAC REIMBURSEMENT RATES 1 TAC TEACHER RETIREMENT SYSTEM OF TEXAS ADMINISTRATIVE PROCEDURES 34 TAC MEMBERSHIP CREDIT 34 TAC TAC TAC TAC EMPLOYMENT AFTER RETIREMENT 34 TAC TAC TAC , HEALTH CARE AND INSURANCE PROGRAMS 34 TAC 41.2, 41.6, TAC TAC CONTESTED CASES 34 TAC TEXAS JUVENILE JUSTICE DEPARTMENT SECURE JUVENILE PRE-ADJUDICATION DETENTION AND POST-ADJUDICATION CORRECTIONAL FACILITIES 37 TAC , GENERAL ADMINISTRATIVE STANDARDS 37 TAC TEXAS DEPARTMENT OF TRANSPORTATION CONTRACT AND GRANT MANAGEMENT 43 TAC TEXAS DEPARTMENT OF MOTOR VEHICLES VEHICLE TITLES AND REGISTRATION 43 TAC 217.3, TAC , VEHICLE TITLES AND REGISTRATION 43 TAC TAC VEHICLE TITLES AND REGISTRATION 43 TAC MOTOR CARRIERS 43 TAC TABLES AND GRAPHICS IN ADDITION Office of Consumer Credit Commissioner Notice of Rate Ceilings Texas Education Agency Public Notice of Texas Request of a Waiver from 1.0 Percent State Cap on the Percentage of Students Who Take an Alternate Assessment 6393 Request for Applications Concerning the Pathways in Technology Early College High Schools Planning Grant Request for Applications Concerning the Pathways in Technology Early College High Schools Success Grant Texas Commission on Environmental Quality Agreed Orders Enforcement Orders Notice of Hearing TABLE OF CONTENTS 42 TexReg 6250

5 Notice of Public Hearing Notice of Water Rights Application Update to the Water Quality Management Plan Texas Ethics Commission List of Late Filers General Land Office Notice and Opportunity to Comment on Requests for Consistency Agreement/Concurrence Under the Texas Coastal Management Program Department of State Health Services Licensing Actions for Radioactive Materials Texas Lottery Commission Scratch Ticket Game Number 2075 "The Glitter is Gold" North Central Texas Council of Governments Request for Proposals for Midlothian - Waxahachie Regional Trail Preliminary Engineering Study Public Utility Commission of Texas Notice of Application for Sale, Transfer, or Merger Notice of Application to Amend a Sewer Certificate of Convenience and Necessity Notice of Application to Amend Water and Sewer Certificates of Convenience and Necessity Notice of Petition for Amendment to a Water Certificate of Convenience and Necessity by Expedited Release Request for Comment Texas Department of Transportation Public Hearing Notice - Statewide Transportation Improvement Program Public Hearing Notice - Unified Transportation Program Request for Proposals - Traffic Safety Program Texas Water Development Board Request for Applications for Fiscal Year 2018 Agricultural Water Conservation Grants TABLE OF CONTENTS 42 TexReg 6251

6 Open Meetings Statewide agencies and regional agencies that extend into four or more counties post meeting notices with the Secretary of State. Meeting agendas are available on the Texas Register's Internet site: Members of the public also may view these notices during regular office hours from a computer terminal in the lobby of the James Earl Rudder Building, 1019 Brazos (corner of 11th Street and Brazos) Austin, Texas. To request a copy by telephone, please call Or request a copy by register@sos.state.tx.us For items not available here, contact the agency directly. Items not found here: minutes of meetings agendas for local government bodies and regional agencies that extend into fewer than four counties legislative meetings not subject to the open meetings law The Office of the Attorney General offers information about the open meetings law, including Frequently Asked Questions, the Open Meetings Act Handbook, and Open Meetings Opinions. The Attorney General's Open Government Hotline is OPEN ( ) or tollfree at (877) OPEN TEX ( ). Additional information about state government may be found here: Meeting Accessibility. Under the Americans with Disabilities Act, an individual with a disability must have equal opportunity for effective communication and participation in public meetings. Upon request, agencies must provide auxiliary aids and services, such as interpreters for the deaf and hearing impaired, readers, large print or Braille documents. In determining type of auxiliary aid or service, agencies must give primary consideration to the individual's request. Those requesting auxiliary aids or services should notify the contact person listed on the meeting notice several days before the meeting by mail, telephone, or RELAY Texas. TTY:

7 Appointments Appointments for October 23, 2017 Appointed as Administrator for the Interstate Agreement on Detainers for a term to expire at the pleasure of the Governor, Travis J. Turner of Huntsville (replacing Kelly Enloe of Normangee who retired). Appointments for October 25, 2017 Appointed to the Texas Funeral Service Commission for a term to expire February 1, 2023, Dianne W. Hefley of Amarillo (replacing Joyce McCown Odom of San Antonio whose term expired). Appointed to the Texas Funeral Service Commission for a term to expire February 1, 2023, Kristin D. Tips of San Antonio (replacing Wesley Smith of Murphy whose term expired). Appointed to Texas State Technical College System Board of Regents for a term to expire August 31, 2021, Antonio Abad of Waco (replacing James Virgil Martin of Sweetwater whose term expired). Appointed to Texas State Technical College System Board of Regents for a term to expire August 31, 2021, Curtis C. Cleveland of Waco (replacing Penny C. Forrest of Waco whose term expired). Appointed to Texas State Technical College System Board of Regents for a term to expire August 31, 2021, Alejandro G. Meade, III of Mission (replacing Linda L. McKenna of Harlingen whose term expired). Greg Abbott, Governor TRD GOVERNOR November 10, TexReg 6253

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9 Requests for Opinions RQ-0188-KP Requestor: Mr. Randall Rice Galveston County Auditor Post Office Box 1418 Galveston, Texas Re: Procedures regarding reappraisal of property after a disaster (RQ KP) Briefs requested by November 17, 2017 RQ-0189-KP Requestor: The Honorable Sid Miller Commissioner Texas Department of Agriculture Post Office Box Austin, Texas Re: Whether the Department of Agriculture's rules regarding weighing food sold for immediate consumption conflict with the section of the Agriculture Code (RQ-0189-KP) Briefs requested by November 28, 2017 For further information, please access the website at or call the Opinion Committee at (512) TRD Amanda Crawford General Counsel Office of the Attorney General Filed: November 1, 2017 ATTORNEY GENERAL November 10, TexReg 6255

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11 Advisory Opinion Requests The Texas Ethics Commission has been asked to consider whether an associate judge may use in political advertising and campaign communications in connection with the associate judge's candidacy for district judge: 1) the title "associate judge" and 2) photographs depicting the associate judge in a judicial robe, sitting on the bench over which the associate judge currently presides.(aor-623) The Texas Ethics Commission is authorized by of the Government Code to issue advisory opinions in regard to the following statutes: (1) Chapter 572, Government Code; (2) Chapter 302, Government Code; (3) Chapter 303, Government Code; (4) Chapter 305, Government Code; (5) Chapter 2004, Government Code; (6) Title 15, Election Code; (7) Chapter 159, Local Government Code; (8) Chapter 36, Penal Code; (9) Chapter 39, Penal Code; (10) , Government Code; and (11) , Government Code. Questions on particular submissions should be addressed to the Texas Ethics Commission, P.O. Box 12070, Capitol Station, Austin, Texas , (512) TRD Seana Willing Executive Director Texas Ethics Commission Filed: November 1, 2017 TEXAS ETHICS COMMISSION November 10, TexReg 6257

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13 TITLE 1. ADMINISTRATION PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION CHAPTER 355. REIMBURSEMENT RATES The Texas Health and Human Services Commission (HHSC) proposes amendments to , concerning General Principles of Allowable and Unallowable Costs; , concerning General Reporting and Documentation Requirements, Methods, and Procedures; , concerning Attendant Compensation Rate Enhancement; , concerning Reimbursement Methodology; , concerning Reporting Costs by Home and Community-based Services (HCS) and Texas Home Living (TxHmL) Providers; and , concerning Reimbursement Methodology for Home and Community-Based Services and Texas Home Living Programs. Background and purpose Effective January 1, 2018, HHSC will implement a cost report reform initiative for HCS/TxHmL and intermediate care facilities for individuals with an intellectual disability or related conditions (ICF/IID) providers by requiring only even-year cost reports beginning with providers' 2018 fiscal year cost reports. These proposed amendments are at (c) for ICF/IID providers and at (a) for HCS/TxHmL providers. As part of this initiative, HHSC is proposing amendments to (d) so that all providers attend state-sponsored cost report training every other year for the even-year cost report. Currently, providers attend cost report training for odd-year cost reports. Section (h)(2)(B) is also being amended to require Attendant Compensation Reports for odd years beginning with the rate year that starts September 1, The report must reflect the activities of the provider while delivering contracted services from the first day of the rate year through the last day of the rate year, and it is due no later than 90 days following the end of the provider entity's fiscal year or 90 days from the transmittal date of the Attendant Compensation Report forms, whichever due date is later. Finally, HHSC proposes to repeal the Total Medicaid Spending Requirement in the ICF/IID reimbursement methodology at (j)(8) and in the HCS/TxHmL reimbursement methodology at (f)(10) beginning September 1, Providers who chose to receive the Medicaid rates in effect on August 31, 2015, (i.e., providers who chose to "opt out" of the September 1, 2015, rate increases in order to be exempt from the Total Medicaid Spending Requirement) will receive the rates that were adopted effective September 1, 2015, effectively eliminating the rate differential between providers who "opted in" and providers who "opted out." Section-by-Section Summary The proposed amendment to (d) changes the cost report training requirement from every other year for the odd-year cost report to every other year for the even-year cost report beginning with providers' 2018 cost reports. If a new preparer wishes to complete an odd-year cost report and has not completed the previous even-year training, he/she must complete an odd-year training. The proposed amendment to (g)(2) and (h)(2) update references to program names. The proposed amendment to (c)(1) indicates that ICF/IID providers will submit even-year cost reports only, beginning with provider's 2018 cost report. The proposed amendment to (h)(2) adds new subparagraph (B) to require submission of attendant compensation reports for odd years, beginning with the rate year that starts September 1, As amended, the remaining subparagraphs are (C) through (H). The proposed amendment to (j) updates an internal citation related to completion of cost reports functioning as Attendant Compensation Reports in the ICF/IID program. The proposed amendment to (t)(2) updates language regarding provider requests for recalculation of recoupment. The proposed amendment to (j) adds an end date of August 31, 2017, for the Total Medicaid Spending Requirement and to the providers' option of choosing the Medicaid rates in effect on August 31, 2015, in paragraph (7). Proposed new paragraph (8) indicates that, for rate periods beginning on or after September 1, 2017, the Total Medicaid Spending Requirement will no longer apply, and providers who "opted out" of the September 1, 2015, rate increases will begin to receive those increases. The proposed amendment to (a) indicates that HCS/TxHmL providers will submit even-year cost reports only, beginning with provider's 2018 cost reports. The proposed amendment to (f) adds an end date of August 31, 2017, for the Total Medicaid Spending Requirement and to the providers' option of choosing the Medicaid rates in effect on August 31, 2015, in paragraph (9). Proposed new paragraph (10) indicates that, for rate periods beginning on or after September 1, 2017, the Total Medicaid Spending Requirement will no longer apply, and providers who "opted out" of the September 1, 2015, rate increases will begin to receive those increases. PROPOSED RULES November 10, TexReg 6259

14 Fiscal Note David Cook, Deputy Chief Financial Officer for HHSC, has determined that for each year of the first five years the amendments to , , , and will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the amendments as proposed. For each year of the first five years the amendments to and will be in effect, there will be fiscal implications to state government as a result of enforcing and administering the amendments as follows: $832,189 ($359,339 General Revenue (GR) and $472,850 Federal Funds (FF)) for fiscal year (FY) 2018; $1,011,370 ($431,653 GR and $579,717 FF) for FY 2019; $1,011,370 ($432,057 GR and $579,313 FF) for FY 2020; $1,011,370 ($432,057 GR and $579,313 FF) for FY 2021; and $1,011,370 ($432,057 GR and $579,313 FF) for FY There will be no effect on local governments as a result of enforcing or administering these amendments. GOVERNMENT GROWTH IMPACT STATEMENT HHSC has determined that during the first five years the amended rules will be in effect: (1) the rules will not create or eliminate a government program; (2) implementation of the rules will not require the creation or elimination of employee positions; (3) implementation of the rules will not require an increase or decrease in future legislative appropriations to the agency; (4) the rules will not require an increase or decrease in fees paid to the agency; (5) the rules will not create a new rule; (6) the rules will limit an existing rule; and (7) the rules will not change the number of individuals subject to the rule. HHSC has insufficient information to determine the rules' effect on the state's economy. Small Business, Micro-Business, AND RURAL Community Impact Analysis David Cook, Deputy Chief Financial Officer for HHSC, has also determined that there will be no adverse impact on small businesses, micro-businesses, or rural communities required to comply with the amendments as proposed. The amended rules do not require any additional cost to a contracted provider. Attendant Compensation Reports collect significantly less provider information than cost reports. Replacing cost reports in the odd years with Attendant Compensation Reports should result in lower costs for providers. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons required to comply with the amendments as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to this rule because the rule does not impose a cost on persons required to comply and is amended to reduce the burden imposed on persons required to comply with the rule. Public Benefit Selvadas Govind, Director of Rate Analysis, has determined that, for each year of the first five years the amended rules are in effect, the public will benefit from adoption of the proposed amendments in three ways. First, HHSC's costs will be reduced because staff will have 69% fewer reports to process from HCS/TxHmL and ICF/IID providers during alternate years. Second, the administrative burden on providers will be reduced because they will no longer submit odd-year cost reports; rather, providers will submit Attendant Compensation Reports, which collect significantly less provider information. Third, the administrative burden on HHSC and providers associated with Medicaid Spending Requirements will be eliminated. Takings Impact Assessment HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, Public Comment Questions about the content of this proposal may be directed to Victor Perez in the HHSC Rate Analysis Department by telephone at (512) Written comments on this proposal may be submitted to Mr. Perez by mail to the HHSC Rate Analysis Department, Mail Code H-400, P.O. Box 85200, Austin, TX ; by fax to (512) ; or by to RAD LTSS@hhsc.state.tx.us within 30 days after publication of this proposal in the Texas Register. To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; or (2) faxed or ed by midnight on the last day of the comment period. When faxing or ing comments, please indicate "Comments on Proposed Rule 1R059" in the subject line. SUBCHAPTER A. COST DETERMINATION PROCESS 1 TAC , , Statutory Authority The amended rules are proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code (b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32. The amended rules implement Texas Government Code, Chapter 531, and Texas Human Resources Code, Chapter 32. No other statutes, articles, or codes are affected by this proposal General Principles of Allowable and Unallowable Costs. (a) - (c) (No change.) (d) Cost report training. It is the responsibility of the provider to ensure that each cost report preparer has completed the required 42 TexReg 6260 November 10, 2017 Texas Register

15 state-sponsored cost report training. Preparers may be employees of the provider or persons who have been contracted by the provider for the purpose of cost report preparation. Preparers must complete cost report training for each program for which a cost report is submitted. Beginning with providers' 2018 cost reports, preparers [Preparers] must complete cost report training every other year for the even-year [odd-year] cost report in order to receive a certificate to complete both that even-year [odd-year] cost report and the following odd-year [evenyear] cost report, if applicable. If a new preparer wishes to complete an odd-year [even-year] cost report and has not completed the previous even-year [odd-year] cost report training, to receive a certificate to complete the odd-year [even-year] cost report, he/she must complete an odd-year [even-year] cost report training. A copy of the most recent cost report training certificate for each preparer of the cost report must be submitted with each cost report, except for cost reports submitted through the State of Texas Automated Information and Reporting System (STAIRS). Contracted preparer's fees to complete state-sponsored cost report training are allowable. (1) New preparers. Preparers, who have not previously completed the required state-sponsored cost report training and received a completion certificate, must complete the state-sponsored cost report training as follows: (A) For School Health and Related Services (SHARS) providers, new preparers must complete state-sponsored online cost report training and receive a certificate of completion. Failure to complete the required training may result in an administrative contract violation as specified in of this title (relating to Reimbursement Methodology for School Health and Related Services (SHARS)). Applicable federal and state accessibility standards apply to online training. (B) For all other programs, new preparers must complete the state-sponsored online cost report training designed for new preparers and receive a certificate of completion for each program for which a cost report is submitted. Applicable federal and state accessibility standards apply to online training. (2) All other preparers. Preparers who are not new preparers as defined in paragraph (1) of this subsection must complete state-sponsored online cost report training and receive a certificate of completion for each program for which a cost report is submitted. Preparers that participate in online training may be assessed a convenience fee, which will be determined by HHSC. Convenience fees assessed for state-sponsored online cost report training are allowable costs. Applicable federal and state accessibility standards apply to online training. (3) For nursing facilities, failure to file a completed cost report signed by preparers who have completed the required cost report training may result in vendor hold as specified in of this title (relating to Vendor Hold). (4) For SHARS providers, failure to complete the required cost report training may result in an administrative contract violation as specified in of this title. (5) For all other programs, failure to file a completed cost report signed by preparers who have completed the required cost report training constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in of this title (relating to Administrative Contract Violations). (e) - (f) (No change.) (g) Unallowable costs. Unallowable costs are expenses that are not reasonable or necessary, according to the criteria specified in subsection (f)(1) - (2) of this section and which do not meet the requirements as specified in subsections (i), (j), and (k) of this section or which are specifically enumerated in of this title or program-specific reimbursement methodology. Providers must not report as an allowable cost on a cost report a cost that has been determined to be unallowable. Such reporting may constitute fraud. (Refer to (a) of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports)). (1) For nursing facilities, placement as an allowable cost on a cost report of a cost which has been determined to be unallowable may result in vendor hold as specified in of this title. (2) For ICF/IID, HCS [Intermediate Care Facilities for Individuals with Intellectual Disabilities (formerly known as Intermediate Care Facilities for Persons with Mental Retardation), Home and Community-based Services], Service Coordination/Targeted Case Management, Rehabilitative Services, and TxHmL [Texas Home Living] programs, placement as an allowable cost on a cost report a cost, which has been determined to be unallowable, constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in of this title. (3) For SHARS providers, submission of a cost that has been determined to be unallowable may result in an administrative contract violation as specified in of this title. (4) For all other programs, submission of a cost, which has been determined to be unallowable, constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in of this title. (h) Other financial and statistical data. The primary purpose of the cost report is to collect allowable costs to be used as a basis for reimbursement determination. In addition, providers may be required on cost reports to provide information in addition to allowable costs to support allowable costs, such as wage surveys, workers' compensation surveys, or other statistical and financial information. Additional data requested may include, when specified and in the appropriate section or line number specified, costs incurred by the provider which are unallowable costs. All information, including other financial and statistical data, shown on a cost report is subject to the documentation and verification procedures required for an audit desk review and/or field audit. (1) For nursing facilities, inaccuracy in providing, or failure to provide, required financial and statistical data may result in vendor hold as specified in of this title. (2) For ICF/IID, HCS [Intermediate Care Facilities for Individuals with Intellectual Disabilities (formerly known as Intermediate Care Facilities for Persons with Mental Retardation), Home and Community-based Services], Service Coordination/Targeted Case Management, Rehabilitative Services, and TxHmL [Texas Home Living] programs, inaccuracy in providing, or failure to provide, required financial and statistical data constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in of this title. (3) For SHARS, inaccuracy in providing, or failure to provide, required financial and statistical data may result in an administrative contract violation as specified in of this title. (4) For all other programs, inaccuracy in providing, or failure to provide, required financial and statistical data constitutes an administrative contract violation. In the case of an administrative contract violation, procedural guidelines and informal reconsideration and/or appeal processes are specified in of this title. PROPOSED RULES November 10, TexReg 6261

16 (i) - (k) (No change.) General Reporting and Documentation Requirements, Methods, and Procedures. (a) - (b) (No change.) (c) Cost report due date. (1) Providers must submit cost reports to HHSC Rate Analysis no later than 90 days following the end of the provider entity's fiscal year or 90 days from the transmittal date of the cost report forms, whichever due date is later. For ICF/IID, providers must submit cost reports to HHSC Rate Analysis only in even years, beginning with the provider's 2018 cost report. (2) For SHARS, providers must submit cost reports to HHSC Rate Analysis as specified in of this title. (3) HHSC may grant extensions of due dates for good cause. A good cause is defined as a circumstance which the provider could not reasonably be expected to control and for which adequate advance planning and organization would not have been of any assistance. Providers must submit requests for extensions in writing to HHSC Rate Analysis. Requests for extensions must be received by HHSC Rate Analysis prior to the cost report due date. HHSC staff will respond in writing to requests within 15 days of receipt. (4) HHSC may require additional financial and other statistical information, in the form of special surveys or reports, to ensure the fiscal integrity of the program. Providers must submit such additional information and/or special surveys or reports to HHSC Rate Analysis upon request by the date specified by HHSC Rate Analysis in its transmittal or cover letter to the special survey, report, or request for additional information. (d) - (i) (No change.) Attendant Compensation Rate Enhancement. (a) - (g) (No change.) (h) Attendant Compensation Report submittal requirements. (1) Annual Attendant Compensation Report. For services delivered on or before August 31, 2009, providers must file Attendant Compensation Reports as follows. All participating contracted providers will provide HHSC Rate Analysis, in a method specified by HHSC Rate Analysis, an annual Attendant Compensation Report reflecting the activities of the provider while delivering contracted services from the first day of the rate year through the last day of the rate year. This report must be submitted for each participating contract if the provider requested participation individually for each contract; or, if the provider requested participation as a group, the report must be submitted as a single aggregate report covering all contracts participating at the end of the rate year within one program of the provider. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with reporting requirements for the owner prior to the termination or contract assignment. This report will be used as the basis for determining compliance with the spending requirements and recoupment amounts as described in subsection (s) of this section. Contracted providers failing to submit an acceptable annual Attendant Compensation Report within 60 days of the end of the rate year will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC Rate Analysis. (A) When a participating provider changes ownership through a contract assignment, the prior owner must submit an Attendant Compensation Report covering the period from the beginning of the rate year to the effective date of the contract assignment as determined by HHSC, or its designee. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. The new owner will be required to submit an Attendant Compensation Report covering the period from the day after the date recognized by HHSC, or its designee, as the contract-assignment effective date to the end of the rate year. (B) Participating providers whose contracts are terminated voluntarily or involuntarily must submit an Attendant Compensation Report covering the period from the beginning of the rate year to the date recognized by HHSC or its designee as the contract termination date. This report will be used as the basis for determining recoupment as described in subsection (s) of this section. (C) Participating providers who voluntarily withdraw from participation, as described in subsection (x) of this section, must submit an Attendant Compensation Report within 60 days from the date of withdrawal as determined by HHSC. This report must cover the period from the beginning of the rate year through the date of withdrawal as determined by HHSC and will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. (D) Participating providers whose cost report year, as defined in (b)(5) of this title, coincides with the state of Texas fiscal year, are exempt from the requirement to submit a separate annual Attendant Compensation Report. For these contracts, their cost report will be considered their annual Attendant Compensation Report. (2) For services delivered on September 1, 2009, and thereafter, cost reports as described in (b) of this title will replace the Attendant Compensation Report with the following exceptions: (A) For services delivered from September 1, 2009, to August 31, 2010, participating providers may be required to submit Transition Attendant Compensation Reports in addition to required cost reports. The Transition Attendant Compensation Report reporting period will include those days in calendar years 2009 and 2010 not included in either the 2009 Attendant Compensation report or the provider's 2010 cost report. This report must be submitted for each participating contract if the provider requested participation individually for each contract; or, if the provider requested participation as a group, the report must be submitted as a single aggregate report covering all contracts participating at the end of the transition reporting period within one program of the provider. A participating contract that has been terminated in accordance with subsection (v) of this section or that has undergone a contract assignment in accordance with subsection (w) of this section will be considered to have participated on an individual basis for compliance with transition reporting requirements for the owner prior to the termination or contract assignment. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section for the transition reporting period. Participating providers failing to submit an acceptable Transition Attendant Compensation Report within 60 days of the date of the HHSC request for the report will be placed on vendor hold until such time as an acceptable report is received and processed by HHSC Rate Analysis. (B) For ICF/IID, HCS, and TxHmL programs, providers must submit an Attendant Compensation Report for odd years beginning with the rate year that starts September 1, The report must reflect the activities of the provider while delivering contracted services from the first day of the rate year through the last day of the rate year. The report is due to HHSC Rate Analysis no later than 90 days following the end of the provider entity's fiscal year or 90 days from the transmittal date of the Attendant Compensation Report forms, whichever due date is later. 42 TexReg 6262 November 10, 2017 Texas Register

17 (C) [(B)] When a participating provider changes ownership through a contract assignment or change of ownership, the previous owner must submit an Attendant Compensation Report covering the period from the beginning of the provider's cost reporting period to the date recognized by HHSC, or its designee, as the contract-assignment or ownership-change effective date. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. The new owner will be required to submit a cost report covering the period from the day after the date recognized by HHSC or its designee as the contract-assignment or ownership-change effective date to the end of the provider's fiscal year. (D) [(C)] When one or more contracts or, for the ICF/IID, HCS and TxHmL programs, component codes of a participating provider are terminated, either voluntarily or involuntarily, the provider must submit an Attendant Compensation Report for the terminated contract(s) or component code(s) covering the period from the beginning of the provider's cost reporting period to the date recognized by HHSC, or its designee, as the contract or component code termination date. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. (E) [(D)] When one or more contracts or, for the ICF/IID, HCS and TxHmL programs, component codes of a participating provider are voluntarily withdrawn from participation as per subsection (x) of this section, the provider must submit an Attendant Compensation Report within 60 days of the date of withdrawal as determined by HHSC, covering the period from the beginning of the provider's cost reporting period to the date of withdrawal as determined by HHSC. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. These providers must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts. (F) [(E)] For new contracts as defined in subsection (g) of this section, the cost reporting period will begin with the effective date of participation in the enhancement. (G) [(F)] Existing providers who become participants in the enhancement as a result of the open enrollment process described in subsection (e) of this section on any day other than the first day of their fiscal year are required to submit an Attendant Compensation Report with a reporting period that begins on their first day of participation in the enhancement and ends on the last day of the provider's fiscal year. This report will be used as the basis for determining any recoupment amounts as described in subsection (s) of this section. These providers must still submit a cost report covering the entire cost reporting period. The cost report will not be used for determining any recoupment amounts. (H) [(G)] A participating provider that is required to submit a cost report or Attendant Compensation Report under this paragraph will be excused from the requirement to submit a report if the provider did not provide any billable attendant services to DADS recipients during the reporting period. (3) Other reports. HHSC may require other reports from all contracts as needed. (4) Vendor hold. HHSC, or its designee, will place on hold the vendor payments for any participating provider who does not submit a timely report as described in paragraph (1) of this subsection, or for services delivered on or after September 1, 2009, a timely report as described in paragraph (2) of this subsection completed in accordance with all applicable rules and instructions. This vendor hold will remain in effect until HHSC Rate Analysis receives an acceptable report. (A) Participating contracts or, for the ICF/IID, HCS and TxHmL programs, component codes that do not submit an acceptable report completed in accordance with all applicable rules and instructions within 60 days of the due dates described in this subsection or, for cost reports, the due dates described in (b) of this title will become nonparticipants retroactive to the first day of the reporting period in question and will be subject to an immediate recoupment of funds related to participation paid to the contractor for services provided during the reporting period in question. These contracts or component codes will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment from subsection (s) of this section. If an acceptable report is not received within 365 days of the due date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC, or its designee, the vendor hold associated with the report will be released. (B) Participating contracts or, for the ICF/IID, HCS and TxHmL programs, component codes that have terminated or undergone a contract assignment or ownership-change from one legal entity to a different legal entity and do not submit an acceptable report completed in accordance with all applicable rules and instructions within 60 days of the contract assignment, ownership-change or termination effective date will become nonparticipants retroactive to the first day of the reporting period in question. These contracts or component codes will remain nonparticipants and recouped funds will not be restored until they submit an acceptable report and repay to HHSC, or its designee, funds identified for recoupment under subsection (s) of this section. If an acceptable report is not received within 365 days of the contract assignment, ownership-change or termination effective date, the recoupment will become permanent and, if all funds associated with participation during the reporting period in question have been recouped by HHSC, or its designee, the vendor hold associated with the report will be released. (5) Provider-initiated amended Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports. Reports must be received prior to the date the provider is notified of compliance with spending requirements for the report in question in accordance with subsection (s) of this section. (i) Report contents. Each Attendant Compensation Report and cost report functioning as an Attendant Compensation Report will include any information required by HHSC to implement this attendant compensation rate enhancement. (j) Completion of compensation reports. All Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed in accordance with the provisions of of this title (relating to General Principles of Allowable and Unallowable Costs; Specifications for Allowable and Unallowable Costs; Revenues; and General Reporting and Documentation Requirements, Methods, and Procedures) and may be reviewed or audited in accordance with of this title (relating to Basic Objectives and Criteria for Audit and Desk Review of Cost Reports). Beginning with the rate year that starts September 1, 2002, all Attendant Compensation Reports and cost reports functioning as Attendant Compensation Reports must be completed by preparers who have attended the required cost report training for the applicable program under (d) of this title. For the ICF/IID program, cost reports functioning as Attendant Compensation Reports must also be completed in accordance with the provisions of [ ] of this title (relating to Reimbursement Methodology). For the HCS and TxHmL programs, cost reports functioning as Attendant Compensa- PROPOSED RULES November 10, TexReg 6263

18 tion Reports must also be completed in accordance with the provisions of of this title. (k) - (s) (No change.) (t) Notification of recoupment and request for recalculation. (1) Notification of recoupment. The estimated amount to be recouped is indicated in the State of Texas Automated Information Reporting System (STAIRS), the online application for submitting cost reports and accountability reports. STAIRS will generate an to the entity contact, indicating that the provider's estimated recoupment is available for review. The entity contact is the provider's authorized representative per the signature authority designation form applicable to the provider's contract or ownership type. If a subsequent review by HHSC or audit results in adjustments to the annual Attendant Compensation Report or cost reporting, as described in subsection (h) of this section, that change the amount to be repaid, the provider will be notified by to the entity contact that the adjustments and the adjusted amount to be repaid are available in STAIRS for review. HHSC, or its designee, will recoup any amount owed from a provider's vendor payment(s) following the date of the initial or subsequent notification. For the HCS and TxHmL programs, if HHSC, or its designee, is unable to recoup owed funds in an automated fashion, the requirements detailed under subsection (dd) of this section apply. (2) Request for recalculation. Providers notified of a recoupment based on an Attendant Compensation Report described in subsection (h)(2)(a) or (h)(2)(f) of this section may request that HHSC recalculate their recoupment after combining the Attendant Compensation Report with the provider's most recently available, audited [next] full-year cost report. The request must be received by HHSC Rate Analysis no later than 30 days after the date on the notification of recoupment. If the 30th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 30th calendar day is the final day the receipt of the request will be accepted. (A) The request must be made by to the address specified in STAIRS, hand delivery, United States (U.S.) mail, or special mail delivery. An request must be typed on the provider's letterhead, signed by a person indicated in subparagraph (B) of this paragraph, then scanned and sent by to HHSC. (B) The request must be signed by an individual legally responsible for the conduct of the provider, such as the sole proprietor, a partner, a corporate officer, an association officer, a governmental official, a limited liability company member, a person authorized by the applicable signature authority designation form for the provider at the time of the request, or a legal representative for the provider. The administrator or director of a facility or program is not authorized to sign the request unless the administrator or director holds one of these positions. HHSC will not accept a request that is not signed by an individual responsible for the conduct of the provider. (u) - (hh) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER D. REIMBURSEMENT METHODOLOGY FOR INTERMEDIATE CARE FACILITIES FOR INDIVIDUALS WITH AN INTELLECTUAL DISABILITY OR RELATED CONDITIONS (ICF/IID) 1 TAC Statutory Authority The amended rule is proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code (b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32. The amended rule implements Texas Government Code, Chapter 531, and Texas Human Resources Code, Chapter 32. No other statutes, articles, or codes are affected by this proposal Reimbursement Methodology. (a) - (i) (No change.) (j) Total Medicaid Spending Requirement. Effective for costs and revenues accrued on or after September 1, 2015, through August 31, 2017, all non-state operated ICF/IID providers are required to spend at least 90 percent of revenues received through the ICF/IID daily Medicaid payment rates on Medicaid allowable costs under the ICF/IID program. (1) Compliance with the total Medicaid spending requirement will be determined in the aggregate for all component codes controlled by the same entity across the ICF/IID, Home and Communitybased Services (HCS), and Texas Home Living (TxHmL) programs within the same cost report year. (2) Compliance with the spending requirement is determined on an annual basis using cost reports as described in Chapter 355, Subchapter A, of this title (relating to Cost Determination Process) and this subchapter. (A) When a provider changes ownership through a contract assignment, the prior owner must submit a report covering the period from the beginning of the provider's fiscal year to the effective date of the contract assignment as determined by HHSC or its designee. This report is used as the basis for determining compliance with the spending requirement. (B) Providers whose contracts are terminated voluntarily or involuntarily must submit a report covering the period from the beginning of the provider's fiscal year to the date recognized by HHSC or its designee as the contract termination date. This report is used as the basis for determining compliance with the spending requirement. 42 TexReg 6264 November 10, 2017 Texas Register

19 (C) When part of a cost reporting period is subject to spending accountability and part is not subject to spending accountability, a provider may choose to have HHSC divide their costs for the entire cost reporting period between the part of the period subject to spending accountability and the part of the period not subject to spending accountability on a pro-rata basis (i.e., pro-rata allocation). For example, if six months of a twelve month cost reporting period are subject to spending accountability, HHSC would divide the provider's costs for the entire cost reporting period by two to determine the costs subject to spending accountability. Providers who do not choose to have HHSC divide their costs on a pro-rata basis must report their costs for the period subject to spending accountability separately from their costs for the period not subject to spending accountability (i.e., direct reporting). Once a provider indicates to HHSC their choice between a pro-rata allocation and direct reporting for a specific cost reporting period, that choice is irrevocable for that cost reporting period. (3) Allowable costs are those described in Chapter 355, Subchapter A, and this subchapter. (4) The total Medicaid revenue for an ICF/IID provider participating in the attendant compensation rate enhancement is offset by any recoupment made under (s) of this title prior to determining compliance with the spending requirement. (5) Providers who fail to meet the 90 percent spending requirement are subject to a recoupment of the difference between the 90 percent spending requirement and their actual Medicaid allowable ICF/IID costs. Recoupments for each rate period under this subsection are limited to the difference between the provider's Medicaid revenues for services provided at the rates subject to spending accountability and what the provider's Medicaid revenues would have been for services provided at the Medicaid rates in effect on August 31, (6) The contracted provider, owner, or legal entity which received the Medicaid payment is responsible for the repayment of the recoupment amount. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification results in placement of a vendor hold on all HHSC and Texas Department of Aging and Disability Services contracts controlled by the responsible entity. (7) Prior to each rate period through August 31, 2017, providers will be given the option of receiving the Medicaid rates adopted by HHSC for the rate period and the Medicaid rates that were in effect on August 31, Providers who chose to receive the Medicaid rates that were in effect on August 31, 2015, will not be subject to the spending accountability requirements described in this subsection. (8) For rate periods beginning on or after September 1, 2017, the Total Medicaid Spending Requirement described in this subsection will no longer apply. Additionally, providers who chose to receive the Medicaid rates that were in effect on August 31, 2015, will receive the rates that were adopted effective September 1, The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER F. REIMBURSEMENT METHODOLOGY FOR PROGRAMS SERVING PERSONS WITH MENTAL ILLNESS OR INTELLECTUAL OR DEVELOPMENTAL DISABILITY 1 TAC , Statutory Authority The amended rules are proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code (b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance (Medicaid) payments under Texas Human Resources Code Chapter 32. The amended rules implement Texas Government Code, Chapter 531, and Texas Human Resources Code, Chapter 32. No other statutes, articles, or codes are affected by this proposal Reporting Costs by Home and Community-based Services (HCS) and Texas Home Living (TxHmL) Providers. (a) Submittal of cost reports. On a biennial [an annual] basis, [all] providers must submit cost reports to [as directed by the] Texas Health and Human Services Commission (HHSC) Rate Analysis only in even years, beginning with providers' 2018 cost reports [in accordance with this subchapter]. HHSC applies the general principles of cost determination as specified in of this title (relating to Introduction). (1) Attendant service costs. Attendant service costs are defined in of this title (relating to Attendant Compensation Rate Enhancement). (2) Staff who provide both attendant and non-attendant services. For staff whose duties include work other than the provision of attendant services for the provider, time spent providing attendant services and associated expenses may be reported as attendant service costs if properly documented in accordance with of this title (relating to General Reporting and Documentation Requirements, Methods, and Procedures). (3) Providers must report the following costs: (A) Staff wages related to the delivery of attendant services. (B) These costs may be either the provider's actual expense or contracted expenditures. (b) - (j) (No change.) Reimbursement Methodology for Home and Community- Based Services and Texas Home Living Programs. PROPOSED RULES November 10, TexReg 6265

20 (a) - (e) (No change.) (f) Total Medicaid Spending Requirement. Effective for costs and revenues accrued on or after September 1, 2015, through August 31, 2017, all HCS and TxHmL providers are required to spend at least 90 percent of revenues received through the HCS and TxHmL waiver programs' Medicaid payment rates on Medicaid allowable costs under these programs. (1) Compliance with the total Medicaid spending requirement will be determined in the aggregate for all component codes controlled by the same entity across the HCS, TxHmL and Intermediate Care Facilities for Individuals with an Intellectual Disability or Related Conditions (ICF/IID) programs within the same cost report year. (2) Compliance with the spending requirement is determined on an annual basis using cost reports as described in Chapter 355, Subchapter A, of this title (relating to Cost Determination Process) and this subchapter. (A) When a provider changes ownership through a contract assignment, the prior owner must submit a report covering the period from the beginning of the provider's fiscal year to the effective date of the contract assignment as determined by HHSC or its designee. This report is used as the basis for determining compliance with the spending requirement. (B) Providers whose contracts are terminated voluntarily or involuntarily must submit a report covering the period from the beginning of the provider's fiscal year to the date recognized by HHSC or its designee as the contract termination date. This report is used as the basis for determining compliance with the spending requirement. (C) When part of a cost reporting period is subject to spending accountability and part is not subject to spending accountability, a provider may choose to have HHSC divide their costs for the entire cost reporting period between the part of the period subject to spending accountability and the part of the period not subject to spending accountability on a pro-rata basis (i.e., pro-rata allocation). For example, if six months of a twelve month cost reporting period are subject to spending accountability, HHSC would divide the provider's costs for the entire cost reporting period by two to determine the costs subject to spending accountability. Providers who do not choose to have HHSC divide their costs on a pro-rata basis must report their costs for the period subject to spending accountability separately from their costs for the period not subject to spending accountability (i.e., direct reporting). Once a provider indicates to HHSC their choice between a pro-rata allocation and direct reporting for a specific cost reporting period, that choice is irrevocable for that cost reporting period. (3) Allowable costs are those described in Chapter 355, Subchapter A, and this subchapter. (4) The total Medicaid revenue for an HCS or TxHmL provider participating in the attendant compensation rate enhancement is offset by any recoupment made under (s) of this title prior to determining compliance with the spending requirement. (5) Revenue and costs for the HCS and TxHmL waiver programs are combined for a component code for determination of compliance with the spending requirement. (6) Providers who fail to meet the 90 percent spending requirement are subject to a recoupment of the difference between the 90 percent spending requirement and their actual Medicaid allowable HCS and TxHmL costs. Recoupments for each rate period under this subsection are limited to the difference between the provider's Medicaid revenues for services provided at the rates subject to spending accountability and what the provider's Medicaid revenues would have been for services provided at the Medicaid rates in effect on August 31, (7) The contracted provider, owner, or legal entity which received the Medicaid payment is responsible for the repayment of the recoupment amount. Failure to repay the amount due or submit an acceptable payment plan within 60 days of notification results in placement of a vendor hold on all HHSC and Texas Department of Aging and Disability Services contracts controlled by the responsible entity. (8) If HHSC, or its designee, is unable to recoup owed funds using an automated system, providers are required to repay some or all of the funds to be recouped through a check, money order or other non-automated method. Providers are required to submit the required repayment amount within 60 days of notification. (9) Prior to each rate period through August 31, 2017, providers will be given the option of receiving the Medicaid rates adopted by HHSC for the rate period and the Medicaid rates that were in effect on August 31, Providers who choose to receive the Medicaid rates that were in effect on August 31, 2015, will not be subject to the spending accountability requirements described in this subsection. (10) For rate periods beginning on or after September 1, 2017, the Total Medicaid Spending Requirement described in this subsection will no longer apply. Additionally, providers who chose to receive the Medicaid rates that were in effect on August 31, 2015, will receive the rates that were adopted effective September 1, The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 4. AGRICULTURE PART 1. TEXAS DEPARTMENT OF AGRICULTURE CHAPTER 5. FUEL QUALITY The Texas Department of Agriculture (Department) proposes the repeal of Title 4, Part 1, 5.1 and 5.5; new 5.1, related to Definitions, and 5.5, related to Inspections; and amendments to 5.4, related to Records for the Fuel Quality Program. These new and amended rules are necessary to comply with House Bill 2174, enacted during the 85th Regular, Texas Legislative Session, which amends of the Texas Agriculture Code related to motor fuel quality and testing. The proposed rules define procedures for fuel quality inspections and complaints. Sections proposed for repeal and proposed as new to permit the reader to more easily read and understand the new requirements in a clear and concise manner. 42 TexReg 6266 November 10, 2017 Texas Register

21 New 5.1 adds definitions which delineate the roles of the Department and Licensed Service Companies (LSC) to align the rules with the new statutory requirements for administering the fuel quality program. Section 5.4 is amended to clarify the Department's role to collect and inspect fuel quality records along with new additional record requirements to be maintained by the facility for complaint and routine inspection samples drawn by an LSC. New 5.5 is repealed and proposed to require LSCs to draw all fuel quality samples in accordance with Department procedures. Additionally, refusing inspection by failing to submit a sample and/or improperly shipping a sample as prescribed by Department procedures constitutes an enforcement violation. Facilities are identified as being responsible for using a third party LSC to perform complaint testing and that facilities must maintain the fuel in the storage tanks at time of complaint notification without amending the fuel prior to sampling and enough fuel must be maintained in storage for a sample collection by a LSC. Stuart Strnad, Director for Consumer Product Protection, has determined that for the first five years the proposal is in effect, there will be no anticipated fiscal impact to local government. There will be minimal fiscal impact to state government as the Department currently conducts routine processing in response to fuel quality complaints. Mr. Strnad has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of administering the proposed rule will be increased consumer protection to the public through efficiencies of administering the consumer protection program, industry compliance and regulation of the affected industry. At this time, the Department cannot estimate the fiscal impact on businesses in the fuel retail industry because samples required to be submitted, other than routine samples, are dependent on complaint volume. Comments on the proposal may be submitted to Stuart Strnad, Director for Consumer Product Protection, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711, or by to rulecomments@texasagriculture.gov. Comments must be received no later than 30 days from the date of publication on the proposal in the Texas Register. 4 TAC 5.1, 5.5 The repeals are proposed under Agriculture Code, , which authorizes the Department to adopt rules fuel quality and testing standards for motor fuel that is sold or offered for sale in this state. The code affected by the proposal is Chapter 17 of the Texas Agriculture Code Definitions Inspections. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TAC 5.1, 5.4, 5.5 The amendments and new rules are proposed under Agriculture Code, , which authorizes the Department to adopt rules fuel quality and testing standards for motor fuel that is sold or offered for sale in this state. The code affected by the proposal is Chapter 17 of the Texas Agriculture Code Definitions. In addition to the definitions set out in Texas Agriculture Code, Chapter 17, and the standards set by the American Society for Testing and Materials (ASTM), the following words and terms shall have the following meanings, unless the context clearly indicates otherwise. (1) ASTM--The American Society for Testing and Materials; the national voluntary consensus standards organization formed for the development of standards on characteristics and performance of materials, products, systems and services and the promotion of related knowledge. (2) Audit--An official TDA administrative review completed by a Representative of the Commissioner of fuel quality samples and device inspections, tests and calibrations records and/or related documentation. (3) Department--Texas Department of Agriculture. (4) Gasoline--That term as defined in Texas Tax Code, Chapter 162. (5) NIST--The National Institute of Standards and Technology. (6) Representative of the Commissioner--An individual employed by the Department, authorized to perform one or more of the following: audits, reviews, inspections, and/or service observations under specified chapters of the Texas Agriculture Code. (7) Representative of the Department--A licensed service company and/or licensed technician acting on behalf of the Department to complete fuel quality sample collections, inspections, tests, and calibrations, on motor fuel metering devices as per Texas Agriculture Code, Chapter 13, Subchapter I Records. (a) Records or other documents specified in this section must be maintained in accordance with Texas Agriculture Code, Chapter 17, and shall be submitted to the Department [department] in the manner and time period as specified in a notice provided by a Representative of the Commissioner [the department]. (b) Motor fuel dealers, distributors, suppliers, wholesalers, and jobbers shall maintain the following records and documents for a period of four years: (1) - (2) (No change.) (3) any record or other document related to the sampling and testing of motor fuel purchased, sold, delivered, or distributed by the dealer, distributor, supplier, wholesaler, or jobber must be maintained. PROPOSED RULES November 10, TexReg 6267

22 (c) Complaint inspection and sampling. All documentation related to complaint inspections and all samples drawn by a Licensed Service Company must be maintained for a period of four years and submitted to the Department upon request. (d) Routine inspection and sampling. All documentation related to routine inspections and all samples drawn by a Licensed Service Company must be maintained for a period of four years and submitted to the Department upon request Inspections. (a) Fuel sample collection shall be performed by a current license holder that holds a service company license or a service technician license issued by the Department under Chapter 13, Subchapter I of the Texas Agriculture Code. (1) Routine fuel sample collection: Beginning the day after notification by the Department that a routine fuel quality sample is required, within ten (10) calendar days, a facility must have a sample drawn by a LSC and shipped to a Department approved contracted laboratory. (2) Complaint fuel sample collection: Beginning the day after notification by the Department that a fuel quality sample must be drawn due to a complaint, within five (5) calendar days a facility must have a LSC draw and ship the sample to a Department approved contracted laboratory. (3) It is a violation to fail or refuse to allow fuel quality testing as prescribed by the Department. (4) It is a violation to fail to or improperly ship a fuel quality sample as prescribed by the Department. (b) A Representative of the Commissioner shall conduct labeling inspections to ensure compliance with posting requirements set forth in of the Texas Agriculture Code, and 16 CFR Part 306, in accordance with procedures adopted by the Department. (c) Routine fuel sampling inspections, labeling inspections, and complaint inspections shall occur upon a schedule determined by the Department. (d) All complaints received by the Department will result in an inspection of the facility and/or fuel blend inspection sampling of the motor fuel(s) identified in the complaint. (1) Facilities are prohibited from utilizing a LSC with which it shares ownership interests, operations, or an affiliation having power to control the other, to conduct a fuel quality complaint inspection and/or draw fuel quality complaint inspection sample(s) for the facility. (2) After a facility receives notice from the Department of a fuel quality complaint, the facility is prohibited from adding fuel to the fuel tank(s) holding the fuel blend(s) which is the subject of the complaint(s) prior to collection of the fuel quality sample. (3) After notification of a fuel quality complaint, and prior to the fuel sample collection, the facility is required to retain an adequate amount of fuel in the fuel tank(s) holding the fuel blend(s) which are the subject of the complaint(s) to assure that the LSC can draw a sufficient fuel quality inspection sample(s). (4) It is a violation by the facility and the LSC to hinder, fail, or refuse to conduct fuel quality complaint testing and sample shipping as prescribed by the Department. (e) The fill pipe box cover for any automotive fuel storage tank or vessel supplying gasoline or diesel fuel shall be permanently, plainly, and visibly marked in such a manner as to identify what type of gasoline or diesel fuel each storage tank delivers to a particular motor fuel dispenser. For example, the markings may include the words, or abbreviation of the words, regular unleaded, unleaded plus, super unleaded, or a related color code scheme, such as white, blue and red. If the fill pipe box covers are marked by means of a color code scheme, a color code legend shall be conspicuously displayed at the place of business. (f) Failure to comply with the requirements of this section may result in the imposition of an administrative penalty, license sanction and/or civil or criminal penalties in accordance with Texas Agriculture Code, Chapters 12 and 17. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 7. PESTICIDES SUBCHAPTER H. STRUCTURAL PEST CONTROL SERVICE The Texas Department of Agriculture (Department) proposes the repeal of the following Divisions of Subchapter H, Chapter 7: Division 1, ; Division 2, , 7.131, ; Division 3, , 7.153, and 7.156; Division 5, ; Division 6, and Further, the Department proposes new Division 1, 7.114; Division 2, ; Division 3, , and 7.156; Division 5, ; and Division 6, The proposal is made in order to clarify current requirements related to structural pest control licensing, compliance and enforcement by the Department, and the Structural Pest Control Advisory Committee. The repeal of the current rules and proposal of the rules as new permits the reader to review the revised regulations in a more clear and concise manner which is easier to understand. Sections and 7.113, related to the settlement of structural pest cases and complaints, are repealed. Section 7.114, related to definitions, is repealed, and new adds definitions applicable to Chapter 7, Subchapter H, Structural Pest Control Service. Division 2 is repealed in its entirety, and all sections are proposed as new rules. New clarifies the types of and requirements of licensing under the structural pest category. New clarifies the structural pest application process. New adds clarification that licensees meet insurance requirements at all times during licensure. New defines types of pest control licenses. New defines examination procedures and adds a provision which permits the expediting of examination application forms for military members, military veterans and military spouses. New clarifies the licensing qualification requirements. New prescribes license expiration and renewal requirements. New adds a provision that no refunds will be made for license applications submitted to the De- 42 TexReg 6268 November 10, 2017 Texas Register

23 partment. New clarifies the requirements for making a hardship request in the event of the loss of the responsible certified applicator or business license holder. Current 7.129, regarding licensing of persons with criminal backgrounds has been renumbered to 7.130, and is proposed without changes. New clarifies restrictions on certified noncommercial applicators. New provides clarification on apprentice registration and training requirements. New relates to technician license requirements. New provides clarification on continuing education requirements for certified applicators and includes options for online continuing education courses. New extend the maximum approval period for technician/noncommercial certified applicator training and continuing education training courses to two (2) years. New provides clarification on deadlines for notifying the Department of employee registration and termination. New changes the number of days a week a technician must receive personal instruction from the responsible certified applicator. New clarifies which pest control use records are required to be kept. New clarifies the requirements for customer contracts and invoices. New provides requirements for pest control signs and when they must be used. New provides requirements for consumer information sheets and when they must be provided. New clarifies the responsibilities of unlicensed persons to post and provide notification of pest control applications. New clarifies the Department's processes for inspections of commercial businesses and school districts and eliminates specific scheduling criteria. New grants the Department entry and access authority to conduct inspections. Subchapter H, Division 5 has been repealed in its entirety and is proposed as new. New sets additional standards for subterranean termite post construction treatments. New adds standards for subterranean termite pre-construction treatments. New describes the requirements for subterranean termite, drywood termite and related wood destroying insect treatment disclosure documents. New provides clarification for Official Wood Destroying Insect Report procedures. New clarifies the real estate transaction inspection report requirements. New revises the posting requirements for notices of inspection. New clarifies and expands requirements for structural fumigation. New adds requirements regarding the Structural Pest Control Advisory Committee to align the rules with of the Occupations Code, as amended by House Bill 3243 during the 85th Regular Legislative Session. The proposed rules have been presented to the Structural Pest Control Advisory Committee (Committee) for review and feedback as required by Texas Occupations Code, The Committee's input has been taken into consideration and included in the proposal. Leslie Smith, Director for Consumer Service Protection, has determined for the first five years the proposal is in effect, there will be nominal fiscal implications for state government as a result of administering the proposed changes. There will be no fiscal impact on local government. Ms. Smith has also determined that for each year of the first five years the proposal is in effect, the public will benefit as affected and potential licensees gain a better awareness of the Department's structural pest control program and related rules. Ensuring applicants' and licensees' understanding of and compliance with the program requirements will result in increased compliance and regulatory protection for residents of Texas. There will be no adverse fiscal impact on individuals, small or micro businesses as a result of the proposed rule changes, as no fees have been increased. Written comments on the proposal may be submitted to Leslie Smith, Director for Consumer Service Protection, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas or by to Leslie.Smith@TexasAgriculture.gov. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register. DIVISION 1. GENERAL PROVISIONS 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Settlement of Contested Cases Settlement of Consumer Complaints Definition of Terms. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 2. LICENSES 4 TAC , 7.131, This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Persons Required to Secure License Application for Licensing, Registration, Certification, and Approval Insurance Requirement Resident Agent Examinations. PROPOSED RULES November 10, TexReg 6269

24 License Expiration and Renewal Fees Loss of Responsible Certified Applicator or Business License Holder Licensing of Persons with Criminal Backgrounds Certified Noncommercial Applicator Restrictions Technician License Requirements Continuing Education Requirements for Certified Applicators Criteria and Evaluation of Continuing Education. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 3. COMPLIANCE AND ENFORCEMENT 4 TAC , 7.153, This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Employee Registration Employee Supervision Pest Control Use Records Contracts Pest Control Sign Consumer Information Sheet Responsibilities of Unlicensed Persons for Posting and Notification Inspections Reduced Impact Pest Control Service Entry and Access. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 5. TREATMENT STANDARDS 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Subterranean Termite Post Construction Treatments Subterranean Termite Pre-Construction Treatment Termite Treatment Disclosure Documents Wood Destroying Insect Report Inspection Procedures Real Estate Transaction Inspection Reports Posting Notice of Inspection Structural Fumigation Requirement. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 6. STRUCTURAL PEST CONTROL ADVISORY COMMITTEE 4 TAC 7.192, This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Rules Governing Operation of the Committee Additional Qualifications for Committee Members. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD TexReg 6270 November 10, 2017 Texas Register

25 Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 1. GENERAL PROVISIONS 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Definition of Terms. In addition to the definitions set out in the Structural Pest Control Act, Chapter 1951, Texas Occupations Code, the following words, names, and terms shall have the below meanings for this subchapter, unless the context clearly indicates otherwise. (1) Adjacent--An area having a common wall, ceiling, or floor. (2) Apprentice registration--a registration by a commercial or noncommercial business entity of an individual who is training and/or performing structural pest control services for the business. (3) Area of common access--an area that an individual is likely to be present in or at on a regular basis, such as a building entranceway, mailboxes, laundry rooms, beverage machines, building bulletin boards, hallways, etc. (4) Calendar year--january 1 to December 31. (5) Category--A type of structural pest control that an individual licensee or business licensee is authorized to perform. (6) Chairman--An individual elected by members of the Structural Pest Control Advisory Committee to preside over meetings. (7) Committee--The Structural Pest Control Advisory Committee. An eleven-member committee appointed by the Commissioner, whose responsibility is to gather information and advise the Commissioner and the Department on the business of structural pest control. (8) Course provider--the person, company, or organization that compiles, organizes, writes and/or produces category specific training or continuing education courses. (9) Department--The Texas Department of Agriculture. (10) Household--Residential structure occupied or intended for occupancy by a single individual, cohabitating individuals, or a family. (11) Inactive license--a license for which certification requirements have been maintained, but technicians and certified applicators are prohibited from legally engaging in structural pest control services, advertising, or solicitation. (12) Infest--To exist in, on, around or invade a structure in a manner that may limit the use or enjoyment of, or cause harm or damage to: households, railroad cars, ships, docks, trucks, airplanes, or other structures, or its contents, or its inhabitants, including any humans or pets; pests, unwanted plants, or diseases of trees, shrubs, or other plantings in a park or adjacent to a residence, business establishment, industrial plant, institutional building or street. (13) Integrated Pest Management (IPM)--A pest management strategy that relies on multiple pest control tactics, including the judicious use of pesticides, informed by accurate identification and scientific knowledge of pests, reliable monitoring methods to assess pest presence, preventative measures to avoid pest infestations, and thresholds to determine when corrective control measures are needed. (14) Obnoxious and undesirable animals or plants--animals or weeds as defined in of the Occupations Code, that limit the use or enjoyment or cause harm or damage of any type to people, pets, structures, landscapes, or the environment. Animals excluded from this definition are members of the Order Primates, hoofed mammals, members of Family Ursidae, members of the Genus Felis, members of the Genus Canis, domestic livestock, ratites, gallinaceous birds and alligators. (15) Occupations Code--Unless otherwise specified, all references shall be to the Texas Occupations Code, Chapter (16) Other noncommercial entity--any workplace with three (3) or more full-time employees. (17) Physically present--face-to-face contact at a work location. (18) Self-study course--a self-study, online or electronic course taken for the purpose of continuing education or training. (19) SPCA--Structural Pest Control Act, Texas Occupations Code, Chapter (20) TPCL--Texas Pest Control License. (21) Vice-Chairman--An individual elected by members of the Structural Pest Control Advisory Committee to preside over meetings in the absence of the Chairman. (22) WDIR--Texas Official Wood Destroying Insect Report. (23) Work location--anywhere structural pest control services are performed or where a meeting is being held for the purpose of supervision or training (job site/classroom). (24) Workplace--Any non-residence structure with three or more full-time paid employees that is treated by a licensed business or a certified noncommercial applicator. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 2. LICENSES PROPOSED RULES November 10, TexReg 6271

26 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Types and Requirements of Licenses. (a) Business Licensee--Any person engaged in structural pest control for compensation must secure a business license in the business's operating name from the Department for each business location, including branch offices. Each business license holder must designate a responsible certified commercial applicator for each business location who is not also serving as a responsible certified commercial applicator for any other business licensee or any other business location. The business license may reflect only those categories in which at least one (1) certified applicator is actively licensed. A business licensee may not operate at any time without a responsible certified applicator designated or current general pest liability insurance. (b) Responsible Certified Commercial Applicator--A certified commercial applicator who has been designated and notified by the business license holder to be responsible for training and supervision of all pest control operations of the business. The person may be employed by other business location(s) as a certified commercial applicator, but may only be the designated responsible certified commercial applicator for (1) one business license location. (c) Certified Commercial Applicator--A person licensed in at least one (1) category as a certified commercial applicator who can perform pest control services, identifications, and control measures without direct supervision but under general supervision of the responsible certified commercial applicator. A certified commercial applicator must hold a separate license for every business for which the certified commercial applicator is employed but is not required to hold a separate license for branch offices of an employer. (d) Certified Noncommercial Applicator--An employee of a governmental entity, apartment building, day care center, hospital, nursing home, hotel, motel, lodge, warehouse, food-processing establishment, school or educational institution, and other noncommercial entity. A person licensed in at least one (1) category as a noncommercial certified applicator may perform pest control services, identifications, and control measures without direct supervision. A certified noncommercial applicator must be licensed for every business entity for which the certified noncommercial applicator is employed but is not required to hold a separate license for branch offices of an employer. (e) Responsible Certified Noncommercial Applicator--A certified noncommercial applicator who has been designated and notified by the noncommercial entity to be responsible for training, supervision, and records of all noncommercial apprentices and technicians of the noncommercial entity. (f) Technician--A person licensed in at least one (1) category who performs pest control services under the direct supervision of a commercial or noncommercial certified applicator. A technician must be licensed for every business or noncommercial entity for which the technician is employed, but is not required to hold a separate license for branch offices of their employer. (g) Apprentice--A sales or service employee who is registered by a structural pest control business or noncommercial entity to complete the required training for a technician license and has not yet passed a technician exam. An apprentice may work only for the business or noncommercial entity for which they are registered Applications for Licensing, Registration, Certification, and Approval. (a) The application for a business license, a certified applicator license, technician license, or for registration as an apprentice under this Chapter must be complete and submitted on a form prescribed by the Department. (b) A license application may be denied if a same or similar license issued to the applicant by this or another state or federal government has been revoked, suspended, probated or denied during the preceding five-year period for any reason. For the purpose of this section, a license is similar if the license was issued for the practice of an occupation in which professional services are normally provided in-person. (c) Licensees and applicants residing outside of Texas must designate in writing a resident agent for service of process in actions taken in the administration and enforcement of the SPCA. Each resident agent must be a citizen of Texas and maintain a permanent address within the state Insurance Requirements. (a) Each business license applicant and certified noncommercial applicator license applicant must submit a certificate of insurance with proof of coverage on the form provided by the Department in an amount not less than $200,000 for bodily injury and property damage coverage, with a minimum total annual aggregate of $300,000 for all occurrences. The insurance policy must insure applicant for damage to persons and/or property occurring as a result of operations performed in the course of the business of structural pest control to premises or any other property under applicant's care, custody, or control. No new business license or certified noncommercial applicator license will be issued until insurance requirements are met. Policies must contain a cancellation provision for notification to the Department not less than thirty (30) days prior to cancellation. (b) A licensee who operates as a wood treater who treats wood on commercial property owned by the licensee must submit a general liability insurance policy or certificate of coverage in an amount not less than $200,000 for bodily injury and property damage coverage, with a minimum total annual aggregate of $300,000 for all occurrences. No license will be issued until this insurance requirement is met. Policies must contain a cancellation provision for notification to the Department not less than thirty (30) days prior to cancellation. (c) If payment of claims results in reducing the total aggregate of coverage below $300,000, the insurance carrier must notify the Department and the licensee within ten (10) business days. The licensee must obtain additional coverage to meet the minimum requirements. (d) Inactive certified applicators and technicians that do not perform structural pest control work for compensation or as a part of the duties of their employment are exempt from insurance requirements. (e) Certified noncommercial applicators employed by governmental entities are exempt from insurance requirements. (f) Only those insurance policies issued by insurers authorized by or registered with the Texas Department of Insurance will be considered to meet the requirements of this section. (g) A structural pest control commercial business or noncommercial certified applicator must maintain general liability insurance with the required minimum coverage during the duration of the licensure period. 42 TexReg 6272 November 10, 2017 Texas Register

27 Structural License Categories. Pest control licenses may be issued in one or more of the following categories. (1) Pest Control--The inspection or control of pests in and around structures or pest animals which may invade homes, restaurants, stores, and other buildings, attacking their contents or furnishings or being a general nuisance, but do not normally attack the building itself. Examples of such pests are cockroaches, silverfish, ants, fleas, ticks, flies, mosquitoes, rats, mice, skunks, raccoons, opossums, etc. (2) Termite and Wood Destroying Insect Control--The inspection or control of termites, beetles, or other wood destroying insects and wood preservation by means other than fumigation in buildings, including homes, warehouses, stores, docks, or any other structures. This category includes the treatment of termites in trees in and around structures. (3) Lawn and Ornamental--The inspection or control of pests or diseases of trees, shrubs, or other plantings in a park or in and around structures, business establishments, industrial parks, institutional buildings or streets. (4) Weed Control--The inspection or control of weeds in right-of-ways, around homes, in a park or in and around structures, business establishments, industrial parks, institutional buildings, streets, and industrial environs. (5) Structural Fumigation--The inspection or control of pests through fumigation of structures not primarily intended to contain food, feed, or grains. (6) Commodity Fumigation--The inspection or control of pests through fumigation of processed commodities or structures normally used to contain commodities. This category does not include raw agricultural commodities. (7) Wood Preservation--Pest control that involves the addition of preservatives to wood products to extend the life of the wood products by protecting them from damage caused by insects, fungi, and marine borers. Examples of wood products may include crossties, poles, and posts. This includes the re-treatment of power-line poles with wood preservative pesticide including fumigants Examinations. (a) Examination required. Each individual not previously qualified by examination in the category or categories for which the license is requested must pass an appropriate examination. An application must be submitted to the Department specifying the examination category desired and pay the fee for each exam requested prior to the scheduled examination session. (b) Examination categories. Examinations will be administered, maintained, and evaluated on a routine basis as determined by Department examination policy in the following categories: (1) Pest control; (2) Termite and Wood Destroying Insect Control; (3) Lawn and Ornamental; (4) Weed Control; (5) Structural Fumigation; (6) Commodity Fumigation; and (7) Wood Preservation. (c) Military requests to expedite examinations. Military members, military veterans, and military spouses, as defined in Occupations Code, Chapter 55, may request their application for examination to be expedited by noting on their application to the Department. To qualify, all other licensing requirements must also be met. (d) Examination standards and requirements. (1) A fee shall be charged for each examination. (2) All examination fees are to be paid as prescribed by the Department. (3) Applicants must present photo identification issued by the Texas Department of Public Safety, or an equivalent from another state prior to taking an examination. (4) All examinations shall be maintained and administered by the Department or its designee. (5) The examination will be administered in written or electronic form and in general, cover the subject of the categories designated on the application. (6) Examinations shall only be administered in English. (7) No written materials, scratch paper, or electronic devices, other than calculators, may be brought into the examination room or used during the examination. (8) Scratch paper will be provided, as necessary, and must be returned to the examination proctor at the end of each examination. (9) Applicants who do not take a scheduled examination shall not receive a refund of the examination fee. (10) Persons who make a minimum grade of 70% shall be issued a certified applicator license upon issuance of the grades. (e) Cheating is prohibited. (1) Cheating consists of giving or receiving unauthorized assistance to answer examination questions; bringing unauthorized materials into the exam room or using unauthorized materials to answer examination questions; using answers from another examinee; copying questions or answers to examination questions to take from the examination room; removing an examination booklet, answer sheet, or scratch paper from the examination room; or any other action which may undermine the integrity of the examination process. (2) "Unauthorized assistance" means any verbal, written or electronic communication during the examination made for the purpose of receiving or providing answers to examination questions. (3) Upon a final determination that an examinee has cheated, any current license issued by the Department is subject to suspension or revocation Licensing Qualification Requirements. (a) Certified commercial applicator. In addition to passing the appropriate category examination, in order to be eligible to obtain a certified commercial applicator license, each applicant must pass the general standards examination administered by the Department. To be eligible to be licensed in any of the categories in 7.125(b) of this title, related to examinations, the applicant must also meet one of the following requirements: (1) Have verifiable employment in the pest control industry under the supervision of a licensed certified applicator for at least twelve (12) months out of the past twenty-four (24) months and must have possessed a technician's license for at least six (6) months during that time period; (2) Furnish proof of previous verifiable employment experience in the pest control industry, including out-of-state experience in PROPOSED RULES November 10, TexReg 6273

28 pest control of at least twelve (12) months out of the past twenty-four (24) months. The proof of experience must be provided by the applicant in the form of a letter from the appropriate licensing entity stating the type of license held and how long the applicant has held the license; (3) Have a degree or certificate in an area of the biological sciences related to pest control from an accredited two (2) or four (4) year college or university; (4) Have previously held a certified applicator license issued by the Structural Pest Control Board or the Department that can be verified by the Department; or (5) Qualify under the hardship clause outlined in of this title, relating to Loss of Responsible Certified Applicator or Business License Holder. (b) Certified non-commercial applicator. In addition to passing the appropriate category examination and the general standards examination, in order to be eligible to obtain a certified noncommercial applicator's license, the applicant must meet one of the following requirements: (1) Have verifiable employment in the pest control industry under the supervision of a licensed certified applicator for at least twelve (12) months out of the past twenty-four (24) months and must have possessed a technician license for at least six (6) months during that time period; (2) Furnish proof of previous verifiable employment experience in the pest control industry, including out-of-state experience in pest control of at least twelve (12) months out of the past twenty-four (24) months. The proof of experience must be provided by the applicant in the form of a letter from the appropriate licensing entity stating the type of license held and how long the applicant has held the license; (3) Have a degree or certificate in an area of the biological sciences, related to pest control, from an accredited two (2) or four (4) year college or university; (4) Complete a Department approved minimum six (6) hour certified noncommercial/technician training course; or (5) Have previously held a certified applicator license issued by the Structural Pest Control Board or the Department that can be verified by the Department. (c) Commercial or noncommercial technician. In addition to passing the appropriate category examination, in order to be eligible to obtain a commercial or noncommercial technician license, the applicant must be registered with the Department, complete all required apprentice training specified in of this title, relating to Requirements for Apprentice Registration, and attend a technician training course at least one (1) time prior to taking the examination. The examination may be taken as many times as necessary in the twelve (12) month period the employee holds a current apprentice registration card License Expiration and Renewal. (a) Each commercial business license expires on the last day of the month, twelve (12) months from the date issued. (b) Commercial technician and certified applicator licenses registered with a commercial business, expire annually on the same date the commercial business license expires. (c) Commercial and noncommercial apprentice licenses expire on the last day of the month, twelve (12) months from the date issued. (d) Noncommercial technician and certified applicator licenses registered with a noncommercial entity expire annually on the same date the noncommercial business license expires. (e) Inactive licenses, regardless of classification, expire annually on December 31. (f) Certified applicators and technicians who change employers may pay additional license fees to adjust the expiration date to that of the business or other entity under which they are operating. (g) Licenses must be renewed by submitting a renewal application to the Department, paying the required fee, and meeting any additional requirements under of this title, relating to Insurance Requirements, and subsection (k) of this section, prior to the license expiration date. (h) Military members, military veterans, and military spouses, as defined in Occupations Code, Chapter 55, may request their application for renewal to be expedited by noting on their application to the Department. To qualify, all other licensing requirements must also be met. (i) A renewal application submitted after the license expiration date is subject to late fees. A renewal application is not considered to be submitted unless it is complete and correct, submitted with the correct fees, and satisfies all additional requirements determined by the Department. Applicants who apply for a renewal license more than 365 days after the license expiration date will be required to be re-examined to obtain a license. (j) Licenses issued by the Department may not be transferred, borrowed, rented, leased or loaned. (k) Whenever a licensee changes their mailing address, business location address, or telephone number, the licensee must notify the Department in a written or electronic manner within ten (10) business days of the effective date of the change. A license may be reprinted upon request and shall be issued to the licensee only. (l) In determining whether additional testing or training must be required of a current licensee before renewal of their license, the Department may consider changes in regulations, technology, pesticide related issues, and the performance or competency of individual licensees. If general re-training or re-testing is required for all applicators in a category or subcategory, the Department will publish notice at least six (6) months in advance of the license renewal date. If individual re-training or re-testing is required as a result of the licensee's performance or inability to perform, the Department shall give notification and set a time and place of re-training. (m) All certified applicators must meet their continuing education requirements in each category for which they hold a license during the prior calendar year, pursuant to of this title, relating to Continuing Education Requirements for Certified Applicators. Failure to do so shall prevent the renewal of the license. (n) All technicians must meet their verifiable training requirements during the prior calendar year, pursuant to of this title, relating to Technician License Requirements. Failure to do so shall prevent the renewal of the license Fees. Applicants and licensees will be charged the following fees: (1) $300 for a business license; (2) $125 for a certified applicators license; (3) $125 for a technician license; (4) $64 per exam in each category; 42 TexReg 6274 November 10, 2017 Texas Register

29 (5) a renewal fee equal to 1-1/2 times the normally required renewal fee for applications received 90 days or less after expiration date; and (6) a renewal fee equal to 2 times the normally required renewal fee for applications received greater than 90 days but less than one year after expiration date. (7) No refunds will be provided for applications submitted to the Department Loss of Responsible Certified Applicator or Business License Holder. (a) In the event of disability, incapacity, or death of the owner of a licensed business, and upon application of an heir electing to continue the business or noncommercial operation, the Commissioner may allow the operation to continue for a period not to exceed six (6) months. The Department must be notified in writing within twenty (20) business days of the disability, incapacity, or death of the business license holder. (b) Upon the disability, incapacity, death, or loss of a responsible certified applicator, or certified applicator for a noncommercial operation, the business license holder or the noncommercial operation may request that the Commissioner allow the operation to continue until the next examination date or a reasonable time period as determined by the Commissioner. The Department must be notified in writing within twenty (20) business days of the date of the disability, incapacity, loss or death of the certified applicator. (c) Upon written request, the Commissioner may grant a hardship extension due to extenuating circumstances. The length of the extension is at the discretion of the Commissioner. All requests are subject to review and may require additional documentation. (d) In the event the Commissioner grants the request for a business or facility to operate for a period of time without the presence of a responsible certified applicator or noncommercial certified applicator, the operation may only apply general use pesticides and may not add any other employees other than a certified applicator during the granted period or until a responsible certified applicator or noncommercial certified applicator, as appropriate, is employed and designated Licensing of Persons with Criminal Backgrounds. (a) The Department performs criminal background checks on each applicant for examination or a license. Applications to examine for or receive a license, including a renewal, may be delayed as the result of evaluating any criminal activity revealed by this criminal background check. (b) No currently incarcerated person is eligible to obtain or renew a pest control license. (c) The Department may revoke, suspend, annul, or amend an existing license, disqualify a person from receiving or renewing a license, or deny to a person the opportunity to be examined for a license because of a person's conviction of a felony or a misdemeanor, if the crime directly relates to the performance of the occupation or activity for which the license is issued and the prior criminal conviction directly affects such person's present fitness to perform such occupation or activity. (d) In determining whether a criminal conviction directly relates to the performance of a licensed occupation or activity, the department shall consider: (1) the nature and seriousness of the crime; (2) the relationship of the crime to the purposes for requiring a license to engage in the occupation; (3) the extent to which a license might offer an opportunity to engage in further criminal activity of the same type as that in which the person previously had been involved; and (4) the relationship of the crime to the ability, capacity, or fitness required to perform the duties and discharge the responsibilities of the licensed occupation. (e) In making a determination in a particular case, the crimes which the department considers as likely to be directly related to the performance of the licensed occupation or activity include, but are not limited to: (1) any felony or misdemeanor of which fraud, dishonesty, or deceit is an essential element; (2) any criminal violation of the SPCA; (3) any criminal violation of statutes regulating the particular occupation or activity for which licensing is sought; (4) any crime involving moral turpitude; (5) murder; (6) burglary; (7) robbery; (8) sexual assault; (9) theft; (10) sexual assault of a child; (11) possession of controlled substances; (12) assault; (13) larceny; (14) multiple convictions for the same crime; and (15) falsification of a government document. (f) In determining whether a criminal conviction directly affects a person's present fitness to hold a license under the SPCA, the Department shall consider the following factors: (1) the extent and nature of the person's past criminal activity; (2) the age of the person at the time of the commission of the crime; (3) the amount of time that has elapsed since the person's last criminal activity, or release from a penal institution or court supervision; (4) the conduct and work activity of the person prior to and following the criminal activity; (5) evidence of the person's rehabilitation or rehabilitative effort while incarcerated or following release; (6) other evidence of the person's present fitness, including letters or recommendation from prosecution, law enforcement, and correctional officers who prosecuted, arrested, or had custodial responsibility for the person; the sheriff and chief of police in the community where the person resides; and any other persons in contact with the convicted person. (g) It is the responsibility of the applicant to the extent possible to secure and provide to the Department the recommendations of the prosecution, law enforcement, and correctional authorities. The applicant must also furnish proof in such form as may be required by the Department that the applicant has maintained a record of steady PROPOSED RULES November 10, TexReg 6275

30 employment, supported dependents, maintained a record of good conduct, and paid all outstanding court costs, supervision fees, fines, and restitution as may have been ordered in all criminal cases in which convicted Certified Noncommercial Applicator Restrictions. (a) A certified noncommercial applicator may not perform commercial pest control services or perform any structural pest control services for a person other than the employer for whom the applicator is certified. A certified noncommercial applicator must not be associated with a licensed structural pest control business unless the applicator is also a certified commercial applicator or technician. (b) Certified noncommercial applicators that have been licensed for a minimum of two (2) years may become certified commercial applicators by requesting an additional license or change of license and paying the required license fee. (c) Certified commercial applicators may become certified noncommercial applicators by requesting an additional license or change of license and paying the required license fee Requirements for Apprentice Registration. (a) An apprentice is a beginning employee, whose training program is the responsibility of the responsible certified applicator or noncommercial certified applicator and who may be trained by and work under the direct supervision of licensed certified applicators and technicians. (b) An apprentice must be at least 16 years of age. (c) An apprentice must be able to demonstrate proficiency in reading EPA approved pesticide labels and warnings. (d) An apprentice must submit an apprentice registration application for technician license within ten (10) days of beginning employment and training. (e) The application must be submitted on the form prescribed by the Department. (f) A fee shall be charged for each application. (g) An apprentice card will be issued by the Department and valid until the end of the month one (1) year from the month the date employment began when all of the above requirements are met and processed. Failure to provide complete and accurate information may result in a change of the effective date of employment. (h) Apprentices must not perform any pest control work without the physical presence of a licensed technician or a certified applicator. Upon completion of and documentation of the required study and on-the-job training and demonstrating competency in each area, the apprentice may work alone so long as a certified applicator is physically present for personal instruction three (3) days a week and the apprentice carries their registration card at all times. (i) The studies and job training required for an apprentice are as follows: (1) complete at least two (2) hours of classroom training in each of the following general standards training subjects: (A) federal and state laws regulating structural pest control and pesticide application; (B) recognition of pests and pest damage; (C) pesticide labels and label comprehension; (D) pesticide safety; (E) environmental protection; (F) application equipment and techniques; (G) pesticide formulations and actions; (H) emergency procedures, pesticide cleanup, and procedures for immediate reporting of spills and misapplication; (I) basic principles of mathematics, chemistry, toxicology, and entomology; and (J) non-chemical pest control techniques, including biological, mechanical and integrated pest management techniques. (2) Complete forty (40) hours of verifiable on-the-job training and eight (8) hours of classroom training in each category in which the apprentice is to provide pest control services. The responsible certified commercial applicator or certified noncommercial applicator must certify in the training records of each apprentice that the apprentice has completed the required training and has demonstrated competency in each category in which the apprentice is to provide service. (3) The twenty (20) classroom hours of general standards training, forty (40) hours of verifiable on-the-job training, and eight (8) hours of classroom training in each category must be completed and documented on the verifiable training record prior to the apprentice taking the category exam and a license being issued. (4) A student currently enrolled in or who has attended or graduated within the past twelve (12) months from an accredited school or university studying relevant materials may be credited with those courses toward classroom training hours for apprenticeship, if those hours have been provided by the school or university and documentation is provided which shows the student passed the class(es) submitted. (5) An apprentice may maintain an apprentice card for a maximum of twelve (12) months. If an apprentice has not met the requirements to become a licensed technician in the twelve (12) month period, the apprentice must be re-registered as an apprentice and must repeat all training requirements for an apprentice. Previous training credit from previous apprentice registrations may not be applied to this requirement. (j) A responsible certified commercial applicator or certified noncommercial applicator must maintain the verifiable training records and certification for each apprentice in the business files for two (2) calendar years after the calendar year in which the training or certification was completed. The verifiable training records form shall be prescribed by the Department and must include, but is not limited to, the following: (1) date training received; (2) number of hours of training; (3) subject of training; (4) printed name, signature, and license number of trainer; (5) designation of on-the-job training or classroom training; (6) competency evaluation by the responsible certified applicator; (7) printed name, signature, and license number of the trainer if the training was provided by a registered licensee of the business; and (8) printed name, signature, and license number of the responsible certified applicator. 42 TexReg 6276 November 10, 2017 Texas Register

31 (k) When an apprentice changes employers due to a business acquisition or sale, or a change in the current employer's tax identification number, the employer who maintains the verifiable training records must make the verifiable training records available to the apprentice or the new employer within twenty (20) days of written request. (l) It is a violation of this section for a business licensee or certified noncommercial applicator to allow an apprentice to perform work in a category in which the apprentice has not been properly trained. A certified applicator registered with the business must be physically present to give verbal instructions to an apprentice at least three (3) days a week and available during operating hours for questions and instructions as needed. (m) An apprentice becomes a licensed technician by: (1) completing a minimum six (6) hour technician training course approved by the Department in general training at least one (1) time prior to taking the examination; (2) completing all training listed under subsection (i) of this section; and (3) making a minimum passing grade of at least 70% on the technician examination. (A) The examination may be taken as many times as necessary in the twelve (12) month period the employee holds an apprentice registration card. (B) There shall be a fee charged per examination. (C) The Technician Training Manual may be obtained from the Texas A&M AgriLife Extension Service. (D) An individual must pass each category examination in which the apprentice applies to become licensed. Re-examination is not necessary if the license is renewed annually. (E) Persons making a passing grade and who qualify for a technician license will be issued a license upon issuance of the grades. (n) All testing procedures shall be governed by of this title, relating to Examinations Technician License Requirements. (a) A technician is a person who has qualified for and been issued a technician's license pursuant to the provisions of of this title, relating to Requirements for Apprentice Registration, whose training and supervision is the responsibility of the responsible certified applicator, and who works under the direct supervision of licensed certified applicators. (b) A certified applicator registered with the business must be physically present to give verbal instructions to a technician at least one (1) day a week and available during operating hours for questions and instructions as needed. (c) The Department shall require as a condition of the renewal of each commercial or noncommercial technician's license that the responsible certified applicator must certify on the verifiable training records form that the technician has completed eight (8) hours of verifiable training in the calendar year preceding the calendar year in which the renewal is to take place. No additional training will be required in the first calendar year in which a technician is first licensed. Changing employers or moving to an inactive status does not eliminate, defer or extend the CEU requirement. (1) The eight (8) hours of verifiable training must be selected from the following general standard subject areas: (A) Federal and state laws regulating structural pest control and pesticide application; (B) Recognition of pest and pest damage; (C) Pesticide labels and label comprehension; (D) Pesticide safety; (E) Environmental protection; (F) Application equipment and techniques; (G) Pesticide formulations and actions; (H) Emergency procedures and pesticide cleanup, and procedures for the immediate reporting of spills and misapplications; (I) Basic principles of mathematics, chemistry, toxicology, and entomology; or (J) Non-chemical pest control techniques including biological, mechanical, and integrated pest management techniques. (2) Two (2) hours of the eight (8) hours of training may be on-the-job training or hands-on-training verified by the responsible certified applicator. (3) Self-study training may be used if the responsible certified applicator certifies that the training is the appropriate training. Inactive technicians may only use self-study training every other year to satisfy their annual training requirement. (4) A technician will receive one (1) hour of credit for each Department approved CEU course completed. (5) No courses may be repeated for credit within the same re-certification year. (d) All verifiable training records and certification for each apprentice must be maintained in the business files for two (2) calendar years after the calendar year in which the training or certification was completed. (e) The verifiable training records forms must be made available to the licensee within twenty (20) days of written request to a current or former employer. (f) The business licensee, responsible certified commercial applicator, or certified noncommercial applicator shall be responsible for the proper certification and maintenance of employee training records in accordance with Chapter 7, Subchapter H of this title. (g) Technicians unable to certify their required training at renewal or during inspection will have twenty (20) days to submit the verifiable training records for training previously obtained prior to the initiation of enforcement proceedings. (h) Upon written request, the Commissioner may grant a hardship extension for completion of training requirements due to extenuating circumstances. The length of the extension is at the discretion of the Commissioner. All requests are subject to review and may require additional documentation Continuing Education Requirements for Certified Applicators. (a) Except as provided in subsections (e) and (i) of this section, as a requirement of annual license renewal, the Department shall require each certified applicator to certify that they have completed Department approved CEUs that cover the applicator's category(ies) of certification for the preceding calendar year. This certification must be completed each calendar year for renewal of the certified applicator's license. Certified applicators who do not meet the re-certification requirements shall not be eligible to renew their licenses and will PROPOSED RULES November 10, TexReg 6277

32 be subject to enforcement action. Licensees must obtain the appropriate number of CEUs in each calendar year as specified in this section. Changing employers or moving to an inactive status does not eliminate, defer or extend the CEU requirement. (b) Each certified applicator is required to obtain two (2) CEUs in general training and one (1) unit in each category in which the applicator is certified. General training is defined to include the topics in (c) of the Occupations Code. At least one (1) of the two (2) general training units required for recertification, must be in either federal and state laws, pesticide safety, environmental protection, or integrated pest management. The other may be in any general topic. (c) No approved course may be repeated for credit within the same calendar year. (d) CEUs may only be obtained through an approved self-study course every other year. Self-study courses will not be accepted two (2) years in a row and will result in deficiency upon review. (e) Applicators will not be required to obtain CEUs during the first calendar year in which their license is issued. Applicators that become certified in additional categories during any calendar year will not be required to obtain units in those categories for that period. (f) Each certified applicator must keep a certificate of completion for each course attended for a period of two (2) calendar years after the calendar year in which it was obtained, and submit such records to the Department upon request. These records are subject to inspection by the Department at any time. Continuing education certificates must be made available to the licensee within twenty (20) days of the written request to a training provider. A copy of a current or former employee's continuing education certificates shall be made available to a licensee within twenty (20) days upon written request to the employer. (g) The business licensee, responsible certified commercial applicator, and certified noncommercial applicator shall be responsible for the proper certification and maintenance of employee continuing education records in accordance with this subchapter. (h) Certified applicators unable to certify their required continuing education requirements at renewal or during inspection will have twenty (20) days to submit the verifiable training records for training previously obtained prior to the initiation of enforcement proceedings. Certified applicators that do not meet the recertification requirements may have their licenses suspended in all deficient categories. (i) Upon written request, the Commissioner may grant a hardship extension for completion of training requirements due to extenuating circumstances. The length of the extension is at the discretion of the Commissioner. All requests are subject to review and may require additional documentation Criteria and Evaluation of Continuing Education Training. (a) The Department shall evaluate continuing education programs and assign the number of qualified category units. No more than one (1) unit will be assigned for any fifty (50) minutes of actual instruction time. A course may be approved for a maximum of two (2) years. After two years, any previously approved course must be updated to reflect changes in current laws, data and/or scientific research in order to requalify for approval for continuing education credit. The Department will consider the learning objectives, technical information given, the accuracy of the information, the relevance of the information to structural pest control, the qualifications of the instructor as determined by the provider, and the amount of actual training or self-study time devoted to each program in the process of evaluation. Each continuing education program, including self-study courses submitted for approval must contain the following: (1) a copy of handout materials, if any, which will be available to participants; (2) inclusive length of time of the course stated in hours and minutes; (3) date, time, physical address, and city of presentation; or if unknown, agreement to provide two (2) weeks' notice of each date of presentation; (4) the number of CEUs to be awarded; (5) the category(ies) of CEU eligibility; (6) a detailed course outline which will indicate the scope of the course and learning objectives; (7) videotapes, slides, compact discs, DVDs, download links, or other media presentations, if applicable; (8) examination for electronic, online or self-study courses, if applicable; (9) the course provider's name, physical address, telephone number, (if available), and company, organization or institution of higher learning affiliation; and (10) additional information, as requested. (b) Parts of courses which focus on promotion of products and/or policies or procedures of a company will not be considered as part of approved instruction time. (c) A self-study course is limited to one (1) CEU in the general training or a specific category. A course may be approved as a selfstudy if it meets the following additional criteria: (1) the course taker must take an examination designed to verify their knowledge of the material provided in the course. The course provider must grade the examination and keep records for a minimum of two (2) calendar years after the calendar year in which the course was given; and (2) the course taker's grade on the examination must be at least 70% correct to obtain credit for the course. (d) The minimum requirements to qualify as a speaker, course presenter, self-study course provider (collectively referred to as "speaker") are: (1) a degree from a recognized institution of higher learning which pertains to the course being taught; (2) five (5) years' experience as an applicator certified by the Department with a current license in the category to be taught; (3) verifiable proof of training and teaching experience within the preceding three (3) years; or (4) a combination of education, work related training, and teaching experience which would be equivalent to two (2) of the three (3) speaker qualification requirements, as determined by the Department. (e) Any person seeking approval of a continuing education course must submit the required information at least thirty (30) days prior to the first day of presentation or first offering of a self-study course. Any changes to approved courses must be submitted to the Department thirty (30) days prior to the date of presentation. The Department may waive this requirement due to extenuating circumstances. (f) The Department shall evaluate and recommend credits within thirty (30) days from the date received. 42 TexReg 6278 November 10, 2017 Texas Register

33 (g) At its discretion, the Department may re-evaluate its approval of a course or speaker under the provisions this section. (h) A certified applicator may request CEU credit by submitting the information required in subsections (a)(2), (a)(4)-(6), and (a)(9) of this section, and verification of attendance for any course attended by the certified applicator which was not previously approved by the Department. The Department will evaluate the request and notify the certified applicator of any CEUs awarded. (i) The course provider is responsible for establishing procedures for: (1) verification of completion, including accurately recording participant attendance throughout the stated class length; (2) awarding course completion certificates; (3) testing to verify a participant's comprehension of the subject matter presented; (4) the qualifications, competence, and performance of the authors, speakers, presenters, or instructors who produce or present its courses; and (5) preparation and administration of a self-study course examination. (j) The course provider must issue a certificate of completion within twenty-one (21) days of the course to each applicator completing the course. This document must include at a minimum the following information: (1) participant's name and license number; (2) name of course provider or sponsoring agency, company or organization; (3) course number; (4) number of CEUs awarded; (5) CEU category; and (6) date and location of training or date of completion for self-study course. (k) The course provider must maintain course completion records for two (2) calendar years after the calendar year in which the course(s) were given and a list of participants must be forwarded to the Department within twenty-one (21) days of completion of the training course on the electronic form prescribed by the Department. The list must include the name of the course provider, course title and course number, number of CEUs awarded, speaker name, name and license number of participants. (l) For purposes of this section, a continuing education course is defined as specific instruction in a category presented by any one (1) course provider, company, or organization. (m) The Department may monitor course providers, speakers, or course presentations, and is exempt from any fee charged for attending a CEU if Department employees are monitoring the program as a part of the duties of their employment. (n) Course providers who falsify information on course certificates provided to participants are subject to penalties, including and up to denial of Department approval for future courses Criteria and Evaluation of Technician/Noncommercial Certified Applicator Training. (a) The Department must evaluate and approve Technician/Noncommercial Certified Applicator Training course programs. The course must be a minimum of six (6) hours and separate from other required apprentice or continuing education training. Each Technician/Noncommercial Certified Applicator Training Course submitted for approval must contain the following: (1) a copy of handout materials, if any, which will be distributed to participants during the course; (2) inclusive length of time of the course stated in hours and minutes; (3) date, time, and physical address of presentation; or if unknown, agreement to provide two (2) weeks' notice of each date of presentation; (4) a detailed course outline which indicating the scope of the course and learning objectives (the course outline should follow the topics covered in the most recent Texas Pesticide Applicator General manual developed by Texas A&M AgriLife Extension); (5) the course provider's name, physical address, telephone number, (if available), and company, organization or institution of higher learning affiliation; and (6) additional information as requested. (b) Parts of courses which focus on promotion of products, policies, or procedures of a company, will not be considered as part of approved instruction time. (c) Any person seeking approval of Technician/Noncommercial Certified Applicator Training course must submit the required information at least thirty (30) days prior to the first day of presentation. The Department may waive this requirement due to extenuating circumstances. (d) The Department shall evaluate and recommend approval or denial within thirty (30) days from the date received. The course provider is responsible for establishing proce- (e) dures for: (1) verification of completion, including accurately recording participant attendance throughout the stated class length; (2) awarding course completion certificates; (3) testing to verify a participant's comprehension of the subject matter presented; (4) the qualifications, competence, and performance of the authors, speakers, presenters, or instructors who produce or present its courses, and (5) preparation and administration of a self-study course examination. (f) The minimum requirements to qualify as a speaker, course presenter, self-study course provider are: (1) a degree from a recognized institution of higher learning which pertains to the course being taught; (2) five (5) years' experience as an applicator certified by the Department with a current license in the category to be taught; (3) verifiable proof of training and teaching experience within the preceding three (3) years; or (4) a combination of education, work related training, and teaching experience which would be equivalent to two (2) of the three (3) speaker qualification requirements, as determined by the Department. (g) The Technician/Noncommercial Certified Applicator Training course provider must issue a certificate within twenty-one PROPOSED RULES November 10, TexReg 6279

34 (21) days of the course to each participant completing the course. This document must include at least the following information: (1) participant's name; (2) apprentice registration number, if applicable, or driver's license number or state issued ID number; (3) name of course provider, company, or organization; (4) course title (Technician Training Course/Noncommercial Certified Applicator Training Course) and number; and (5) date and location of training. (h) The course provider must maintain course completion records for two (2) calendar years after the calendar year in which the course was given and a list of participants must be forwarded to the Department within twenty-one (21) days of completion of the training course. The list must include the name of the course provider, the course title, course number, name of participant, and apprentice registration number, if applicable. (i) The course will be approved for a maximum of two (2) years. (j) The Department may re-evaluate or cancel a currently approved training course during the calendar year for failure to comply with the elements of the requirements of this section. (k) Course providers who falsify information on course certificates provided to participants are subject to penalties, including and up to denial of Department approval for future courses. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 3. COMPLIANCE AND ENFORCEMENT 4 TAC , This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Notice of Employment or Termination. (a) It shall be the duty of the business licensee or certified noncommercial applicator to inform the Department in writing of its employment and/or termination of all licensees and apprentices. (b) Notice of employment of all licensees and apprentice registrations must be received by the Department within ten (10) days of the date of employment and must include the full name and license number of the employee, if applicable, the date of employment, and the facility location where the employee training records will be maintained, and other information as may be required. (c) Notice of termination must include the former employee's name, license number and date of termination, and must be received by the Department within ten (10) days of the date of termination Employee Supervision. (a) The responsible certified applicator is responsible for the supervision and training of all licensed or registered personnel and the handling, storage and use of pesticides and devices by all employees of a pest control business. (b) In order to provide adequate supervision, the responsible certified applicator or designated certified applicator must be physically present to give verbal instructions to an apprentice at least three (3) days a week and to a technician at least one (1) day a week. The responsible certified applicator employed by the business must also be available during business operating hours for questions and instructions, as needed. (c) Apprentices shall not perform pest control services without physical supervision until they have completed all classroom training, required on-the-job training, have demonstrated proficiency, and verification has been entered in their training records by a licensed applicator. (d) The business license holder, and the responsible certified commercial applicator or certified noncommercial applicator shall be responsible for actions of employees when they are performing pest control operations Pest Control Use Records. (a) The responsible certified applicator or certified noncommercial applicator shall ensure that correct and accurate records of all uses of pesticides and pest control devices registered with the EPA and the Department, including those pesticides that have been exempted from registration by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA, Section 25b), are maintained for a period of two (2) calendar years from the calendar year in which the record was created. Pest records must be kept on the premises of the business facility location or, in the case of a certified noncommercial applicator, the employer's premises. The records must include, but are not limited to: (1) the billing name and address of the customer, or the employer for whom a noncommercial applicator is working; (2) service address where the pesticides and/or devices were used, except that for utility pole re-treatments, records shall be kept for the location of each pole treated; (3) name of pesticides or pest control devices used or EPA registration number; (4) total amounts of each pesticide applied where the percentage of active ingredient was not changed (ready to use pesticides); (5) pest control devices used and total number of each device; (6) the mixing rate and total amount of material applied or the percentage of active ingredient(s) and total amount of material applied for manufacturer's formulations that are mixed with water or other material, if applicable; (7) the target pest or purpose for which the pesticides or devices were used; 42 TexReg 6280 November 10, 2017 Texas Register

35 and (8) date the pesticides or pest control devices were used; (9) the name, and license number of the person(s) receiving training, supervising, and applying pesticides or using pest control devices and the TPCL number (and letter if applicable) of the commercial business for which they are performing structural pest control services. (b) For termite treatments, records must include: (1) the appropriate unit of measurement of the area treated per application site, i.e. square feet; (2) if a physical barrier is used, the appropriate unit of measurement (square foot or linear foot) of the physical barrier must be recorded and a diagram describing the installation will be provided; and (3) for commercial preconstruction treatments other than baits, baiting systems, wood applied termiticide products, or physical barriers, the number of application tanks which were in use for the treatment, the capacity, in gallons, of each application tank, and the start and stop time for the treatment. (c) These records shall be made available to the Department upon written or verbal request Contracts and Invoices. (a) Each written contract, warranty, service agreement, termite disclosure document, or guarantee of a business regulated by the Department must contain on the face of the document the business name, business license number (and letter if applicable), physical address or mailing address, telephone number, and the jurisdiction statement: "Licensed and regulated by: Texas Department of Agriculture, P.O. Box 12847, Austin, TX , Phone (866) , Fax (888) " (b) The business name, business license number (and letter if applicable), telephone number, and physical address or mailing address must be on the face of any invoice. (c) The requirements in subsections (a) and (b) of this section must be legible and print shall be in at least 8-point type Pest Control Sign. (a) A pest control sign must be provided by the licensee to a residential rental property owner or manager at least 48 hours prior to a planned indoor treatment at a residential rental property with five (5) or more rental units. (b) A pest control sign must be provided by the licensee to the employer or building manager at least 48 hours prior to a planned indoor treatment at a workplace. (c) A pest control sign must be provided by the licensee to the chief administrator, IPM Coordinator, or building manager at least 48 hours prior to a planned indoor treatment at a hospital, nursing home, hotel, motel, lodge, warehouse, food-processing establishment, school or educational institution, or day care center. (d) A person may not be considered in violation of this section if the space to be treated is vacant, unused, and unoccupied, or if extenuating circumstances require an emergency treatment. (e) Each pest control sign must be at least 8 1/2 inches by 11 inches in size and contain the required information with the first line in a minimum of 24-point type (one-fourth inch) and all remaining lines in a minimum of 12-point type (one-eighth inch). The addition of advertising and logos to the sign is permissible to the extent that such advertising does not interfere with the purpose of public notification of a pest control treatment. A standard sign in Spanish is available from the Department upon request. The sign shall appear in a format approved by the Department. The text and format of the sign is available on the Structural Pest Control Service website at: or by contacting the Texas Department of Agriculture, P.O. Box 12847, Austin, TX , (866) (f) In the space marked "For more information call or contact," the telephone number to obtain information on the pesticide(s) used must be listed, such as the contact number for the apartment manager, building manager, IPM Coordinator, or pest control operator. (g) In the space marked "phone number of hotline for pesticide information," the following wording must be used: National Pesticide Information Center (h) If a workplace has its own pesticide information center, the workplace center telephone number may be listed rather than the information in subsection (g) of this section Consumer Information Sheet. (a) For an indoor treatment at a private residence that is not a rental property, the certified applicator or technician must make the consumer information sheet available to the owner of the residence. (b) For an indoor treatment at a residential rental property with less than five (5) rental units, the certified applicator or technician must make the consumer information sheet available to each resident, upon request, at the time of each treatment. (c) For an indoor treatment at a residential rental property with five (5) or more rental units, the certified applicator or technician must make the consumer information sheet available to the owner or manager of the complex. The certified applicator or technician must also supply the owner or manager with a pest control sign. The owner or manager or an employee or agent of the owner or manager, other than the certified applicator or technician, must notify residents who live in direct or adjacent areas of the treatment by: (1) posting the sign in an area of common access to residents at least 48 hours before each planned treatment; or (2) distributing application information consistent with of this title, relating to Pest Control Sign, at least 48 hours before each planned treatment by leaving the sign on the front door of each unit or in a conspicuous place inside each unit. (d) For an indoor treatment at a workplace, the certified applicator or technician must make the consumer information sheet available and supply a pest control sign to the employer or the building manager. The employer or the building manager or an employee or agent of the owner or manager, other than the certified applicator or technician, must notify individuals at the workplace of the date of the planned treatment by: (1) posting the sign in an area of common access that the employees are most likely to see at least 48 hours before each planned treatment; and (2) making available the consumer information sheet to any individual working in the building on request of the individual if the request is made during normal business hours. (e) For an indoor treatment at a building that is a hospital, nursing home, hotel, motel, lodge, warehouse, food-processing establishment, school or educational institution, or a day care center, the certified applicator or technician must make available the consumer information sheet and a pest control sign to the chief administrator, IPM Coordinator, or building manager. The chief administrator, IPM Coordinator, or building manager must notify the individuals who work or reside in the building of the treatment by: PROPOSED RULES November 10, TexReg 6281

36 (1) posting the sign in an area of common access that the individuals are likely to check at least 48 hours before each planned treatment; and (2) making available the consumer information sheet to any individual working or residing in the building on request of the individual. (f) The Department's consumer information sheet must be used. Copies of the consumer information sheet are available from the Department in English and Spanish on the Structural Pest Control Service website at: or by contacting the Texas Department of Agriculture, P.O. Box 12847, Austin, TX , (866) The Department's consumer information sheet may be copied and used in accordance with this section. (g) The pre-notification requirements of of this title are waived if the customer and certified applicator sign a statement attesting to the fact that an emergency exists which requires immediate treatment. If such an emergency exists, the consumer information sheet must be made available by the licensee. The statement must be kept on file with the pest control use records. If the customer is not available to sign a statement at the time of treatment, that shall be recorded in the use records along with the customer's name and telephone number. An emergency is defined as an imminent hazard to health. An emergency treatment is limited to the localized area of the emergency Responsibilities of Unlicensed Persons for Posting and Notification. (a) Owners or managers of residential rental properties with five (5) or more units must: (1) post a pest control sign at least 48 hours before the planned indoor treatment in an area of common access to residents; or (2) distribute the application information consistent with 7.146(e) of this title, relating to Pest Control Sign, to each unit planned to be treated and each unit adjacent to those planned to be treated or in an adjacent or area of common access at least 48 hours before the planned time of treatment; and (3) make the consumer information sheet available upon request. (b) Employers, building managers, IPM Coordinators, and chief administrators of workplaces, hospitals, nursing homes, hotels, motels, lodges, warehouses, food-processing establishments, school or educational institutions, and day care centers must post a pest control sign in an area of common access at least 48 hours prior to each planned indoor treatment and make a consumer information sheet available to any individual working or residing in the building upon the request of that individual. (c) Chief administrators or the IPM Coordinators of schools or educational institutions and day care centers must notify the parents or guardians of children attending the facility in writing that pesticides are periodically applied indoors and outdoors, and that information on the times and types of applications and prior notification is available upon request. Such notification must be made at the time of the students' registration. Telephonic, written, or electronic notification of planned applications will meet the notification requirements. (d) The 48 hour pre-notification requirements of subsections (a) and (b) of this section may be waived if an emergency exists and the customer and certified applicator sign a statement attesting to the fact that an emergency exists that requires immediate treatment. The statement must be kept on file with the pest control use records at the business license location. Certified noncommercial applicators may attest to an emergency by signing a statement attesting to the emergency and must keep the statement on file with the pest control use records. An emergency is defined as an imminent hazard to health and emergency treatment is limited to the localized area of the emergency. (e) A person may not be considered in violation of this section if a pest control sign is removed by an unauthorized person or if the space to be treated is vacant, unused and unoccupied at the time of treatment Inspections. Each licensed pest control business shall be inspected at least once in the business's first year of receiving a license and at least every four (4) years thereafter. School districts will be inspected at least once every five (5) years. The Department may waive these requirements due to Department staff availability, budgetary constraints, inspection trends, or operational efficiencies. Businesses and school districts demonstrating a lack of compliance with Department rules may be inspected more frequently than every four (4) years for businesses and every five (5) years for school districts based on risk using the following elements of consideration: (1) prior violations; (2) prior inspection results; and (3) prior complaints Entry and Access. (a) The Department may conduct investigations and inspections of structural pest control activities involving any person in this state to determine compliance with the SPCA, and Department rules. (b) In conducting investigations, the Department may: (1) enter the premises of a licensee, business, or facility during normal business hours to examine records, question witnesses, inspect pesticides and equipment used for pest control, and collect samples; (2) enter premises where individuals are performing or are suspected of performing pest control operations to inspect the use of pesticides and devices, check employee credentials, collect samples, identify pests, and inspect equipment; and (3) on public property, inspect pesticides and equipment, and question employees of persons conducting or suspected of conducting structural pest control activities. (c) Any licensee who interferes with an employee of the Department attempting to enter or access property, equipment, or records for purposes of this chapter, shall be subject to disciplinary action up to and including revocation of licenses and/or registrations. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TexReg 6282 November 10, 2017 Texas Register

37 DIVISION 5. TREATMENT STANDARDS 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Subterranean Termite Post Construction Treatments. (a) All pesticides used for post construction termite treatments must be registered with the EPA and the Department. All pesticide liquid applications must be made by using the application rates and methods and by following the precautionary statements on the labeling of the pesticide being used. All termite baiting system applications must be made using the methods and following the precautionary statements on the product label. (b) A treatment of less than the entire structure will be permitted to accommodate the customer's requests to allow the treating company to perform the job in a manner prescribed by their professional evaluation and label requirements. (c) All treatments must strictly adhere to the procedures outlined in the disclosure statement required in of this title, relating to Subterranean Termite, Drywood Termite and Related Wood Destroying Insect Treatment Disclosure Documents. A deviation will be permitted when unexpected circumstances occur necessitating a change in the treatment and the applicator responsible for the treatment provides the customer with a written addendum to the contract or disclosure documents at the completion of the treatment. (d) Upon completion of a termite treatment, or installation of a baiting system, the company responsible for providing the treatment must leave a durable sticker of not less than one (1) inch by two (2) inches in size on the wall adjacent to the water heater, electric breaker box, or beneath the kitchen sink giving the name, address, and telephone number of the business licensee, name and license number of the applicator, product used, the date of the treatment or installation of the baiting system, and a statement that the notice should not be removed. (e) The business license holder or certified noncommercial applicator must keep and maintain a correct and accurate copy of the Termite Treatment Disclosure Documents for a period of two (2) calendar years from the calendar year in which they were created Subterranean Termite Pre-Construction Treatments. (a) Subsections (b) - (f) of this section do not apply to baits or baiting systems and subsections (c) - (d) of this section do not apply to wood applied termiticide products. (b) All pesticides used for pre-construction termite treatments must be registered with the EPA and the Department. All pesticide liquid applications must be made by using the application rates and methods and by following the precautionary statements on the labeling of the pesticide being used. (c) For a full treatment, the entire structure must be treated to provide a continuous horizontal and vertical pesticide barrier. The final treatment shall be performed within thirty (30) days of notification of completion of landscaping or one (1) year from the date of completion of construction, whichever comes first. However, when construction has proceeded to the point that all areas cannot be treated before the company providing the treatment is called to perform the application, a partial treatment is permitted if the owner of the structure or the person in charge of the construction and the licensee for the pest control company sign a statement attesting to the construction conditions, and attach it to the contract with an amended diagram or blueprint or building plat showing the exact areas to be treated and send copies to the owner of the property within seven (7) days of the application. A copy of the disclosure with an amended diagram or blueprint or building plat showing the exact areas to be treated must be made available to the Department upon request. A partial treatment will also be permitted if allowed by label directions and if the licensee proposing the treatment issues a Termite Treatment Disclosure Document prior to the treatment. (d) In order to comply with subsection (c) of this section, it will be necessary to return to the pretreatment site after the slab has been poured and/or piers and support beams have been placed to complete the treatment for the vertical barrier. (e) A primary treatment of the wood framing (such as a borate treatment) must follow full label application instructions and must be performed with a termiticide that has specific label instructions to be used as a primary treatment to offer protection for prevention of subterranean termites in new construction. This treatment may be used in lieu of a full, partial, or bait treatment and must include application instructions to exposed surfaces of wood framing with exterior sheathing in place but before any walls are enclosed to a height of not less than two (2) feet above a contact with a slab foundation or a (2) foot horizontal and vertical treatment of wood above contact with a concrete crawlspace or basement foundation. Label instructions must provide application instructions for the prevention of subterranean termite intrusion and tubing onto non-cellulose areas around bath-traps, plumbing penetrations and concrete foundation areas. (f) Notice of all pre-construction treatments with contracts requiring treatment of a structure other than a single family dwelling must be submitted between the hours of 6:00 a.m. and 9:00 p.m. using the Department's designated notification system at least four (4), and no more than twenty-four (24), hours prior to a termiticide application. The licensee must provide address and site location, type of treatment (partial or full), date and time of treatment, approximate and appropriate unit of measurement used under contract, and the name, license number, and physical address of the pest control business. If the treatment is cancelled, notice of cancellation must be sent using the Department's designated notification system within one (1) hour of the time the pest control business learns of the cancellation. (g) For all commercial pre-construction treatments other than baits, baiting systems, wood applied termiticide products or physical barriers, the licensee must maintain records of the appropriate unit of measurement treated per application site, amount of termiticide used per application site, rate at which termiticide is mixed for each application site, number of application tanks which were in use for the treatment, the capacity, in gallons, of each application tank, and the start and stop time for the treatment. The business license holder or, in the case of the certified noncommercial applicator, the applicator must keep and maintain a correct and accurate copy of the pre-construction treatment and disclosure records for a period of two (2) calendar years from the calendar year in which they were created. A baiting system may be used in lieu of a pre-construction treatment if installed within thirty (30) days of notification of completion of landscaping. All termite baiting system applications must be made using the methods and PROPOSED RULES November 10, TexReg 6283

38 following the precautionary statements on the product label. If a physical barrier is used, the appropriate unit of measurement of the physical barrier must be recorded and a diagram describing the installation must be provided Subterranean Termite, Drywood Termite and Related Wood Destroying Insect Treatment Disclosure Documents. (a) As part of each written estimate submitted for a subterranean termite, drywood termite, powder post beetle, wood boring beetle or related wood destroying insect (excluding carpenter ants) treatment to a customer, the pest control business proposing the treatment must present the prospective customer or designee with disclosure documents. Verbal estimates may be provided to customers to advise of a general range of treatment costs, but a written estimate must be provided before beginning a treatment. Written estimates for termite and related wood destroying insect treatments and treatment disclosure documents shall only be made by licensed technicians or certified applicators licensed in the termite category. (b) Each subterranean termite, drywood termite, powder post beetle, wood boring beetle or related wood destroying insect (excluding carpenter ants) treatment disclosure document must include, but is not limited to: (1) the business name, address, phone number, TPCL number, and the date the written estimate was submitted; treated; (2) the address or physical location of the structure to be (3) a diagram or blueprint or building plat and description of the structure or structures to be treated to include the following: (A) numerical perimeter measurements of the entire structure as accurately as practical; (B) areas of active or previous termite activity; (C) areas to be treated; (D) known wood destroying insect activity; (E) areas of conditions conducive to infestation by wood destroying insects; and (F) construction details and other information about construction relevant to the treatment proposal; (4) a label for any pesticide recommended or used. If a physical barrier is used, the appropriate unit of measurement of the physical barrier must be recorded and a diagram describing the installation must be provided; (5) the complete details of the warranty provided, if any; (6) the signature of approval on the disclosure documents by a certified applicator or licensed technician in the termite category employed by the company making the proposal; (7) the concentration of termiticide used or minimum number of bait stations to be installed; (8) for subterranean termite post construction treatments, the following statements and definitions in at least 8-point type: (A) A termite treatment may be a partial treatment or spot treatment using termiticide, approved physical barriers, or a baiting system. These types of treatments are defined as follows: (i) Partial Treatments. This technique allows a wide variety of treatment strategies but is more involved than a spot treatment (see definition below). Ex.: treatment of some or all of the perimeter, bath traps, expansion joints, stress cracks, portions of framing, walls and bait locations. (ii) Spot Treatments. Any treatment which concerns a limited, defined area less than ten (10) linear or square feet that is intended to protect a specific location or "spot." Often there are adjacent areas that are susceptible to termite infestation which are not treated. (iii) Baiting Systems. This type of treatment may include interior and/or perimeter placement of monitoring or baiting systems along with routine inspection intervals. The baiting technique may include one (1) or more locations as prescribed by the product label and instructions. (iv) Barriers. If a physical barrier is used, the square footage of the physical barrier must be recorded and a diagram describing the installation will be provided. (B) The types of treatment defined may apply to construction types as follows: (i) Pier and Beam. Treatment of the outer perimeter including porches, patios and treatment of the attached garage. In the crawl space, treatment would include any soil to structure contacts (piers and/or pipes). (ii) Slab Construction. Treatment of the perimeter and all known slab penetrations as well as any known expansion joints or stress cracks. (9) for all termite treatments the following statement in at least 8-point type: For all treatments there will be a diagram showing exactly what will be treated. Treatment specifications and warranties for those treatments may vary widely. Review the pesticide label provided to you for minimum treatment specification. If you have any questions, contact the pest control company or the Texas Department of Agriculture, P.O. Box 12847, Austin, Texas Phone (866) ; (10) for any pre-construction treatment, the "Proper Pre-Construction Subterranean Termite Treatments - A Guide for Builders and Consumers" guide, must be provided to the contractor or purchaser of the pre-treatment service prior to the beginning of the treatment. The text and format of the termite pre-treatment disclosure document is available on the Structural Pest Control Service website at: or by contacting the Texas Department of Agriculture at the address provided in paragraph (9) of this subsection; (11) for drywood termite, powder post beetle, wood boring beetle, and other related wood destroying insect treatments the following statements and definitions in at least 8-point type: A drywood termite, powder post beetle, wood boring beetle, or other related wood destroying insect treatment may be a full treatment or spot treatment. These types of treatments are defined as follows: (A) Full Treatment: A treatment to control 100% of the insect infestation by tarpaulin fumigation or appropriate sealing method. A full treatment by fumigation is designed to eliminate every insect colony. It should include the infested structure and all attached structures; or (B) Spot Treatment: Any treatment less than a full treatment by tarpaulin fumigation. This treatment should be considered only when a drywood termite, powder post beetle, wood boring beetle or related insect infestation has a limited and defined area of infestation. Adjacent areas susceptible to dry wood termite, powder post beetle, wood boring beetle or related insect infestations are not treated. Because of the nature of wood destroying insects, these untreated areas may continue to harbor drywood termites, powder post beetle, wood 42 TexReg 6284 November 10, 2017 Texas Register

39 boring beetle, and related insects throughout the structure without detection; (12) a consumer information sheet described in of this title, relating to Consumer Information Sheet; and (13) The jurisdiction statement, "Licensed and regulated by: Texas Department of Agriculture, P.O. Box 12847, Austin, TX , Phone (866) , Fax (888) " (c) For a re-treatment of a property for an existing customer, the pest control business must provide the following before conducting the re-treatment: (1) the label of the pesticide to be used; (2) a diagram or updated diagram of the structure showing areas to be treated; and (3) a consumer information sheet described in 7.147, of this title. (d) The business license holder or, in the case of the certified noncommercial applicator, the applicator must keep and maintain correct and accurate copies of the Disclosure Documents for a period of two (2) calendar years from the calendar year in which they were created Official Wood Destroying Insect Report Inspection Procedures. (a) Inspections for the purpose of issuing a WDIR must be conducted in a manner consistent with the procedures described in this section by a licensed certified applicator or technician in the termite category. The printed name and registration number or license number of any employees receiving training that are present for the inspection must be listed on the report. The purpose of the inspection is to provide a WDIR regarding the absence or presence of wood destroying insects and conditions conducive to wood destroying insect infestation. The inspection should provide the basis for recommendations for preventive or remedial actions, if necessary, to minimize economic losses. Only for purposes of a Real Estate Transaction Inspection Report, as described in of this title, relating to Real Estate Transaction Inspection Reports, there must be visible evidence of active infestation in the structure or visible evidence of a previous infestation in the structure with no evidence of prior treatment to recommend a corrective treatment. The inspection must be conducted so as to ensure examination of all visible accessible areas in or on a structure in accordance with accepted procedures. While such an examination may reveal wood destroying insects, there are instances when concealed infestations and/or damage may not be discovered. Examinations of inaccessible or obstructed areas are not required. (b) Inaccessible or obstructed areas recognized by the Department include, but are not limited to: (1) inaccessible attics or portion thereof; (2) the interior of hollow walls, spaces between a floor or porch deck and the ceiling or soffit below; (3) such structural segments as porte cocheres, enclosed bay windows, buttresses, and similar areas to which there is no access without defacing or tearing out lumber, masonry, or finished work; (4) areas behind or beneath stoves, refrigerators, furniture, built-in cabinets, insulation, floor coverings; and (5) areas where storage conditions or locks make inspection impracticable. (c) The inspector must describe the structure(s) inspected and include the following: (1) the address or location; (2) a diagram showing: (A) approximate numerical perimeter measurements of the structure as accurately as practical (does not have to be to scale); (B) construction details needed for clarity of the report; (C) areas of current wood destroying insect activity; (D) areas of previous wood destroying insect activity; and (E) areas of conditions conducive to infestation by wood destroying insects; (3) inaccessible or obstructed areas, including, but not limited to the areas listed in subsection (b) of this section. (d) The inspection must include, but is not limited to, the following areas if accessible and unobstructed: (1) plumbing, which includes: (A) bathroom; (B) kitchen; (C) laundry; or (D) other specified area, i.e., hot tub, etc.; (2) window and door frames and sills; (3) baseboards, flooring, walls, and ceilings; (4) entrance steps and porches; (5) exterior of slab or foundation wall; (6) crawl spaces, which include: (A) support piers (include stiff legs); (B) floor joist; (C) sub floors; (D) sill plates; and (E) foundation wall. (7) fireplace; and (8) weep holes. (e) Visible evidence of the following conditions must be reported: (1) wood destroying insects or signs of current active infestation; (2) termite tubes or frass; (3) exit holes or frass from other wood destroying insects; (4) evidence of previous treatment or infestation; (5) conditions conducive to wood destroying insect infestation, including but not limited to: (A) a structure with wood to ground contact; (B) formboards left in place; (C) excessive moisture; (D) wood debris under or around structure; (E) footing too low or soil line too high; (F) insufficient clearance in crawl space; PROPOSED RULES November 10, TexReg 6285

40 (G) expansion joints or cracks in slab; (H) decks; or (6) infestation of other wood destroying insects Real Estate Transaction Inspection Reports. (a) All inspection reports issued regarding the visible presence or absence of termites, other wood destroying insects and conditions conducive to infestation of wood destroying insects in connection with a real estate transaction must be made on a form prescribed by the Department. Forms must be maintained in the inspection file. (b) Lending providers such as the Veterans Administration may require the inspection results on another form. That form is supplemental to the required Department form and must be maintained in the inspection file. (c) The Department report form includes a space to report conditions consistent with of this title, relating to the Official Wood Destroying Insect Report Inspection Procedures, which is available at: or by contacting the Texas Department of Agriculture, P.O. Box 12847, Austin, TX , (866) (d) For each inspection, copies of the completed form must be prepared for: report. (1) the person who ordered the inspection; and (2) business files of the business license holder issuing the (e) The licensee issuing the report must retain records of inspection reports for a minimum of two (2) calendar years from the calendar year in which the report was created Posting Notice of Inspection. (a) Upon completion of an inspection for the purposes of completing a WDIR, the inspector must post a durable sticker on the wall adjacent to the water heater, electric breaker box, or beneath the kitchen sink giving the name and license number of the licensee, the date of the inspection, and a statement that the sticker should not be removed. (b) It is a violation of this section for any licensee to remove or deface a posted inspection sticker Structural Fumigation Requirements. (a) Fumigation of structures to control wood destroying insects or other pests shall be performed only under the direct on-site supervision of a certified applicator licensed in the category of structural fumigation. Direct on-site supervision means that the certified applicator exercising such supervision must be present at the site of the fumigation during the introduction of the fumigant, any reentry prior to aeration, during the initial aeration process and when the structure is released for occupancy. (b) All motor vehicles used by a licensee or licensee's employees in conducting structural fumigation services, to include the transportation of tarps and fumigants, shall display the TPCL number of the business. The transportation of all fumigants shall be done consistent with label directions. (c) A licensee licensed in the structural fumigation category may subcontract the performance of a structural fumigation to another licensee licensed in the structural fumigation category. The primary contractor shall notify the customer that the performance of the structural fumigation service will be performed by another properly licensed business other than the primary contractor. This written notification shall be a part of the disclosure documents as a separate statement itself or attached to the disclosure documents, and must be signed and dated by the customer. Both the primary contractor and the subcontractor shall maintain a copy of the disclosure documents issued to and signed and dated by the customer, and the report as described in subsection (l) of this section for a period of two calendar years from the calendar year in which the service was provided. (d) Structural fumigation shall be performed in compliance with all label requirements applicable to state and federal laws and regulations. (1) During a fumigation, whenever the presence of two (2) persons trained in the use of fumigant is required by the fumigant label, at least one (1) of these persons must be the certified applicator providing direct on-site supervision as described in subsection (a) of this section and the second person must be trained in the necessary safety precautions. (2) Two (2) trained persons shall be present at each fumigation site during the introduction of the fumigant, any reentry prior to aeration, during the initial aeration process, and if the label requires, until the active aeration period with all operable doors and windows open is completed and the structure is secured for the remaining aeration period. (3) During these periods of time, two (2) operational Self- Contained Breathing Apparatuses (SCBA) must be present at the fumigation site. Fumigators must have in their possession any keys necessary to unlock secondary locking devices and/or an access device that would allow for immediate access to the structure the entire time the structure is under fumigation. (4) A trained person in structural fumigation may be a registered apprentice, licensed technician, or certified applicator in the structural fumigation category having been trained in the proper use of a SCBA and clearing devices. (e) Prior to the release of the fumigant, warning signs shall be posted in plainly visible locations on or in the immediate vicinity of all entrances to the structure under fumigation and shall not be removed until the premises is determined safe for occupancy. Ventilation shall be conducted with due regard for public safety. (f) Local fire, police, or emergency authorities shall be notified of the structural fumigation prior to introduction of the fumigant. Notification shall be made in writing, by or by telephone as long as a record is made of the name of the person that was informed and the date and time. The same agency shall be informed that the structure is released for occupancy. (g) The space to be fumigated shall be vacated by all occupants prior to the commencement of fumigation. The space to be fumigated shall be sealed in such manner to ensure that the concentration of the fumigant released is retained in compliance with the manufacturer's recommendations. Fumigation tarps with puncture holes, tears, rips, or splitting seams must be taped or repaired in such a manner to ensure that the concentration of the fumigant released is retained in compliance with the manufacturer's recommendations. (h) Warning signs shall be printed in red on white backgrounds and shall contain the following statement in letters not less than two (2) inches in height: "Danger-Fumigation." Signs must also depict a skull and crossbones, not less than one (1) inch in height, the name of the fumigant, the date and time fumigant was introduced, and the name, license number, and telephone number where the certified applicator performing the fumigation may be reached twenty-four (24) hours a day. (i) On any structure that has been fumigated, the certified applicator responsible for the fumigation shall, immediately upon 42 TexReg 6286 November 10, 2017 Texas Register

41 completion, post a durable sticker on the wall adjacent to the electric breaker box, water heater, or beneath the kitchen sink. This must be a durable sticker not less than one (1) inch by two (2) inches in size. It must have the name and license number of the certified applicator, date of fumigation, fumigant used, and the purpose for which it was fumigated (target pest). (j) A certified applicator performing the fumigation shall use adequate warning agents with all fumigants that lack such properties. When conditions involving abnormal hazards exist, the person exercising direct on-site supervision shall take such safety precautions in addition to those prescribed to protect the public health and safety. The certified applicator responsible for the fumigation shall visibly inspect the structures to assure vacancy prior to introduction of fumigant. (k) The certified applicator responsible for the fumigation shall also post a person or persons to guard the location whenever a licensed applicator is not present from the time the fumigant is introduced until the label concentration for aeration is reached. The person posted at the location shall deter entry into the structure by routinely inspecting the structure under fumigation at least once each hour. The person posted at the location shall remain alert and on duty as directed by the certified applicator. The certified applicator responsible for the fumigation shall secure all entrances to the structure in such a manner as to prevent entry by anyone other than the certified applicator responsible for the fumigation. The structure must remain secured by secondary locking devices until the structure is released for occupancy. (l) For the purpose of maintaining proper safety, establishing responsibility in handling the fumigants, and to ensure a successful fumigation the business performing the structural fumigation shall compile and retain a report for each fumigation job and/or treatment for a period of at least two (2) calendar years from the calendar year in which the fumigation was performed. The certified applicator responsible for the fumigation must have a copy of the report at the time of the fumigation. The report for each fumigation job or treatment must contain the following information to be recorded as the fumigation progresses: (1) name, address and business license number of the pest control business; (2) name and address of property and owner; (3) measured cubic feet fumigated; (4) target pest or pest controlled; (5) fumigant or fumigants used, EPA registration number and amount; (6) name of warning agent and amount used; (7) temperature and wind conditions; (8) time gas introduced and aerated (date and hour); (9) name and license number of the certified applicator responsible for the fumigation and providing direct on-site supervision; (10) list of any extraordinary safety precautions taken; (11) date and time released for occupancy (signed by certified applicator); (12) the dates and times local fire, police or emergency authorities were notified; (13) the identification of clearing devices used; and (14) proof that the Department was notified of the structural fumigation with the date and time of the notification. (m) Fumigations for the purpose of controlling wood destroying insects are subject to the provisions of of this title, relating to Subterranean Termite, Drywood Termite and Related Wood Destroying Insect Treatment Disclosure Documents. (n) Every licensee engaged in application of a fumigant is required to use an approved and calibrated clearance device consistent with the fumigant label. (1) The approved and calibrated clearance device must be used consistently with the label. (2) An independent and qualified facility or person must perform calibration of the clearance device not less than annually and anytime it is suspected to be inaccurate. Calibration must be in compliance with the manufacturer's requirements. (3) Proof of calibration must be kept on file for a period of two (2) calendar years from the calendar year in which the calibration took place and available for review by the Department. The record of proof for each clearing device shall contain the date of calibration and the name of the independent and qualified facility or person who performed the calibration. (o) The certified applicator responsible for the fumigation shall be responsible for following label requirements for aeration and clearing of the structure that is being fumigated. (p) Notice of all fumigations of a structure must be submitted using the Department's designated notification system between the hours of 6:00 a.m. and 9:00 p.m., at least four (4), and no more than twenty-four (24) hours prior to the structural fumigation application. If the structural fumigation is cancelled, notice of the cancellation must be sent using the Department's designated notification system within three hours of the time the pest control company learns of the cancellation. The licensee must provide: (1) address and site location; (2) fumigant to be used; (3) date and time of treatment (for the purposes of this section the time of treatment is when the business conducting the fumigation is scheduled to arrive at the fumigation site); and (4) measured cubic feet under contract; (5) the name and license number of the business licensee; (6) the name and license number of the certified applicator responsible for overseeing the fumigation. (q) Before an individual may apply for an initial certified applicator's license in the structural fumigation category the following experience requirements must be met: (1) Attend a forty (40) hour structural fumigation school that has at least sixteen (16) hours of hands on training, and has been approved by the Department; or (2) Obtain forty (40) hours of on-the-job training with at least sixteen (16) hours of hands on training that is approved by the Department. Department approved hands-on-training includes the following: Inspect structure and identify pest(s) prior to fumigation; (A) (B) Prepare disclosure documents pursuant to the provisions of 7.174, of this title; (C) Measure structure and calculate volume; PROPOSED RULES November 10, TexReg 6287

42 (D) Calculate dosage of fumigant; (E) Notify local fire, police or emergency authority as appropriate; (F) Secure materials left inside structure, check pilot lights & appliances; fumigation; (H) Post the structure and secure entrances to the structure; (G) Tarp, place snakes, or otherwise seal structure for (I) Instruct the person (guard) on duty at the site on responsibilities and safety precautions; (J) Set up equipment including splash pan and fans; (K) Introduce fumigant and warning agent (if required) to the structure; (L) Aerate structure; (M) Take down tarps, remove snakes, remove locks, or otherwise remove sealing material; (N) Clear the structure; (O) Store and/or dispose of fumigant containers; (P) Prepare the report of fumigation required by subsection (l) of this section; and (Q) Securing the fumigant for transportation consistent with label directions. (r) Current certified applicators with the structural fumigation category must receive four (4) hours of training per year to maintain their structural fumigation certification. The four (4) hours of training may be classroom or on the job training. Department approved handson-training includes the following: (1) Inspect structure and identify pest(s) prior to fumigation; (2) Prepare disclosure documents pursuant to the provisions of of this title; (3) Measure structure and calculate volume; (4) Calculate dosage of fumigant; (5) Notify local fire, police or emergency authority as appropriate; (6) Secure materials left inside structure, check pilot lights & appliances; (7) Tarp, place snakes, or otherwise seal structure for fumigation; (8) Post the structure and secure entrances to the structure; (9) Instruct the person (guard) on duty at the site on responsibilities and safety precautions; (10) Provide onsite supervision during application (only one applicator per company may claim provision of onsite supervision); (11) Set up equipment including splash pan and fans; (12) Introduce fumigant and warning agent (if required) to the structure; (13) Aerate structure; (14) Take down tarps, remove snakes, remove locks, or otherwise remove sealing material; (15) Clear the structure; (16) Provide onsite supervision during aeration and clearing (only one applicator per company may claim provision of onsite supervision); (17) Store and/or dispose of fumigant containers; (18) Prepare the report of fumigation required by subsection (l) of this section; and (19) Securing the fumigant for transportation consistent with label directions. (s) In addition to the four (4) hours of training per year, certified applicators must acquire one (1) CEU per year in structural fumigation to maintain the certification following initial testing. (t) A verifiable performance/training records form will be made available to the Department upon request. These performance/training records forms shall be kept on a format prescribed by the department in the business file for at least two (2) calendar years from the calendar year in which the training was received. The responsible certified applicator for the company that performed the training must certify in the training records of each certified applicator that the certified applicator has completed the required training and has demonstrated competency. The verifiable performance/training records form will be made available to the certified applicator or technician upon written request. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) DIVISION 6. STRUCTURAL PEST CONTROL ADVISORY COMMITTEE 4 TAC This proposal is made pursuant to the Texas Occupations Code, Chapter 1951, which designates the Department as the sole authority for licensing persons engaged in the business of structural pest control, and provides the Department with the authority to adopt rules to implement and enforce related laws and regulations. The code affected by the proposal is Occupations Code, Chapter Rules Governing Operation of the Committee. (a) At the first meeting of each year, a Chairman and a Vice Chairman shall be elected by the members of the Committee for a term of one (1) year. (b) The Chairman of the Committee is responsible for: 42 TexReg 6288 November 10, 2017 Texas Register

43 (1) setting an agenda for each committee meeting; and (2) may add an item to an agenda on request by the Department or Commissioner. (c) The members, other than the Commissioner of State Health Services, shall serve staggered four-year terms. (Initial committee members may serve shorter terms.) The terms of four (4) members of the Committee shall expire on February 1 of each odd-numbered year. (d) During the first meeting of each calendar year, the Committee will include on its agenda as an item of business, a self-assessment of its actions during the prior year. (1) The self-assessment will be done using a process and on a form prepared by the Commissioner. (2) In addition to evaluating its performance during the prior calendar year, the Committee shall establish goals to improve performance during the upcoming year. (3) The Committee shall forward the self-assessment to the Commissioner for review. (e) In addition to quarterly meetings, the Committee may meet as needed and upon the request of the Commissioner. (f) All Committee members must successfully complete, during the first calendar quarter of their term, a course provided by the Department or otherwise approved by the Commissioner that covers the Texas Open Meetings Act, the Texas Open Records Act, the Rulemaking process in Texas, the requirements of the conflict of interest laws or other laws relating to public officials in Texas, and any applicable ethics policies adopted by the Department. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 12. WEIGHTS AND MEASURES SUBCHAPTER D. METROLOGY 4 TAC The Texas Department of Agriculture (Department) proposes the repeal of Title 4, Part 1, Chapter 12, Subchapter D, 12.30, and new 12.30, concerning metrology services. These changes are necessary to align the Department's rules with international traceability components and standards. By repealing the current rule and proposing as a new rule, when read, the new rule is intended to be more clear, concise and easier to understand to ensure compliance with metrology standards and requirements. The laboratory traceability component is necessary to document traceability of the Department's metrology lab components and standards to the International System of Units (SI), and to clarify that the metrology lab's recognition by the National Institute of Standards and Technology (NIST) acts as a certification of such traceability. The Department's compliance with NIST Handbook 143, and the weights and measures program handbook applicable to the calibration of devices and standards by state laboratories, afford the requisite international traceability recognition; accordingly, NIST Handbook 143 is proposed for adoption by reference as part of the amended rule. The Department has not proposed any changes to the amount of fees in the proposed new Fees listed in the new rule have been titled to better correspond with the language in the NIST Handbook, and organized to clearly identify fees per weight class. Stuart Strnad, Director for Consumer Product Protection, has determined that for the first five-year period the proposed amendment is in effect, there will be no fiscal implications for state government because no fees have been increased. There is no estimated change in state revenue for the next 5 years. There is no anticipated fiscal impact for local governments as a result of administering or enforcing the rule amendment, as proposed. Mr. Strnad has also determined that for each year of the first five years the proposed amendment is in effect, the public benefit anticipated as a result of administering the proposed rule will be increased consumer protection to the public through compliance and regulation of the affected industry. There are no anticipated costs to micro-businesses, small businesses or individuals required to comply with the proposed rule, as they are currently required to comply with requirements set forth in Comments on the proposal may be submitted to Stuart Strnad, Director for Consumer Product Protection, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas 78711, or by at Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register. The repeal is proposed under Texas Agriculture Code, , which designates the Department as the agency responsible for weights and measures and metrology regulation, and , which requires the Department to charge a fee for each weights and measure device to be registered. The code affected by the proposal is Texas Agriculture Code, Chapter Metrology Services. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TAC The new rule is proposed under Texas Agriculture Code, , which designates the Department as the agency responsible for weights and measures and metrology regulation, PROPOSED RULES November 10, TexReg 6289

44 and , which requires the Department to charge a fee for each weights and measure device to be registered. The code affected by the proposal is Texas Agriculture Code, Chapter Metrology Services. (a) Metrology Services and Laboratory Traceability. The Department's metrology laboratory shall maintain National Institute of Standards and Technology (NIST) recognition and certification of international metrological traceability to the International System of Units (SI), as necessary to provide a service to calibrate standards needing the same international metrological traceability. (1) The Department adopts by reference NIST Handbook 143-State Weights and Measures Laboratories Program Handbook (available on the NIST State Laboratory Program Resources website and also available upon request from the Superintendent of Documents, United States Government Printing Office, 710 North Capitol Street, Washington, D.C ). (2) For information on scheduling an appointment for metrology services, see the Department's website or contact the Department's Giddings metrology laboratory. (b) Calibration Service Parameters and Fees. Metrology calibration services are available according to the following nominal value ranges and fee schedule. (1) Mass Calibrations and Adjustments. (A) Precision Calibrations (Echelon II, Fine Accuracy). Includes weight classes of ASTM Class "2,3"; OIML Class "F1,F2": (i) Up to and including 3 kilograms: $70; (ii) More than 3 kilograms, up to and including 30 kilograms: $110; (iii) More than 30 kilograms: $140. (B) Tolerance Calibrations (Echelon III, Medium Accuracy). Includes the following weight classes--nist Class "F"; ASTM Class "4,5,6,7"; OIML Class "M1,M2,M3"; and other weights: $30; $60; or $10; $20; or (i) Less than 10 pounds: $20; (ii) 10 pounds or more, but less than 500 pounds: (iii) 500 pounds or more, but less than 2,500 pounds: (iv) 2,500 pounds or more: $110. (C) Weight Adjustments. (i) Less than 10 pounds: $10; (ii) 10 pounds or more, but less than 100 pounds: (iii) 100 pounds up to and including 1,000 pounds: (iv) Greater than 1,000 pounds: $40. (2) Volume Calibrations and Neck Calibrations. Volume Transfer II. (A) 5 gallons or less: $55; (B) More than 5 gallons: $65, plus $1 for each gallon over 5 gallons; (C) LPG provers holding 25 gallons or less: $150; (D) LPG provers holding over 25 gallons: $325; or (E) Prover Neck Calibration (new, first time calibrated or damaged): $50. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 21. CITRUS SUBCHAPTER B. CITRUS QUALITY 4 TAC The Texas Department of Agriculture (the Department) proposes amendments to Title 4, Part 1, Chapter 21, Subchapter B, 21.21, related to citrus quality standards. The amendments are proposed to update requirements and restrictions for citrus fruit, and are necessary to update standards for marketable citrus. Proposed amendments to establish minimum juice requirements for new pack size 163 oranges at 48.8 cubic centimeters (cc) juice per fruit and for the new pack size 64 grapefruit at 81.0 cc juice per fruit. The proposed amendments also update the size categories for orange and grapefruit to conform to the current USDA categories and clarify requirements. To assure the updated and expanded requirements neither increased nor decreased requirements for cc of juice per fruit significantly, the revised tables were calculated by regressing fruit size on current requirements for juice volume. Linear, quadratic and cubic regressions were compared, with best fit to the published standards, for orange and for grapefruit, coming from the cubic regressions, which explained 99.64% for oranges and 99.56% for grapefruit, with regard to variation in tabular values in minimum cc of juice required per fruit. For orange, y=66.139x x x ; and for grapefruit, y=19.794x x x ; where x is the average diameter of a fruit for a given tabular pack size and y is minimum cc of juice required per fruit. Dr. Awinash Bhatkar, Coordinator for Biosecurity and Agriculture Resource Management, has determined that for the first fiveyear period the proposed amendments are in effect, there will be no fiscal impact for state or local government. Dr. Bhatkar has determined that for each year of the first five years the proposed rules are in effect, the public benefits anticipated as a result of enforcing the proposed rules will be marketability of small sizes of oranges and grapefruit and facilitation of marketing of orange and grapefruit as a result of updating of orange and grapefruit grading standards. There will be no additional costs to citrus producers, small and/or micro-businesses, or the public as a result of the proposal. 42 TexReg 6290 November 10, 2017 Texas Register

45 Written comments on the proposal may be submitted to Dr. Awinash Bhatkar, Coordinator for Biosecurity and Agriculture Resource Management, Texas Department of Agriculture, by mail to Dr. Awinash Bhatkar, Texas Department of Agriculture, P.O. Box 12847, Austin, Texas or by to Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register. The proposal is made pursuant to Chapters 19 and 71 of the Texas Agriculture Code, which authorize the Department to adopt rules necessary to protect agricultural and horticultural interests and administer citrus programs. Chapters 19 and 71 of the Texas Agriculture Code are affected by the proposal Standards. All citrus fruit handled and/or sold within the state of Texas must be mature and fit for consumption. Fruit are considered mature and fit for consumption if the following conditions are met: (1) Grapefruit: (A) (No change.) (B) minimum juice requirement (in cubic centimeters) as it relates to fruit size: Figure: 4 TAC 21.21(1)(B) [Figure: 4 TAC 21.21(1)(B)] (2) Oranges: (A) (No change.) (B) minimum juice requirement (in cubic centimeters) as it relates to fruit size: Figure: 4 TAC 21.21(2)(B) [Figure: 4 TAC 21.21(2)(B)] The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 26, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 16. ECONOMIC REGULATION PART 2. PUBLIC UTILITY COMMISSION OF TEXAS CHAPTER 24. SUBSTANTIVE RULES APPLICABLE TO WATER AND SEWER SERVICE PROVIDERS SUBCHAPTER H. WATER UTILITY SUBMETERING AND ALLOCATION 16 TAC , The Public Utility Commission of Texas (commission) proposes amendments to and new to implement legislation regarding submetering and allocated water and sewer utility services as well as establishing a complaints process and restitution. The proposed amendments and addition of a new section implement Senate Bill 873 (SB 873), 85th Texas Legislature, Regular Session. Project Number is assigned to this proceeding. SB 873 amended Texas Water Code (TWC) to add new definitions for the terms "condominium manager" and "utility costs," and amended the existing definition of "owner." In addition, SB 873 added new TWC (a) to define the term "overcharge." The commission proposes the addition of new (c)(3) to define the term "condominium manager" and to renumber the definitions thereafter for consistency purposes. The commission also proposes the addition of new (c)(11) and (17) to define the terms "overcharge" and "utility costs," respectively. To add clarity to the rules, the commission also adds new (c)(16) to define the term "undercharge." In addition to these changes, the commission proposes reordering the definitions so that they are in alphabetical order. SB 873 also amended TWC to add new subsection (f), which specifies that the amendments do not limit the owner, operator or manager from billing or collecting for any amount unrelated to water or sewer submetering utility costs. Similarly, SB 873 amended TWC to add new subsection (b), which specifies that the amendments to TWC do not limit the owner, operator or manger from billing or collecting for any amount unrelated to water or sewer nonsubmetering utility costs. The commission proposes amending (b) to make this specification. SB 873 made changes to TWC (b) to specify that the commission has exclusive jurisdiction under TWC Chapter 13 regarding submetering and allocated utility service. The commission proposes adding new (a) to make this specification. In addition, SB 873 amended TWC (c) to establish a complaints and hearings process whereby a complainant can appear remotely for a hearing, and specified that the commission shall require the owner or manager to repay the complaining tenant the amount overcharged if the amount is determined to be valid. The commission proposes adding new (b) to implement this subsection. Lastly, SB 873 amended TWC (d) to stipulate that any changes to TWC do not limit or impair the commission's enforcement authority under TWC Subchapter K and specifies that the commission may assess an administrative penalty for a violation under this chapter. The commission proposes adding new (c) to implement this section. Ms. Tammy Benter, Director, Water Utility Regulation Division, has determined that for each year of the first five-year period the proposed 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. Tammy Benter 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 the sections will be to implement SB 873 and to ensure consistency and restitution PROPOSED RULES November 10, TexReg 6291

46 in addressing complaints relating to the authority and liability of owners and managers of apartment homes, manufactured home rental communities, condominiums and multiple use facilities in charging tenants for submetered and allocated master metered water and sewer services. There will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing these sections. Therefore, no regulatory flexibility analysis is required. There is no anticipated economic cost to persons who are required to comply with these sections as proposed. Tammy Benter has also determined that for each year of the first five years the proposed sections are in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under of the Administrative Procedure Act (APA), Tex. Gov't Code Ann (West 2016). The commission staff will conduct a public hearing on this rulemaking, if requested pursuant to the APA, Tex. Gov't Code Ann , at the commission's offices located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas on November 28, The request for public hearing must be received by November 17, Comments on the proposal may be filed with the Commission's filing clerk at 1701 North Congress Avenue, Austin, Texas or mailed to P.O. Box 13326, Austin, Texas , within 30 days after publication. Sixteen copies of comments to the proposed amendment and new rule are required to be filed by 22.71(c) of this title. Comments should be organized in a manner consistent with the organization of the proposed rule(s). The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed sections. The commission will consider the costs and benefits in deciding whether to adopt the sections. All comments should refer to Project Number The amendments and new rule are proposed under TWC (b), which provides the commission with the authority to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross reference to statutes: TWC (b) General Rules and Definitions. (a) (No change) (b) Application. The provisions of this subchapter apply to apartment houses, condominiums, multiple use facilities, and manufactured home rental communities billing for water and wastewater utility service on a submetered or allocated basis. The provisions of this subchapter do not limit the authority of an owner, operator, or manager of an apartment house, manufactured home rental community, or multiple use facility to charge, bill for, or collect rent, an assessment, an administrative fee, a fee relating to upkeep or management of chilled water, boiler, heating, ventilation, air conditioning, or other building system, or any other amount that is unrelated to water and server utility service costs. (c) Definitions. The following words and terms, when used in this subchapter, have the defined [following] meanings, unless the context clearly indicates otherwise. (1) - (2) (No change.) (3) Condominium manager--a Condominium unit owners' association organized under Texas Property Code , or an incorporated or unincorporated entity comprising the council of owners under Chapter 81, Property Code. Condominium Manager and Manager of a Condominium have the same meaning. (4) [(3)] Customer service charge--a customer service charge is a rate that is not dependent on the amount of water used through the master meter. (5) [(4)] Dwelling unit--one or more rooms in an apartment house or condominium, suitable for occupancy as a residence, and containing kitchen and bathroom facilities; a unit in a multiple use facility; or a manufactured home in a manufactured home rental community. (6) [(5)] Dwelling unit base charge--a flat rate or fee charged by a retail public utility for each dwelling unit recorded by the retail public utility. [(6) Master meter--a meter used to measure, for billing purposes, all water usage of an apartment house, condominium, multiple use facility, or manufactured home rental community, including common areas, common facilities, and dwelling units.] (7) (No change.) (8) Master meter--a meter used to measure, for billing purposes, all water usage of an apartment house, condominium, multiple use facility, or manufactured home rental community, including common areas, common facilities, and dwelling units. (9) [(8)] Multiple use facility--a commercial or industrial park, office complex, or marina with five or more units that are occupied primarily for nontransient use and are rented at intervals of one month or longer. (10) [(9)] Occupant--A tenant or other person authorized under a written agreement to occupy a dwelling. (11) Overcharge--The amount, if any, a tenant is charged for submetered or nonsubmetered master metered utility service to the tenant's dwelling unit after a violation occurred relating to the assessment of a portion of utility costs in excess of the amount the tenant would have been charged under this subchapter. Overcharge and Overbilling have the same meaning. (12) [(10)] Owner--The legal titleholder of an apartment house, a manufactured home rental community, or a multiple use facility; and [a condominium association; or] any individual, firm, or corporation expressly identified in the lease agreement as [that purports to be] the landlord of tenants in the [an] apartment house, manufactured home rental community, or multiple use facility. The term does not include the manager of an apartment home unless the manager is expressly identified as the landlord in the lease agreement. (13) [(11)] Point-of-use submeter--a device located in a plumbing system to measure the amount of water used at a specific point of use, fixture, or appliance, including a sink, toilet, bathtub, or clothes washer. (14) [(12)] Submetered utility service--water utility service that is master metered for the owner by the retail public utility and individually metered by the owner at each dwelling unit; wastewater utility service based on submetered water utility service; water utility service measured by point-of-use submeters when all of the water used in a dwelling unit is measured and totaled; or wastewater utility service based on total water use as measured by point-of-use submeters. (15) [(13)] Tenant--A person who owns or is entitled to occupy a dwelling unit or multiple use facility unit to the exclusion of others and, if rent is paid, who is obligated to pay for the occupancy under a written or oral rental agreement. 42 TexReg 6292 November 10, 2017 Texas Register

47 (16) Undercharge--The amount, if any, a tenant is charged for submetered or nonsubmetered master metered utility service to the tenant's dwelling unit less than the amount the tenant would have been charged under this subchapter. Undercharge and Underbilling have the same meaning. (17) Utility costs--any amount charged to the owner by a retail public utility for water or wastewater service. Utility Costs and Utility Service Costs have the same meaning. (18) [(14)] Utility service--for purposes of this subchapter, utility service includes only drinking water and wastewater Complaint Jurisdiction. (a) Jurisdiction. The commission has exclusive jurisdiction for violations under this subchapter. (b) Complaints. If an apartment house owner, condominium manager, manufactured home rental community owner, or other multiple use facility owner violates a commission rule regarding utility costs, the person claiming the violation may file a complaint with the commission and may appear remotely for a hearing. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER J. ENFORCEMENT, SUPERVISION, AND RECEIVERSHIP 16 TAC The Public Utility Commission of Texas (commission) proposes to amend (a)(2) by adding new subparagraph (D) and new clauses (i) - (iii) relating to the operation of a utility that discontinues operation or is referred for the appointment of a receiver. The proposed amendments implement House Bill 294 (HB 294), 85th Texas Legislature, Regular Session, which amended Texas Water Code (a) (TWC) by adding an additional criterion for which, at the request of the commission, the attorney general shall bring suit for the appointment of a receiver to collect the assets and carry on the business of a water or sewer utility. Project Number is assigned to this proceeding. HB 294 specifies that, at the request of the commission, the attorney general shall bring suit for the appointment of a receiver to collect the assets and carry on the business of a water or sewer utility that violates a final judgment issued by a district court in a suit brought by the attorney general under TWC Chapters 7 or 13 or the Texas Health and Safety Code Chapter 341. Ms. Tammy Benter, Director, Water Utility Regulation Division, has determined that for each year of the first five-year period the proposed 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. Benter has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section will be to implement HB 294 and to ensure continuous and adequate service for water or sewer utilities by appointing a receiver to collect the assets and carry on the business of the utility in certain circumstances. There will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this section. Therefore, no regulatory flexibility analysis is required. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Ms. Benter has also determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and therefore no local employment impact statement is required under section of the Administrative Procedure Act (APA), Tex. Gov't Code Ann (West 2016). The commission staff will conduct a public hearing on this rulemaking, if requested pursuant to the APA, Tex. Gov't Code Ann , at the commission's offices located in the William B. Travis Building, 1701 North Congress Avenue, Austin, Texas on November 30, The request for public hearing must be received by November 15, Comments on the proposed amendments may be filed with the Commission's Filing Clerk at 1701 North Congress Avenue, Austin, Texas or mailed to P.O. Box 13326, Austin, Texas , within 30 days after publication. Sixteen copies of comments to the proposed amendment are required to be filed by 22.71(c) of this title. Reply comments may be submitted within 40 days after publication. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed amendments. The commission will consider the costs and benefits in deciding whether to adopt the identified section. All comments should refer to Project Number The amendments are proposed under TWC (b), which provides the commission with the authority to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross reference to statutes: TWC (b) Operation of Utility that Discontinues Operation or is Referred for Appointment of a Receiver. (a) After providing a utility with notice and an opportunity for a hearing, the commission may appoint a willing person, municipality, or political subdivision to temporarily manage and/or operate a utility that: (1) has discontinued or abandoned operations or the provision of services; or (2) is being referred to the attorney general for the appointment of a receiver under TWC for: (A) having expressed an intent to abandon or abandoned operation of its facilities; (B) having violated a final order of the commission; [or] (C) having allowed any property owned or controlled by it to be used in violation of a final order of the commission; or[.] PROPOSED RULES November 10, TexReg 6293

48 (D) having violated a final judgment issued by a district court in a suit brought by the attorney general under: (i) Chapter 13, Texas Water Code; (ii) Chapter 7, Texas Water Code; or (iii) Chapter 341, Texas Health and Safety Code. (b) - (d) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 19. EDUCATION PART 2. TEXAS EDUCATION AGENCY CHAPTER 102. EDUCATIONAL PROGRAMS SUBCHAPTER GG. COMMISSIONER'S RULES CONCERNING COLLEGE AND CAREER READINESS SCHOOL MODELS 19 TAC The Texas Education Agency (TEA) proposes new , concerning college and career readiness school models. The proposed new rule would establish a grant program and designation process for the Pathways in Technology Early College High School (P-TECH) program established by Senate Bill (SB) 22, 85th Texas Legislature, Regular Session, SB 22, 85th Texas Legislature, Regular Session, 2017, established the P-TECH program to provide students with opportunities for work-based education programs and to earn associate degrees and work credentials. SB 22 requires the commissioner to adopt rules as necessary to administer the P-TECH program, including rules to ensure that a student participating in the program is not considered for accountability purposes to have dropped out of high school or failed to complete the curriculum requirements for high school graduation until after the sixth anniversary of the date of the student's first day in high school. In addition, SB 22 outlines requirements for articulation agreements with institutions of higher education to implement workbased education programs that lead to degrees or certificates and memoranda of understanding with regional industry or business partners to give students who receive work-based training or education from the partner under the P-TECH program priority in interviewing for any jobs for which the student is qualified that are available on the student's completion of the program. SB 22 also establishes the basic requirements of a P-TECH program, specifies that the program must be provided at no cost to participating students, and creates an advisory council to provide recommendations to the commissioner on the establishment and administration of the P-TECH program and the criteria for a campus's designation as a P-TECH school. Finally, SB 22 specifies that a student in the P-TECH program is entitled to the benefits of the Foundation School Program in proportion to the amount of time spent by the student on high school courses while completing the course of study established by the applicable articulation agreement or memorandum of understanding. Proposed new would implement the requirements of SB 22 by establishing the basic requirements for designation of a P-TECH and providing for a grant program for school districts wanting to establish one or more P-TECH campuses. The agency anticipates addressing further requirements of SB 22 in future rulemaking. The proposed new rule would require school districts to submit an annual designation application to TEA for each campus it requests to designate as a P-TECH. Additionally, a proposed P-TECH may be required to submit data to determine if the campus meets the designation requirements. The proposed new rule would have no locally maintained paperwork requirements. FISCAL NOTE. Lily Laux, executive director for school programs, has determined that for the first five-year period the new section is in effect, there will be no fiscal implications for state government as a result of enforcing or administering the new section. There will be fiscal implications for school districts that choose to participate in the P-TECH program, but not beyond what is required by the authorizing statute. TEC, , requires the P-TECH program to be provided at no cost to participating students. Participating school districts would incur all startup and ongoing costs. P-TECHs may receive direct funding if selected for a grant to help offset the cost. Approximately $1.9 million in each year of fiscal year (FY) 2018 and FY 2019 will be available for startup and implementation costs for a limited number of P-TECHs. Costs for the program will vary depending on the program of study the campus elects to offer. Particular programs of study may have significant equipment and materials costs. In addition, TEA will be awarding approximately $1 million in funds to a technical assistance provider to assist campuses interested in opening a P-TECH. Technical assistance will include leadership coaching and support, planning assistance, assistance in establishing a work-based education program, and professional development for teachers and administrators. There is no effect on local economy for the first five years that the proposed new section is in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed new section does not impose a cost on regulated persons and, therefore, is not subject to Texas Government Code, PUBLIC BENEFIT/COST NOTE. Ms. Laux has determined that for each year of the first five years the new section is in effect the public benefit anticipated as a result of enforcing the new section will be providing clarity regarding the granting and designation process and requirements for a campus to be designated as a P-TECH. There is no anticipated economic cost to persons who are required to comply with the proposed new section. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct ad- 42 TexReg 6294 November 10, 2017 Texas Register

49 verse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, , is required. REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins November 10, 2017, and ends December 11, Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Rulemaking, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas Comments may also be submitted electronically to A request for a public hearing on the proposal submitted under the Administrative Procedure Act must be received by the commissioner of education not more than 14 calendar days after notice of the proposal has been published in the Texas Register on November 10, STATUTORY AUTHORITY. The new section is proposed under the Texas Education Code (TEC), , which establishes definitions related to the P-TECH program; TEC, , which specifies the formation of the P-TECH advisory council, including the members who must compose the council, and the functions of the council; TEC, , which requires the commissioner to establish and administer the P-TECH program and specifies certain requirements of the program; TEC, , which requires the commissioner to establish criteria for a campus's designation as a P-TECH school and participation in the P-TECH grant program; and TEC, , which requires the commissioner to adopt rules as necessary to administer the P-TECH program, including rules to ensure a student participating in the program is not considered for accountability purposes to have dropped out of high school or failed to complete the curriculum requirements for high school graduation until after the sixth anniversary of the date of the student's first day in high school. CROSS REFERENCE TO STATUTE. The new section implements the Texas Education Code, , , and , as added by Senate Bill (SB) 22, 85th Texas Legislature, Regular Session, Pathways in Technology Early College High School. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Institution of higher education--an institution of higher education has the meaning assigned by the Texas Education Code (TEC), (2) Optional Flexible School Day Program (OFSDP)--A program approved by the commissioner of education to provide flexible hours and days of attendance for eligible students in Grades 9-12, as defined in of this title (relating to Optional Flexible School Day Program). (3) Pathways in Technology Early College High School (P-TECH)--A public school established under the TEC, , that enables a student in Grade 9, 10, 11, or 12 who is at risk of dropping out, as defined by the TEC, , or who wishes to accelerate completion of high school to combine high school courses and college-level courses. A P-TECH program must provide for a course of study that, on or before the sixth anniversary of a student's first day of high school, enables a participating student to receive both a high school diploma and a credential and/or an associate degree and must include work-based education programs. (4) P-TECH Blueprint--The document that outlines the P-TECH requirements, including design elements and outcomes-based measures. (5) P-TECH program--the program established under the TEC, (6) School district--for the purposes of this section, the definition of school district includes an open-enrollment charter school. (7) Work-based education program--an instructional strategy that provides students with real-life work experiences to apply academic and technical skills and develop employability. A work-based education program is also known as work-based learning. (b) Grants. Provisions of this subsection expire December (1) The P-TECH grant program encourages school districts and open-enrollment charter schools to open campuses implementing the P-TECH model. (2) Funds shall be distributed by the commissioner on a competitive grant basis to be used by school districts on behalf of campuses for the implementation of the P-TECH requirements designed to increase the numbers of students graduating high school with postsecondary credentials and work-based education. (3) Each applicant seeking funding through the P-TECH grant program under the TEC, , must submit an application in a format prescribed by the commissioner through a request for applications. (c) Application for designation of a P-TECH school. (1) Applicant eligibility. A school district must submit a separate application on behalf of each campus it requests to designate as a P-TECH. (2) Application process. A school district must submit each application in accordance with the procedures determined by the commissioner. (d) Notification. The Texas Education Agency (TEA) will notify each applicant of its selection or non-selection for designation. (e) Conditions of P-TECH program operation. (1) A school district operating a P-TECH program must comply with all assurances and requirements in the grant and/or designation application. (2) P-TECH designation is valid for a maximum of one year. (3) A student enrolled in a P-TECH program on a granted or designated P-TECH campus may not be required to pay for tuition, fees, or required textbooks for any coursework or work-based education experience. The school district or charter school in which the student is enrolled shall pay for tuition, fees, and required textbooks, to the extent those charges are not waived by the institution of higher education. (4) The P-TECH program must be provided at no cost to students enrolled on a granted or designated P-TECH campus. (f) Incentives available to an approved P-TECH. (1) Designation as a P-TECH will allow a campus to access programs available to the college and career readiness models programs. (2) A designated P-TECH campus is eligible to apply to participate in the OFSDP defined in of this title. Each des- PROPOSED RULES November 10, TexReg 6295

50 ignated P-TECH campus must apply separately in accordance with the TEC, , and procedures established by the commissioner. (3) A student enrolled at a P-TECH campus and participating in the P-TECH program is not considered for accountability purposes to have dropped out of high school or failed to complete the curriculum requirements for high school graduation until after the sixth anniversary of the date of the student's first day in high school. (g) Evaluation of a designated P-TECH campus. (1) The commissioner will establish specific evaluation procedures prior to the beginning of each school year. (2) Beginning in the school year, the commissioner shall adopt measures, performance standards, and an appeals process. Failure to meet the standards may result in sanctions under the TEC, Chapter 39, including closure of the P-TECH program. (3) Beginning in the school year, each designated P-TECH may be required to submit information and required data to the TEA each year in a manner and by a deadline specified by the commissioner. This information must comply with the P-TECH measures and performance standards set by the commissioner. (h) Renewal or revocation of authority. (1) In order to renew a P-TECH designation, a school district must submit a separate renewal application on behalf of each of its designated campuses each year. (2) The commissioner may deny renewal or revoke the authorization of a designated P-TECH program based on the following factors: (A) noncompliance with application assurances and/or the provisions of this section; (B) lack of program success as evidenced by progress reports and program data; (C) failure to meet performance standards specified in the application and/or P-TECH Blueprint; or (D) failure to provide accurate, timely, and complete information as required by the TEA to evaluate the effectiveness of the P-TECH program. (3) A decision by the commissioner to deny renewal as or revoke authorization of a P-TECH is final and may not be appealed. (4) The commissioner may impose sanctions on a school district as authorized by the TEC, Chapters 39 and 39A, for failure to comply with the requirements of this section. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 25. HEALTH SERVICES PART 1. DEPARTMENT OF STATE HEALTH SERVICES CHAPTER 95. PRESCRIPTION DRUG DONATION PROGRAM 25 TAC The Executive Commissioner of the Health and Human Services Commission, (HHSC) on behalf of the Department of State Health Services (DSHS), proposes new 95.1, concerning Purpose; new 95.2, concerning Definitions; new 95.3, concerning Participating Provider Eligibility; new 95.4, concerning Standards and Procedures for Donating or Accepting Prescription Drugs; new 95.5, concerning Standards and Procedures for Inspecting and Storing Donated Prescription Drugs; new 95.6, concerning Standards and Procedures for Dispensing Donated Prescription Drugs; new 95.7 concerning Liability; new 95.8, concerning Handling Fee; and new 95.9, concerning Recordkeeping Requirements for Participating Providers. BACKGROUND AND PURPOSE House Bill (HB) 2561, 85th Legislature, Regular Session, 2017, added Health and Safety Code, Chapter 442, Donation of Prescription Drugs. Health and Safety Code, grants the Executive Commissioner of HHSC the authority to develop rules to adopt standards and procedures for accepting, storing, labeling and dispensing donated prescription drugs to be consistent with public health and safety standards. The new rules will establish the Prescription Drug Donation Program (program) and allow individuals to donate unused prescription drugs to participating providers, who will distribute them to eligible recipients. Participation in the program by a health care facility or pharmacy is voluntary. The new rules will include definitions; participating provider, donor, and recipient form requirements; information on participating providers; liability information; an elective handling fee; and a database of participating providers. SECTION-BY-SECTION SUMMARY Proposed new 95.1 describes the purpose of the chapter. Proposed new 95.2 contains relevant definitions for the program. Proposed new 95.3 describes the eligibility criteria for entities to become participating providers in the Prescription Drug Donation Program. Also, this new section states that DSHS will also establish, maintain, and post a database of participating providers on the program's website. Proposed new 95.4 describes the standards and procedures that donors and participating providers must follow in order to donate or accept prescription drugs. Proposed new 95.5 describes the standards and procedures that participating providers must follow to inspect and store donated prescription drugs. Proposed new 95.6 describes the standards and procedures that a participating provider must comply with in order to dispense donated prescription drugs. This new rule also includes language that the prescription drugs under this program shall not be resold. 42 TexReg 6296 November 10, 2017 Texas Register

51 Proposed new 95.7 describes the limitation of liability for donors and participating providers. Proposed new 95.8 describes the handling fee that the participating provider may charge to cover the costs of inspecting, storing, labeling, and dispensing the donated prescription drug. Proposed new 95.9 describes the recordkeeping requirements for participating providers. FISCAL NOTE Imelda Garcia, Director, Infectious Disease Prevention Section, has determined that for each year of the first five years that the sections will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the sections as proposed. GOVERNMENT GROWTH IMPACT STATEMENT DSHS has determined that during the first five years that the sections will be in effect: (1) the proposed rules will create a government program and participation in the program by a health care facility or pharmacy is voluntary; (2) implementation of the proposed rules will not affect the number of employee positions; (3) implementation of the proposed rules will not require an increase or decrease in future legislative appropriations; (4) the proposed rules will not affect fees paid to the agency; (5) the proposed rules will create new rules to comply with HB 2561 and is a voluntary program; (6) the proposed rules will not expand, limit, or repeal an existing rule; (7) the proposed rules will not change the number of individuals subject to the rules because this is a voluntary program; and (8) DSHS has insufficient information to determine the proposed rules' effect on the state's economy because this is a voluntary program. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Ms. Garcia has also determined that there will be no adverse economic effect on small businesses, micro-businesses or rural communities required to comply with the sections as proposed. The rules do not apply to small businesses or micro-businesses, or rural communities. Participation in the program by a health care facility or pharmacy is voluntary. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Government Code, does not apply to these rules because the rules are necessary to implement legislation that does not specifically state that Government Code, applies to the rules. PUBLIC BENEFIT Imelda Garcia, Director, Infectious Disease Prevention Section, has determined that for each year of the first five years that the sections will be in effect, the public will benefit from adoption of the sections. The public benefit anticipated as a result of enforcing or administering the sections will be that under this program, eligible prescription drugs that would normally be discarded can be donated to participating providers. Individuals who would normally be unable to obtain these prescription drugs due to financial hardship could receive them from participating providers at a maximum of $20, if the participating provider elects to charge a handling fee. TAKINGS IMPACT ASSESSMENT DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Francela Brazil Williams, Operations Specialist, Department of State Health Services-Pharmacy Branch, 1100 West 49th Street, W-140B; Mail Code 4544, Austin, Texas, by fax to (512) or by to francela.williams@dshs.texas.gov within 30 days of publication of this proposal in the Texas Register. STATUTORY AUTHORITY The new sections are authorized by Health and Safety Code, , which states that the Executive Commissioner may adopt rules to implement Chapter 442; states the Executive Commissioner by rule shall adopt standards and procedures for accepting, storing, labeling, and dispensing donated prescription drugs, and inspecting donated prescription drugs to determine whether the drugs are adulterated and whether the drugs are safe and suitable for redistribution; , requires DSHS to establish, maintain and post a database of participating providers on the DSHS program's website; and by Government Code, , and Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation of and provision of health and human services by DSHS and for the administration of Health and Safety Code, Chapter The new sections are authorized by Health and Safety Code, Chapters 442 and 1001; and Government Code, Chapter Purpose. The purpose of this chapter is to establish rules in accordance with the Health and Safety Code, Chapter 442, Donation of Prescription Drugs, which creates the Prescription Drug Donation Program. Under this Program, individuals may donate unused unit-dose prescription drugs to participating providers, who may redistribute eligible drugs to willing recipients Definitions. The following words and terms, when used in this chapter, must have the following meanings, unless the context clearly indicates otherwise. (1) Adulterated Drug or Device--As defined in the Texas Food, Drug and Cosmetic Act, Health and Safety Code, (2) Controlled Substance--As defined in the Health and Safety Code, (3) Department--The Department of State Health Services. PROPOSED RULES November 10, TexReg 6297

52 (4) Dispense--To prepare, package, compound, or label in the course of professional practice, a prescription drug or device for delivery to an ultimate user or the user's agent under a practitioner's lawful order. (5) Donor--An individual who donates unused, unit-dose packaged prescription drugs under Health and Safety Code, Chapter 442, to a participating provider. (6) Health Care Facility--A facility that provides health care services to patients and maintains a pharmacy in the facility. The term includes the following facilities if a pharmacy is maintained in the facility: (A) a general or special hospital as defined by Health and Safety Code, Chapter 241; (B) an ambulatory surgical center licensed under Health and Safety Code, Chapter 243; and (C) an institution licensed under Health and Safety Code, Chapter 242. (7) Health Care Professional--An individual licensed, certified, or otherwise authorized to administer health care and prescribe prescription drugs, for profit or otherwise, in the ordinary course of business or professional practice. The term does not include a health care facility. (8) Manufacturer--A person who is a designer, formulator, constructor, rebuilder, fabricator, producer, compounder, processor, or assembler of any product or any component part thereof and who places the product or any component part thereof in the stream of commerce. (9) Participating Provider--A health care facility or pharmacy, or a pharmacist who is an employee of the facility or pharmacy that elects to participate in the collection and redistribution of donated prescription drugs under Health and Safety Code, Chapter 442. (10) Pharmacist--A person licensed under Occupations Code, Chapter 558. (11) Pharmacy--An entity licensed under Occupations Code, Chapter 560. (12) Prescription Drug--As defined under Occupations Code, (13) Program--Prescription Drug Donation Program. (14) Recipient--An individual who voluntarily receives donated prescription drugs under Health and Safety Code Chapter 442. (15) Tamper-Evident--Packaging that allows for detection of unauthorized access to a prescription drug. (16) Unit-Dose--A dose of medicine prepared in an individual packet by a licensed facility for convenience, safety, or monitoring Participating Provider Eligibility. (a) Participation in the Prescription Drug Donation Program by a health care facility or pharmacy is voluntary. (b) To be eligible for participation in the Program, a participating provider must be in compliance with all applicable federal and state laws relating to the inspection, storage, labeling, and dispensing of prescription drugs and shall maintain appropriate active, non-restricted state-issued licenses or registrations. (c) A participating provider electing to participate in the Program shall complete and return a Participating Provider Form prescribed by the Department and available on the Program's website, designating a responsible contact and verifying it meets and will comply with the requirements of the Program. (d) A pharmacy or health care facility may withdraw from participation in the Program at any time by providing written notice to the Department on a Participating Provider Form prescribed by the Department, and available on the Program's website referenced in subsection (c) of this section. (e) The Department shall establish and maintain an electronic database that lists each participating provider. The Department shall post the database on Program's Internet website referenced in subsection (c) of this section Standards and Procedures for Donating or Accepting Prescription Drugs. (a) Donor Requirements. (1) No drugs that require storage temperatures other than normal room temperature as specified by the manufacturer or United States Pharmacopoeia (USP) shall be donated or accepted as part of the Prescription Drug Donation Program. Drugs that require storage temperatures other than normal room temperature as specified by the manufacturer or USP shall not be donated or accepted because of the increased potential for these drugs to become adulterated. (2) Controlled substances shall not be donated or accepted. Pursuant to federal and state laws, a controlled substance cannot be returned or reused once the drug has been dispensed to a patient. (3) Drugs previously purchased by Medicaid shall not be donated. (4) All donated drugs must: (A) be approved by the Food and Drug Administration (FDA); (B) be dispensed only by prescription; (C) bear the federal legend "Rx Only" or "Caution," Federal Law Prohibits Dispensing Without Prescription;" (D) be packaged into unit-dose packages; and (E) be intended for human use. (5) The donor must sign a Donor Form prescribed by the Department stating that: (A) the donor is the owner of the donated prescription drug; (B) the donated prescription drug has been properly stored and the container has not been opened or tampered with; (C) the donated prescription drug has not been adulterated or misbranded; and (D) the donor is voluntarily donating the prescription drug. (b) Participating Provider Requirements. (1) Upon the Department's confirmed receipt of the Participating Provider Form, a participating provider may accept legally obtained prescription drugs from a donor in the Program if the drugs meet the requirements of this rule, as determined by a pharmacist who is employed by or under contract with the participating provider and the donor has completed a Donor Form as prescribed by the Department. (2) The participating provider may accept a prescription drug only if all of the following requirements are met: 42 TexReg 6298 November 10, 2017 Texas Register

53 (A) the drug is in its original sealed and tamper-evident unit-dose packaging. However, a drug in a single-unit dose or blister pack with the outside packaging opened may be accepted if the singleunit-dose packaging is undisturbed; (B) the drug has been stored according to manufacturer or USP storage requirements; (C) the packaging contains the lot number and expiration date of the drug. If the lot number is not retrievable, all specified medications will be destroyed; (D) the drug has an expiration date that is more than six months after the date that the drug was donated. However, a donated prescription drug bearing an expiration date that is six months or less after the date the prescription drug was donated may be accepted and distributed if the drug is in high demand, as determined by the participating provider, and can be dispensed for use prior to the drug's expiration date; (E) the drug and the packaging does not have any physical signs of tampering or adulteration, and there is no reason to believe that the drug is adulterated; and (F) all drugs shall be inventoried by the participating provider. The inventory shall include the name of the drug, strength of the drug, quantity of the drug, lot number, and the date of donation Standards and Procedures for Inspecting and Storing Donated Prescription Drugs. (a) A licensed pharmacist employed by or under contract with the participating provider shall inspect donated prescription drugs to determine, to the extent reasonably possible in the judgement of the pharmacist, that the drugs are not adulterated or misbranded, are safe and suitable for dispensing, and are not ineligible drugs. (b) Donated drugs may not be stored with non-donated inventory. When donated drugs are not inspected immediately upon receipt, the participating provider shall quarantine the donated drugs separately from all dispensing stock until the donated drugs have been inspected and approved for dispensing. (c) The participating provider shall destroy donated non-controlled substances that are not suitable for dispensing and make a record of such destruction. (d) The pharmacist-in-charge shall develop and implement a written procedure for proper management of drug recalls by the manufacturer. Such procedures shall include, where appropriate, contacting patients to whom the recalled drug products have been dispensed. (e) The pharmacist-in-charge shall reasonably ensure that a recalled drug has been removed from inventory no more than 24 hours after receipt of the recall notice, and quarantined until proper disposal or destruction of the drug Standards and Procedures for Dispensing Donated Prescription Drugs. (a) Donated drugs may be dispensed only if the drugs are prescribed by a health care professional for use by an eligible recipient and are dispensed by a licensed pharmacist who has determined that the drugs are of an acceptable integrity. (b) The recipient must sign a Recipient Form prescribed by the Department stating that the recipient: (1) understands that the drugs are donated; (2) accepts any risk associated with accidental mishandling of the drugs; and (3) acknowledges that the donor and the participating provider are acting in good faith and are therefore released from liability. (c) The participating provider shall dispense donated prescription drugs in compliance with applicable federal and state laws and regulations for dispensing prescription drugs, including all requirements relating to packaging, labeling, record keeping, drug utilization review and patient counseling. (d) The participating provider shall remove the original donor's identification and the name of the original dispensing pharmacy from the package prior to dispensing the drugs. (e) The participating provider shall be responsible for drug recalls and shall have an established mechanism to notify recipients in the event of a drug recall. (f) Prescription drugs donated under this Program shall not be resold. (g) All participating providers shall comply with the laws and rules pertaining to dispensing of prescription drugs as contained in the Occupations Code, Chapters , and 569 (relating to the Texas Pharmacy Act); and Title 22 Texas Administrative Code, Chapters 281, 283, 291, 295, 297, 303, 305, 309, and 311 (relating to the Texas State Board of Pharmacy) Liability. Donors and participating providers in the Prescription Drug Donation Program are not criminally liable and are not subject to professional disciplinary action if they act in good faith in donating, accepting, storing, labeling, distributing, and dispensing prescription drugs under Health and Safety Code, Chapter 442. Donors and participating providers are not civilly liable for damages for bodily injury, death, or property damage that arises from donating, accepting, storing, labeling, distributing, or dispensing prescription drugs under the Health and Safety Code, Chapter 442, unless the injury, death, or damage arises from the donor or participating provider's recklessness or intentional conduct Handling Fee. The participating provider may charge a handling fee not to exceed $20.00 to a recipient to cover the costs of inspecting, storing, labeling, and dispensing the donated prescription drug Recordkeeping Requirements for Participating Providers. Records required as part of this Program shall be maintained pursuant to Occupations Code, Chapter 554. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 24, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 133. HOSPITAL LICENSING PROPOSED RULES November 10, TexReg 6299

54 The Health and Human Services Commission (HHSC) proposes amendments to , concerning Hospital Functions and Services, and , concerning Spatial Requirements for New Construction. BACKGROUND AND PURPOSE In October 2015, the Department of State Health Services (DSHS) updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with 25 TAC Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, rules in Title 25, Chapter 133 (relating to Hospital Licensing) that incorporated the Texas Food Establishment rules by reference were not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by licensed hospitals. This lack of authority to enforce food safety rule violations by licensed hospitals presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , emergency rules were adopted to update and to include the references to Chapter 228. The emergency rules were adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rules for another 60 days. Therefore, amendments to and are proposed for the permanent adoption of the rule reference updates. The purpose of the rule amendments is to update references to the current food safety rules in the hospital licensing rules, thereby allowing HHSC to enforce the hospital licensing rules relating to food safety in order to protect the health, safety, and welfare of the public. SECTION-BY-SECTION SUMMARY The proposed amendments to (d) and (e) replace the rule references to of this title (relating to Texas Food Establishments) with the new rule references to Chapter 228 of this title (relating to Retail Food). FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the sections will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the sections as proposed. GOVERNMENT GROWTH IMPACT STATEMENT HHSC has determined that during the first five years that the sections will be in effect: (1) the proposed rule amendments will not create or eliminate a government program; (2) implementation of the proposed rule amendments will not affect the number of employee positions; (3) implementation of the proposed rule amendments will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendments will not affect fees paid to the agency; (5) the proposed rule amendments will not create new rules; (6) the proposed rule amendments will not expand, limit, or repeal existing rules; (7) the proposed rule amendments will not change the number of individuals subject to the rules; and (8) the proposed rule amendments will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Patrick Waldron, Branch Manager, has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rules do not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Waldron has also determined that for each year of the first five years the sections are in effect, the public will benefit from adoption of the sections. The public benefit anticipated as a result of enforcing or administering the sections will be allowing HHSC to enforce the hospital licensing rules relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS HHSC has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Patrick Waldron, Branch Manager, Health Care Quality Section, Mail Code 1949, P.O. Box , Austin, Texas ; by fax to (512) ; or by to Patrick.Waldron@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register. SUBCHAPTER C. REQUIREMENTS 25 TAC STATUTORY AUTHORITY OPERATIONAL 42 TexReg 6300 November 10, 2017 Texas Register

55 Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for the construction, maintenance, and operation of licensed hospitals. Texas Government Code, , authorizes the Executive Commissioner to adopt rules and policies necessary for the operation and provision of health and human services. The amendments are authorized by Texas Health and Safety Code, Chapter 241, and Texas Government Code, Chapter Hospital Functions and Services. (a) - (c) (No change.) (d) Dietary services. The hospital shall have organized dietary services that are directed and staffed by adequate qualified personnel. However, a hospital that has a contract with an outside food management company or an arrangement with another hospital may meet this requirement if the company or other hospital has a dietitian who serves the hospital on a full-time, part-time, or consultant basis, and if the company or other hospital maintains at least the minimum requirements specified in this section, and provides for the frequent and systematic liaison with the hospital medical staff for recommendations of dietetic policies affecting patient treatment. The hospital shall ensure that there are sufficient personnel to respond to the dietary needs of the patient population being served. (1) (No change.) (2) Director. The director shall: (A) - (D) (No change.) (E) maintain authority and responsibility for the following, but not be limited to: (i) - (vii) (No change.) (viii) ensuring compliance with Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Texas Food Establishments)]. (3) (No change.) (e) - (y) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER I. PHYSICAL PLANT AND CONSTRUCTION REQUIREMENTS 25 TAC Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for the construction, maintenance, and operation of licensed hospitals. Texas Government Code, , authorizes the Executive Commissioner to adopt rules and policies necessary for the operation and provision of health and human services. The amendments are authorized by Texas Health and Safety Code, Chapter 241, and Texas Government Code, Chapter Spatial Requirements for New Construction. (a) - (d) (No change.) (e) Dietary suite. (1) Architectural requirements. (A) General. Construction, equipment, and installation shall comply with Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Texas Food Establishments)]. (B) - (E) (No change.) (2) - (5) (No change.) (f) - (ff) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 134. PRIVATE PSYCHIATRIC HOSPITALS AND CRISIS STABILIZATION UNITS The Health and Human Services Commission (HHSC) proposes amendments to , concerning Facility Functions and Services, and , concerning Spatial Requirements for New Construction. BACKGROUND AND PURPOSE In October 2015, the Department of State Health Services (DSHS) updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with 25 TAC Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, rules in Title 25, Chapter 134 (relating to Private Psychiatric Hospitals and Crisis Stabilization Units) that incorporated the Texas Food Establishment rules by reference were not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by private psychiatric hospitals. This lack of authority to enforce food safety rule violations by private psychiatric hospitals presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , emergency rules were adopted to update and to include the rules references to Chapter 228. The emergency rules were adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rules for another 60 days. Therefore, PROPOSED RULES November 10, TexReg 6301

56 amendments to and are proposed for the permanent adoption of the rule reference updates. The purpose of the rule amendments is to update references to the current food safety rules in the private psychiatric hospital rules, thereby allowing HHSC to enforce the private psychiatric hospital rules relating to food safety in order to protect the health, safety, and welfare of the public. SECTION-BY-SECTION SUMMARY The proposed amendments to (b) and (d) replace the rule references to of this title (relating to Texas Food Establishments) with the new rules references to Chapter 228 of this title (relating to Retail Food). FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the sections will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the sections as proposed. GOVERNMENT GROWTH IMPACT STATEMENT HHSC has determined that during the first five years that the sections will be in effect: (1) the proposed rule amendments will not create or eliminate a government program; (2) implementation of the proposed rule amendments will not affect the number of employee positions; (3) implementation of the proposed rule amendments will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendments will not affect fees paid to the agency; (5) the proposed rule amendments will not create new rules; (6) the proposed rule amendments will not expand, limit, or repeal existing rules; (7) the proposed rule amendments will not change the number of individuals subject to the rules; and (8) the proposed rule amendments will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Patrick Waldron, Branch Manager, has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rules do not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Waldron has also determined that for each year of the first five years the sections are in effect, the public will benefit from adoption of the sections. The public benefit anticipated as a result of enforcing or administering the sections will be allowing HHSC to enforce the private psychiatric hospital rules relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS HHSC has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Patrick Waldron, Branch Manager, Health Care Quality Section, Mail Code 1949, P.O. Box , Austin, Texas ; by fax to (512) ; or by to Patrick.Waldron@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register. SUBCHAPTER C. REQUIREMENTS 25 TAC OPERATIONAL STATUTORY AUTHORITY Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for the construction, maintenance, and operation of private mental hospitals. Texas Government Code, , authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services. The amendment is authorized by Texas Health and Safety Code, Chapter 557, and Texas Government Code, Chapter Facility Functions and Services. (a) (No change.) (b) Dietary services. The facility shall have organized dietary services that are directed and staffed by adequate qualified personnel. However, a facility that has a contract with an outside food management company or an arrangement with another facility may meet this requirement if the company or other facility has a dietitian who serves the facility on a full-time, part-time, or consultant basis, and if the company or other facility maintains at least the minimum requirements specified in this section, and provides for the frequent and systematic liaison with the facility medical staff for recommendations of dietetic policies affecting patient treatment. The facility shall ensure that there 42 TexReg 6302 November 10, 2017 Texas Register

57 are sufficient personnel to respond to the dietary needs of the patient population being served. (1) (No change.) (2) Director. The director shall: (A) - (D) (No change.) (E) maintain authority and responsibility for the following, but not be limited to: (i) - (vi) (No change.) (vii) ensuring compliance with Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Texas Food Establishments)]. (3) (No change.) (c) - (p) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER G. PHYSICAL PLANT AND CONSTRUCTION REQUIREMENTS 25 TAC Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for the construction, maintenance, and operation of private mental hospitals. Texas Government Code, , authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services. The amendment is authorized by Texas Health and Safety Code, Chapter 557, and Texas Government Code, Chapter Spatial Requirements for New Construction. (a) - (c) (No change.) (d) Dietary suite. (1) Architectural requirements. (A) General. Construction, equipment, and installation shall comply with the standards specified in Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Rules on Food Service Sanitation)]. (B) - (E) (No change.) (2) - (5) (No change.) (e) - (p) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 137. BIRTHING CENTERS SUBCHAPTER D. OPERATIONAL AND CLINICAL STANDARDS FOR THE PROVISION AND COORDINATION OF TREATMENT AND SERVICES 25 TAC The Health and Human Services Commission (HHSC) proposes an amendment to , concerning Physical and Environmental Requirements For Centers. BACKGROUND AND PURPOSE In October 2015, the Department of State Health Services (DSHS) updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with 25 TAC Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, the rule in Title 25, Chapter 137 (relating to Birthing Centers) that incorporated the Texas Food Establishment rules by reference was not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by birthing centers. This lack of authority to enforce food safety rule violations by birthing centers presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , an emergency rule was adopted to update to include the reference to Chapter 228. The emergency rule was adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rule for another 60 days. Therefore, the amendment to is proposed for the permanent adoption of the rule reference update. The purpose of the rule amendment is to update the reference to the current food safety rules in the birthing center rule, thereby allowing HHSC to enforce the birthing center rule relating to food safety in order to protect the health, safety, and welfare of the public. SECTION-BY-SECTION SUMMARY The proposed amendment to (2) replaces the reference to of this title (relating to Texas Food Establishments) with the new reference to Chapter 228 of this title (relating to Retail Food). FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the section will be in ef- PROPOSED RULES November 10, TexReg 6303

58 fect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the section as proposed. GOVERNMENT GROWTH IMPACT STATEMENT HHSC has determined that during the first five years that the section will be in effect: (1) the proposed rule amendment will not create or eliminate a government program; (2) implementation of the proposed rule amendment will not affect the number of employee positions; (3) implementation of the proposed rule amendment will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendment will not affect fees paid to the agency; (5) the proposed rule amendment will not create a new rule; (6) the proposed rule amendment will not expand, limit, or repeal an existing rule; (7) the proposed rule amendment will not change the number of individuals subject to the rule; and (8) the proposed rule amendment will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Patrick Waldron, Branch Manager, has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rule does not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to these rule because the rule is necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Waldron has also determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be allowing HHSC to enforce the birthing center rule relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS HHSC has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Patrick Waldron, Branch Manager, Health Care Quality Section, Mail Code 1949, P.O. Box , Austin, Texas ; by fax to (512) ; or by to Patrick.Waldron@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register. STATUTORY AUTHORITY Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for birthing centers. Texas Government Code, , authorizes the Executive Commissioner to adopt rules and policies necessary for the operation and provision of health and human services. The amendment is authorized by Texas Health and Safety Code, Chapter 244, and Texas Government Code, Chapter Physical and Environmental Requirements for Centers. The physical and environmental requirements for a center are as follows. (1) (No change.) (2) The center must have the capacity to provide clients with liquid nourishment. The center may provide commercially packaged food to clients in individual servings. If other food is provided by the center, it will be subject to the requirements of Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Texas Food Establishments)]. (3) - (7) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 139. ABORTION FACILITY REPORTING AND LICENSING SUBCHAPTER D. MINIMUM STANDARDS FOR LICENSED ABORTION FACILITIES 25 TAC TexReg 6304 November 10, 2017 Texas Register

59 The Health and Human Services Commission (HHSC) proposes an amendment to , concerning Physical and Environmental Requirements. BACKGROUND AND PURPOSE In October 2015, the Department of State Health Services (DSHS) updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with 25 TAC Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, the rule in Title 25, Chapter 139 (relating to Abortion Facility Reporting and Licensing) that incorporated the Texas Food Establishment rules by reference was not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by abortion facilities. This lack of authority to enforce food safety rule violations by abortion facilities presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , an emergency rule was adopted to update to include the rule reference to Chapter 228. The emergency rule was adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rule for another 60 days. Therefore, the amendment to is proposed for the permanent adoption of the rule reference update. The purpose of the rule amendment is to update references to the current food safety rules in the abortion facility rule, thereby allowing HHSC to enforce the abortion facility rule relating to food safety in order to protect the health, safety, and welfare of the public. SECTION-BY-SECTION SUMMARY The proposed amendment to (1) replaces the reference to of this title (relating to Texas Food Establishments) with a new reference to Chapter 228 of this title (relating to Retail Food). FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the section will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the section as proposed. GOVERNMENT GROWTH IMPACT STATEMENT HHSC has determined that during the first five years that the section will be in effect: (1) the proposed rule amendment will not create or eliminate a government program; (2) implementation of the proposed rule amendment will not affect the number of employee positions; (3) implementation of the proposed rule amendment will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendment will not affect fees paid to the agency; (5) the proposed rule amendment will not create a new rule; (6) the proposed rule amendment will not expand, limit, or repeal an existing rule; (7) the proposed rule amendment will not change the number of individuals subject to the rule; and (8) the proposed rule amendment will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Patrick Waldron, Branch Manager, has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rule does not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rule. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to this rule because the rule is necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Waldron has also determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be allowing HHSC to enforce the abortion facility rule relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS HHSC has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Patrick Waldron, Branch Manager, Health Care Quality Section, Mail Code 1949, P.O. Box , Austin, Texas ; by fax to (512) ; or by to Patrick.Waldron@hhsc.state.tx.us within 30 days of publication of this proposal in the Texas Register. STATUTORY AUTHORITY Texas Health and Safety Code, , requires HHSC to develop, establish, and enforce standards for abortion facilities. Texas Government Code, , authorizes the Executive Commissioner to adopt rules and policies necessary for the operation and provision of health and human services. PROPOSED RULES November 10, TexReg 6305

60 The amendment is authorized by Texas Health and Safety Code, Chapter 245 and Texas Government Code, Chapter Physical and Environmental Requirements. The physical and environmental requirements for a licensed abortion facility are as follows. (1) A facility shall: (A) - (E) (No change.) (F) have the capacity to provide patients with liquids. The facility may provide commercially packaged food to patients in individual servings. If other food is provided by the facility, it shall be subject to the requirements of Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Texas Food Establishments)]; (G) - (I) (No change.) (2) - (3) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Karen Ray Chief Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 229. FOOD AND DRUG The Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (DSHS), proposes amendments to Chapter 229 Food and Drug, Subchapter K, Texas Food Establishments, , concerning Certification of Food Managers in Areas Under the Department of State Health Services Permitting Jurisdiction; and , concerning Accreditation of Food Handler Education or Training Programs; Subchapter U, Permitting Retail Food Establishments, concerning Definitions; , concerning Permitting Fees and Procedures; and , concerning Minimum Standards for Permitting and Operation; Subchapter Z, Inspection Fees for Retail Food Establishments, , concerning Definitions; , concerning Minimum Standards for Permitting and Operation; and , concerning Refusal of Inspection Request; Administrative Penalties; Subchapter EE, Cottage Food Production Operation, , concerning Cottage Food Production Operations; and Subchapter FF, Farmers' Markets, , concerning Definitions; and , concerning Temperature Requirements. BACKGROUND AND PURPOSE In October 2015, DSHS updated retail food safety rules by repealing 25 TAC and (relating to Texas Food Establishments) and replacing them with Title 25, Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, rules elsewhere in Title 25, Chapter 229 (relating to Food and Drug) that incorporated the Texas Food Establishment rules by reference were not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by food establishments, cottage food production operations, and farmers' markets. This lack of authority to enforce food safety rule violations by food establishments, cottage food production operations, and farmers' markets presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , emergency rules were adopted to update , , , , , , , , and to include the rules references to Chapter 228. The emergency rules were adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rules for another 60 days. Therefore, amendments to , , , , , , , , and are proposed for the permanent adoption of the rule reference updates. The purpose of the rule amendments is to update references to the current food safety rules in food establishments, cottage food production operations, and farmers' markets, thereby allowing DSHS to enforce rules relating to food safety in order to protect the health, safety, and welfare of the public. The new rules in Chapter 228 are based on the current 2013 United States Food and Drug Administration Model Food Code, which allows the Texas food rules to be in conformity with the rest of the country. SECTION-BY-SECTION SUMMARY Subchapter K. Texas Food Establishments. The proposed amendments to (c) replace the rule reference (74) with the new rule reference to Also, the potentially hazardous foods definition was replaced with the definition of Time/Temperature Control for Safety (TCS) food--(formerly Potentially Hazardous Food (PHF)). The proposed amendments to (c) replace the rule references to with Chapter 228, Subchapter B; replaces the rule references to with Chapter 228, Subchapter C; and replaces the rule reference to with Chapter 228, Subchapter D. Subchapter U. Permitting Retail Food Establishments. The proposed amendments to (6) replace the rule reference to of this title (relating to Definitions) under the Texas Food Establishment Rules with of this title (relating to Definitions) under the Retail Food rules. The proposed amendments to (a) replace the rule references to of this title (relating to Mobile Food Establishments) with of this title (relating to Mobile Food Units). Also, (i) is amended by replacing the rule references and of this title (relating to Texas Food Establishments) with Chapter 228 of this title (relating to Retail Food). The proposed amendments to replace the rule references to and of this title (relating to Texas Food Establishments) with Chapter 228 of this title (relating to Retail Food). Subchapter Z. Inspection Fees For Retail Food Establishments. The proposed amendments to (5)(C) replace the rule reference to with Section (5)(D) is amended to replace the rule reference to of this title 42 TexReg 6306 November 10, 2017 Texas Register

61 (relating to Texas Food Establishments) with Chapter 228 of this title (relating to Retail Food). The proposed amendments to replace the rules references to and of this title (relating to Texas Food Establishments) with Chapter 228 of this title (relating to Retail Food). Also, the website for the Retail Food Establishments is updated to The proposed amendments to replace the rules references to and of this title (relating to Texas Food Establishments) with Chapter 228 of this title (relating to Retail Food). Subchapter EE. Cottage Food Production Operation. The proposed amendments to (b) replace the rule reference to with Subchapter FF. Farmers' Markets The proposed amendments to (3) replace the rule reference to with Also, (10) is amended to replace the definition of "Potentially hazardous food (time/temperature control for safety food--as defined in of this title" with "Time/Temperature Control for Safety (TCS) food--(formerly Potentially Hazardous Food)--As defined in of this title." The proposed amendments to (d) replace the rule reference to (115) with Also, (f) is amended to replace the rule reference to (c)(1)(C) of this title (relating to Specifications for Receiving Food) with of this title (relating to Specifications for Receiving). FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the sections will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the sections as proposed. GOVERNMENT GROWTH IMPACT STATEMENT DSHS has determined that during the first five years that the sections will be in effect: (1) the proposed rule amendments will not create or eliminate a government program; (2) implementation of the proposed rule amendments will not affect the number of employee positions; (3) implementation of the proposed rule amendments will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendments will not affect fees paid to the agency; (5) the proposed rule amendments will not create new rules; (6) the proposed rule amendments will not expand, limit, or repeal existing rules; (7) the proposed rule amendments will not change the number of individuals subject to the rules; and (8) the proposed rule amendments will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Jon Huss, Associate Commissioner, has determined that there will be no adverse economic effect on small businesses, microbusinesses, or rural communities. The rules do not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Huss has also determined that for each year of the first five years the rules are in effect, the public will benefit from the adoption of the rules. The anticipated public benefit will be allowing DSHS to enforce the food establishments, cottage food production operations, and farmers' markets rules relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS DSHS has determined that this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Cheryl Wilson, Interim Manager, Standards and Quality Assurance Section; Department of State Health Services, Mail Code 1987, P.O. Box , Austin, Texas ; by fax to (512) Fax; or by to Cheryl.Wilson@dshs.texas.gov within 30 days of publication of this proposal in the Texas Register. SUBCHAPTER K. TEXAS FOOD ESTABLISHMENTS 25 TAC , STATUTORY AUTHORITY The amendments are authorized by Texas Health and Safety Code, , which requires DSHS to adopt rules for granting and maintaining retail food permits in areas not regulated by counties and public health districts; Texas Health and Safety Code, , which requires DSHS to adopt rules for labeling of foods produced by cottage food production PROPOSED RULES November 10, TexReg 6307

62 operations; Texas Health and Safety Code, , which authorizes DSHS to implement rules relating to food temperature requirements and permits at farmers' markets; and Texas Government Code, , and Texas Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendments are authorized by Texas Health and Safety Code, Chapters 437 and 1001, and Texas Government Code, Chapter Certification of Food Managers in Areas Under the Department of State Health Services Permitting Jurisdiction. (a) - (b) (No change.) (c) Food manager certification exemptions. The following food establishments are exempt from the requirements in subsection (b) of this section: (1) - (2) (No change.) (3) establishments that do not prepare or handle exposed Time/Temperature Control for Safety (TCS) food--(formerly Potentially Hazardous Food (PHF)), [potentially hazardous foods] as defined in [ (74)] of this title (relating to Definitions); or (4) (No change.) (d) - (f) (No change.) Accreditation of Food Handler Education or Training Programs. (a) - (b) (No change) (c) Food handler education and training program. The department may accredit an education or training program for basic food safety. The program shall include employee knowledge, responsibilities and training as required in the Texas Food Establishment Rules (TFER). (1) Education or training course curriculum. A food handler training or education course shall include the following basic food safety principles. (A) Foodborne disease outbreak. Instruction on foodborne disease outbreak shall include the definition of foodborne disease outbreak, the causes and preventive measures, including employee reporting requirements as defined in Chapter 228, Subchapter B [ ] of this title (relating to Management and Personnel). (B) Good hygienic practices. Instruction on good hygienic practices shall include the procedures as required in Chapter 228, Subchapter B [ ] of this title. (C) Preventing contamination by employees. Instruction shall include the training as required in Chapter 228, Subchapter C [ (e)(1)(D)] of this title (relating to Food), regarding the training requirements for contact with ready to eat food with their bare hands. (D) Cross Contamination. Instruction on cross contamination shall include procedures on the prevention of cross-contamination of foods, sanitization methods and corrective actions as required in Chapter 228, Subchapter C of this title and Chapter 228, Subchapter D [ of this title and ] of this title (relating to Equipment, Utensils, and Linens). (E) Time and temperature. Instruction shall include time and temperature control of foods to limit pathogen growth or toxin production as required in Chapter 228, Subchapter C [ ] of this title. (2) - (4) (No change.) (d) - (l) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER U. PERMITTING RETAIL FOOD ESTABLISHMENTS 25 TAC The amendments are authorized by Texas Health and Safety Code, , which requires DSHS to adopt rules for granting and maintaining retail food permits in areas not regulated by counties and public health districts; Texas Health and Safety Code, , which requires DSHS to adopt rules for labeling of foods produced by cottage food production operations; Texas Health and Safety Code, , which authorizes DSHS to implement rules relating to food temperature requirements and permits at farmers' markets; and Texas Government Code, , and Texas Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendments are authorized by Texas Health and Safety Code, Chapters 437 and 1001, and Texas Government Code, Chapter Definitions. The following words and terms, when used in these sections, shall have the following meanings, unless the context clearly indicates otherwise: (1) - (5) (No change.) (6) Food establishment--an operation that stores, prepares, packages, serves, or otherwise provides food for human consumption such as: a food service establishment; retail food store; satellite or catered feeding location; catering operation if the operation provides food directly to a consumer or to a conveyance used to transport people; market; remote catered operations; conveyance used to transport people, institution; or food bank; and that relinquishes possession of food to a consumer directly, or indirectly through a delivery service such as home delivery of grocery orders or restaurant takeout orders, or delivery service that is provided by common carriers. (A) - (B) (No change.) (C) All definitions found in [ ] of this title (relating to Definitions) under the Retail Food rules [Texas Food 42 TexReg 6308 November 10, 2017 Texas Register

63 Establishment Rules] are applicable to these sections except that, for purposes of obtaining a permit and payment of fees only, the term "food establishment" does not include: (i) - (xi) (No change.) (7) - (18) (No change.) Permitting Fees and Procedures. (a) Permitting fees. (1) - (2) (No change.) (3) A person who operates a mobile food unit shall obtain a permit from the department for each mobile food unit operated. (A) Each mobile food unit shall be inspected and be in compliance with of this title (relating to Mobile Food Units) [ of this title (relating to Mobile Food Establishments)], and pay a nonrefundable permit fee before a permit is issued. If a request for inspection is not received or if the mobile food unit does not meet the minimum standards contained in of this title [ of this title (relating to Mobile Food Establishments)] within one year of paying the permit fee, a new fee shall be paid. (B) (No change.) (4) - (8) (No change.) (b) - (h) (No change.) (i) Issuance of a permit. The department may issue a permit or a renewal permit for an establishment based on compliance specified in Chapter 228 of this title (relating to Retail Food) [ and of this title (relating to Texas Food Establishments)], and payment of all fees. Copies of the permit application may be obtained from the department, 1100 West 49th Street, Austin, Texas or online at (1) - (3) (No change.) (j) Renewal of a permit. (1) (No change.) (2) The department may renew a permit if the applicant is in compliance with Chapter 228 of this title [ , and of this title], and all fees are paid. (3) (No change.) (k) - (l) (No change.) Minimum Standards for Permitting and Operation. All food establishments shall be operated in accordance with the requirements specified in Chapter 228 of this title (relating to Retail Food). [ and of this title (relating to Texas Food Establishments).] Copies may be obtained from the department, 1100 West 49th Street, Austin, Texas , or may be downloaded from the following website: The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER Z. INSPECTION FEES FOR RETAIL FOOD ESTABLISHMENTS 25 TAC , , The amendments are authorized by Texas Health and Safety Code, , which requires DSHS to adopt rules for granting and maintaining retail food permits in areas not regulated by counties and public health districts; Texas Health and Safety Code, , which requires DSHS to adopt rules for labeling of foods produced by cottage food production operations; Texas Health and Safety Code, , which authorizes DSHS to implement rules relating to food temperature requirements and permits at farmers' markets; and Texas Government Code, , and Texas Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendments are authorized by Texas Health and Safety Code, Chapters 437 and 1001, and Texas Government Code, Chapter Definitions. The following words and terms, when used in these sections, shall have the following meanings, unless the context clearly indicates otherwise: (1) - (4) (No change.) (5) Food establishment-- (A) - (B) (No change.) (C) Food establishment does not include: (i) - (v) (No change.) (vi) a Bed and Breakfast Limited facility as defined in [ ] of this title (relating to Definitions); or (vii) (No change.) (D) All definitions found in Chapter 228 of this title (relating to Retail Food) [ of this title under the Texas Food Establishment Rules] are applicable to these sections except that, for purposes of inspection or payment of inspection fees only, the term "food establishment" does not include: (i) - (vi) (No change.) (6) - (15) (No change.) Minimum Standards for Permitting and Operation. All food establishments shall be operated in accordance with the requirements specified in Chapter 228 of this title (relating to Retail Food). [ and of this title (relating to Texas Food Establishments).] Copies may be obtained from the department, 1100 West 49th Street, Austin, Texas , or may be downloaded from the following website: [ PROPOSED RULES November 10, TexReg 6309

64 Refusal of Inspection Request; Administrative Penalties. (a) - (b) (No change.) (c) Administrative penalties. Administrative penalties, as provided in the Health and Safety Code, , and in of this title (relating to Assessment of Administrative Penalties), may be assessed for violation of these sections or requirements specified in Chapter 228 of this title (relating to Retail Food). [ , and of this title (relating to Texas Food Establishments).] The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER EE. COTTAGE FOOD PRODUCTION OPERATION 25 TAC The amendment is authorized by Texas Health and Safety Code, , which requires DSHS to adopt rules for granting and maintaining retail food permits in areas not regulated by counties and public health districts; Texas Health and Safety Code, , which requires DSHS to adopt rules for labeling of foods produced by cottage food production operations; Texas Health and Safety Code, , which authorizes DSHS to implement rules relating to food temperature requirements and permits at farmers' markets; and Texas Government Code, , and Texas Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendment is authorized by Texas Health and Safety Code, Chapters 437 and 1001, and Texas Government Code, Chapter Cottage Food Production Operations. (a) (No change.) (b) Definitions. The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise. (1) - (6) (No change.) (7) Food establishment-- (A) - (B) (No change.) (C) Food establishment does not include: (i) - (v) (No change.) (vi) a Bed and Breakfast Limited establishment as defined in [ ] of this title (relating to Definitions) concerning food establishments; (vii) - (viii) (No change.) (8) - (11) (No change.) (c) - (h) (No change.) The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER FF. FARMERS' MARKETS 25 TAC , The amendments are authorized by Texas Health and Safety Code, , which requires DSHS to adopt rules for granting and maintaining retail food permits in areas not regulated by counties and public health districts; Texas Health and Safety Code, , which requires DSHS to adopt rules for labeling of foods produced by cottage food production operations; Texas Health and Safety Code, , which authorizes DSHS to implement rules relating to food temperature requirements and permits at farmers' markets; and Texas Government Code, , and Texas Health and Safety Code, , which authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendments are authorized by Texas Health and Safety Code, Chapters 437 and 1001, and Texas Government Code, Chapter Definitions. The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise. (1) - (2) (No change.) (3) Fish--As defined in [ ] of this title (relating to Definitions). (4) - (9) (No change.) (10) Time/Temperature Control for Safety (TCS) food--(formerly Potentially Hazardous Food) [Potentially hazardous food (time/temperature control for safety food)]--as defined in [ ] of this title Temperature Requirements. (a) - (c) (No change.) (d) Cooking of raw animal foods. Raw animal foods shall be cooked to heat all parts of the food to the following temperatures: 42 TexReg 6310 November 10, 2017 Texas Register

65 (1) - (4) (No change.) (5) a raw or undercooked whole-muscle, intact beef steak may be served if: (A) the steak is labeled to indicate that it meets the definition of "whole-muscle, intact beef" as defined in [ (115)] of this title (relating to Definitions); or (B) (No change.) (6) (No change.) (e) (No change.) (f) Eggs. A farmer or egg producer that sells eggs directly to the consumer at a farm or farmers' market shall maintain the eggs at an ambient air temperature of 7 degrees Celsius (45 degrees Fahrenheit) as specified in [ (c)(1)(C)] of this title (relating to Specifications for Receiving [Food]). The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 265. GENERAL SANITATION SUBCHAPTER B. TEXAS YOUTH CAMPS SAFETY AND HEALTH 25 TAC The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (DSHS), proposes an amendment to , concerning Site and Physical Facilities. BACKGROUND AND PURPOSE In October 2015, DSHS updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with Title 25, Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, the rule in Title 25, Chapter 265, Subchapter B (relating to Texas Youth Camps Safety and Health) that incorporated the Texas Food Establishment rules by reference was not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by youth camps. This lack of authority to enforce food safety rule violations by youth camps presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , an emergency rule was adopted to update to include the rules references to Chapter 228. The emergency rule was adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rule for another 60 days. Therefore, the amendment to is proposed for the permanent adoption of the rule reference update. The purpose of the rule amendment is to update the reference to the current food safety rules in the youth camp rule, thereby allowing DSHS to enforce the youth camp rule relating to food safety in order to protect the health, safety, and welfare of the public, and to refer to a playground safety handbook that contains updated safety standards. SECTION-BY-SECTION SUMMARY The proposed amendment to (t) replaces the rule references to Chapter 229, Subchapter K, et seq., of this title (relating to Texas Food Establishments), with the new rules reference to Chapter 228 of this title (relating to Retail Food). Section (u) is also amended to refer to the most recent version of the "Public Playground Safety Handbook" publication concerning the standards for playgrounds and playground equipment. FISCAL NOTE Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the section will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the section as proposed. GOVERNMENT GROWTH IMPACT STATEMENT DSHS has determined that during the first five years that the section will be in effect: (1) the proposed rule amendment will not create or eliminate a government program; (2) implementation of the proposed rule amendment will not affect the number of employee positions; (3) implementation of the proposed rule amendment will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendment will not affect fees paid to the agency; (5) the proposed rule amendment will not create a new rule; (6) the proposed rule amendment will not expand, limit, or repeal an existing rule; (7) the proposed rule amendment will not change the number of individuals subject to the rule; and (8) the proposed rule amendment will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Jon Huss, Associate Commissioner, has determined that there will be no adverse economic effect on small businesses, microbusinesses, or rural communities. The rule does not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rule. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS PROPOSED RULES November 10, TexReg 6311

66 Texas Government Code, does not apply to this rule because the rule is necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Huss has determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be allowing DSHS to enforce the youth camp rule relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS DSHS has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Cheryl Wilson, Interim Manager, Standards and Quality Assurance Section; Department of State Health Services, Mail Code 1987, P.O. Box , Austin, Texas ; by fax to (512) Fax; or by to Cheryl.Wilson@dshs.texas.gov within 30 days of publication of this proposal in the Texas Register. STATUTORY AUTHORITY Texas Health and Safety Code, , requires DSHS to establish health and safety standards for youth camps. Texas Government Code, , and Texas Health and Safety Code, , authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendment is authorized by Texas Health and Safety Code, Chapters 141 and 1001; and Texas Government Code, Chapter Site and Physical Facilities. (a) - (s) (No change.) (t) Permanent food preparation, storage and service areas. Permanent food preparation, storage and service areas shall be maintained in compliance with Chapter 228 of this title (relating to Retail Food) [229, Subchapter K, et seq., of this title (relating to Texas Food Establishments), as amended]. Items inspected may include, but are not limited to: (1) - (26) (No change.) (u) Playgrounds and equipment. Playgrounds and playground equipment shall meet the standards set forth in the U.S. Consumer Product Safety Commission Publication Number 325, "Public Playground Safety Handbook," November 2010 ["Handbook for Public Playground Safety," April 2008 ( SCPUB/PUBS/325.pdf) as amended]. Equipment that does not meet these standards may not be used by campers. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 295. OCCUPATIONAL HEALTH SUBCHAPTER G. SANITATION AT TEMPORARY PLACES OF EMPLOYMENT 25 TAC The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (DSHS), proposes an amendment to , concerning Standards for Food Service. BACKGROUND AND PURPOSE In October 2015, DSHS updated retail food safety rules by repealing 25 TAC (relating to Texas Food Establishments) and replacing them with Title 25, Chapter 228 (relating to Retail Food). When these rules were repealed and replaced, the rule in Title 25, Chapter 295, Subchapter G (relating to Sanitation at Temporary Places of Employment) that incorporated the Texas Food Establishment rules by reference was not updated to refer to the new rules in Chapter 228. Consequently, DSHS was unable to enforce violations of food safety rules by temporary places of employment. This lack of authority to enforce food safety rule violations by temporary places of employment presented a peril to the health, safety, and welfare of the public. Under Texas Government Code, , an emergency rule was adopted to update to include the rules references to Chapter 228. The emergency rule was adopted on August 24, 2017, and will expire on December 21, 2017, with an option to extend the rule for another 60 days. Therefore, the amendment to is proposed for the permanent adoption of the rule reference update. The purpose of the rule amendment is to update the reference to the current food safety rules in the temporary places of employment rule, thereby allowing DSHS to enforce the temporary places of employment rule relating to food safety in order to protect the health, safety, and welfare of the public. SECTION-BY-SECTION SUMMARY The proposed amendment to replaces the rules reference to of this title (relating to Food Service Sanitation), with the new rules reference to Chapter 228 of this title (relating to Retail Food). FISCAL NOTE 42 TexReg 6312 November 10, 2017 Texas Register

67 Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the section will be in effect, there will be no fiscal implications to state or local governments as a result of enforcing and administering the section as proposed. GOVERNMENT GROWTH IMPACT STATEMENT DSHS has determined that during the first five years that the section will be in effect: (1) the proposed rule amendment will not create or eliminate a government program; (2) implementation of the proposed rule amendment will not affect the number of employee positions; (3) implementation of the proposed rule amendment will not require an increase or decrease in future legislative appropriations; (4) the proposed rule amendment will not affect fees paid to the agency; (5) the proposed rule amendment will not create a new rule; (6) the proposed rule amendment will not expand, limit, or repeal an existing rule; (7) the proposed rule amendment will not change the number of individuals subject to the rule; and (8) the proposed rule amendment will not affect the state's economy. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT ANALYSIS Jon Huss, Associate Commissioner, has determined that there will be no adverse economic effect on small businesses, microbusinesses, or rural communities. The rule does not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rule. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. COSTS TO REGULATED PERSONS Texas Government Code, does not apply to this rule because the rule is necessary to protect the health, safety, and welfare of the residents of Texas. PUBLIC BENEFIT Mr. Huss has also determined that for each year of the first five years the rule is in effect, the public will benefit from the adoption of the rule. The anticipated public benefit will be allowing DSHS to enforce the temporary places of employment rule relating to food safety in order to protect the health, safety, and welfare of the public. REGULATORY ANALYSIS HHSC has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Written comments on the proposal may be submitted to Cheryl Wilson, Interim Manager, Standards and Quality Assurance Section; Department of State Health Services, Mail Code 1987, P.O. Box , Austin, Texas ; by fax to (512) Fax; or by to Cheryl.Wilson@dshs.texas.gov within 30 days of publication of this proposal in the Texas Register. STATUTORY AUTHORITY Texas Health and Safety Code, , authorizes HHSC to establish standards and procedures for the management and control of sanitation and for health protection measures. Texas Government Code, , and Texas Health and Safety Code, , authorize the Executive Commissioner of HHSC to adopt rules and policies necessary for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter The amendment is authorized by Texas Health and Safety Code, Chapters 341 and 1001; and Texas Government Code, Chapter Standards for Food Service. The preparation, storage, and dispensing of food at any temporary place of employment shall be accomplished according to Chapter 228 of this title (relating to Retail Food) [ of this title (relating to Food Service Sanitation)] as administered by the health authority having local jurisdiction. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Barbara L. Klein Interim General Counsel Department of State Health Services Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 28. INSURANCE PART 1. TEXAS DEPARTMENT OF INSURANCE CHAPTER 1. GENERAL ADMINISTRATION SUBCHAPTER C. ASSESSMENT OF MAINTENANCE TAXES AND FEES PROPOSED RULES November 10, TexReg 6313

68 28 TAC INTRODUCTION. The Texas Department of Insurance proposes amendments to 28 Texas Administrative Code 1.414, concerning the 2018 assessment of maintenance taxes and fees imposed by the Insurance Code. The proposed amendments are necessary to adjust the rates of assessment for maintenance taxes and fees for 2018 on the basis of gross premium receipts for calendar year EXPLANATION. Section includes rates of assessment to be applied to life, accident, and health insurance; motor vehicle insurance; casualty insurance and fidelity, guaranty, and surety bonds; fire insurance and allied lines, including inland marine; workers' compensation insurance; workers' compensation self-insured groups; title insurance; health maintenance organizations (HMOs); third party administrators; nonprofit legal services corporations issuing prepaid legal services contracts; and workers' compensation certified self-insurers. The department proposes an amendment to the section heading to reflect the year for which the proposed assessment of maintenance taxes and fees is applicable. The department also proposes amendments in subsections (a) - (f), and (h) to reflect the appropriate year for accurate application of the section. The department proposes amendments in subsections (a)(1) - (9), (c)(1) - (3), (d), (e), and (f) to update rates to reflect the methodology the department developed for The following paragraphs provide an explanation of the methodology used to determine proposed rates of assessment for maintenance taxes and fees for 2018: In general, the department's 2018 revenue need (the amount that must be funded by maintenance taxes or fees; examination overhead assessments; the department's self-directed budget account, as established under Insurance Code ; and premium finance examination assessments) is determined by calculating the department's total cost need, and subtracting from that number funds resulting from fee revenue and funds remaining from fiscal year To determine total cost need, the department combined costs from the following: (i) appropriations set out in Chapter 605 (SB 1), Acts of the 85th Legislature, Regular Session, 2017 (the General Appropriations Act), which come from two funds, the General Revenue Dedicated - Texas Department of Insurance Operating Account No (Account No. 0036) and the General Revenue Fund - Insurance Companies Maintenance Tax and Insurance Department Fees; (ii) funds allowed by Insurance Code Chapter 401, Subchapters D and F, as approved by the commissioner for the self-directed budget account in the Treasury Safekeeping Trust Company to be used exclusively to pay examination costs associated with salary, travel, or other personnel expenses and administrative support costs; (iii) an estimate of other costs statutorily required to be paid from those two funds and the self-directed budget account, such as fringe benefits and statewide allocated costs; and (iv) an estimate of the cash amount necessary to finance both funds and the self-directed budget account from the end of the 2018 fiscal year until the next assessment collection period in From these combined costs, the department subtracted costs allocated to the Division of Workers' Compensation (DWC) and the workers' compensation research and evaluation group. The department determined how to allocate the remaining cost need to be attributed to each funding source using the following method: For each section within the department that provides services directly to the public or the insurance industry, the department allocated the costs for providing those direct services on a percentage basis to each funding source, such as the maintenance tax or fee line, the premium finance assessment, the self-directed budget account, the examination assessment, or another funding source. The department applied these percentages to each section's annual budget to determine the total direct cost to each funding source. The department calculated the percentage for each funding source by dividing the total directly allocated to each funding source by the total direct cost. The department used this percentage to allocate administrative support costs to each funding source. Examples of administrative support costs include services provided by human resources, accounting, budget, the commissioner's administration, and information technology. The department calculated the total direct costs and administrative support costs for each funding source. The General Appropriations Act includes appropriations to state agencies other than the department that must be funded by Account No and the General Revenue Fund - Insurance Companies Maintenance Tax and Insurance Department Fees. The department adds these costs to the sum of the direct costs and the administrative support costs for the appropriate funding source, when possible. For instance, the department allocates an appropriation to the Texas Department of Transportation for the crash information records system to the motor vehicle maintenance tax. The department includes costs for other agencies that cannot be directly allocated to a funding source to the administrative support costs. For instance, the department includes an appropriation to the Texas Facilities Commission for building support costs in administrative support costs. The department calculates the total revenue need after completing the allocation of costs to each funding source. To complete the calculation of revenue need, the department removes costs, revenues received, and fund balance related to the self-directed budget account. Based on remaining balances, the department reduces the total cost need by subtracting the estimated ending fund balance for fiscal year 2017 (August 31, 2017) and estimated fee revenue collections for fiscal year The resulting balance is the estimated revenue need that must be supported during the 2018 fiscal year by the following funding sources: the maintenance taxes or fees, exam overhead assessments, and premium finance assessments. The department determines the revenue need for each maintenance tax or fee line by dividing the total cost need for each maintenance tax line by the total of the revenue needs for all maintenance taxes. The department multiplies the calculated percentage for each line by the total revenue need for maintenance taxes. The resulting amount is the revenue need for each maintenance tax line. The department adjusts the revenue need by subtracting the estimated amount of fee and reimbursement revenue collected for each maintenance tax or fee line from the total of the revenue need for each maintenance tax or fee line. The department further adjusts the resulting revenue need as described below. The cost allocated to the life, accident, and health maintenance tax exceeds the amount of revenue that can be collected at the maximum rate set by statute. The department allocates the difference between the amount estimated to be collected at the 42 TexReg 6314 November 10, 2017 Texas Register

69 maximum rate and the costs allocated to the life, accident, and health maintenance tax to the other maintenance tax or fee lines. The department allocates the life, accident, and health shortfall based on each of the remaining maintenance tax or fee lines a proportionate share of the total costs for maintenance taxes or fees. The department uses the adjusted revenue need as the basis for calculating the maintenance tax rates. For each line of insurance, the department divides the adjusted revenue need by the estimated premium volume or assessment base to determine the rate of assessment for each maintenance tax or fee. The following paragraphs provide an explanation of the methodology to develop the proposed rates for DWC and the Office of Injured Employee Counsel (OIEC). To determine the revenue need, the department considered the following factors applicable to costs for DWC and OIEC: (i) the appropriations in the General Appropriations Act for fiscal year 2018 from Account No. 0036; (ii) estimated other costs statutorily required to be paid from Account No. 0036, such as fringe benefits; and (iii) an estimated cash amount to finance Account No costs from the end of the 2018 fiscal year until the next assessment collection period in The department adds these three factors to determine the total revenue need. The department reduces the total revenue need by subtracting the estimated fund balance at August 31, 2017, and the DWC fee and reimbursement revenue estimate to be collected and deposited to Account No in fiscal year The resulting balance is the estimated revenue need from maintenance taxes. The department calculated the maintenance tax rate by dividing the estimated revenue need by the combined estimated workers' compensation premium volume and the certified self-insurers' liabilities plus the amount of expense incurred for administration of self-insurance. The following paragraphs provide an explanation of the methodology the department used to develop the proposed rates for the workers' compensation research and evaluation group. To determine the revenue need, the department considered the following factors that are applicable to the workers' compensation and research and evaluation group: (i) the appropriations in the General Appropriations Act for fiscal year 2018 from Account No and from the General Revenue Fund - Insurance Companies Maintenance Tax and Insurance Department Fees; (ii) estimated other costs statutorily required to be paid from this funding source, such as fringe benefits; and (iii) an estimated cash amount to finance costs from this funding source from the end of the 2018 fiscal year until the next assessment collection period in The department adds these three factors to determine the total revenue need. The department reduced the total revenue need by subtracting the estimated fund balance at August 31, The resulting balance is the estimated revenue need from maintenance taxes. The department calculated the maintenance tax rate by dividing the estimated revenue need by the estimated assessment base. Insurance Code provides that a captive insurance company is subject to maintenance tax under Subtitle C, Title 3, on the correctly reported gross premiums from writing insurance on risks located in Texas as applicable to the individual lines of business written. The rates proposed in this rule will be applied to captive insurance companies based on the individual lines of business written, unless the commissioner postpones or waives the tax for a period not to exceed two years for any foreign or alien captive insurance company redomesticating to Texas under Insurance Code (c). FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATE- MENT. Joe Meyer, assistant chief financial officer, has determined that for each year of the first five years the proposal will be in effect, the expected fiscal impact on state government is an estimated income of $148,011,657 to the state's general revenue fund. There will be no fiscal implications for local government as a result of enforcing or administering the proposed section, and there will be no effect on local employment or local economy. PUBLIC BENEFIT AND COST NOTE. Mr. Meyer also has determined that for each year of the first five years the amended section is in effect, the public benefit expected as a result of enforcing the section will be the collection of maintenance tax and fee assessments. The cost in 2018 to an insurer that received premiums in 2017 will be: for motor vehicle insurance,.052 of 1 percent of those gross premiums; for casualty insurance and fidelity, guaranty, and surety bonds,.071 of 1 percent of those gross premiums; for fire insurance and allied lines, including inland marine,.345 of 1 percent of those gross premiums; for workers' compensation insurance,.069 of 1 percent of those gross premiums; and for title insurance,.090 of 1 percent of those gross premiums. An insurer that receives premiums for workers' compensation insurance in 2017 will also pay 2.0 percent of that premium for the operation of DWC and OIEC and.054 of 1 percent of that premium to fund the Workers' Compensation Research and Evaluation Group's activities. A workers' compensation self-insurance group will pay 2.0 percent of its 2017 gross premium for the group's retention under Labor Code 407A.301 and.069 of 1 percent of its 2017 gross premium for the group's retention under Labor Code 407A.302. The cost in 2018 for an insurer that received premiums in 2017 for life, health, and accident insurance, will be.040 of 1 percent of those gross premiums. In 2018, an HMO will pay $.24 per enrollee if it is a single service HMO or a limited service HMO, and $.72 per enrollee if it is a multiservice HMO. In 2018, a third party administrator will pay.011 of 1 percent of its correctly reported gross amount of administrative or service fees received in In 2018, for a nonprofit legal services corporation issuing prepaid legal services contracts, the cost will be.011 of 1 percent of correctly reported gross revenues for In 2018, to fund the Workers' Compensation Research and Evaluation Group's activities, a workers' compensation certified selfinsurer will pay.054 of 1 percent of the tax base calculated under Labor Code (b), and a workers' compensation self-insurance group will pay.054 of 1 percent of the tax base calculated under Labor Code 407A.301(c). Finally, in 2018, a workers' compensation certified self-insurer will pay 2.0 percent of the tax base calculated under Labor Code (b). Except for workers' compensation certified self-insurers, there are two components of costs for entities required to comply with the proposal: the cost to gather the information, calculate the assessment, and complete the required forms; and the cost of the maintenance tax or fee. Typically, a person familiar with the accounting records of the company and accounting practices in general will perform the activities necessary to comply with the section. These persons are similarly compensated between $26 PROPOSED RULES November 10, TexReg 6315

70 and $44 an hour. The actual time necessary to complete the form will vary depending on the number of lines of insurance written by the company. For a company that writes only one line of business subject to the tax, the department estimates it will take two hours to complete the form. If a company writes all the lines subject to the tax, the department estimates it will take six hours to complete the form. In the case of a certified self-insurer, DWC will calculate the maintenance tax and bill the certified self-insurer. The requirement to pay the maintenance tax or fee is the result of the legislative enactment of the statutes that impose the maintenance tax or fee and is not a result of the adoption or enforcement of this proposal. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. As required by Government Code (c), the department has determined the proposal may have an adverse economic effect on approximately 117 insurance companies and HMOs and approximately 541 third party administrators that are small or micro businesses required to comply with the proposed rules. Adverse economic impact may result from the costs of the maintenance taxes and fees. The cost of compliance will not vary between large businesses and small or micro businesses, and the department's cost analysis and resulting estimated costs in the public benefit and cost note portion of this proposal is equally applicable to small or micro businesses. The total cost of compliance to large businesses and small or micro businesses does not depend on the size of the business. For insurers in the following lines of insurance, the cost of compliance depends on the amount of gross premiums in 2017: motor vehicle insurance; casualty insurance and fidelity, guaranty, and surety bonds; fire insurance and allied lines, including inland marine; workers' compensation insurance; title insurance; and life, health, and accident insurance. For annuity and endowment contracts, the cost of compliance depends on the amount of gross considerations in For HMOs, the cost of compliance depends on the number of enrollees in For third party administrators, the cost of compliance depends on the amount of correctly reported gross administrative or service fees in For nonprofit legal services corporations issuing prepaid legal services contracts, the cost of compliance depends on the correctly reported gross revenues. For workers' compensation certified self-insurers and workers' compensation certified self-insurance groups, the cost of compliance depends on the tax base calculated under Labor Code (b). In accordance with Government Code (c-1), the department considered other regulatory methods to accomplish the objectives of the proposal that will also minimize any adverse impact on small and micro businesses. The primary objective of the proposal is to provide the rates of assessment for maintenance taxes and fees for 2018 to be applied to life, accident, and health insurance; motor vehicle insurance; casualty insurance and fidelity, guaranty and surety bonds; fire insurance and allied lines, including inland marine; workers' compensation insurance; workers' compensation selfinsured groups; title insurance; HMOs; third party administrators; nonprofit legal services corporations issuing prepaid legal services contracts; and workers' compensation certified self-insurers. The other regulatory methods considered by the department to accomplish the objectives of the proposal and to minimize any adverse impact on small and micro businesses include: (i) not adopting the proposed rule, (ii) adopting different tax rates for small and micro businesses, and (iii) exempting small and micro businesses from the tax requirements. Not adopting the proposed rule. Under Insurance Code , if the commissioner does not advise the comptroller of the applicable maintenance tax assessment rates, the comptroller must assess taxes based on the previous year's assessment. Use of the previous year's rates and the estimated assessment bases for 2017, the department estimates revenue collections would be less than amounts needed by approximately $5.1 million. If no rule is adopted the department would collect insufficient revenue to fund the department's costs. The department has rejected this option. Adopting different taxes for small and micro businesses. The current methodology is already the most equitable methodology the department can develop. The department applies an assessment methodology that contemplates a smaller assessment for small or micro businesses because the assessment is determined based on number of enrollees, gross premiums, or gross amount of administrative or service fees. The department anticipates that a small or micro business that would be most susceptible to economic harm would be one that has fewer enrollees, lower gross premiums, or a lower gross amount of administrative or service fees. However, based on the proposed rule, a small or micro business would pay a smaller assessment, and would reduce its risk of economic harm. The department has rejected this option. Exemption of small and micro businesses from the tax requirements. As noted above, the current methodology is already the most equitable methodology the department can develop. The tax methodology currently used contemplates a small business paying lower maintenance taxes because assessments are based on number of enrollees, gross premiums, or gross amount of administrative or service fees. A small or micro business that has fewer enrollees, has lower gross premiums, or receives fewer gross administrative or service fees would be assessed lower taxes. If the assessment were completely eliminated for small or micro businesses, the department would need to completely revise its calculations to shift costs to other insurers and entities, which would result in a less balanced methodology. The department has rejected this option. The department, after considering the purpose of the authorizing statutes, does not believe it is legal or feasible to waive or modify the requirements of the proposal for small and micro businesses. The department has determined that the proposal will not have an adverse economic effect on rural communities because maintenance taxes and fees are not collected from rural communities. As a result, and in accordance with Government Code (c), it is not necessary for the department to address rural communities in its regulatory flexibility analysis. EXAMINATION OF COSTS UNDER GOVERNMENT CODE The department has determined that the proposed amendments do impose a possible cost on regulated persons. However, no additional rule amendments or repeals are required under Government Code because the proposed amendments are necessary to implement legislation. Insurance Code (a)(1), (b), and (c); (a), (d), and (e); ; ; ; ; ; ; ; ; ; ; and ; and Labor Code , , , (a) - (c), , (b), 42 TexReg 6316 November 10, 2017 Texas Register

71 407A.301, and 407A.302 direct the department to annually impose maintenance taxes and fees on each authorized insurer and the proposed amendments are necessary to comply with this requirement. TAKINGS IMPACT ASSESSMENT. The department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code REQUEST FOR PUBLIC COMMENT. Submit any written comments on the proposal no later than 5:00 p.m., Central time, on December 11, 2017, by mail to the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, P.O. Box , Austin, Texas ; or by to chiefclerk@tdi.texas.gov. Simultaneously submit an additional copy of the comments to the Texas Department of Insurance, Joe Meyer, Assistant Chief Financial Officer, Financial Services, Mail Code 108-3A, P.O. Box , Austin, Texas ; or by to joe.meyer@tdi.texas.gov. Separately submit any request for a public hearing to the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, P.O. Box , Austin, Texas , before the close of the public comment period. If the department holds a hearing, the department will consider written and oral comments presented at the hearing. STATUTORY AUTHORITY. The amendments are proposed under Insurance Code (a)(1), (b), and (c); (a), (d), and (e); ; ; ; ; ; ; ; ; ; ; ; and ; and Labor Code , , , (a) - (c), , (b), 407A.301, and 407A.302. Insurance Code (a)(1) states that the Texas Department of Insurance operating account is an account in the general revenue fund, and that the account includes taxes and fees received by the commissioner or comptroller that are required by the Insurance Code to be deposited to the credit of the account. Section (b) states that the commissioner administer money in the Texas Department of Insurance operating account and may spend money from the account in accordance with state law, rules adopted by the commissioner, and the General Appropriations Act. Section (c) states that money deposited to the credit of the Texas Department of Insurance operating account may be used for any purpose for which money in the account is authorized to be used by law. Insurance Code (a) requires the department to reimburse the appropriate portion of the general revenue fund for the amount of expenses incurred by the comptroller in administering taxes imposed under the Insurance Code or another insurance law of Texas. Section (d) provides that in setting maintenance taxes for each fiscal year, the commissioner ensure that the amount of taxes imposed is sufficient to fully reimburse the appropriate portion of the general revenue fund for the amount of expenses incurred by the comptroller in administering taxes imposed under the Insurance Code or another insurance law of Texas. Section (e) provides that if the amount of maintenance taxes collected is not sufficient to reimburse the appropriate portion of the general revenue fund for the amount of expenses incurred by the comptroller, other money in the Texas Department of Insurance operating account be used to reimburse the appropriate portion of the general revenue fund. Insurance Code directs the commissioner to annually determine the rate of assessment of each maintenance tax imposed under Insurance Code Title 3, Subtitle C. Insurance Code imposes a maintenance tax on each authorized insurer with gross premiums subject to taxation under Insurance Code Insurance Code also specifies that the tax required by Insurance Code Chapter 252 is in addition to other taxes imposed that are not in conflict with Insurance Code Chapter 252. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 1.25 percent of the gross premiums subject to taxation under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating all classes of insurance specified under: Insurance Code Chapters 1807, , 2171, 6001, 6002, and 6003; Chapter 5, Subchapter C; Chapter 544, Subchapter H; Chapter 1806, Subchapter D; and ; Government Code , , and ; and Occupations Code Chapter Insurance Code specifies that an insurer must pay maintenance taxes under Insurance Code Chapter 252 on the correctly reported gross premiums from writing insurance in Texas against loss or damage by: bombardment; civil war or commotion; cyclone; earthquake; excess or deficiency of moisture; explosion as defined by Insurance Code (b); fire; flood; frost and freeze; hail, including loss by hail on farm crops; insurrection; invasion; lightning; military or usurped power; an order of a civil authority made to prevent the spread of a conflagration, epidemic, or catastrophe; rain; riot; the rising of the waters of the ocean or its tributaries; smoke or smudge; strike or lockout; tornado; vandalism or malicious mischief; volcanic eruption; water or other fluid or substance resulting from the breakage or leakage of sprinklers, pumps, or other apparatus erected for extinguishing fires, water pipes, or other conduits or containers; weather or climatic conditions; windstorm; an event covered under a home warranty insurance policy; or an event covered under an inland marine insurance policy. Insurance Code imposes a maintenance tax on each authorized insurer with gross premiums subject to taxation under Insurance Code Section also provides that the tax required by Insurance Code Chapter 253 is in addition to other taxes imposed that are not in conflict with Insurance Code Chapter 253. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 0.4 percent of the gross premiums subject to taxation under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating all classes of insurance specified under Insurance Code Insurance Code specifies that an insurer must pay maintenance taxes under Insurance Code Chapter 253 on the PROPOSED RULES November 10, TexReg 6317

72 correctly reported gross premiums from writing a class of insurance specified under Insurance Code Chapters 2008, 2251, and 2252; Chapter 5, Subchapter B; Chapter 1806, Subchapter C; Chapter 2301, Subchapter A; and Title 10, Subtitle B. Insurance Code imposes a maintenance tax on each authorized insurer with gross premiums subject to taxation under Insurance Code Section also provides that the tax required by Insurance Code Chapter 254 is in addition to other taxes imposed that are not in conflict with Insurance Code Chapter 254. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 0.2 percent of the gross premiums subject to taxation under Insurance Code Section also provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating motor vehicle insurance. Insurance Code specifies that an insurer must pay maintenance taxes under Insurance Code Chapter 254 on the correctly reported gross premiums from writing motor vehicle insurance in Texas, including personal and commercial automobile insurance. Insurance Code imposes a maintenance tax on each authorized insurer with gross premiums subject to taxation under Insurance Code , including a stock insurance company, mutual insurance company, reciprocal or interinsurance exchange, and Lloyd's plan. Section also provides that the tax required by Insurance Code Chapter 255 is in addition to other taxes imposed that are not in conflict with Insurance Code Chapter 255. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 0.6 percent of the gross premiums subject to taxation under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating workers' compensation insurance. Insurance Code specifies that an insurer must pay maintenance taxes under Insurance Code Chapter 255 on the correctly reported gross premiums from writing workers' compensation insurance in Texas, including the modified annual premium of a policyholder that purchases an optional deductible plan under Insurance Code Chapter 2053, Subchapter E. The section also provides that the rate of assessment be applied to the modified annual premium before application of a deductible premium credit. Insurance Code (a) imposes a maintenance tax on each authorized insurer, including a group hospital service corporation, managed care organization, local mutual aid association, statewide mutual assessment company, stipulated premium company, and stock or mutual insurance company, that collects from residents of this state gross premiums or gross considerations subject to taxation under Insurance Code Section (a) also provides that the tax required by Chapter 257 is in addition to other taxes imposed that are not in conflict with Insurance Code Chapter 257. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 0.04 percent of the gross premiums subject to taxation under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating life, health, and accident insurers. Insurance Code specifies that an insurer must pay maintenance taxes under Insurance Code Chapter 257 on the correctly reported gross premiums collected from writing life, health, and accident insurance in Texas, as well as gross considerations collected from writing annuity or endowment contracts in Texas. The section also provides that gross premiums on which an assessment is based under Insurance Code Chapter 257 may not include premiums received from the United States for insurance contracted for by the United States in accordance with or in furtherance of Title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.) and its subsequent amendments; or premiums paid on group health, accident, and life policies in which the group covered by the policy consists of a single nonprofit trust established to provide coverage primarily for employees of a municipality, county, or hospital district in this state; or a county or municipal hospital, without regard to whether the employees are employees of the county or municipality or of an entity operating the hospital on behalf of the county or municipality. Insurance Code imposes a per capita maintenance tax on each authorized HMO with gross revenues subject to taxation under Insurance Code Section also provides that the tax required by Insurance Code Chapter 258 is in addition to other taxes that are not in conflict with Insurance Code Chapter 258. Insurance Code provides that the rate of assessment set by the commissioner on HMOs may not exceed $2 per enrollee. Section also provides that the commissioner annually adjust the rate of assessment of the per capita maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating HMOs. Section also provides that rate of assessment may differ between basic health care plans, limited health care service plans, and single health care service plans and must equitably reflect any differences in regulatory resources attributable to each type of plan. Insurance Code provides that an HMO must pay per capita maintenance taxes under Insurance Code Chapter 258 on the correctly reported gross revenues collected from issuing health maintenance certificates or contracts in Texas. Section also provides that the amount of maintenance tax assessed may not be computed based on enrollees who, as individual certificate holders or their dependents, are covered by a master group policy paid for by revenues received from the United States for insurance contracted for by the United States in accord with or in furtherance of Title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.) and its subsequent amendments; revenues paid on group health, accident, and life certificates or contracts in which the group covered by the certificate or contract consists of a single nonprofit trust established to provide coverage primarily for employees of a municipality, county, or hospital district in this state; or a county or municipal hospital, 42 TexReg 6318 November 10, 2017 Texas Register

73 without regard to whether the employees are employees of the county or municipality or of an entity operating the hospital on behalf of the county or municipality. Insurance Code imposes a maintenance tax on each authorized third party administrator with administrative or service fees subject to taxation under Insurance Code Section also provides that the tax required by Insurance Code Chapter 259 is in addition to other taxes imposed that are not in conflict with the chapter. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 1 percent of the administrative or service fees subject to taxation under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses of regulating third party administrators. Insurance Code requires a third party administrator to pay maintenance taxes under Chapter 259 on the administrator's correctly reported administrative or service fees. Insurance Code imposes a maintenance tax on each nonprofit legal services corporation subject to Insurance Code Chapter 961 with gross revenues subject to taxation under Insurance Code Section also provides that the tax required by Insurance Code Chapter 260 is in addition to other taxes imposed that are not in conflict with the chapter. Insurance Code provides that the rate of assessment set by the commissioner may not exceed 1 percent of the corporation's gross revenues subject to taxation under Insurance Code Section also provides that the commissioner annually adjust the rate of assessment of the maintenance tax so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating nonprofit legal services corporations. Insurance Code provides that a nonprofit legal services corporation must pay maintenance taxes under this chapter on the correctly reported gross revenues received from issuing prepaid legal services contracts in this state. Insurance Code imposes a maintenance fee on all premiums subject to assessment under Insurance Code Section also specifies that the maintenance fee is not a tax and must be reported and paid separately from premium and retaliatory taxes. Insurance Code specifies that the maintenance fee is included in the division of premiums and may not be separately charged to a title insurance agent. Insurance Code provides that the commissioner annually determine the rate of assessment of the title insurance maintenance fee. Section (b) provides that in determining the rate of assessment, the commissioner consider the requirement to reimburse the appropriate portion of the general revenue fund under Insurance Code Insurance Code provides that rate of assessment set by the commissioner may not exceed 1 percent of the gross premiums subject to assessment under Insurance Code Section (b) provides that the commissioner annually adjust the rate of assessment of the maintenance fee so that the fee imposed that year, together with any unexpended funds produced by the fee, produces the amount the commissioner determines is necessary to pay the expenses during the succeeding year of regulating title insurance. Insurance Code requires an insurer to pay maintenance fees under Chapter 271 on the correctly reported gross premiums from writing title insurance in Texas. Insurance Code provides that a captive insurance company is subject to maintenance tax under Insurance Code, Title 3, Subtitle C, on the correctly reported gross premiums from writing insurance on risks located in this state as applicable to the individual lines of business written by the captive insurance company. Insurance Code provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state. Labor Code imposes an annual maintenance tax on each insurance carrier to pay the costs of administering the Texas Workers' Compensation Act and to support the prosecution of workers' compensation insurance fraud in Texas. Labor Code also provides that the assessment may not exceed an amount equal to 2 percent of the correctly reported gross workers' compensation insurance premiums, including the modified annual premium of a policyholder that purchases an optional deductible plan under Insurance Code Article 5.55C, which was recodified as Insurance Code by House Bill 2017, 79th Legislature, Regular Session (2005). Labor Code also provides that the rate of assessment be applied to the modified annual premium before application of a deductible premium credit. Additionally, Labor Code states that a workers' compensation insurance company is taxed at the rate established under Labor Code , and that the tax be collected in the manner provided for collection of other taxes on gross premiums from a workers' compensation insurance company as provided in Insurance Code Chapter 255. Finally, Labor Code states that each certified self-insurer must pay a fee and maintenance taxes as provided by Labor Code Chapter 407, Subchapter F. Labor Code requires the commissioner of insurance to set and certify to the comptroller the rate of maintenance tax assessment, taking into account: (i) any expenditure projected as necessary for DWC and OIEC to administer the Texas Workers' Compensation Act during the fiscal year for which the rate of assessment is set and reimburse the general revenue fund as provided by Insurance Code ; (ii) projected employee benefits paid from general revenues; (iii) a surplus or deficit produced by the tax in the preceding year; (iv) revenue recovered from other sources, including reappropriated receipts, grants, payments, fees, and gifts recovered under the Texas Workers' Compensation Act; and (v) expenditures projected as necessary to support the prosecution of workers' compensation insurance fraud. Labor Code also provides that in setting the rate of assessment, the commissioner of insurance may not consider revenue or expenditures related to the State Office of Risk Management, the workers' compensation research functions of the department under Labor Code Chapter 405, or any other revenue or expenditure excluded from consideration by law. Labor Code provides that the commissioner of insurance must annually adjust the rate of assessment of the mainte- PROPOSED RULES November 10, TexReg 6319

74 nance tax imposed under so that the tax imposed that year, together with any unexpended funds produced by the tax, produces the amount the commissioner of insurance determines is necessary to pay the expenses of administering the Texas Workers' Compensation Act. Labor Code (a) - (c) establishes a maintenance tax on insurance carriers and self-insurance groups to fund the workers' compensation research and evaluation group, it provides for the department to set the rate of the maintenance tax based on the expenditures authorized and the receipts anticipated in legislative appropriations, and it provides that the tax is in addition to all other taxes imposed on insurance carriers for workers' compensation purposes. Labor Code imposes a maintenance tax on each workers' compensation certified self-insurer for the administration of the DWC and OIEC and to support the prosecution of workers' compensation insurance fraud in Texas. Labor Code also provides that not more than 2 percent of the total tax base of all certified self-insurers, as computed under subsection (b) of the section, may be assessed for the maintenance tax established under Labor Code Labor Code also provides that to determine the tax base of a certified self-insurer for purposes of Labor Code Chapter 407, the department multiply the amount of the certified self-insurer's liabilities for workers' compensation claims incurred in the previous year, including claims incurred but not reported, plus the amount of expense incurred by the certified self-insurer in the previous year for administration of self-insurance, including legal costs, by Labor Code also provides that the tax liability of a certified self-insurer under the section is the tax base computed under subsection (b) of the section multiplied by the rate assessed workers' compensation insurance companies under Labor Code and Finally, Labor Code provides that in setting the rate of maintenance tax assessment for insurance companies, the commissioner of insurance may not consider revenue or expenditures related to the operation of the self-insurer program under Labor Code Chapter 407. Labor Code (b) provides that the department compute the fee and taxes of a certified self-insurer and notify the certified self-insurer of the amounts due. Section (b) also provides that a certified self-insurer must remit the taxes and fees to DWC. Labor Code 407A.301 imposes a self-insurance group maintenance tax on each workers' compensation self-insurance group based on gross premium for the group's retention. Labor Code 407A.301 provides that the self-insurance group maintenance tax is to pay for the administration of DWC, the prosecution of workers' compensation insurance fraud in Texas, the research functions of the department under Labor Code Chapter 405, and the administration of OIEC under Labor Code Chapter 404. Labor Code 407A.301 also provides that the tax liability of a group under subsection (a)(1) and (2) of the section is based on gross premium for the group's retention multiplied by the rate assessed insurance carriers under Labor Code and Labor Code 407A.301 also provides that the tax liability of a group under subsection (a)(3) of the section is based on gross premium for the group's retention multiplied by the rate assessed insurance carriers under Labor Code Additionally, Labor Code 407A.301 provides that the tax under the section does not apply to premium collected by the group for excess insurance. Finally, Labor Code 407A.301(e) provides that the tax under the section be collected by the comptroller as provided by Insurance Code Chapter 255 and Insurance Code Labor Code 407A.302 requires each workers' compensation self-insurance group to pay the maintenance tax imposed under Insurance Code Chapter 255, for the administrative costs incurred by the department in implementing Labor Code Chapter 407A. Labor Code 407A.302 provides that the tax liability of a workers' compensation self-insurance group under the section is based on gross premium for the group's retention and does not include premium collected by the group for excess insurance. Labor Code 407A.302 also provides that the maintenance tax assessed under the section is subject to Insurance Code Chapter 255, and that it be collected by the comptroller in the manner provided by Insurance Code Chapter 255. CROSS REFERENCE TO STATUTE. Amendments in this proposal to affect Insurance Code (a)(1), (b), and (c); (a), (d), and (e); , ; ; ; ; ; ; ; ; and ; and Labor Code , , , (a) - (c), , (b), 407A.301, and 407A Assessment of Maintenance Taxes and Fees, 2018 [2017]. (a) The department assesses the following rates for maintenance taxes and fees on gross premiums of insurers for calendar year 2017 [2016] for the lines of insurance specified in paragraphs (1) - (9) of this subsection: (1) for motor vehicle insurance, under Insurance Code , the rate is.052 [.056] of 1 percent; (2) for casualty insurance and fidelity, guaranty, and surety bonds, under Insurance Code , the rate is.071 [.072] of 1 percent; (3) for fire insurance and allied lines, including inland marine, under Insurance Code , the rate is.345 [.364] of 1 percent; (4) for workers' compensation insurance, under Insurance Code , the rate is.069 [.064] of 1 percent; (5) for workers' compensation insurance, under Labor Code , the rate is 2.0 [1.8] percent; (6) for workers' compensation insurance, under Labor Code , the rate is.054 [.016] of 1 percent; (7) for workers' compensation insurance, under Labor Code 407A.301, the rate is 2.0 [1.8] percent; (8) for workers' compensation insurance, under Labor Code 407A.302, the rate is.069 [.064] of 1 percent; and (9) for title insurance, under Insurance Code , the rate is.090 [.103] of 1 percent. (b) The rate for the maintenance tax to be assessed on gross premiums for calendar year 2017 [2016] for life, health, and accident insurance and the gross considerations for annuity and endowment contracts, under Insurance Code , is.040 of 1 percent. (c) The department assesses rates for maintenance taxes for calendar year 2017 [2016] for the following entities as follows: (1) under Insurance Code , the rate is $.24 [$.23] per enrollee for single service health maintenance organizations, $.72 [$.69] per enrollee for multiservice health maintenance organizations, 42 TexReg 6320 November 10, 2017 Texas Register

75 and $.24 [$.23] per enrollee for limited service health maintenance organizations; (2) under Insurance Code , the rate is.011 [.010] of 1 percent of the correctly reported gross amount of administrative or service fees for third party administrators; and (3) under Insurance Code , the rate is.011 [.021] of 1 percent of the correctly reported gross revenues for nonprofit legal services corporations issuing prepaid legal services contracts. (d) Under Labor Code , each certified self-insurer must pay a maintenance tax for the workers' compensation research and evaluation group in calendar year 2018 [2017] at a rate of.054 [.016] of 1 percent of the tax base calculated under Labor Code (b) which must be billed to the certified self-insurer by the Division of Workers' Compensation. (e) Under Labor Code and 407A.301, each workers' compensation self-insurance group must pay a maintenance tax for the workers' compensation research and evaluation group in calendar year 2018 [2017] at a rate of.054 [.016] of 1 percent of the tax base calculated under Labor Code (b). (f) Under Labor Code and , each certified self-insurer must pay a self-insurer maintenance tax in calendar year 2018 [2017] at a rate of 2.0 [1.8] percent of the tax base calculated under Labor Code (b) which must be billed to the certified self-insurer by the Division of Workers' Compensation. (g) The enactment of Senate Bill 14, 78th Legislature, Regular Session, relating to certain insurance rates, forms, and practices, did not affect the calculation of the maintenance tax rates or the assessment of the taxes. (h) The taxes assessed under subsections (a), (b), (c), and (e) of this section will be payable and due to the Comptroller of Public Accounts on March 1, 2018 [2017]. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Norma Garcia General Counsel Texas Department of Insurance Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 7. CORPORATE AND FINANCIAL REGULATION SUBCHAPTER J. EXAMINATION EXPENSES AND ASSESSMENTS 28 TAC INTRODUCTION. The Texas Department of Insurance proposes amendments to 28 Texas Administrative Code , concerning assessments to cover the expenses of examining domestic and foreign insurance companies and self-insurance groups providing workers' compensation insurance. Under Insurance Code , the term "insurance company" as used in this proposal includes a health maintenance organization (HMO) as defined in Insurance Code EXPLANATION. The proposed amendments are necessary to establish the examination expenses to be levied against and collected from each domestic and foreign insurance company and each self-insurance group providing workers' compensation insurance examined during the 2018 calendar year. The proposed amendments are also necessary to establish the rates of assessment to be levied against and collected from each domestic insurer, based on admitted assets and gross premium receipts for the 2017 calendar year, and from each foreign insurer examined during the 2017 calendar year using the same methodology. The department proposes an amendment to the section heading to reflect the year for which the proposed assessment will be applicable. The department also proposes amendments in subsections (b)(1) and (2), (c)(1), (c)(2)(a) and (B), (c)(3), and (d) to reflect the appropriate year for accurate application of the section. The department proposes amendments in subsection (c)(2)(a) and (B) to update assessments to reflect the methodology the department has developed for The following paragraphs provide an explanation of the methodology used to determine examination overhead assessments for In general, the department's 2018 revenue need (the amount that must be funded by maintenance taxes or fees; examination overhead assessments; premium finance exam assessments; and funds in the self-directed budget account, as established under Insurance Code ) is determined by calculating the department's total cost need, and subtracting from that number funds resulting from fee revenue and funds remaining from fiscal year To determine total cost need, the department combined costs from the following: (i) appropriations set out in Chapter 605 (SB 1), Acts of the 85th Legislature, Regular Session, 2017 (the General Appropriations Act), which come from two funds, the General Revenue Dedicated - Texas Department of Insurance Operating Account No (Account No. 0036) and the General Revenue Fund - Insurance Companies Maintenance Tax and Insurance Department Fees; (ii) funds allowed by Insurance Code Subchapters D and F of Chapter 401 as approved by the commissioner of insurance for the self-directed budget account in the Treasury Safekeeping Trust Company to be used exclusively to pay examination costs associated with salary, travel, or other personnel expenses and administrative support costs; (iii) an estimate of other costs statutorily required to be paid from those two funds and the self-directed budget account, such as fringe benefits and statewide allocated costs; and (iv) an estimate of the cash amount necessary to finance both funds and the self-directed budget account from the end of the 2018 fiscal year until the next assessment collection period in From these combined costs, the department subtracted costs allocated to the Division of Workers' Compensation and the workers' compensation research and evaluation group. The department determined how to allocate the revenue need to be attributed to each funding source using the following method: Each section within the department that provides services directly to the public or the insurance industry allocated the costs for providing those direct services on a percentage basis to each funding source, such as the maintenance tax or fee line, PROPOSED RULES November 10, TexReg 6321

76 the premium finance assessment, the examination assessment, the self-directed budget account as limited by Insurance Code , or another funding source. The department applied these percentages to each section's annual budget to determine the total direct cost to each funding source. The department calculated a percentage for each funding source by dividing the total directly allocated to each funding source by the total of the direct cost. The department used this percentage to allocate administrative support costs to each funding source. Examples of administrative support costs include services provided by human resources, accounting, budget, the commissioner's administration, and information technology. The department calculated the total of direct costs and administrative support costs for each funding source. To complete the calculation of the revenue need, the department combined the costs allocated to the examination overhead assessment source and the self-directed budget account source. The department then subtracted the fiscal year 2018 estimated amount of examination direct billing revenue from the amount of the combined costs of the examination overhead assessment source and the self-directed budget account source. The resulting balance is the amount of the examination revenue need for the purpose of calculating the examination overhead assessment rates. To calculate the assessment rates, the department allocated 50 percent of the revenue need to admitted assets and 50 percent to gross premium receipts. The department divided the revenue need for gross premium receipts by the total estimated gross premium receipts for calendar year 2017 to determine the proposed rate of assessment for gross premium receipts. The department divided the revenue need for admitted assets by the total estimated admitted assets for calendar year 2017 to determine the proposed rate of assessment for admitted assets. FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATE- MENT. Joe Meyer, assistant chief financial officer, has determined that for each year of the first five years the proposed amendments will be in effect, the expected fiscal impact on state government is estimated income of $12,727,040 to the Texas Department of Insurance Examination Self-Directed Account in the Texas Treasury Safekeeping Trust Company. There will be no fiscal implications for local government as a result of enforcing or administering the section, and there will be no effect on local employment or the local economy. PUBLIC BENEFIT AND COST NOTE. Mr. Meyer also has determined that for each year of the first five years the proposed amendments are in effect, the public benefit expected as a result of enforcing the section will be adequate and reasonable assessment rates to defray the state's expenses of domestic and foreign insurer examinations and administration of the laws related to these examinations during the 2018 calendar year. Mr. Meyer has determined that the direct economic cost to entities required to comply with the proposed amendments will vary. The examination expense will consist of the actual salary of the examiner directly attributable to the examination and the actual expenses of the examiner directly attributable to the examination, including transportation, lodging, meals, subsistence expenses, and parking fees. The actual salary of an examiner is to be determined by dividing the annual salary of the examiner by the total number of working days in a year, and a company or group is to be assessed the part of the annual salary attributable to each working day the examiner examines the company or group. The amount of the assessment in 2018 for every domestic insurer and those foreign insurers examined in 2017 will be of 1 percent of the company's admitted assets as of December 31, 2017, excluding pension assets specified in subsection (c)(2)(a), and of 1 percent of the company's gross premium receipts for 2017, excluding pension related premiums specified in subsection (c)(2)(b), and premiums related to welfare benefits described in subsection (c)(6). There are two components of costs for entities required to comply with the assessment requirements in the proposal: the cost to gather the information, calculate the assessment, and complete the required forms; and the cost of the assessment. Typically, a person familiar with the accounting records of the company and accounting practices in general will perform the activities necessary to comply with the section. The compensation is generally between $26 and $44 an hour. The department estimates that the required form can be completed in two hours. The requirement to pay the assessment necessary to cover the expenses of company examination is the result of legislative enactment and is not a result of the adoption or enforcement of this proposal. For those domestic and foreign companies with an overhead assessment of less than $25 as computed under (c)(2)(A) and (B), a minimum overhead assessment of $25 will be assessed. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. As required by Government Code (c), the department has determined that the proposal may have an adverse economic effect on approximately 18 domestic insurance companies that are small or micro businesses required to comply with the proposed rules. It is not possible to anticipate the number or size of foreign insurance companies that may be required to comply with the proposed rule, because of the limited number of examinations the department conducts on foreign insurance companies. The department has determined that none of the workers' compensation self-insurance groups that must comply with the proposed rule would qualify as a small or micro business. Adverse economic impact may result from costs associated with examination fees and the amount of the required assessment resulting from this proposal. The cost of compliance will not vary between large businesses and small or micro businesses, and the department's cost analysis and resulting estimated costs in the public benefit or cost note portion of this proposal is equally applicable to small or micro businesses. The total cost of compliance to large businesses and small or micro businesses is not dependent on the size of the business, but rather is dependent on: for workers' compensation self-insurance groups, the length of time it takes to conduct an examination, the annual salary of the examiner, and expenses associated with the examination; and for domestic and foreign insurers, the length of time it takes to conduct an examination, expenses associated with the examination, and the admitted assets and gross premium receipts of the company. In accordance with Government Code (c-1), the department has considered other regulatory methods to accomplish the objectives of the proposal that will also minimize any adverse impact on small and micro businesses. The primary objective of the proposal is to propose a rule addressing examination fees and assessments for domestic and foreign insurance companies and workers' compensation self-insurance groups. 42 TexReg 6322 November 10, 2017 Texas Register

77 The other regulatory methods considered by the department to accomplish the objectives of the proposal and to minimize any adverse impact on small and micro businesses include: (i) not adopting the proposed rule, (ii) adopting a different assessment requirement for small and micro businesses, and (iii) exempting small or micro businesses from the assessment requirements. Not adopting the proposed rule. Without adopting the proposed rule the department would be unable to collect the necessary funds to cover the examination functions of the department. The purpose of conducting examinations is to monitor the activities and solvency of insurance companies. Failure by the department to perform its examination functions could result in public harm if a company does not comply with the Insurance Code or becomes insolvent and this is not detected because of the lack of regular examinations. Not adopting the rule would also result in the department being out of compliance with Insurance Code (c) and (a-1), which direct the department to impose an annual assessment on domestic and foreign insurers in an amount sufficient to meet all other expenses and disbursements necessary to comply with the insurer examination laws of Texas. This option has been rejected. Adopting a different assessment requirement for small and micro businesses. The proposed assessment is already based on the most equitable methodology the department can develop. The department applies an assessment methodology that results in a smaller assessment, down to a minimum assessment of $25, for domestic and foreign insurer small or micro businesses because the assessment is determined based on premium levels and admitted assets. The department anticipates that a domestic or foreign insurer that is a small or micro business most susceptible to economic harm would be one that writes fewer premiums and has fewer admitted assets. However, based on the proposed assessment requirements of the rule, that small or micro business would pay a smaller assessment, reducing its risk of economic harm. This option has been rejected. Exempting small or micro businesses from the assessment requirements. As previously noted, the current methodology used to develop the proposed rule is already the most equitable that the department can develop. The department applies a methodology that contemplates a domestic or foreign insurer that is a small or micro business paying less of an assessment if it writes fewer premiums or has less admitted assets. However, if the assessment were completely eliminated for small or micro businesses, the department would need to completely revise its calculations to shift costs to other insurers and entities, which would result in a less balanced methodology. This option has been rejected. The department, after considering the purpose of the authorizing statutes, does not believe it is legal or feasible to waive or modify the requirements of the proposal for small and micro businesses. The department has determined that the proposal will not have an adverse economic effect on rural communities because examinations are not conducted on rural communities and rural communities do not pay assessments to cover examination expenses. As a result, and in accordance with Government Code (c), it is not necessary for the department to address rural communities in its regulatory flexibility analysis. EXAMINATION OF COSTS UNDER GOVERNMENT CODE The department has determined that the proposed amendments do impose a possible cost on regulated persons. However, no additional rule amendments or repeals are required under Government Code because the proposed amendments are necessary to implement legislation. Insurance Code (a)(1), (b), and (c); ; ; ; ; and (h); and Labor Code 407A.252(b) direct the department to levy assessments on domestic and foreign insurers to cover examination expenses and the proposed amendments are necessary to comply with this requirement. TAKINGS IMPACT ASSESSMENT. The department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code REQUEST FOR PUBLIC COMMENT. Submit any written comments on the proposal no later than 5:00 p.m., Central time, on December 11, 2017, by mail to the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, P.O. Box , Austin, Texas ; or by to chiefclerk@tdi.texas.gov. Simultaneously submit an additional copy of the comments to Texas Department of Insurance, Joe Meyer, Assistant Chief Financial Officer, Financial Services, Mail Code 108-3A, P.O. Box , Austin, Texas ; or by to joe.meyer@tdi.texas.gov. Separately submit any request for a public hearing to the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, P.O. Box , Austin, Texas , before the close of the public comment period. If the department holds a hearing, the department will consider written and oral comments presented at the hearing. STATUTORY AUTHORITY. The amended section is proposed under Insurance Code (a)(1), (b), and (c); ; ; , ; (h); and ; and Labor Code 407A.252(b). Insurance Code (a)(1) states that the Texas Department of Insurance operating account is an account in the general revenue fund, and that the account includes taxes and fees received by the commissioner or comptroller that are required by the Insurance Code to be deposited to the credit of the account. Section (b) states that the commissioner administers money in the Texas Department of Insurance operating account and may spend money from the account in accordance with state law, rules adopted by the commissioner, and the General Appropriations Act. Section (c) states that money deposited to the credit of the Texas Department of Insurance operating account may be used for any purpose for which money in the account is authorized to be used by law. Insurance Code provides that a domestic insurer examined by the department or under the department's authority must pay the expenses of the examination in an amount the commissioner certifies as just and reasonable. Insurance Code also provides that the department collect an assessment at the time of the examination to cover all expenses attributable directly to that examination, including the salaries and expenses of department employees and expenses described by Insurance Code Section also requires that the department impose an annual assessment on domestic insurers in an amount sufficient to meet all other expenses and disbursements necessary to comply with the laws of Texas relating to the examination of insurers. Additionally, states that in determining the amount of assessment, the department consider the insurer's annual premium receipts or admitted as- PROPOSED RULES November 10, TexReg 6323

78 sets, or both, that are not attributable to 90 percent of pension plan contracts as defined by 818(a), Internal Revenue Code of 1986; or the total amount of the insurer's insurance in force. Insurance Code provides that an insurer not organized under the laws of Texas must reimburse the department for the salary and expenses of each examiner participating in an examination of the insurer and for other department expenses that are properly allocable to the department's participation in the examination. Section (a-1) requires that the department also impose an annual assessment on insurers not organized under the laws of this state subject to examination as described by the section in an amount sufficient to meet all other expenses and disbursements necessary to comply with the laws of this state relating to the examination of insurers, and the amount imposed must be computed in the same manner as the amount imposed under (c) for domestic insurers. Section also requires an insurer to pay the expenses under the section directly to the department on presentation of an itemized written statement from the commissioner. Additionally, provides that the commissioner determine the salary of an examiner participating in an examination of an insurer's books or records located in another state based on the salary rate recommended by the National Association of Insurance Commissioners or the examiner's regular salary rate. Insurance Code requires the department to impose additional assessments against insurers on a pro rata basis as necessary to cover all expenses and disbursements required by law and to comply with Insurance Code Chapter 401, Subchapter D, and , , , and Insurance Code requires the department to deposit any assessments or fees collected under Insurance Code Chapter 401, Subchapter D, relating to the examination of insurers and other regulated entities by the financial examinations division or actuarial division, as those terms are defined by Insurance Code , to the credit of an account with the Texas Treasury Safekeeping Trust Company to be used exclusively to pay examination costs as defined by Insurance Code , to reimburse the Texas Department of Insurance operating account for administrative support costs, and for premium tax credits for examination costs and examination overhead assessments. Additionally, provides that revenue not related to the examination of insurers or other regulated entities by the financial examinations division or actuarial division be deposited to the credit of the Texas Department of Insurance operating account. Insurance Code (h) provides that Insurance Code Chapter 401, Subchapter D, applies to an HMO, except to the extent that the commissioner determines that the nature of the examination of an HMO renders the applicability of those provisions clearly inappropriate. Insurance Code provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of Texas. Labor Code 407A.252(b) provides that the commissioner of insurance may recover the expenses of an examination of a workers' compensation self-insurance group under Insurance Code Article 1.16, which was recodified as Insurance Code , , , and by House Bill 2017, 79th Legislature, Regular Session (2005), to the extent the maintenance tax under Labor Code 407A.302 does not cover those expenses. CROSS REFERENCE TO STATUTE. Amendments in this proposal to affect Insurance Code (a)(1), (b), and (c); ; ; ; ; and (h); and Labor Code 407A.252(b) Examination Assessments for Domestic and Foreign Insurance Companies and Self-Insurance Groups Providing Workers' Compensation Insurance, 2018 [2017]. (a) Under Insurance Code and for purposes of this section, the term "insurance company" includes a health maintenance organization as defined in Insurance Code (b) An insurer not organized under the laws of Texas (foreign insurance company) must pay the costs of an examination as specified in this subsection. (1) Under Insurance Code , a foreign insurance company must reimburse the department for the salary and examination expenses of each examiner participating in an examination of the insurance company allocable to an examination of the company. To determine the allocable salary for each examiner, the department divides the annual salary of each examiner by the total number of working days in a year. The department assesses the company the part of the annual salary attributable to each working day the examiner examines the company during 2018 [2017]. The expenses the department assesses are those actually incurred by the examiner to the extent permitted by law. (2) Under Insurance Code (a-1), a foreign insurance company examined in 2017 [2016] entirely, or an exam beginning in 2017 [2016] and completed in 2018 [2017], must pay an annual assessment in an amount sufficient to meet all other expenses and disbursements necessary to comply with the laws of this state relating to the examination of insurers. The amount imposed must be computed in the same manner as the amount imposed for domestic insurers as applicable under subsection (c) of this section. (3) A foreign insurance company must pay the reimbursements and payments required by this subsection to the department as specified in each itemized bill the department provides to the foreign insurance company. (c) Under Insurance Code , , and Chapter 803, a domestic insurance company must pay examination expenses and rates of overhead assessment in accordance with this subsection. (1) A domestic insurance company must pay the actual salaries and expenses of the examiners allocable to an examination of the company. The annual salary of each examiner is to be divided by the total number of working days in a year, and the company is to be assessed the part of the annual salary attributable to each working day the examiner examines the company during 2018 [2017]. The expenses assessed must be those actually incurred by the examiner to the extent permitted by law. (2) Except as provided in paragraphs (3) and (4) of this subsection, the overhead assessment to cover administrative departmental expenses attributable to examination of companies is: (A) [.00086] of 1 percent of the admitted assets of the company as of December 31, 2017 [2016], taking into consideration the annual admitted assets that are not attributable to 90 percent of pension plan contracts as defined in 818(a) of the Internal Revenue Code of 1986 (26 U.S.C. 818(a)); and (B) [.00311] of 1 percent of the gross premium receipts of the company for the year 2017 [2016], taking into consideration the annual premium receipts that are not attributable to 90 percent 42 TexReg 6324 November 10, 2017 Texas Register

79 of pension plan contracts as defined in 818(a) of the Internal Revenue Code of 1986 (26 U.S.C. 818(a)). (3) Except as provided in paragraph (4) of this subsection, if a company was a domestic insurance company for less than a full year during calendar year 2017 [2016] because of a redomestication, the overhead assessment for the company is the overhead assessment required under paragraph (2)(A) and (B) of this subsection divided by 365 and multiplied by the number of days the company was a domestic insurance company during calendar year 2017 [2016]. (4) If the overhead assessment required under paragraph (2)(A) and (B) of this subsection or paragraph (3) of this subsection produces an overhead assessment of less than $25, a domestic insurance company must pay a minimum overhead assessment of $25. (5) The department will base the overhead assessments on the assets and premium receipts reported in the annual statements. (6) For the purpose of applying paragraph (2)(B) of this subsection, the term "gross premium receipts" does not include insurance premiums for insurance contracted for by a state or federal government entity to provide welfare benefits to designated welfare recipients or contracted for in accordance with or in furtherance of the Human Resources Code, Title 2, or the federal Social Security Act (42 U.S.C. 301 et seq.). (d) Under Labor Code 407A.252, a workers' compensation self-insurance group must pay the actual salaries and expenses of the examiners allocable to an examination of the group. To determine the allocable salary for each examiner, the department divides the annual salary of each examiner by the total number of working days in a year. The department assesses the group the part of the annual salary attributable to each working day the examiner examines the company during 2018 [2017]. The expenses the department assesses are those actually incurred by the examiner to the extent permitted by law. (e) A domestic insurance company must pay the overhead assessment required under subsection (c) of this section to the Texas Department of Insurance at the address provided on the invoice not later than 30 days from the invoice date. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 27, TRD Norma Garcia General Counsel Texas Department of Insurance Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 34. PUBLIC FINANCE PART 1. COMPTROLLER OF PUBLIC ACCOUNTS CHAPTER 3. TAX ADMINISTRATION SUBCHAPTER O. STATE AND LOCAL SALES AND USE TAX 34 TAC The Comptroller of Public Accounts proposes an amendment to 3.287, concerning exemption certificates. This section is being amended to update information regarding the Texas Sales and Use Tax Exemption Certification Form and to implement provisions of Senate Bill 934, 82nd Legislature, 2011, and House Bills 800 and 1223, 83rd Legislature, Additional changes are made to improve the clarity of the section. Subsection (a) is amended to clarify that the term exemption certificate as used in this section refers to the Texas Sales and Use Tax Exemption Certification, Form (Back), unless otherwise stated. The reference to using a resale certificate instead of an exemption certificate to claim exemption for taxable items purchased for resale is deleted from subsection (a) and is now addressed in subsection (c). Subsection (b)(1) is amended to add "or" at the end of the statement to indicate that the subsection is disjunctive. Paragraphs (1) and (2) are also amended to provide the titles of the Tax Code provisions referenced in the paragraphs. Subsection (c) is amended to provide references to other sections of this title for information concerning exemptions enacted by House Bill 268, 82nd Legislature, 2011, relating to agriculture and timber, House Bill 800, 83rd Legislature, 2013, relating to qualified research, and House Bill 1223, 83rd Legislature, 2013, relating to data centers. Subsection (c) is also amended to reference of this title (relating to Prior Contracts), of this title (relating to Local Sales and Use Taxes), and of this title (relating to Resale Certificate; Sales for Resale). Subsection (c) is also amended to improve readability. Subsection (d) is amended to replace the word "retailer" with the word "seller" for consistency throughout the subsection. Tax Code, ("Seller" or "Retailer") assigns the same meaning to both terms. Paragraph (1) is amended to follow more closely the language of Tax Code, (Gross Receipts Presumed Subject to Tax). The statute provides that all gross receipts of a seller are presumed to have been subject to the sales tax unless the seller has accepted a properly completed resale or exemption certificate. A cross-reference to of this title is also added. Paragraph (2) is amended to explain the good faith safe harbor in greater detail. This subparagraph memorializes longstanding comptroller policy regarding the elements required for such good faith acceptance. See STAR Accession No. 9105L1110D06 (May 20, 1991) and Comptroller's Decision Nos. 35,834 (1997), 48,258 (2009), and 105,608 (2012). In addition, the statement in current subsection (d)(5) that a seller must be familiar with the exemptions that are available for the items it sells is revised and relocated to subsection (d)(2). Paragraph (3) is amended to track the statutory language of Tax Code, (Resale or Exemption Certificate; Criminal Penalty) more closely and implement Section 17 of Senate Bill 934, 82nd Legislature, 2011, which amended Tax Code, (b) to apply to all offenses described under Tax Code, (a). Tax Code, (b) had previously been limited to offenses described under Tax Code, (a)(1) and (2). Subsection (d)(5) is amended to reference of this title (relating to Timber Items) for information on blanket exemption certificates received for timber items. In paragraph (4), the term "deduction" is deleted and replaced with the term "exemption" for consistency throughout the sec- PROPOSED RULES November 10, TexReg 6325

80 tion. Paragraph (5) is amended to delete information that is now addressed in paragraph (2) and to add a reference to of this title (relating to Timber Items) for information on blanket exemption certificates received for timber items. New paragraph (7) is added to alert sellers of the related recordkeeping requirements by cross-referencing of this title (relating to Records Required; Information Required) and providing that exemption certificates are subject to the record-keeping requirements set out in that section. Subsection (e) is amended to describe more completely the topics addressed in the subsection. The phrase "taxable use of items purchased " replaces the phrase "improper use of items purchased..." A separate clause is added to address improper use of an exemption certificate. In addition, the subsection is amended to mirror language used in other sections of this title. Paragraph (6), relating to contractors, is deleted because it is no longer applicable. See House Bill 85, 73rd Legislature, New paragraph (6) is added to provide that subsection (e) does not apply to manufacturing equipment purchased tax-free and then used in a taxable manner. Subsection (g) is amended to delete references to the Resolution Trust Corporation (RTC) and correct a typographical error. Congressional authorization of the RTC expired in 1995, and its assets and activities were transferred back to the Federal Deposit Insurance Corporation. See Resolution Trust Corporation Completion Act, Pub. L. No , 107 Stat (1993). Subsection (h) is amended to include the current form number for the Texas Sales and Use Tax Exemption Certification, Form (Back); delete the comptroller's mailing address and phone numbers, which are no longer correct; and add a reference to the comptroller's website. Subsection (h) is also amended to delete statements indicating that the Texas Sales and Use Tax Exemption Certification is adopted by reference and available at the office of the Texas Register. Tom Currah, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government. Mr. Currah also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be by conforming the rule to current statutes and agency policy. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule. Comments on the proposal may be submitted to Teresa G. Bostick, Director, Tax Policy Division, P.O. Box 13528, Austin, Texas Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register. The amendment is proposed under Tax Code, (Comptroller's Rules; Compliance; Forfeiture) which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law. The amendment implements Tax Code, (Registration Number Required for Timber and Certain Agricultural Items), (Certain Property Used in Research and Development Activities; Reporting of Estimates and Evaluation), (Property Used in Certain Data Centers; Temporary Exemption), and (Resale or Exemption Certificate; Criminal Penalty) Exemption Certificates. (a) Definition. Exemption certificate--a document that, when properly executed, allows the tax-free purchase of an item that would otherwise be subject to tax. Except as otherwise stated, the exemption certificate described in this section refers to the Texas Sales and Use Tax Exemption Certification, Form (Back) or a document substantially in the same format. [A purchaser claiming an exemption because the item purchased is for resale must issue a resale certificate to the seller. See of this title (relating to Resale Certificate; Sales for Resale).] There is no provision in Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax) [the sales and use tax act] for an exemption number or a tax exempt number to be issued or used in connection with the Texas Sales and Use Tax Exemption Certification, Form (Back) [an exemption certificate]. (b) Who may issue an exemption certificate. An exemption certificate of the type described in this section may only be issued by one of the following: (1) an organization that has qualified for exemption under [the] Tax Code, (Governmental Entities) or (Religious, Educational, and Public Service Organizations). See of this title (relating to Exempt Organizations); or (2) a person purchasing an item that is exempt under [the] Tax Code, Chapter 151, Subchapter H (Exemptions). (c) Exemptions addressed by other sections of this title: Direct [Maquiladora exemption and direct] payment permit holders, maquiladoras, agriculture, timber, qualifying data centers, qualified research, prior contracts and sales for resale [permits]. (1) Purchasers [People who make purchases] using direct pay permits should refer to of this title (relating to Direct Payment Procedures and Qualifications). (2) Purchasers [People who make purchases] using maquiladora exemption permits should refer to of this title (relating to Maquiladoras). (3) Purchasers claiming an agriculture exemption should refer to of this title (relating to Agriculture, Animal Life, Feed, Seed, Plants, Ice Used by Commercial Fishermen and Others, Work Animals (including Guard Dogs),and Fertilizer). (4) Purchasers claiming a timber exemption should refer to of this title (relating to Timber Items). (5) Purchasers claiming a qualifying data center exemption should refer to of this title (relating to Property Used in a Qualifying Data Center or Qualifying Large Data Center Project; Temporary State Sales Tax Exemption). (6) Purchasers claiming a qualified research exemption should refer to of this title (relating to Qualified Research). (7) Purchasers claiming a prior contract exemption should refer to of this title (relating to Prior Contracts) and of this title (relating to Local Sales and Use Taxes). (8) Purchasers claiming a sale for resale exemption should refer to of this title (relating to Resale Certificate; Sales for Resale). (d) Acceptance of exemption certificate. 42 TexReg 6326 November 10, 2017 Texas Register

81 (1) All gross receipts of a seller [retailer] are presumed subject to sales or use tax unless a valid and properly completed resale or exemption certificate is accepted by the seller. Resale certificates are addressed in detail in of this title. (2) A seller does not owe tax on a sale, lease, or rental of a taxable item if the seller accepts a properly completed exemption certificate in good faith. An exemption certificate is deemed to be accepted in good faith if: (A) the exemption certificate is accepted at or before the time of the transaction; (B) the exemption certificate is properly completed, meaning that all of the information required by subsection (f) of this section is legible; and (C) the seller does not know, and does not have reason to know, that the sale is not exempt. It is the seller's responsibility to be familiar with Texas sales tax law as it applies to the seller's business and to be familiar with the exemptions that are available for the items the seller sells. [(2) A sale is exempt if the exemption certificate is accepted in good faith at the time of the transaction and the seller lacks actual knowledge that the claimed exemption is invalid.] (3) A person commits an offense if the person: intentionally or knowingly makes a false entry in, or a fraudulent alteration of, an exemption certification; makes, presents, or uses an exemption certificate with knowledge that it is false and with the intent that it be accepted as a valid exemption certificate; or intentionally conceals, removes, or impairs the verity or legibility of an exemption certificate or unreasonably impedes the availability of an exemption certificate. [who intentionally or knowingly makes, presents, uses, or alters an exemption certificate for the purpose of evading the Texas sales or use tax is guilty of a criminal offense.] (A) If the tax evaded by the invalid certificate is less than $20, the offense is a Class C misdemeanor. (B) If the tax evaded by the invalid certificate is $20 or more but less than $200, the offense is a Class B misdemeanor. (C) If the tax evaded by the invalid certificate is $200 or more but less than $750, the offense is a Class A misdemeanor. (D) If the tax evaded by the invalid certificate is $750 or more but less than $20,000, the offense is a felony of the third degree. (E) If the tax evaded by the invalid certificate is $20,000 or more, the offense is a felony of the second degree. (4) The seller should obtain the properly executed exemption certificate at the time the transaction occurs. All certificates obtained on or after the date the comptroller's auditor actually begins work on the audit at the seller's place of business or on the seller's records after the entrance conference are subject to verification. All incomplete certificates will be disallowed regardless of when they were obtained. The seller has 60 days from the date written notice is received by the seller from the comptroller in which to deliver the certificates to the comptroller. Written notice shall be given by the comptroller upon the filing of a petition for redetermination or claim for refund. For the purposes of this section, written notice given by mail is presumed to have been received by the seller within three business days from the date of deposit in the custody of the United States Postal Service. The seller may overcome the presumption by submitting proof from the United States Postal Service or by other competent evidence showing a later delivery date. Any certificates delivered to the comptroller during the 60-day period will be subject to independent verification by the comptroller before any exemptions [deductions] will be allowed. Certificates delivered after the 60-day period will not be accepted and the exemption [deduction] will not be granted. (5) [The exemption certificate will be valid if the seller received it in good faith from a purchaser and if the certificate states valid qualifications for an exemption. A retailer must be familiar with the exemptions that are available for the items the retailer sells.] A seller [retailer] may accept a blanket exemption certificate given by a purchaser who purchases only items that are exempt. For information on blanket exemption certificates received for agricultural exemptions, see of this title. For information on blanket exemption certificates received for timber items see of this title. [(relating to Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer).] (6) An exemption certificate is not acceptable when an exemption is claimed because tangible personal property is exported outside the United States. For proper documentation required for proof of export, see of this title (relating to Imports and Exports) and of this title (relating to Customs Brokers). (7) Exemption certificates are subject to the provisions of of this title (relating to Records Required; Information Required). A seller is required to keep exemption certificates for a minimum of four years from the date on which the sale is made and throughout any period in which any tax, penalty, or interest may be assessed, collected, or refunded by the comptroller or in which an administrative hearing or judicial proceeding is pending. (e) Taxable [Improper] use of items purchased under an exemption certificate; improper use of an exemption certificate. (1) When an item purchased under a valid exemption certificate is used in a taxable manner, whether the use is in Texas or outside the state, the purchaser is liable for payment of sales tax based on the value of the tangible personal property or taxable service for the period of time used. If the exemption certificate was invalid at the time of its issuance, the purchaser owes tax on the original purchase price. (2) The value of tangible personal property is the fair market rental value of the tangible personal property. The fair market rental value is the amount that a purchaser would pay on the open market to rent or lease the tangible personal property for use. If tangible personal property has no fair market rental value, sales tax is due based upon the original purchase price. (3) The value of a taxable service is the fair market value of the taxable service. The fair market value is the amount that a purchaser would pay on the open market to obtain that taxable service. If a taxable service has no fair market value, sales tax is due based upon the original purchase price. (4) At any time, the person who purchased [using] tangible personal property or a taxable service [purchased] under a valid exemption certificate and is using the tangible personal property or taxable service in a divergent taxable manner may stop paying tax on the value of tangible personal property or [the value of a] taxable service and instead pay sales tax on the original purchase price. When the person elects to pay sales tax on the purchase price, credit will not be allowed for taxes previously paid based on value. (5) Sales tax is not due when a taxable [an] item purchased under a valid exemption certificate is donated to an organization exempt from tax under [the] Tax Code, or (a)(1) or (2), provided the purchaser does not use the donated tangible personal property or the donated taxable service. (6) This subsection is not applicable when an item purchased under Tax Code, (Property Used in Manufacturing) PROPOSED RULES November 10, TexReg 6327

82 is used in a taxable manner. A purchaser who uses such items in a taxable manner is liable for sales or use tax and should refer to of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing). [Contractors using equipment purchased under a valid exemption certificate on both taxable and exempt projects must account for tax based upon the provisions in of this title (relating to Contractors).] (f) Content of an exemption certificate. An exemption certificate must show: (1) the name and address of the purchaser; (2) a description of the item to be purchased; (3) the reason the purchase is exempt from tax; (4) the signature of the purchaser and the date; and (5) the name and address of the seller. (g) Purchases of taxable items by agents of the Federal Deposit Insurance Corporation (FDIC) [or the Resolution Trust Corporation (RTC)]. The FDIC [or RTC] may purchase items tax-free [tax free] for use in operating a property or business to which it has title. An exemption certificate may be issued by the FDIC [or RTC] or by persons acting as agents for the FDIC [or RTC] when purchasing items that are incorporated into or used on the property or business being managed. The certificate must state that the purchases are being made by or for the FDIC [or RTC]. The FDIC [or RTC] or persons managing property or a business for the FDIC [these corporations] may issue an exemption certificate when: (1) the FDIC [or RTC] provides documentation to the person managing the property or business showing that title to the property or business being managed was transferred to the FDIC [or RTC]; and (2) the FDIC [or RTC] has entered into a written agreement with the person managing the property or business that designates that person as its agent and authorizes that person to make purchases on its behalf. The agreement must be in the person's files for review by the comptroller. It is not necessary to provide a copy of the agreement to suppliers. (h) Form of an exemption certificate. An exemption certificate must be in substantially the form of a Texas Sales and Use Tax Exemption Certification, Form (Back) [that the comptroller adopts by reference]. Copies of the form [are available for inspection at the office of the Texas Register or] may be obtained from the Comptroller of Public Accounts, Tax Policy Division or[, 111 West 6th Street, Austin, Texas Copies may also be requested] by calling [our toll-free number] The form is also available online at [In Austin, call (From a Telecommunication Device for the Deaf (TDD) only, call toll free. In Austin, the local TDD number is ).] The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 26, TRD Lita Gonzalez General Counsel Comptroller of Public Accounts Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 9. PROPERTY TAX ADMINISTRA- TION SUBCHAPTER D. APPRAISAL REVIEW BOARD 34 TAC The Comptroller of Public Accounts proposes repealing 9.804, concerning arbitration of appraisal review board determinations. This rule is being replaced by new , which comprise new Subchapter K, titled Arbitration of Appraisal Review Board Determinations. Tom Currah, Chief Revenue Estimator, has determined that for the first five-year period the repeal will be in effect, there will be no significant revenue impact on the state or units of local government. Mr. Currah 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 rule will be by improving the administration of local property valuation and taxation. The proposed repeal would have no fiscal impact on small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the repealed rule. The repeal would have no significant fiscal impact on small businesses or rural communities. Comments on the repeal may be submitted to Mike Esparza, Director, Property Tax Assistance Division, P.O. Box 13528, Austin, Texas Comments may be submitted by sent to: ptad.arb@cpa.texas.gov and must be received no later than 30 days from the date of publication of the proposal in the Texas Register. The repeal is proposed under Tax Code, 41A.13 (Rules), which authorizes the comptroller to adopt rules necessary to implement and administer Chapter 41A of the Tax Code governing the appeal of appraisal review board orders through binding arbitration. The repeal implements Tax Code, 41A.13 (Rules), which authorizes the comptroller to adopt rules necessary to implement and administer Tax Code, Chapter 41A governing the appeal of appraisal review board orders through binding arbitration Arbitration of Appraisal Review Board Determinations. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 24, TRD TexReg 6328 November 10, 2017 Texas Register

83 Lita Gonzalez General Counsel Comptroller of Public Accounts Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER K. ARBITRATION OF APPRAISAL REVIEW BOARD DETERMINATIONS 34 TAC The Comptroller of Public Accounts proposes new , concerning arbitration of appraisal review board determinations. These new rules replace 9.804, which is being repealed in a separate filing. These new rules will comprise new Subchapter K, titled Arbitration of Appraisal Review Board Determinations. This replacement of with new Subchapter K serves three purposes. First, in organizing the rule sections relating to arbitration into 16 separate rules, it is expected that the administrative provisions governing binding arbitration will be more easily readable and understood by the public. Second, many previous requirements regarding arbitration procedures are clarified and several others modified to strengthen and streamline the administration of the binding arbitration process. Third, this proposal also implements legislative changes to Tax Code, Chapter 41A (Appeal through Binding Arbitration), which the 85th Legislature, 2017, enacted through passage of Senate Bill (SB) 731 and SB 1286, 2 through 4 and 7. This preamble provides an overview of the new subchapter, addressing the major changes to existing procedures relating to arbitration and the required changes to implement recent legislation. The legislatively-driven changes as well as the most significant changes to the existing binding arbitration administrative provisions are addressed, section by section, beginning with new , Definitions. In addition to revising and putting in alphabetical order the seven definitions in existing 9.804, four more definitions are added to new : "Appraisal Review Board (ARB)" and "Individual" as well as "Order," the determination the ARB issues which is the subject of the arbitration, and "Person". New , Request for Arbitration, sets out in one section all of the substantive and procedural requirements to properly initiate an appeal of an ARB order through binding arbitration. New subsection (f), in particular, is a critical provision as it succinctly identifies each of the seven (or eight if an agent is involved) jurisdictional requirements that each request for binding arbitration must meet. New subsection (h) provides a ready reference to the types of properties that qualify for binding arbitration along with the corresponding deposit amounts required. Subsections (f)(1) and (h)(6) reflect SB 731's legislative increase from $3 million to $5 million as the jurisdictional property value limit and corresponding deposit amount of $1,550. New subsection (g) specifies when two or more tracts of land qualify as contiguous for purposes of submitting only one deposit to arbitrate such property. Tracts are contiguous if: 1) each tract of land physically touches another tract of land being appealed; 2) no intervening area, whether natural or manmade, that is owned by another person, entity, or governmental unit, separates the tracts; 3) the property type of each tract being appealed is identified on the request for binding arbitration as "Land" or "Agricultural" or any other category of real property that is not an improvement; and 4) all of the tracts of land being appealed are of the same property type. New , Agent Representation in Arbitration, puts in one place all of the requirements for an arbitration agent and clarifies the manner in which agents may be properly appointed. This section also makes clear the necessity of providing the agent authorization form, signed by the owner, with each request for arbitration in which an agent expects to act on behalf of an owner. New , Appraisal District Responsibility for Request, specifies each of the procedures appraisal districts are to perform within ten calendar days to process requests for binding arbitration. New subsection (b) grants appraisal districts that process 500 or more requests for arbitration during the previous year to perform these tasks within ten business days (rather than calendar days). The new rule makes clear that all requests are to be forwarded to the comptroller's office except those which the appraisal district is to reject for failure to provide the correct deposit. New , Comptroller Processing of Request, specifies the grounds under which the comptroller is required to deny a request for binding arbitration and does so by simply referencing (f), the provision which identifies the jurisdictional requirements for a valid request for arbitration. Subsections (c) and (d) identify the limited circumstances under which failure to perform a technical requirement, such as signing the request for arbitration form, may be cured within ten days of notice. New , Comptroller Appointment of Arbitrators, not only implements a part of SB 1286, the new legislative method by which the comptroller is to appoint arbitrators, but also sets out all of the requirements that govern the appointment of arbitrators generally. Under the current rule, owners or agents and appraisal districts are to attempt to agree on an arbitrator. SB 1286 requires the comptroller to select the arbitrator. New subsection (b) provides that the comptroller will use a computerized system to distribute appointments as evenly as possible among arbitrators. In each case, the comptroller shall select first for appointment from among only those arbitrators on the registry who principally reside in the county in Texas where the property that is the subject of the arbitration is located as required under SB Upon the refusal of all of these arbitrators to accept the appointment to a particular matter, the comptroller may appoint an otherwise eligible arbitrator on the registry residing in another county in Texas. New also makes explicit the circumstances under which an arbitrator may not accept and may not continue with an appointment, such as becoming unqualified or ineligible. New , Application for Inclusion in Comptroller's Registry of Arbitrators, sets out the requirements regarding the application process for inclusion in the arbitrator registry. It also provides that in signing and submitting the application, the applicant attests not only that he or she meets all the qualification requirements, but also principally resides in the state of Texas in the county identified, the new residency requirement of SB New , Qualifications for Inclusion in the Comptroller's Registry of Arbitrators, sets forth in one section all the qualifications required, including the professional ones, and the particular circumstances which render one not qualified to serve; it also implements the new Texas residency requirement of SB New subsection (b) requires a person to principally reside PROPOSED RULES November 10, TexReg 6329

84 in Texas to qualify as an arbitrator and provides that this standard is met if he or she lives in a residential property in Texas more than 50% of his or her time. This residency requirement also is addressed by reference to residence homestead exemptions the individual may hold. New subsection (d) requires that an arbitrator applying for renewal of inclusion in the registry have no history of failure to comply with new Subchapter K, in addition to the previous requirements. New , Arbitrator Eligibility for A Particular Appointment, sets out in one section all of the eligibility requirements for appointment to a particular matter, including the two new eligibility requirements of SB First, under SB 1286, only arbitrators who principally reside in the county where the property at issue is located are eligible for appointment to each arbitration. An arbitrator who lives outside the county may be appointed, however, if there are no available arbitrators who live in the county where the property is located. County of residence is defined under new subsection (c) in a manner similar to the standard set for Texas residency. Second, also as required under SB 1286, a person is ineligible for appointment in the same county appraisal district where, during the previous five years, the person represented any entity for compensation in any proceeding under the Property Tax Code, or served as an officer or employee of the appraisal district, or as a member of that county's ARB. Representation in any proceeding, as described under new subsection (e), begins with the filing of a notice of protest and includes communications with appraisal district employees regarding a matter under protest; protest settlement negotiations; any appearance at an ARB hearing; any involvement in a binding arbitration under Tax Code, Chapter 41A; and any involvement at either the district court or appellate court level in an appeal pursued under Tax Code, Chapter 42. Likewise, any person who has served as an officer or employee of any firm, company, or other legal entity that represented any person or entity for compensation in any proceeding under the Property Tax Code during the previous five years regarding property in the same appraisal district as the property at issue is ineligible for appointment. New , Arbitrator Duties, makes clear that a person who accepts an arbitration appointment is required to conduct each arbitration pursuant to the terms of Tax Code, Chapter 41A, as well as Subchapter K, and for the fee amount permitted under subsection (d). The arbitrator fee schedule is set out in subsection (d) and includes the new arbitrator fee of $1,500 for property valued at more than $3 million but not more than $5 million, as permitted under SB 731. Arbitrators are required under subsection (b) to notify the comptroller's office within ten days of any material changes in their information on file- including a change in county of residence- and failure to do so may result in removal from the registry and denial of future applications for inclusion in the registry. New , Provision of Arbitration Services, sets forth the procedural requirements under which an arbitrator is to conduct an arbitration proceeding unless the parties agree otherwise. Significant changes are proposed in this area, particularly as they relate to the following matters: in-person hearings at the request of the owner or agent; party input in selection of the hearing date; the detail required for the written hearing notice; arbitrator conduct standards; and those circumstances which require the dismissal of an arbitration proceeding. New , Removal of Arbitrator from the Registry of Arbitrators, sets out clearly and concisely the terms under which an arbitrator will be removed from the registry. This section as well as proposed (f) regarding appointment of arbitrators, both implement another portion of SB This new law mandates that the comptroller not appoint and shall remove a person listed as an arbitrator for good cause, including a finding that the person has engaged in repeated bias or misconduct while acting as an arbitrator. In either instance, new sets out the procedures and standards that govern the refusal to appoint or the removal of an individual from the arbitrator registry for good cause. The last four provisions of Subchapter K address: new , Arbitration Determination and Award; new , Payment of Arbitrator Fee, Refund of Property Owner Deposit, and Correction of Appraisal Roll; new , Prohibited Communications regarding Pending Arbitrations; and new , Forms. These four rules are largely unchanged from current provisions on these same topics, with a couple of exceptions. It is proposed the arbitrator be permitted to transmit the arbitration determination and award to the parties electronically as well as by fax or mail. One provision, new (h), addresses the manner in which the withdrawal of a request for arbitration and the payment of the arbitration deposit or fee is to be handled. That is, the 14-day deadline for withdrawal before the hearing is measured from the date the comptroller receives written notice; and the hearing date is the one set in the written notice under (d), either by agreement of the parties or 30 days from the date the arbitrator mailed the notice. Changes are proposed to two forms- the Request for Binding Arbitration form (Form AP-219) and the Arbitration Determination and Award form (Form )- which are adopted by reference under new Changes to both forms are primarily to reflect the increase to $5 million or less in the jurisdictional value of property subject to arbitration under SB 731. A change to the award and determination form is to clarify when dismissal for delinquent taxes is required. Dismissal of an arbitration is required not only if taxes are delinquent but also if the taxes were not timely paid, that is, before the applicable statutory delinquency date set by the Tax Code. Dismissal is required in the later instance even if the taxes were paid by the time of the arbitration hearing. Tom Currah, Chief Revenue Estimator, has determined that for the first five-year period the new rules will be in effect, there will be no significant revenue impact on the state or units of local government. Mr. Currah also has determined that for each year of the first five years the new rules are in effect, the public benefit anticipated as a result of enforcing the rules will be by improving the administration of local property valuation and taxation. The proposed new rules would have no fiscal impact on small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the new rules. The new rules would have no significant fiscal impact on small businesses or rural communities. Comments on the proposed rules may be submitted to Mike Esparza, Director, Property Tax Assistance Division, P.O. Box 13528, Austin, Texas Comments may be submitted by sent to: ptad.arb@cpa.texas.gov and must be received no later than 30 days from the date of publication of the proposal in the Texas Register. These new sections are proposed under Tax Code, 41A.13 (Rules), which authorizes the comptroller to adopt rules necessary to implement and administer Tax Code, Chapter 41A gov- 42 TexReg 6330 November 10, 2017 Texas Register

85 erning the appeal of appraisal review board orders through binding arbitration. These new sections implement Tax Code, 41A.01(2), 41A.03(a)(2)(F), 41A.06(b)(2)(F), 41A.061(c)(2), 41A.07(a)(1) and (2), and 41A.07(e), (f), and (g), and 41A Definitions. The following phrases, words, and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise. (1) Agent--An individual, authorized pursuant to Tax Code, 41A.08(b), and in accordance with of this title (relating to Agent Representation in Arbitration), to represent a party in binding arbitration. (2) Appraisal district--a political subdivision established in each county responsible for appraising property in the county for ad valorem tax purposes for each taxing unit that imposes such taxes on property in the county. (3) Appraisal review board (ARB)--The board established in a county's appraisal district pursuant to Tax Code, 6.41, that issues the order that is the subject of the owner's request for binding arbitration. (4) Appraised value--the value of property determined under the appraisal methods and procedures of Tax Code, Chapter 23. (5) Binding arbitration--a method to appeal an eligible appraisal review board order a property owner may choose that is governed by Tax Code, Chapter 41A, and this subchapter. (6) Comptroller or comptroller's office--the Comptroller of Public Accounts of the State of Texas, the state agency responsible for the adoption of rules governing the binding arbitration system pursuant to Tax Code, Chapter 41A. (7) Individual--A single human being. (8) Market value--the price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other. (9) Order--A written determination an appraisal review board issues pursuant to Tax Code, 41.47, regarding an owner's protest filed pursuant to Tax Code, 41.41(a)(1), for appraised or market value, or pursuant to Tax Code, 41.41(a)(2), for unequal appraisal. (10) Owner--A person or entity having legal title to property who has the right to appeal an eligible ARB order through binding arbitration under Tax Code, Chapter 41A. It does not include lessees who have the right to protest property valuations before county appraisal review boards. (11) Person--Includes an individual, corporation, organization, business trust, estate, trust, partnership, association, and any other legal entity Request for Arbitration. (a) An owner may initiate an appeal of an ARB order determining a protest of property value through binding arbitration, upon submission of a written request with the required deposit to the appraisal district responsible for appraising the owner's property, under the terms and conditions of this section. (b) The request for binding arbitration and a deposit in the appropriate amount under subsection (h) of this section must be filed with the appraisal district not later than the 45th calendar day after the date the owner receives the ARB order determining the protest, as evidenced by the certified mail receipt showing delivery to the owner. The request and deposit shall be submitted to the appraisal district by hand delivery, by certified first-class mail, or as provided by Tax Code, 1.08 or (c) The request for arbitration must be on the comptroller's prescribed Request for Binding Arbitration form (Form AP-219). The ARB shall provide a copy of this form as well as a notice of the owner's right to binding arbitration when it sends to the owner the ARB's order determining a protest filed pursuant to Tax Code, 41.41(a)(1) or (2) if the value of the property determined by the order is $5 million or less or the property qualifies as the owner's residence homestead under Tax Code, (d) If an agent, other than an attorney, has been appointed to represent the owner, and the agent signs the Request for Binding Arbitration form (Form AP-219) on behalf of the owner, the comptroller shall deny the request unless the Appointment of Agent for Binding Arbitration form (Form ), signed by the owner, is properly completed and submitted with the request, Form AP-219. (e) If the owner signs and submits the Request for Binding Arbitration form (Form AP-219) and indicates on the request form that an agent has been appointed but fails to submit the Appointment of Agent for Binding Arbitration form (Form ), the comptroller's office may recognize the agent as the owner's representative with the authority to receive communications and a refund of the arbitration deposit, as applicable, only if the appointment of agent form (Form ), signed by the owner, is properly completed and submitted within ten (10) calendar days of the comptroller's written or verbal notice to the owner that Form was not previously provided with the request for arbitration. (f) A request for binding arbitration on property that meets the following terms and conditions qualifies for binding arbitration under Tax Code, Chapter 41A: (1) The request concerns the appraised or market value of $5 million or less for the property as determined by the ARB order, or the property qualifies as the owner's residence homestead under Tax Code, (2) The request does not involve any matter in dispute other than the determination of the appraised or market value of the property pursuant to a protest filed under Tax Code, 41.41(a)(1) for the appraised or market value or 41.41(a)(2) for unequal appraisal. Issues not subject to binding arbitration include a protest regarding the owner's motion for correction of an appraisal roll, a protest concerning the qualification of property for a tax exemption or special appraisal, or any other issue outside the scope of Tax Code, 41.41(a)(1) or (2). (3) A deposit in the correct amount set forth under subsection (h) of this section, in the form of a check issued and guaranteed by a banking institution (such as a cashier's or teller's check) or by a money order, payable to the Comptroller of Public Accounts, is included with the request. Personal checks, cash, or other forms of payment shall not be accepted. PROPOSED RULES November 10, TexReg 6331

86 (4) No taxes on the property at issue are delinquent and the undisputed taxes due on the property were paid before the delinquency date set by Tax Code, Chapter 31, as applicable. (5) No lawsuit has been filed in district court regarding the property for the tax year at issue. (6) The request for binding arbitration is timely filed pursuant to subsection (b) of this section. (7) The request is made on the comptroller's Request for Binding Arbitration form (Form AP-219) and is signed by the property owner or by the owner's agent, if authorized. (8) If the owner's agent signs the comptroller's Request for Binding Arbitration form (Form AP-219), the comptroller's Appointment of Agent for Binding Arbitration form (Form ) must be submitted with the request. The appointment of agent form (Form ) must be signed by the owner, identify as the owner's agent the same individual who signed the request form, and explicitly authorize the individual agent to sign the request form. (g) If the request involves contiguous tracts of land pursuant to Tax Code, 41A.03(a-1), each tract of land and ARB order must separately meet the requirements of subsection (f) of this section, except that a single arbitration deposit in an amount under subsection (h) of this section that corresponds to the tract with the highest appraised or market value of all the contiguous tracts as reflected on the ARB orders being appealed is sufficient. In the event two or more tracts are not contiguous, the property owner may select the one property that will be arbitrated; otherwise, the property with the highest appraised or market value will be selected for arbitration. For purposes of this section, two or more tracts of land qualify as contiguous if: (1) each tract of land physically touches another tract of land being appealed; (2) no intervening area, whether natural or manmade, that is owned by another person, entity, or governmental unit, separates the tracts; (3) the property type of each tract being appealed is identified on the request for binding arbitration as "Land" or "Agricultural" or any other category of real property that is not an improvement; and (4) all of the tracts of land being appealed are of the same property type, i.e., all are designated "Land" or all are designated "Agricultural" or all are designated another category of real property that is not an improvement. (h) A deposit made payable to the Comptroller of Public Accounts is required to be submitted with each request for binding arbitration in the following amounts, as applicable: (1) $450 if the property qualifies as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is $500,000 or less as determined by the ARB order; (2) $500 if the property qualifies as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is more than $500,000 as determined by the ARB order; (3) $500 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is $1 million or less as determined by the ARB order; (4) $800 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is more than $1 million but not more than $2 million as determined by the ARB order; (5) $1,050 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value of the property is more than $2 million but not more than $3 million as determined by the ARB order; and (6) $1,550 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value of the property is more than $3 million but not more than $5 million as determined by the ARB order Agent Representation in Arbitration. (a) The parties to an arbitration proceeding may represent themselves or, at their own cost, may be represented by the following agents: (1) an attorney who is licensed in Texas; (2) a person who is licensed as a real estate broker or sales agent under Occupations Code, Chapter 1101; (3) a person who is licensed or certified as a real estate appraiser under Occupations Code, Chapter 1103; (4) a property tax consultant registered under Occupations Code, Chapter 1152; (5) an individual who is licensed as a certified public accountant under Occupations Code, Chapter 901; or (6) an employee of the appraisal district. (b) An owner may authorize a specific individual, qualified under subsection (a)(1) - (5) of this section, to act as an agent on his or her behalf in a binding arbitration proceeding under Tax Code, Chapter 41A. The terms and conditions of subsections (c) - (f) of this section apply to agents qualified under subsection (a)(2) - (5) of this section. (c) For a valid appointment of an arbitration agent, other than an attorney, to represent an owner in a binding arbitration proceeding, the owner is required to complete and sign the comptroller-prescribed Appointment of Agent for Binding Arbitration form (Form ). No other agent appointment or authorization form or document is acceptable. (d) The owner must specify on Form the actions the agent is authorized to take on his or her behalf with respect to the binding arbitration. Authorized actions that are to be addressed on the form include: (1) whether the agent has the authority to sign the Request for Binding Arbitration form (Form AP-219); (2) whether the agent has the authority to receive deposit refunds; and (3) whether the agent has the authority to represent the owner in the arbitration hearing. (e) The owner must identify on Form a specific individual to act as agent and provide the agent's license or certificate number and type that qualifies under subsection (a)(2) - (5). A company or business entity does not qualify as an agent. If an owner authorizes an agent to receive deposit refunds, the agent authorization form must include the agent's social security number, federal tax identification number, or Texas state tax identification number. If the owner has authorized an agent to receive deposit refunds, all correspondence from the comptroller regarding the arbitration will be sent to the authorized agent. (f) If an agent signs and submits on behalf of the owner, a Request for Binding Arbitration form (Form AP-219) for the owner's property, the signed Appointment of Agent for Binding Arbitration 42 TexReg 6332 November 10, 2017 Texas Register

87 form (Form ) must be submitted at the same time which shows the owner authorized the agent to sign the request regarding the property. Failure to timely attach this completed and signed agent appointment form to the request will result in the comptroller's denial of the request for arbitration the agent submitted. (g) In order for an agent other than an attorney or appraisal district employee to represent an appraisal district, the chief appraiser must sign a written statement authorizing the agent to represent the district in the arbitration proceeding and provide a copy of this authorization to the property owner and the arbitrator at or before the time of the arbitration hearing Appraisal District Responsibility for Request. (a) Except as provided by subsection (b) of this section, within ten (10) calendar days of receipt of each request for binding arbitration, the appraisal district shall complete the following tasks: (1) review each request for binding arbitration to determine if each of the requirements of (f) of this title (relating to Request for Arbitration) have been met; (2) assign a unique arbitration number to each request; (3) attach a copy of the ARB order that forms the basis of the request if the property owner has not provided it, and in the case of an appeal relating to two or more contiguous tracts of land pursuant to Tax Code, 41A.03(a-1), a copy of the ARB order for each tract; (4) complete and sign that portion of the comptroller's Request for Binding Arbitration form applicable to the appraisal district to certify, based on the examination of the documentation submitted, which of the requirements of (f) of this title have been met for a valid request for binding arbitration; and (5) forward, pursuant to subsection (e) of this section, each Request for Binding Arbitration form, the accompanying deposit, and the ARB order (as well as the appointment of agent form , if provided), to the comptroller's office, except those requests which shall be rejected under subsection (c) of this section for failure to provide the required deposit in the correct amount. (b) If an appraisal district processed 500 or more requests for binding arbitration forms during the previous calendar year, the appraisal district shall complete the tasks identified in subsection (a) of this section within ten (10) business days of receipt of each request for binding arbitration. (c) The appraisal district shall reject each request for binding arbitration that does not have the required deposit in the correct amount. In such event, the appraisal district shall return the request with a notification of the rejection to the owner or agent by regular first-class mail unless another form of delivery was requested in writing. (d) The appraisal district shall provide promptly any additional information the comptroller's office requests to process the request for binding arbitration submission. (e) The appraisal district shall deliver the materials identified in subsection (a)(5) of this section to the comptroller by hand delivery or by certified first-class mail, and must simultaneously deliver a copy of the submission to the owner or agent, as appropriate, by regular first-class mail Comptroller Processing of Request. (a) Upon receipt of a request for binding arbitration from the appraisal district, the comptroller shall review it to determine whether to accept the request and appoint an arbitrator to the matter, deny the request, or request additional information from the appraisal district or owner or agent. The comptroller shall notify the owner or agent and the appraisal district of the determination to accept or deny the request by regular first-class mail or electronically, at the comptroller's discretion. (b) Upon review of the request, including the appraisal district's certification, as well as additional information that may have been provided in response to a request from the comptroller under subsection (a) of this section, the comptroller shall deny each request for arbitration that fails to meet the requirements of (f) of this title (relating to Request for Arbitration). (c) If the owner or agent, as applicable, fails either to sign the Request for Binding Arbitration form (Form AP-219), or to provide an opinion of value on this form, the request for binding arbitration shall be denied unless the defect is cured by signing the form or providing the value opinion in writing within ten (10) calendar days of the comptroller's written or verbal notice of the failure. (d) As provided by (e) of this title, if the owner signs and submits the Request for Binding Arbitration form (Form AP-219), indicates on the request form that an agent has been appointed, but fails to submit the Appointment of Agent for Binding Arbitration form (Form ), the comptroller's office shall not recognize the agent as the owner's representative with the authority to receive communications or a refund of the arbitration deposit, as applicable, unless the appointment of agent form (Form ), signed by the owner, is properly completed and submitted within ten (10) calendar days of the comptroller's written or verbal notice to the owner that Form was not previously provided with the request for arbitration. (e) Upon acceptance of a valid request for binding arbitration, the comptroller shall appoint an arbitrator pursuant to of this title (relating to Comptroller Appointment of Arbitrators) Comptroller Appointment of Arbitrators. (a) The comptroller shall appoint, pursuant to the terms of this section, an individual included in the registry who is both qualified under of this title (relating to Qualifications for Inclusion in the Comptroller's Registry of Arbitrators) and eligible for the particular appointment under of this title (relating to Arbitrator Eligibility for A Particular Appointment), to resolve each valid request for binding arbitration. (b) In selecting an individual from among a group of qualified and eligible arbitrators available for assignment, the comptroller may use a computerized system that distributes the arbitration appointments as evenly as possible among arbitrators. In each case, the comptroller shall select first for appointment only from among those arbitrators on the registry who principally reside in the county in Texas where the property that is the subject of the arbitration is located. Upon the refusal of all of these arbitrators to accept the appointment to a particular arbitration matter, the comptroller may appoint an otherwise eligible arbitrator on the registry residing in another county in Texas. (c) The comptroller shall notify the arbitrator of his or her appointment to a particular matter by regular first-class mail. (d) The arbitrator shall respond to the comptroller, in writing, within five (5) business days of the arbitrator's receipt of the comptroller's notice of appointment whether he or she accepts or refuses the appointment for any reason. The arbitrator shall deliver notice of his or her acceptance or refusal of the appointment to the comptroller electronically, by facsimile transmission, or by regular first-class mail. If the arbitrator is required to refuse the appointment for any of the reasons set out in subsection (g) or (h) of this section, the arbitrator shall provide the specific reason in writing to the comptroller. (e) If the comptroller does not receive from the arbitrator written notice of acceptance or refusal of the appointment within five (5) business days, the comptroller shall presume that the appointment has PROPOSED RULES November 10, TexReg 6333

88 been refused. If the arbitrator refuses the appointment, the comptroller shall appoint a substitute arbitrator from the registry, as provided by subsection (b) of this section, within ten (10) business days of the receipt of notice or presumption of refusal. The process of appointment of arbitrators pursuant to this section shall continue in this fashion until an acceptance is obtained. (f) The comptroller may not appoint a person listed as an arbitrator on the registry for good cause if the person is found, pursuant to of this title (relating to Removal of Arbitrator from the Registry of Arbitrators), to have engaged in repeated bias or misconduct while acting as an arbitrator. (g) An arbitrator may not accept an appointment and may not continue an arbitration after appointment in the following circumstances: (1) the arbitrator is or becomes not qualified as defined by of this title; (2) the arbitrator is or becomes ineligible as defined by of this title; or (3) the arbitrator has an interest in the outcome of the arbitration. (h) An arbitrator may not accept an arbitration appointment regarding an unequal appraisal appeal, unless and until the arbitrator completes a training program of at least four hours in length that the comptroller has approved on property tax law which emphasizes the requirements regarding the equal and uniform appraisal of property. (i) The owner or agent or the appraisal district may request the comptroller to appoint a substitute arbitrator before the arbitration hearing begins upon a showing, supported by competent evidence, that the assigned arbitrator was required to refuse the appointment pursuant to subsection (g) or (h) of this section Application for Inclusion in Comptroller's Registry of Arbitrators. (a) An individual seeking to be listed in the comptroller's registry of arbitrators must submit a completed application on the comptroller-prescribed form, providing all requested information and documentation, and affirming that the applicant meets the qualifications set forth in of this title (relating to Qualifications for Inclusion in the Comptroller's Registry of Arbitrators). The application must state that false statements provided by applicants may result in misdemeanor or felony convictions. (b) By signing and submitting the application for inclusion in the comptroller's registry of arbitrators, and any documentation required on the prescribed form, the applicant attests that he or she: (1) principally resides in the state of Texas in the county identified; (2) meets all of the qualifications required under of this title; (3) has read and understands the provisions of this subchapter and the Property Tax Code, including Chapter 41A (Appeal through Binding Arbitration); (4) will conduct any and all arbitrations pursuant to the terms of Tax Code, Chapter 41A, and this subchapter, including (m) of this title (relating to Provisions of Arbitration Services); (5) will perform these arbitration services for the applicable fee set out in (d) of this title (relating to Arbitrator Duties); and (6) will notify the comptroller of any change in the applicant's qualifications, eligibility to serve, contact information, or any material change regarding information provided in the application, within ten (10) calendar days of the change. (c) The attestation provided pursuant to subsection (b) of this section shall remain in effect until the renewal date of the applicant's license or certification under which the applicant was qualified professionally as provided by (c) of this title. (d) The comptroller shall deny an application if it is determined that the applicant does not meet all of the qualifications of of this title or if inclusion of the applicant in the arbitration registry would otherwise not be in the interest of impartial arbitration proceedings. (e) If the application is approved, the applicant's name, county of residence in Texas, and other pertinent information provided in the application and the applicant's professional resume or curriculum vitae may be added to the comptroller's registry of arbitrators. (f) The comptroller must notify the applicant of the approval or denial of the application as soon as practicable and must provide a brief explanation of the reason(s) for the denial. The applicant may provide a written statement of why the comptroller should reconsider the denial within thirty (30) calendar days of the applicant receiving the denial notice. The comptroller may approve the application if the applicant provides information to justify the approval. If the application is subsequently approved, the comptroller shall notify the applicant as soon as practicable. (g) Owners, agents, arbitrators, and appraisal districts are responsible for verifying the accuracy of the information provided in the arbitrator registry and communicating any inaccuracies to the comptroller as soon as practicable in order that the registry may be corrected. Inclusion of an arbitrator in the comptroller's registry is not and shall not be construed as a representation by the comptroller that all information provided is true and correct and shall not be construed or represented as a professional endorsement of the arbitrator's qualifications to conduct arbitration proceedings. (h) The registry shall be maintained on the comptroller's Internet website or in non-electronic form and will be updated within thirty (30) calendar days of the date the comptroller's office approves and processes applications Qualifications for Inclusion in the Comptroller's Registry of Arbitrators. (a) To qualify initially as an arbitrator for inclusion in the comptroller's registry of arbitrators and to continue to be included in the registry, an individual must satisfy or comply with the requirements of this section. (b) A person must principally reside in the state of Texas to qualify for inclusion in the arbitrator registry. A person who has been granted a residence homestead exemption on property he or she owns and occupies in Texas qualifies as an arbitrator. A person does not qualify for inclusion in the registry of arbitrators if he or she has been granted a residence homestead exemption in another state or has been granted more than one such exemption. If an arbitrator owns no property for which a residence homestead exemption has been granted in any state, including Texas, then the arbitrator's principal residence is in the state of Texas if the arbitrator lives in a residential property in Texas more than 50% of his or her time. Falsely claiming to principally reside in Texas will result in the immediate removal of the individual from the registry and the reporting of this misconduct to the individual's professional licensing or certification board or regulatory authority. 42 TexReg 6334 November 10, 2017 Texas Register

89 (c) To qualify professionally to serve as an arbitrator, a person must either: (1) be licensed as an attorney and hold a current, active Texas law license; or (2) have completed at least 30 hours of training in arbitration and alternative dispute resolution procedures from a university, college, or legal or real estate trade association; and hold a current, active license or certification and have been licensed or certified continuously during the five years preceding the date the person agrees to serve as an arbitrator, in any one of the following professions or occupations: (A) a real estate broker or sales agent under Occupations Code, Chapter 1101; (B) a real estate appraiser under Occupations Code, Chapter 1103; or (C) a certified public accountant under Occupations Code, Chapter 901. (d) For an arbitrator to continue to qualify for inclusion in the registry, he or she must: (1) complete and submit a new or renewal application form issued by the comptroller on or before: (A) each renewal date of the applicant's license or certification under which the applicant was qualified previously pursuant to subsection (c) of this section; or (B) the second anniversary of the date the arbitrator was initially added to the registry or his or her listing on the registry renewed; section; (3) have no history of failure to comply with this subchapter; and (2) be in compliance with subsections (b) and (c) of this (4) have completed during the preceding two years at least eight (8) hours of continuing education in arbitration and alternative dispute resolution procedures offered by a university, college, real estate trade association, or legal association. This continuing education requirement may be satisfied by submission of documentation that the arbitrator attended or taught personally at least eight (8) hours of one or more training courses that meet the requirements of this paragraph. (e) An individual does not qualify for inclusion in the registry of arbitrators during any period in which he or she holds any one of the following positions in this state: (1) member of a board of directors of any appraisal district; (2) member of any appraisal review board; (3) employee, contractor, or officer of any appraisal district; (4) employee of the comptroller; or (5) member of a governing body, officer, or employee of any taxing unit Arbitrator Eligibility for a Particular Appointment. (a) To be eligible for appointment as an arbitrator to a particular arbitration proceeding, an individual must satisfy or comply with the requirements of this section. (b) To be eligible for initial appointment in an arbitration, the arbitrator must principally reside in the county in Texas where the property that is the subject of the arbitration is located. If no available arbitrator on the registry principally resides in the county in which the property that is the subject of the arbitration is located, the comptroller may appoint an otherwise eligible arbitrator on the registry residing in another county in Texas. (c) An arbitrator is considered to principally reside in Texas in that county where the arbitrator owns property on which a residence homestead exemption has been granted to the arbitrator. If an arbitrator owns no property for which a residence homestead exemption has been granted in any state, including Texas, then the arbitrator's principal residence is that residential property in the county in which the arbitrator resides more than 50% of his or her time. (d) A person is ineligible for and may not accept any appointment as an arbitrator in a county in which the property that is the subject of the arbitration is located, if at any time during the five (5) years preceding the appointment at issue, the person has engaged in the following activities in that same county's appraisal district: (1) represented any person or entity for compensation in any proceeding under the Property Tax Code; (2) served as an officer or employee of the appraisal district; or (3) served as a member of the appraisal review board for the appraisal district. (e) For purposes of subsection (d)(1) of this section: (1) any proceeding under the Property Tax Code begins with the filing of a notice of protest and includes: communications with appraisal district employees regarding a matter under protest; protest settlement negotiations; any appearance at an ARB hearing; any involvement in a binding arbitration under Tax Code, Chapter 41A; and any involvement at either the district court or appellate court level of an appeal pursued under Tax Code, Chapter 42; and (2) any person who has served as an officer or employee of any firm, company, or other legal entity that has represented any person or entity for compensation in any proceeding as described by subsection (e)(1) of this section, is ineligible and may not accept the appointment. (f) An individual is ineligible for and may not accept an appointment as an arbitrator in any arbitration matter in which the individual is related by affinity within the second degree or by consanguinity within the third degree as determined under Government Code, Chapter 573, to any of the following people who are deemed to be a party to the arbitration matter itself: (1) the property owner; (2) an officer, employee, or contractor of the appraisal district responsible for appraising the property at issue; (3) a member of the board of directors of the appraisal district responsible for appraising the property at issue; or (4) a member of the appraisal review board in the area in which the property at issue is located. (g) An individual is ineligible for and may not accept an appointment as an arbitrator in any arbitration matter in which the individual currently or during the previous five (5) years has had a business relationship with the owner, the agent, or the appraisal district involved in that particular arbitration matter Arbitrator Duties. (a) Upon inclusion in the comptroller's registry of arbitrators, an individual who accepts an arbitration appointment shall conduct PROPOSED RULES November 10, TexReg 6335

90 each arbitration proceeding pursuant to the terms of Tax Code, Chapter 41A, and this subchapter; and for a fee that is not more than the applicable amount stated in the fee schedule set out in subsection (d) of this section. (b) Each arbitrator included in the comptroller's registry is required to notify the comptroller in writing of any changes in contact information (including address, phone number, address, website), and any material change in the information provided in his or her application or in his or her qualifications or eligibility for appointment within ten (10) calendar days of the change. A material change includes, but is not limited to a change in county of residence, loss of required licensure, incapacity, ineligibility or other condition that would prevent the person from lawfully and professionally performing arbitration duties. (c) Violations of subsection (a) of this section or failure of the arbitrator to report a material change under subsection (b) of this section may result in the immediate removal of the arbitrator from the current registry upon its discovery and the denial of future applications for inclusion in the registry. An arbitrator's failure to report a material change as required by this section shall not affect the determinations and awards made by the arbitrator during the period that the arbitrator is listed in the registry. (d) The arbitrator' s fee shall not exceed: (1) $400 if the property qualifies as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is $500,000 or less as determined by the ARB order; (2) $450 if the property qualifies as the owner's residence homestead under Tax Code, 11.13, and appraised or market value is more than $500,000 as determined by the ARB order; (3) $450 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is $1 million or less as determined by the ARB order ; (4) $750 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value is more than $1 million but not more than $2 million as determined by the ARB order; (5) $1,000 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value of the property is more than $2 million but not more than $3 million as determined by the ARB order; and (6) $1,500 if the property does not qualify as the owner's residence homestead under Tax Code, 11.13, and the appraised or market value of the property is more than $3 million but not more than $5 million as determined by the ARB order Provision of Arbitration Services. (a) The arbitrator may require written agreements with the appraisal district and the owner or agent concerning provision of arbitration services, including but not limited to the time, date, place, and manner of conducting and concluding the arbitration proceeding. Arbitration services shall be provided pursuant to this section unless the parties agree otherwise. (b) Unless the property owner or agent and the appraisal district both agree to arbitration by submission of written documents only, the arbitration will be conducted in person or by teleconference. The arbitrator may decide whether to conduct the arbitration in person or by teleconference unless the property owner or agent indicates on the Request for Binding Arbitration form (Form AP-219) that the arbitration be conducted in person only. If the arbitration is conducted in person, the arbitrator and both parties shall appear in person for the hearing. If the arbitration is conducted in person, the proceeding must be held in the county where the appraisal district office is located and from which the appraisal review board order determining protest was issued, unless the parties agree to another location. The selected location must be in an office-type setting generally open to the public. (c) Upon acceptance of an appointment, the arbitrator shall contact promptly by telephone or electronic mail the property owner or agent and the appraisal district to notify the parties of his or her appointment, to propose one or more dates for the arbitration hearing, and to request alternate hearing dates from the parties if the date(s) proposed is not acceptable. The arbitrator should cooperate with the appraisal district and the owner or agent in scheduling the arbitration hearing. (d) The arbitrator shall set the hearing date and serve written notice of the hearing information required by subsection (e) of this section as follows: (1) if the arbitrator, property owner or agent, and appraisal district have all agreed in writing to the same hearing date after consultation under subsection (c) of this section, the notice of hearing with the agreed date may be served electronically or by first-class mail; or (2) if no agreement is reached after three (3) or more business days of the arbitrator's initial contact attempt under subsection (c) of this section, the arbitrator shall set the hearing date at least 30 days from the date of mailing of the notice which shall be served by registered or certified mail with return receipt requested. (e) The arbitrator shall provide or include in the written notice of hearing served under subsection (d) of this section, the following information: (1) the date and time of the arbitration hearing; (2) the physical address of the hearing location if the hearing is in person; (3) the date by which the parties must exchange evidence before the hearing; (4) the arbitrator's contact information, including address, phone number, and mailing address, as well as a fax number if available; (5) a copy of the arbitrator's written procedures for the hearing; (6) the methods, including electronic mail, U.S. first-class mail, overnight or personal delivery, by which the parties are to communicate and exchange materials; and (7) any other matter about which the arbitrator wishes to advise the parties before the hearing. (f) The arbitrator may continue a hearing for reasonable cause. The arbitrator shall continue a hearing if both parties agree to the continuance. The arbitrator may hear and determine the controversy on the evidence produced at the hearing even if a party fails to appear so long as the party has received notice of the hearing pursuant to subsection (d) of this section. Appearance at the hearing waives any defect in the notice. (g) Each party at the hearing is entitled to be heard; present evidence material to the controversy; and cross-examine any witness. The arbitrator shall administer to each witness testifying the same oath required of a witness in a civil action in district court. (h) The arbitrator shall decide to what extent the arbitration hearing procedures are formal or informal. The arbitrator shall have available at the hearing a copy of the written procedures the arbitrator previously delivered to the parties with the hearing notice. The parties 42 TexReg 6336 November 10, 2017 Texas Register

91 shall be allowed to record audio of the proceedings, but may record video only with the consent of the arbitrator. (i) The parties to an arbitration proceeding may represent themselves or, at their own cost, may be represented by an agent if the requirements of of this title (relating to Agent Representation in Arbitration) have been met. (j) An arbitrator should behave in a professional manner at all times in rendering arbitration services. An arbitrator should treat the parties with respect in the course of the binding arbitration proceeding. The arbitrator shall not engage in conduct that creates a conflict of interest. (k) The confidentiality provisions of Tax Code, 22.27, concerning information provided to an appraisal office, apply to information provided to arbitrators. The information may not be disclosed except as provided by law. (l) The arbitrator shall not communicate with the owner, the appraisal district, or an agent, nor shall the owner, the appraisal district, or an agent communicate with the arbitrator, prior to the arbitration hearing or after the arbitration hearing and before the arbitration determination and award is issued, concerning specific evidence, argument, facts, or the merits, regarding the property subject to arbitration. Such communications may be grounds for the removal of the arbitrator from the comptroller's registry of arbitrators. (m) The arbitrator shall dismiss a pending arbitration action with prejudice, for lack of jurisdiction, under any one of the following circumstances: (1) that taxes on the property subject to the appeal are delinquent or undisputed taxes were not paid before the delinquency date set by the applicable section of Tax Code, Chapter 31; (2) that the ARB order(s) appealed did not determine a protest filed pursuant to Tax Code, 41.41(a)(1) or (2) concerning either the appraised or market value of the property or unequal appraisal of the property; (3) that the appraised or market value of the property as determined in the ARB order was either more than $5 million or the property did not qualify as the owner's residence homestead under Tax Code, 11.13; (4) that the request for arbitration was filed with the appraisal district more than 45 calendar days after the date the owner received the ARB order determining the protest; or (5) that the owner filed an appeal with the district court under Tax Code, Chapter 42, concerning the value of the property at issue in the pending arbitration. (n) When a binding arbitration proceeding is brought pursuant to Tax Code, 41A.03(a-1) involving two or more contiguous tracts of land, the arbitrator shall dismiss from consideration in the proceeding each tract of land and each appraisal review board order appealed in which it is determined that any of the circumstances set forth in subsection (m) of this section apply to the particular tract or ARB order. However, the combined total value of all ARB orders appealed may exceed the $5 million threshold so long as each individual tract meets the $5 million limit. (o) The arbitrator must complete an arbitration proceeding in a timely manner and will make every effort to complete the proceeding within 120 days from his or her acceptance of the appointment. Failure to comply with the timely completion of arbitration proceedings may result in the removal of the arbitrator from the comptroller's registry of arbitrators Removal of Arbitrator from the Registry of Arbitrators. (a) The comptroller shall remove a person from the arbitrator registry if: (1) the person fails or declines to renew the person's agreement to serve as an arbitrator in the manner required under of this title (relating to Qualifications for Inclusion in the Comptroller's Registry of Arbitrators); or (2) the director of the Property Tax Assistance Division of the comptroller's office determines by clear and convincing evidence there is good cause for removal. (b) Good cause for removal includes the following grounds: (1) the person is not qualified or becomes not qualified to serve as an arbitrator under the terms of of this title; (2) the person is not eligible or becomes ineligible under the terms of of this title (relating to Arbitrator Eligibility for A Particular Appointment); (3) the person fails to respond to or refuses to comply with requests for information from the comptroller's office; (4) the person has violated one or more provisions of of this title (relating to Arbitrator Duties), of this title (relating to Provision of Arbitration Services), or (d) of this title (relating to Arbitration Determination and Award) (20-day deadline for arbitrator to issue determination and award); and (5) the person has engaged in repeated instances of bias or misconduct while acting as an arbitrator. (c) Clear and convincing evidence means the measure or degree of proof that produces a firm belief or conviction of the truth of the allegations regarding the arbitrator and that the allegations constitute good cause for removal. (d) A person may request the removal of an arbitrator from the registry by filing the following items with the comptroller's Property Tax Assistance Division within sixty (60) calendar days of the last incident giving rise to the request: (1) a letter, addressed to the division director and signed by the requestor, that identifies the arbitrator sought to be removed and the grounds under subsection (b) of this section that constitute good cause for removal; (2) at least one sworn statement from an individual with first-hand knowledge of the conduct complained of that sets forth the facts in detail to support the grounds for removal; and (3) for grounds for removal alleged under subsection (b)(4) or (5) of this section, copies of all available communications exchanged between the arbitrator and the parties, including s, documents, and any other materials, as well as electronic video or audio recordings. (e) The confidentiality provisions of Tax Code, 22.27, concerning information provided to an appraisal office, apply to information reviewed or submitted under this section and may not be disclosed except as provided by law. If any of the materials submitted are deemed confidential, that portion of the materials that is considered confidential must be designated as such to protect it from disclosure. (f) Requests for removal that are not timely or that fail to meet the requirements in subsection (d) of this section will be denied. Requests for removal under subsection (b)(5) of this section that do not identify and include evidence of more than one incident of alleged bias or misconduct will be denied. Requests under subsection (b)(5) of this section based on substantive arbitration issues and the resulting awards will be denied summarily. PROPOSED RULES November 10, TexReg 6337

92 (g) Within thirty (30) calendar days after submission, the division will notify the requestor whether the request is accepted for review or denied. There is no appeal for denial of a request. If accepted for review, all materials the requestor submitted will be forwarded by certified mail, return receipt requested or electronically, to the arbitrator who is the subject of the request for a response. The arbitrator has thirty (30) calendar days from receipt of the materials to respond to the division, explaining why a finding of good cause for removal should not be made. (h) Within thirty (30) calendar days of receipt of the arbitrator's response, the division director will determine whether clear and convincing evidence supports a finding of good cause for removal of the arbitrator from the registry. The division will notify promptly the requestor and the arbitrator of the director's determination. (i) If good cause for removal under subsection (a)(2) of this section is found, the arbitrator will be removed from the registry for a period of two (2) years from the date of the determination. (j) There is no appeal for removal of a person from the registry under this section. An arbitrator removed under subsection (a)(2) of this section may reapply for inclusion in the registry two (2) years from the date of the removal determination. The circumstances giving rise to the removal under this section may be considered in evaluating the re-application Arbitration Determination and Award. (a) The arbitrator shall determine the appraised or market value of the property that is the subject of the arbitration. (b) If the arbitrator makes a determination of the appraised value of property that qualifies for special appraisal under Tax Code, Chapter 23, Subchapter B, C, D, E, or H, the statutory provisions regarding special appraisal and the comptroller's rules, including the comptroller's special appraisal manuals, must be followed in making the appraised value determination. (c) If the arbitrator makes a determination of the value of a residence homestead that has an appraised value that is less than its market value due to the appraised value limitation required by Tax Code, 23.23, the appraised value may not be changed unless: (1) the arbitrator determines that the formula for calculating the appraised value of the property under Tax Code, 23.23, was incorrectly applied and the change correctly applies the formula; (2) the calculation of the appraised value of the property reflected in the ARB order includes an amount attributable to new improvements and the change reflects the arbitrator's determination of the value contributed by the new improvements; or (3) the arbitrator determines that the market value of the property is less than the appraised value indicated on the ARB order and the change reduces the appraised value to the market value determined by the arbitrator. (d) Within twenty (20) calendar days of the conclusion of the arbitration hearing, the arbitrator shall render and issue his or her decision by completing and signing the comptroller-prescribed Arbitration and Determination Award form (Form ). The comptroller's office generates and delivers this form by first-class mail to the arbitrator for his or her completion and signature. The arbitrator shall deliver a copy of the completed and signed Arbitration and Determination Award form electronically, or by facsimile transmission, or by regular first-class mail, to the owner or agent, the comptroller, and the appraisal district. (e) An arbitration award is final and may not be appealed except as permitted under Civil Practice and Remedies Code, , and may be enforced in the manner provided by Civil Practice and Remedies Code, Chapter 171, Subchapter D Payment of Arbitrator Fee, Refund of Property Owner Deposit, and Correction of Appraisal Roll. (a) Deposits owners or agents submit to appraisal districts with requests for arbitration which the appraisal districts forward to the comptroller's office pursuant to of this title (relating to Appraisal District Responsibility for Request) shall be deposited into individual accounts for each owner and according to assigned arbitration numbers. (b) The provisions of Government Code, Chapter 2251, shall apply to the payment of arbitrator fees by the comptroller, if applicable, beginning on the date that the comptroller receives a copy of the arbitrator's determination and award by regular first-class mail. (c) The payment of arbitrators' fees and arbitration deposit refunds shall be processed, after the comptroller retains $50 for administrative costs, in the following manner: (1) If the arbitrator determines that the appraised or market value, as applicable, of the property that is the subject of the appeal is nearer to the property owner's opinion of value of the property as stated in the request for binding arbitration than the value reflected in the ARB order, the comptroller shall refund the property owner's arbitration deposit. In this case, the appraisal district, on receipt of a copy of the award, shall pay the arbitrator's fee. (2) If the arbitrator determines that the appraised or market value, as applicable, of the property that is the subject of the appeal is not nearer to the property owner's opinion of value of the property as stated in the request for binding arbitration than the value reflected in the ARB order, the comptroller shall pay the arbitrator's fee out of the owner's arbitration deposit. (3) If the arbitrator determines that the appraised or market value, as applicable, of the property that is the subject of the appeal is exactly one-half of the difference in value between the property owner's opinion of value of the property as stated in the request for binding arbitration and the ARB order, the comptroller shall process payment of the arbitrator's fee and arbitration deposit pursuant to paragraph (2) of this subsection. (d) The chief appraiser shall correct the appraised or market value, as applicable, of the property as shown on the appraisal roll to reflect the arbitrator's determination if the conditions of either subsection (c)(1) or (3) of this section are met. The chief appraiser shall correct the appraised or market value, as applicable, of the property as shown on the appraisal roll to reflect the arbitrator's determination if the conditions of subsection (c)(2) of this section are met and if the value, as determined by the arbitrator, is less than the value reflected on the ARB order. (e) Unless the appraisal district is to pay the arbitrator's fee pursuant to subsection (c)(1) of this section, the arbitrator's fee will be paid to him or her from the owner's deposit and mailed to the address shown on the arbitrator's registry application. If the arbitrator's fee is less than the maximum allowable fee under (d) of this title (relating to Arbitrator Duties), the comptroller shall refund to the owner or agent any remaining deposit, less $50 retained by the comptroller for administrative costs. If the arbitrator's fee is the maximum allowable fee under (d) of this title, the comptroller shall retain $50 of the deposit for administrative costs and no refund will be paid. (f) If the comptroller denies a request for arbitration as provided by (b) of this title (relating to Comptroller Processing of Request), the comptroller shall refund to the owner or agent the deposit, less the $50 retained by the comptroller for administrative costs. 42 TexReg 6338 November 10, 2017 Texas Register

93 (g) If an arbitrator dismisses a pending arbitration pursuant to (m) of this title (relating to Provision of Arbitration Services), the comptroller shall refund to the owner or agent the deposit, less the $50 retained by the comptroller for administrative costs. In such event, the arbitrator must seek payment from the owner or agent for the services rendered prior to the dismissal of the proceeding. (h) An owner or agent may withdraw a request for arbitration only by written notice delivered to the appraisal district, the comptroller, and the arbitrator, if one has been appointed. If the owner or agent notifies the comptroller of the withdrawal of a request for arbitration in writing fourteen (14) or more calendar days before the arbitration hearing date set in the written notice under (d) of this title, the comptroller shall refund to the owner or agent the deposit, less the $50 retained by the comptroller for administrative costs. If the owner or agent withdraws a request for arbitration less than fourteen (14) calendar days before the arbitration hearing date set in the written notice under (d) of this title, the comptroller shall pay out of the deposit the fee, if any, charged by the arbitrator. (i) A refund to an owner or agent or a payment to an arbitrator is subject to the provisions of Government Code, The comptroller's form for request for binding arbitration will require identification of the social security number or tax identification number of the individual authorized to receive deposit refunds. For an owner, the owner is required to provide the owner's social security number, federal tax identification number, or Texas state tax identification number. If an agent has been authorized by the owner to receive deposit refunds, the agent is required to provide the agent's social security number, federal tax identification number, or Texas state tax identification number. Deposit refunds will not be processed without the required identification. The comptroller shall not issue a warrant for payment to a person who is indebted to the state or has a tax delinquency owing to the state until the indebtedness or delinquency has been fully satisfied Prohibited Communications Regarding Pending Arbitrations. No party to an arbitration including, but not limited to, a property owner, a property owner's agent, an appraisal district, or an arbitrator, may seek the comptroller's advice or direction on a matter relating to a pending arbitration under Tax Code, Chapter 41A. An arbitration is pending from the date a request for arbitration is filed and continues until delivery of the arbitrator's final arbitration determination and award pursuant to Tax Code, 41A.09. The prohibition in this subsection shall not apply to administrative matters assigned to the comptroller, such as the processing of arbitration requests and deposits Forms. (a) The Comptroller of Public Accounts adopts by reference the Request for Binding Arbitration form (Form AP-219), which owners and agents are required to complete and sign to initiate an appeal by arbitration; and the Arbitration Determination and Award form (Form ), which arbitrators are required to complete and sign to render and issue his or her decision. (b) Except as provided by subsection (a) of this section, all comptroller forms regarding binding arbitration under Tax Code, Chapter 41A, may be revised at the discretion of the comptroller. The comptroller also may prescribe additional forms for the administration of binding arbitration. (c) All current forms regarding arbitration, including the Appointment of Agent for Binding Arbitration form (Form ), can be obtained from the Comptroller of Public Accounts, Property Tax Assistance Division, P.O. Box 13528, Austin, Texas Current arbitration forms, except the Arbitration Determination and Award form (Form ), are available on the comptroller's website. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 24, TRD Lita Gonzalez General Counsel Comptroller of Public Accounts Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS CHAPTER 29. BENEFITS SUBCHAPTER H. FORFEITURES OF ACCRUED BENEFITS 34 TAC 29.90, The Teacher Retirement System of Texas (TRS) proposes new rules 29.90, relating to Forfeiture of Certain Benefits Due to Criminal Offense and 29.91, relating to Restoring Forfeited Benefits After Conviction is Overturned. The proposed new rules will be located in proposed new subchapter H of chapter 29, titled Forfeitures of Accrued Benefits. Proposed new rule addresses Senate Bill 7 which requires that if a defendant who is or was an employee of a public primary or secondary school is convicted of a qualifying felony of which the victim is a student, the defendant forfeits the right to receive any service retirement benefits payable by TRS. Proposed new rule addresses a requirement in the same bill providing that benefits must be restored to the defendant when the conviction is overturned on appeal or the defendant meets the requirements for innocence under (a)(2), Civil Practices and Remedies Code. The requirements of the bill take effect on the effective date of the rules adopted by the Board of Trustees. Senate Bill 7 requires the Board of Trustees to adopt rules necessary to implement the new section of the law, , Government Code, no later than December 31, Senate Bill 7 was passed during the regular session of the 85th Legislature and added , Government Code, to the TRS plan terms. The new statute addresses when a person who is a member or retiree of TRS forfeits the right to receive service retirement benefits by being convicted of a felony under 21.02, Penal Code, relating to continuous sexual abuse of young child or children; 21.12, Penal Code, relating to improper relationship between educator and student; , Penal Code, relating to sexual assault; or , Penal Code, relating to aggravated sexual assault, of which a student is the victim and the crime occurred while the defendant was employed by a TRS-covered employer. The proposed new rule details how TRS will comply with the new statute. Proposed new 29.90, concerning the forfeiture of certain benefits due to a criminal offense, requires that upon receipt of notice of judgment from a state or federal district court, a district attorney or U.S. Attorney, or the defendant's employer that includes PROPOSED RULES November 10, TexReg 6339

94 the information required for TRS to determine that the defendant's benefits are forfeited under , TRS will terminate the distribution of monthly service retirement benefits to the defendant if the defendant has retired and refund the balance of accumulated contributions in the member's account at the time of retirement or refund the balance of accumulated contributions in the member account to the defendant if he/she has not retired. Because the statute requires that benefits payable to an alternate payee under certain domestic relations orders are not affected by the defendant's ineligibility to receive a retirement annuity, the proposed new rule addresses how TRS will ensure that the alternate payee receives the benefits due under the qualified domestic relations order (QDRO). Proposed new 29.91, concerning restoring forfeited benefits after a conviction is overturned, addresses how benefits will be restored to a person whose conviction identified in is overturned or who meets the requirements for innocence under (a)(2), Civil Practices and Remedies Code. The new rule addresses how annuity payments that were forfeited will be restored to the member and the amount of the benefit payment if the annuities were divided based on the terms of a qualifying QDRO. It also distinguishes between annuities that were forfeited in the past and annuities that are due in the future. Annuities that were forfeited in the past must immediately be paid to the person along with interest, while annuities that are due in the future may be paid only upon repayment by the person of the accumulated contributions distributed on his/her behalf under The proposed new rule also addresses what benefits will be paid to certain alternate payees. Because Senate Bill 7 specifically addresses QDRO's in place before September 1, 2017 and QDRO's entered pursuant to , but does not address QDRO's entered after September but not pursuant to , there is a difference in how payments to alternate payees under the different QDRO's are affected. Don Green, Chief Financial Officer, has determined that, for each year of the first five years that the rules will be in effect, enforcing or administering them does not have foreseeable implications relating to cost or revenues of the state or local governments. Any implications relating to cost or revenues of the state or local governments are due to the enacted legislation requiring TRS to enforce or administer the law. Mr. Green has further determined that, for each year of the first five years that the rules will be in effect, the public benefits expected as a result of adoption of the proposed rules will be to specify how TRS will implement the provisions of recently enacted legislation requiring the forfeiture of certain service retirement benefits due to conviction of certain criminal offenses and the restoration of those benefits upon the overturning of a related conviction. Mr. Green has also determined that the proposed rules impose no economic cost to entities or persons required to comply with the proposed rules. Rather, any cost to entities or persons required to comply with the proposed rules is due to the enacted legislation the rules implement. Consequently, , Government Code, does not apply to the proposed rules. Mr. Green has determined that there will be no effect on a local economy because of the proposal, and therefore no local employment impact statement is required under , Government Code. Mr. Green has also determined that there will be no direct adverse economic effect on small businesses or micro-businesses as a result of the proposed rule; therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under , Government Code. Comments must be submitted in writing to Brian Guthrie, Executive Director, 1000 Red River Street, Austin, Texas Written comments must be received by TRS no later than 30 days after publication of this notice in the Texas Register. New rules and are proposed under the authority of , Government Code, as added by Senate Bill 7, 85th Legislature (Regular Session), 2017, concerning certain ineligibility for retirement annuity Forfeiture of Certain Benefits Due to Criminal Offense. (a) Upon receipt of a notice of judgment prescribed in subsection (b) of this section from a state or federal district court, state district or U.S. attorney, or the defendant's employer related to a qualifying felony described in , Government Code, that was committed by a member or retiree and in which each and every element of the offense occurred after the effective date of this rule, the Teacher Retirement System of Texas (TRS) shall make only the disbursements described in this section on behalf of the defendant. Disability retirement benefits payable on behalf of a defendant are not affected by this section. (b) A notice of judgment must include the following: (1) the name and social security number of the defendant or other identifying information sufficient for TRS to correctly identify the defendant as a member or retiree of TRS; (2) a statement or sufficient information for TRS to conclude that the crime was a felony described in (a) or (a-1), Government Code; (3) an affirmative statement that each and every element of the crime occurred after the effective date of this rule; (4) a statement that the defendant was a member or service retiree of TRS when the crime was committed; (5) a statement that the defendant was an employee of a TRS-covered employer at the time the crime was committed and that the crime related to the defendant's employment; and (6) a statement that the victim of the crime was a student at the time the qualifying felony occurred. (c) If the defendant is a member of TRS but has not retired under service retirement at the time TRS receives the prescribed notice of judgment required in subsection (a) of this section, TRS shall terminate the defendant's membership and issue a refund of the accumulated contributions in the member account, and in the event the defendant participated in the Deferred Retirement Option Plan (DROP) the refund shall include amounts in the defendant's DROP account, subject to the following: (1) The defendant or a person authorized to act on the behalf of the defendant must complete the documents required by TRS to effectuate the refund; (2) The refund of the defendant's accumulated contributions and any DROP balance is subject to the terms of any domestic relations order (DRO) determined by TRS to be a qualified domestic relations order (QDRO) that is in effect before September 1, 2017 and is subject to the terms of any QDRO entered on or after September 1, 2017 except as provided in paragraph (3) of this subsection; (3) Upon receipt of a certified copy of a DRO related to a division of retirement plan benefits entered on or after September 1, 2017 pursuant to (i), Government Code, and a determination by TRS that the DRO is a qualified order under Chapter 804, Government Code, TRS shall apply the QDRO to the accumulated contributions in the member account and in any DROP account at the time no- 42 TexReg 6340 November 10, 2017 Texas Register

95 tice is received by TRS and issue a refund to the defendant of any accumulated contribution amounts or DROP account balance not awarded to the alternate payee in the QDRO. In addition: (A) If the member has fewer than five years of service credit at the time the notice of judgment is received by TRS, TRS shall distribute to the alternate payee the portion of the accumulated contributions awarded to alternate payee, and TRS shall have no further obligation for the payment of benefits to the alternate payee; (B) If the member has five or more years of service credit at the time the notice of judgment is received by TRS, TRS shall maintain the portion of the accumulated contributions and any portion of a DROP account awarded to the alternate payee under the terms of the QDRO until the earliest month the defendant would have been eligible for service retirement benefits, including a benefit reduced for early age, and at that time shall commence distribution to the alternate payee of the alternate payee's portion of a standard annuity benefit, reduced for early age if applicable, based on the defendant's annual compensation and service credit maintained by TRS at the time of the refund to the defendant under this subsection. In addition to a portion of the standard annuity, TRS shall also distribute to the alternate payee in the form of a lump sum any portion of the balance remaining in a DROP account awarded to the alternate payee under the QDRO plus applicable interest; and (C) If the defendant dies before reaching the earliest age eligible for retirement, TRS shall distribute to the alternate payee the portion of the accumulated contributions plus applicable interest awarded to the alternate payee under the QDRO in the form of a lump sum payment, and TRS shall have no further obligation for payments of benefits to the alternate payee; (4) The alternate payee's interest in the standard annuity benefits payable by TRS under paragraph (3) of this subsection terminates at the earlier of the death of the defendant or the alternate payee as required in , Government Code. If there are any unpaid accumulated contributions or amounts in the defendant's DROP account awarded to the alternate payee under the terms of the QDRO remaining at the time of the alternate payee's death, the unpaid accumulated contributions, unpaid amounts in the DROP account, and any excess unpaid accumulated contributions remaining if monthly annuity payments have commenced to the alternate payee, are payable to the defendant; and (5) The refund of accumulated contributions to an alternate payee under the terms of a QDRO pursuant to this subsection terminates the interest of the alternate payee in any future benefits payable by TRS on behalf of the defendant. (d) If the defendant is a service retiree at the time TRS receives the prescribed notice of judgment required in subsection (a) of this section, TRS shall cease distributions to the defendant of any future service retirement benefits, including any partial lump sum option (PLSO) payments, and any remaining DROP account balance, effective with the annuity for the month following the month in which TRS receives notice of judgment required in this section and shall, in lieu of future service retirement benefits, issue a refund of the accumulated contributions in the member account at the time of retirement and any balance remaining in the defendant's DROP account at the time of the refund, subject to the following: (1) The refund of accumulated contributions and payment of any unpaid DROP account balance is subject to the terms of any DRO determined by TRS to be a qualified order that is in effect on or after September 1, 2017 that is not entered pursuant to (i), Government Code and the alternate payee shall receive the share of the accumulated contributions and any remaining DROP account balance awarded by the QDRO; (2) The refund of accumulated contributions and any DROP account balance pursuant to this subsection to an alternate payee under the terms of a QDRO entered on or after September 1, 2017 but not entered pursuant to (i), Government Code terminates the interest of the alternate payee in any future benefits payable by TRS on behalf of the defendant; (3) The defendant shall receive the portion of a refund of accumulated contributions and any unpaid DROP balance awarded to the defendant pursuant to a DRO approved by TRS as a QDRO before September 1, 2017; however payments to the alternate payee of the portion of the service retirement annuity awarded to the alternate payee shall continue under the terms of the QDRO and the pension plan as set forth in paragraph 4 of this subsection. The alternate payee of a QDRO approved before September 1, 2017 shall not receive any portion of the refund of the accumulated contributions to the member required in this subsection; (4) Upon receipt of a certified copy of a DRO related to a division of property made pursuant to (i), Government Code, entered on or after September 1, 2017, and a determination by TRS that the DRO is a qualified order under Chapter 804, Government Code, TRS shall apply the QDRO to the service retirement annuity amount and shall pay the alternate payee the portion of each service retirement annuity payment, including a portion of any PLSO payments remaining, and any remaining DROP amount ordered in the QDRO. The QDRO award shall also be applied to the amount of accumulated contributions in the defendant's account at the time of retirement and any balance remaining in the defendant's DROP account at the time the notice of judgment is implemented by TRS and TRS shall issue a refund to the defendant of the amount of accumulated contributions in the member's account at the time of retirement that is not awarded to the alternate payee in the QDRO and the portion of any remaining balance in a DROP account after distributions due to service retirement that were not awarded to the alternate payee. The alternate payee under a QDRO entered pursuant to (i), Government Code, shall not receive any portion of the refund of the account balance; and (5) The alternate payee's interest in the benefits payable by TRS on behalf of the defendant, established in a QDRO approved by TRS before September 1, 2017 or entered pursuant to (i), Government Code, terminates at the earlier of the death of the defendant or the alternate payee. In the event the defendant elected an optional annuity retirement plan, the alternate payee shall receive the portion awarded in the QDRO of the benefit amount payable to the beneficiary of the optional annuity but benefits shall not be paid to the beneficiary. The alternate payee's interest in the benefits payable by TRS under an optional annuity retirement plan terminates at the earlier of the death of the beneficiary or the expiration period, or the alternate payee as required in , Government Code. If there are any remaining unpaid excess accumulated contributions or any DROP account balance awarded to the alternate payee under the terms of the QDRO remaining at the time of the alternate payee's death, the unpaid excess accumulated contributions and unpaid remaining DROP balance are payable to the defendant or the defendant's estate Restoring Forfeited Benefits After Conviction is Overturned. (a) Upon receipt of a notice of a judgment overturning the conviction of a former TRS member or service retiree for a qualifying felony that resulted in the termination of membership in TRS or the forfeiture of service retirement benefits required in , Government Code, or upon receipt of a notice of judgment that the person whose membership in TRS was terminated or who forfeited service retirement benefits as required in , Government Code meets the PROPOSED RULES November 10, TexReg 6341

96 requirements for innocence under (a)(2), Civil Practice and Remedies Code, TRS shall restore the person to membership or distribute service retirement benefits to the person as provided in this section. (b) A person whose membership in TRS was terminated as provided in of this subchapter before the distribution of service retirement benefits commenced shall be restored to membership in TRS as follows: (1) If there was a qualified domestic relations order (QDRO) in effect before September 1, 2017, membership shall be restored upon receipt from the former member of an amount equal to the total accumulated contributions paid on behalf of the member under of this subchapter, including any accumulated contributions paid to an alternate payee under the terms of a QDRO. However, TRS shall not pay to the alternate payee any portion of any benefits restored under this section under the terms of a QDRO in effect before September 1, 2017, even if the benefits result in part from the reinstatement of service credit initially credited during the marriage. (2) If a QDRO was entered on or after September 1, 2017 under the authority provided in (i), Government Code, the person shall repay all of the accumulated contributions distributed under 29.90, and: (A) If a distribution of service retirement benefits has not yet commenced to the alternate payee, the amount of accumulated contributions held under 29.90(c)(3) for the benefit of the alternate payee shall be restored to the member account. Any future distribution of benefits on behalf of the member shall be subject to the terms of the QDRO entered under the authority of , Government Code; or (B) If a distribution of service retirement benefits has commenced to the alternate payee, the former member shall pay the amount of accumulated contributions refunded on his or her behalf less the portion of accumulated contributions retained by TRS under the terms of the QDRO and TRS shall commence distributing to the member the portion of the retirement benefits elected by the member and not awarded to the alternate payee. The alternate payee shall continue to receive the portion of the standard service retirement annuity awarded under the terms of the QDRO until the earlier of the death of the alternate payee or the member. (3) If a QDRO was entered on or after September 1, 2017 but not under the authority provided in (i), membership shall be restored upon receipt from the person of an amount equal to the total accumulated contributions paid on behalf of the member under 29.90, including any accumulated contributions paid to an alternate payee. However, TRS shall not pay to the alternate payee any portion of any benefits restored under this section under the terms of a QDRO in effect before September 1, 2017, even if the benefits result in part from the reinstatement of service credit initially credited during the marriage. (4) If there was no QDRO in effect with respect to the member, membership is restored upon receipt by TRS of an amount equal to all accumulated contributions refunded to the member. (c) A person whose membership in TRS was terminated as provided in after the commencement of service retirement benefits shall be restored to TRS membership as follows: (1) If there was a QDRO in effect before September 1, 2017 or on or after September 1, 2017 under the authority provided in (i), Government Code: (A) the member shall receive an amount equal to the accrued total of annuity payments, including any PLSO payments, previously forfeited due to the conviction through the calendar month of notice of the judgement overturning the conviction to TRS plus interest, less any amounts paid to the alternate payee under the terms of a QDRO; (B) the member shall repay to TRS an amount equal to the portion of the accumulated contributions refunded to the member. A distribution of service retirement annuities, less any amount distributed to the alternate payee under the terms of the QDRO, may resume to the member effective with the annuity payable for the calendar month in which TRS receives the member's payment of the amount refunded under this section; (2) If there was a QDRO in effect after September 1, 2017 and not under the authority of provided in (i), Government Code: (A) the member shall receive an amount equal to the accrued total of annuity payments, including any PLSO payments, previously forfeited due to the conviction through the calendar month of notice of the judgement overturning the conviction to TRS plus interest; (B) the member shall repay to TRS an amount equal to all accumulated contributions refunded by TRS, including any accumulated contributions paid to an alternate payee pursuant to the QDRO. A distribution of service retirement annuities may resume to the member effective with the annuity payable for the calendar month in which TRS receives the member's payment of the amount of refunded accumulated contributions. TRS shall not pay to the alternate payee any portion of any benefits restored under this section under the terms of the QDRO, even if the benefits result in part from the reinstatement of service credit initially credited during the marriage. (3) If there was no QDRO in effect with respect to the member, the member shall receive an amount equal to the accrued total of annuity payments, including any PLSO payments, previously forfeited due to the conviction through the calendar month of notice of the judgement overturning the conviction to TRS plus interest. A distribution of service retirement annuities may resume to the member effective with the annuity payable for the calendar month in which TRS receives the member's payment of the total amount accumulated contributions refunded to the member. (d) The amount of interest payable under subsection (c) of this section is the amount of interest provided for member contributions in , Government Code, for the time period that the service retirement benefits were previously forfeited. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 41. HEALTH CARE AND INSURANCE PROGRAMS 42 TexReg 6342 November 10, 2017 Texas Register

97 SUBCHAPTER A. RETIREE HEALTH CARE BENEFITS (TRS-CARE) 34 TAC 41.1, 41.5, 41.7, The Teacher Retirement System of Texas (TRS or system) proposes amendments to 41.1, relating to Initial Enrollment Periods for the Health Benefit Program under the Texas Public School Retired Employees Group Benefits Act (TRS-Care), 41.5, relating to Payment of Contributions, and 41.7, relating to Effective Date of Coverage. TRS also proposes new relating to Eligibility for the Alternative Plan for Medicare-Eligible Participants. The proposed amended or new rules all concern TRS-Care, the health benefit program TRS administers for retired eligible public school employees and their eligible dependents. The proposed amendments to 41.1, 41.5, and 41.7 and new affect Chapter 1575, Insurance Code, which provides for the establishment and administration of TRS-Care. The proposed changes to subsections (c) and (d) of 41.1 address changes to the TRS-Care plans that will take effect in early January of For the sake of consistency, the proposed changes to subsection (c) provide that the initial enrollment period for surviving spouses and surviving dependent children of a deceased retiree shall be similar to the initial enrollment periods of an eligible service retiree (under subsection (a)) and an eligible disability retiree (under subsection (b)) of this rule. The same can be said of the proposed changes to subsection (d) with regard to the proposed initial enrollment period for surviving spouses and surviving dependent children of a deceased active member. TRS-Care will continue its current practice of providing advance written notice of these initial enrollment periods to surviving spouses and surviving dependent children that are known to TRS. The proposed changes to subsections (e) and (h) of 41.5 address upcoming changes to the TRS-Care plans that are being implemented in response to recent legislation, including House Bill 3976 (85th Legislature, Regular Session, 2017) ("HB 3976"). Beginning on January 1, 2018, there will no longer be a free TRS-Care plan (i.e., TRS-Care 1) and there will no longer be two other levels of coverage; the TRS-Care 2 and TRS-Care 3 plans are being eliminated. Accordingly, failure to timely pay the full amount of a required contribution for coverage of a retiree or a surviving spouse will result in termination of coverage under TRS-Care. TRS will no longer have the option to downgrade the retiree's or surviving spouse's coverage to a free TRS-Care plan. TRS-Care will continue to work with retirees and surviving spouses over a period of months in an effort to bring their balances current before termination of coverage occurs. The reference to , Insurance Code in 41.7(b) is proposed for deletion because recent legislation repealed that statute effective January 1, The proposed substantive changes to 41.7(d) address upcoming changes to the TRS-Care plans that are being implemented in response to recent legislation. As noted above, beginning on January 1, 2018, there will no longer be multiple levels of coverage in TRS-Care. Therefore, the reference to "level[s] of coverage" is no longer appropriate. Also, with upcoming eligibility requirements, the ability of surviving spouses and surviving dependent children to remain in a given plan will be subject to the applicable eligibility requirements of the given plan. The proposed substantive changes to 41.7(h) are in response to recent legislation which, effective January 1, 2018, replaces the current Age 65 enrollment opportunity with a broader, new Age 65 enrollment opportunity. The effective date of coverage will be (1) the first day of the month following the month of the retiree's or surviving spouse's 65th birthday if the application for coverage is received before or during the month of the retiree's or surviving spouse's 65th birthday; or (2) the first day of the month following the receipt of the application if the application for coverage is received after the month of the retiree's or surviving spouse's 65th birthday but within the enrollment period. In 41.7(i), the proposed addition of the two references to Medicare Part B is needed because, effective January 1, 2018, a participant will be eligible for the Medicare Advantage plan if the participant only has Medicare Part B. Accordingly, TRS-Care will begin adjusting the costs of coverage for participants upon receiving proof of enrollment not only in Medicare Part A but also in Medicare Part B. The re-lettering of the references to the last three subsections of 41.7 result from the proposed elimination of 41.7(j), discussed immediately below. Current 41.7(j) is proposed for deletion because, as noted above, beginning on January 1, 2018, there will no longer be different levels of coverage (i.e., plans with reduced levels of coverage). The three existing levels of coverage, embodied in the TRS-Care 1, TRS-Care 2, and TRS-Care 3 plans, are being eliminated at the end of this current plan year. In new, re-lettered 41.7(j), the proposed changes provide that all retirees, surviving spouses, and surviving dependent children may cancel their TRS-Care coverage by submitting an appropriate notice of cancellation form. Cancellations will be effective on the later of: (1) the first day of the month following TRS-Care's receipt of the completed notice of cancellation form; or (2) the date requested by the retiree, surviving spouse, or surviving dependent child on the completed notice of cancellation form received by TRS-Care. The removal of the "fourteen day" retroactive cancellation option will streamline TRS-Care operations without a substantial impact upon participants. In response to recent legislation, TRS will begin offering a new "alternative Plan" on January 1, Proposed new TRS-Care rule 41.12, entitled Eligibility for the Alternative Plan for Medicare-Eligible Participants, establishes the eligibility criteria for enrollment in this plan. An individual will be eligible to enroll in the Alternative Plan if: (1) the individual is eligible to enroll in TRS-Care; and (2) the individual is eligible for Medicare and either: (i) does not have reasonable access to a particular provider, as determined by TRS; or (ii) as of January 1, 2018, does not have Medicare Part B coverage and the individual's ability to obtain Medicare Part B coverage is cost prohibitive, as determined by TRS. Don Green, Chief Financial Officer, has determined that, for each year of the first five years that the rules will be in effect, enforcing or administering them does not have foreseeable implications relating to cost or revenues of the state or local governments. Any implications relating to cost or revenues of state or local governments are due to recently enacted legislation requiring TRS to enforce or administer the law, including HB Mr. Green has further determined that, for each year of the first five years that the rules will be in effect, the public benefits expected as a result of adoption of the proposed rules will be to specify how TRS will implement the provisions of recently enacted legislation, including HB 3976, which entails plan design changes and new enrollment opportunities for the TRS-Care program. Mr. Green has PROPOSED RULES November 10, TexReg 6343

98 also determined that the proposed rules impose no economic cost to entities or persons required to comply with the proposed rules. Any cost to entities or persons required to comply with the proposed rules is due to recently enacted legislation, including HB Consequently, , Government Code, does not apply to the proposed rules. Mr. Green has determined that there will be no effect on a local economy because of the proposals, and therefore no local employment impact statement is required under , Government Code. Mr. Green has also determined that there will be no direct adverse economic effect on small businesses or micro-businesses as a result of the proposed rule; therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under , Government Code. Comments must be submitted in writing to Brian Guthrie, Executive Director, 1000 Red River Street, Austin, Texas Written comments must be received by TRS no later than 30 days after publication of this notice in the Texas Register. The amendments to 41.1, 41.5, and 41.7 and new are proposed under the authority of , Insurance Code, which authorizes the TRS Board of Trustees to adopt rules it considers reasonably necessary to implement and administer the TRS-Care program Initial Enrollment Periods for the Health Benefit Program under the Texas Public School Retired Employees Group Benefits Act (TRS-Care). (a) The initial enrollment period in the health benefits program under the Texas Public School Retired Employees Group Benefits Act (TRS-Care) for eligible Teacher Retirement System of Texas (TRS) retirees who take a service retirement and who are eligible to enroll in TRS-Care at the time of retirement expires at the end of the later of: (1) the last day of the month that is 3 consecutive calendar months, but in no event less than 90 days, after their effective retirement date; or (2) the last day of the month that is 3 consecutive calendar months, but in no event less than 90 days, following the last day of the month in which their election to retire is received by TRS. (b) The initial enrollment period in TRS-Care for eligible TRS disability retirees expires at the end of the last day of the month that is 3 consecutive calendar months, but in no event less than 90 days, after the date that the disability retirement is approved by the TRS Medical Board. (c) The initial enrollment period in TRS-Care for an eligible [a] surviving spouse of a deceased retiree and for an eligible [a] surviving dependent child of a deceased [an eligible] retiree expires on the last day of the month that is 3 consecutive calendar months, but in no event less than 90 days, after the retiree died. [at the end of the later of: ] [(1) the 31st day after the end of the month in which the eligible retiree died; or] [(2) the 31st day after the date of the notice of eligibility that is sent to the surviving spouse or the surviving dependent child at the individual's last known address, as shown in the TRS-Care records.] (d) The initial enrollment period in TRS-Care for an eligible [a] surviving spouse of a deceased active member and for an eligible [a] surviving dependent child of a deceased active member expires on the last day of the month that is 3 consecutive calendar months, but in no event less than 90 days, after the active member died.[, as both are defined by , Insurance Code, expires at the end of the later of:] [(1) the 31st day after the end of the month in which the active member died; or] [(2) the 31st day following the date of the notice of opportunity to enroll that is sent to the surviving spouse or the surviving dependent child at the individual's last known address, as shown in the TRS-Care records.] (e) Notwithstanding the other provisions of this section: (1) A retiree may enroll a new spouse within 31 days of the date on which the retiree marries; (2) A retiree or surviving spouse may enroll a child who becomes a dependent as defined by , Insurance Code, within 31 days after the date on which the child becomes a dependent eligible for coverage under TRS-Care; and (3) A participant shall be entitled to all applicable COBRA rights under the Federal Public Health Service Act. (f) If a retiree fails to enroll a newly eligible spouse or dependent child or if a surviving spouse fails to enroll a newly eligible dependent child within the time periods set out in subsection (e) of this section, the retiree or surviving spouse will not be able to enroll the spouse or dependent child in TRS-Care until a subsequent enrollment period Payments of Contributions. (a) Retirees, surviving spouses, and surviving dependent children or their representative (collectively, "participants") shall pay monthly contributions as set by the trustee for their and their dependents' participation in TRS-Care. (b) To be eligible for TRS-Care coverage, a participant must authorize the trustee in writing to deduct the contribution amount from the annuity payment. After such authorization, the trustee may deduct the amount of the contribution from the annuity payment. (c) If the amount of the contribution is more than the amount of the annuity payment, the participant will be billed directly by TRS or the TRS-Care administrator for the entire contribution amount. (d) Failure to timely pay the full amount of a required contribution for coverage of a dependent or a surviving dependent child will result in termination of coverage for the dependent or surviving dependent child at the end of the month for which the last contribution was made. (e) Failure to timely pay the full amount of a required contribution for coverage of a retiree or a surviving spouse [enrolled in a TRS-Care 2 plan or a TRS-Care 3 plan] will result in termination of coverage [in the TRS-Care 2 plan or the TRS-Care 3 plan, as applicable, and enrollment in TRS-Care 1] for the retiree or surviving spouse[, resulting in a decrease in coverage] at the end of the month for which the last contribution was made. [The retiree or surviving spouse will not be able to change his or her TRS-Care coverage tier (level of coverage) unless and until the retiree or surviving spouse has an additional enrollment opportunity as set out in 41.2 of this title (relating to Additional Enrollment Opportunities) or some other opportunity under Insurance Code, ] (f) A disability retiree whose annuity payments are forfeited under of this title (Relating to Forfeiture of Disability Retirement Annuity Payments Due to Excess Compensation) shall pay the total monthly cost of coverage, as determined by the trustee, attributable to the participation of that disability retiree and the dependents of that disability retiree during the months for which the disability re- 42 TexReg 6344 November 10, 2017 Texas Register

99 tiree's annuity payments are forfeited. A disability retiree shall pay the total monthly cost of coverage starting with the calendar month for which the first annuity payment is forfeited. The disability retiree shall continue to pay the total monthly cost of coverage for each month of coverage in which the annuity payment for that month is forfeited in accordance with of this title. Nothing in this section shall be construed to prevent TRS from collecting the total monthly cost of coverage for months in which annuities should have been but were not forfeited if TRS determines that a disability retiree knowingly failed to report compensation as required and the failure resulted in payment of annuities by TRS that the disability retiree was not eligible to receive. (g) Notwithstanding subsections (d) and (e) of this section, a disability retiree whose annuity payments are forfeited under of this title who fails to timely pay the full amount of a required contribution for coverage attributable to his participation or that of his dependents, including but not limited to amounts found due and owing pursuant to a TRS determination that a disability retiree knowingly failed to report compensation as required and the failure resulted in payment of annuities by TRS that the disability retiree was not eligible to receive, shall have coverage under TRS-Care for himself and his dependents suspended unless TRS-Care receives full payment of all costs of coverage currently due and owing within thirty-one (31) days after TRS-Care mails written notice to the disability retiree of the current amount due and owing. Under such circumstances, the suspension of coverage will be effective at midnight of the last day of the month in which TRS-Care mailed the above written notice to the disability retiree of the current amount due and owing. During such a suspension, coverage under TRS-Care will cease and the costs of coverage for TRS-Care will no longer accrue. (h) If TRS resumes payment of an annuity to a disability retiree whose coverage has been suspended as described in subsection (g) of this section, the following shall apply: (1) Such disability retiree shall pay, no later than the last day of the month in which TRS resumes annuity payments to the disability retiree, all costs of coverage due and owing attributable to the participation of that disability retiree and the dependents of that disability retiree, including past due amounts for coverage prior to the suspension and the costs of coverage for all months during which the disability retiree's annuity payments are resumed, if any. (2) Upon payment, reinstatement of TRS-Care coverage shall be effective the first day of the earliest month for which the disability retiree's annuity payments are resumed. (3) If payment in full of all required contributions then due and owing is not timely received by TRS-Care, then [notwithstanding subsections (d) and (e) of this section]: (A) TRS-Care coverage for the dependents of that disability retiree shall be terminated effective the last day of the month in which the dependents' coverage was suspended under subsection (g) of this section; (B) TRS-Care coverage for the disability retiree shall be terminated [enrolled in a TRS-Care 2 plan or a TRS-Care 3 plan prior to the suspension, as applicable, will terminate] effective the last day of the last month in [during] which the disability retiree's coverage was suspended under subsection (g) of this section. [and the disability retiree will be enrolled in TRS-Care 1, effective the first day of the earliest month for which the disability retiree's annuity payments are resumed following the suspension, resulting in a decrease in coverage; and] [(C) TRS-Care coverage for the disability retiree enrolled prior to the suspension in TRS-Care 1 will resume effective the first day of the earliest month for which the disability retiree's annuity payments are resumed following the suspension. The disability retiree will not be able to change his TRS-Care coverage tier (level of coverage) or add dependents unless and until the disability retiree has an additional enrollment opportunity as set out in 41.2 of this title or some other opportunity under Insurance Code, ] Effective Date of Coverage. (a) Except as allowed by subsection (c) of this section, for TRS members who take a service or disability retirement and enroll in coverage during their initial enrollment period as described in 41.1 of this title (relating to Initial Enrollment Periods for the Health Benefits Program Under the Texas Public School Retired Employees Group Benefits Act (TRS-Care)), the effective date of coverage is: (1) the first day of the month following the effective date of retirement if the application for coverage is received by TRS-Care on or before the effective retirement date; or (2) the first day of the month following the receipt of the application for coverage by TRS-Care if the application is received after the effective retirement date but within the initial enrollment period. (b) A [Subject to , Insurance Code, a] TRS member who takes a service or disability retirement and enrolls in coverage during his or her initial enrollment period may, at any time during his or her initial enrollment period, make changes to his or her coverage elections. The effective date of coverage for the new elections is the first day of the month following receipt by TRS-Care of the application requesting the change in coverage. (c) Regardless of the date a TRS member submits his application for retirement, if a TRS member enrolls in coverage during his initial enrollment period as described in 41.1 of this title, the TRS member may defer the effective date of coverage described in subsection (a) of this section for himself and his eligible dependents to the first day of any of the three (3) months immediately following the month after the effective date of retirement. This deferment period runs concurrent with, and does not extend, the enrollment period as described in 41.1 of this title. In no event may a TRS member defer the effective date of TRS-Care coverage to a date prior to the date upon which TRS-Care receives the application for coverage from the TRS member. (d) Surviving spouses and surviving dependent child(ren) who are currently enrolled with the retiree [participant] at the time of the retiree's [participant's] death will continue to be enrolled in the same [level of coverage and the same] coverage plan, subject to the applicable eligibility requirements of that coverage plan. (e) If the surviving spouse or the surviving dependent child was not enrolled in TRS-Care immediately preceding his or her becoming eligible for coverage, the effective date of coverage will be, at the election of the surviving spouse or the surviving dependent child, either the first day of the month following: (1) TRS-Care's receipt of an application during the initial enrollment period as described in 41.1 of this title; or (2) the month of the death of the deceased TRS service or disability retiree or deceased active TRS member, provided TRS-Care receives an application during the initial enrollment period as described in 41.1 of this title. (f) The effective date of coverage for an eligible dependent who is enrolled under a retiree's or surviving spouse's TRS-Care coverage during the initial enrollment period is the same date as the retiree or surviving spouse's effective date of coverage unless the dependent is enrolled after the retiree's effective retirement date and after the retiree has enrolled but within the initial enrollment period, in which case the PROPOSED RULES November 10, TexReg 6345

100 dependent's effective date of coverage will be the first day of the month following TRS-Care's receipt of the application to enroll the dependent. (g) The effective date of coverage for an eligible individual who is enrolled in TRS-Care as a result of a special enrollment event, as described in 41.2(c) [(b)(1)] of this title [chapter] (relating to Additional Enrollment Opportunities), is the date specified under the provisions of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No , 110 Stat (1996)). (h) The effective date of coverage for an eligible individual who is enrolled in TRS-Care as a result of the Age 65 enrollment opportunity, as [a retiree, a surviving spouse, and an eligible dependent] described in 41.2(b) [(a)(2) or (3) of this title who submit an application within the time period described by 41.2(a)(8)] of this title is: (1) the first day of the month following the month of the retiree's or surviving spouse's 65th birthday if the application for coverage is received by TRS-Care [on or] before or during the month of the retiree's or surviving spouse's 65th birthday; or (2) the first day of the month following the receipt of the application by TRS-Care if the application for coverage is received after the month of the retiree's or surviving spouse's 65th birthday but within the enrollment period. (i) Except as provided in subsections (k), (l), and (m)[, and (n)] of this section, the effective date of changes in coverage due to the acquisition of Medicare Part A and/or Medicare Part B is the first of the month following the date of TRS-Care's receipt of proof, satisfactory to TRS-Care, of the participant's or dependent's Medicare Part A and/or Medicare Part B coverage. [(j) Except as provided in subsections (l), (m), and (n) of this section, the effective date of reduction in coverage shall be the first day of the month following TRS-Care's receipt of a signed request for reduced coverage.] (j) [(k)] A retiree, surviving spouse, or surviving dependent child may cancel any coverage by submitting the appropriate notice of cancellation form [notice ] to TRS-Care. Cancellations will be effective on the later of: (1) the first day of the month following TRS-Care's receipt of the completed [date printed on the] notice of cancellation form [("notice date") sent to the retiree at the retiree's last known address, as shown in the TRS-Care records, if TRS-Care receives the completed notice of cancellation within fourteen days of the notice date]; or (2) the date requested by the retiree, surviving spouse, or surviving dependent child on the [first day of the month following TRS- Care's receipt of the retiree's] completed notice of cancellation form received by TRS-Care. [ if the form is received more than fourteen calendar days after the notice date; or ] [(3) the first day of the month following TRS-Care's receipt of a written request to cancel coverage from a surviving spouse or from or on behalf of a surviving dependent child.] (k) [(l)] Where a participant has Medicare Part A coverage and TRS-Care has been paying primary to Medicare on Medicare Part A claims, TRS-Care may seek the recovery of funds and may make the effective date of the correct coverage retroactive to the first day of the earliest month for which recovery of such overpaid funds is possible under Medicare rules. (l) [(m)] Where a participant has Medicare Part A coverage and TRS-Care has been paying primary to Medicare on Medicare Part A claims, TRS-Care may make the effective date of the correct coverage retroactive to when the participant was first enrolled in both Medicare and TRS-Care to a maximum retroactive period of twelve months, including the month in which proof, satisfactory to TRS-Care, of Medicare Part A coverage is received by TRS-Care, and based thereon, TRS-Care may refund or credit the amount due to the participant. (m) [(n)] Upon TRS-Care's discovery that a participant does not have Medicare Part A coverage, in contrast to TRS-Care records indicating the participant has Medicare Part A coverage, TRS-Care will contact the participant and advise the participant that the cost of coverage and the coverage will be adjusted prospectively effective the first day of the next month unless proof, satisfactory to TRS-Care, of Medicare Part A coverage is received by TRS-Care prior to that date. Claims will be paid based upon the coverage in effect at the time the services were provided. Any claims already paid as if Medicare Part A were in effect will not be adjusted Eligibility for the Alternative Plan for Medicare-Eligible Participants. An individual is eligible to enroll in the Alternative Plan offered under TRS-Care if: (1) the individual is eligible to enroll in TRS-Care; and (2) the individual is eligible for Medicare and either: (A) does not have reasonable access to a particular provider, as determined by TRS; or (B) as of January 1, 2018, does not have Medicare Part B coverage and the individual's ability to obtain Medicare Part B coverage is cost prohibitive, as determined by TRS. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) TITLE 43. TRANSPORTATION PART 10. TEXAS DEPARTMENT OF MOTOR VEHICLES CHAPTER 209. FINANCE SUBCHAPTER B. PAYMENT OF FEES FOR DEPARTMENT GOODS AND SERVICES 43 TAC The Texas Department of Motor Vehicles (department) proposes new , Charges for Public Information. EXPLANATION OF PROPOSED NEW SECTION Government Code, requires each governmental body to use the rules adopted by the attorney general in determining the charges for providing copies of public information. Proposed 42 TexReg 6346 November 10, 2017 Texas Register

101 new adopts the rules of the attorney general relating to charges for public information. FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the new section as proposed is in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed new section. Ms. Flores has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed new section. PUBLIC BENEFIT AND COST Ms. Flores has also determined that for each year of the first five years the new section is in effect, the public benefit anticipated as a result of enforcing or administering the new section will be transparency of department compliance with statutes and rules relating to charges for public information. There are no anticipated economic costs for persons required to comply with the new section as proposed. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed new section may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, STATUTORY AUTHORITY The new section is proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department. CROSS REFERENCE TO STATUTE Government Code, Chapter Charges for Public Information. In accordance with Government Code, , the Texas Department of Motor Vehicles adopts the rules of the Office of the Attorney General relating to the Cost of Copies of Public Information at 1 TAC, The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 210. CONTRACT MANAGEMENT SUBCHAPTER B. HISTORICALLY UNDERUTILIZED BUSINESS PROGRAM 43 TAC The Texas Department of Motor Vehicles (department) proposes amendments to , Program. EXPLANATION OF PROPOSED AMENDMENTS Amendments to are proposed to correct a citation to the Comptroller of Public Accounts' historically underutilized businesses (HUB) rules. FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the amendments as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed amendments. Ms. Flores has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed amendments. PUBLIC BENEFIT AND COST Ms. Flores has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be accuracy of the department's rule. There are no anticipated economic costs for persons required to comply with the amendments as proposed. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed amendments may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department; and more specifically, Government Code, , which provides that a state agency shall PROPOSED RULES November 10, TexReg 6347

102 adopt the commission's rules under , Commission Administration; Comptroller Assistance, as the agency's own rules. CROSS REFERENCE TO STATUTE Government Code, Chapter Program. The board of the Texas Department of Motor Vehicles adopts the rules of the Comptroller of Public Accounts relating to the Historically Underutilized Business (HUB) Program at 34 TAC, Part 1, Chapter 20, Subchapter D, Division 1 [B]. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 215. MOTOR VEHICLE DISTRIBUTION SUBCHAPTER G. WARRANTY PERFORMANCE OBLIGATIONS 43 TAC The Texas Department of Motor Vehicles (department) proposes amendments to , Compliance with Order Granting Relief. EXPLANATION OF PROPOSED AMENDMENTS Amendments are proposed to to make it consistent with Occupations Code, and to replace the acronym "OEM" with "original equipment manufacturer" because "OEM" is not defined in Chapter 215. FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the amendments as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed amendments. Corrie Thompson, Interim Director of the Enforcement Division, has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed amendments. PUBLIC BENEFIT AND COST Ms. Thompson has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be a rule that is consistent with the statute. There are no anticipated economic costs for persons required to comply with the proposed amendments. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed amendments may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code and Occupation Code; and more specifically, Occupations Code, (b), which requires the board to adopt rules for the enforcement and implementation of Subchapter M, Warranties: Rights of Vehicle Owners. CROSS REFERENCE TO STATUTE Occupations Code, Compliance with Order Granting Relief. (a) Compliance with an order issued by the final order authority will be monitored by the department. (b) A complainant is not bound by a final decision and order. (c) If a complainant does not accept the final decision, the proceeding before the final order authority will be deemed concluded and the complaint file closed. (d) If the complainant accepts the final decision, then the manufacturer, converter, or distributor, and the dealer to the extent of the dealer's responsibility, if any, shall immediately take such action as is necessary to implement the final decision and order. (e) If a manufacturer, converter, or distributor replaces or repurchases a motor vehicle pursuant to an order issued by the final order authority, [reacquires a vehicle to settle a complaint filed under Occupations Code, or , or brings a motor vehicle into the State of Texas that has been reacquired to resolve a warranty claim in another jurisdiction,] then the manufacturer, converter, or distributor shall, prior to the resale of such motor vehicle, retitle the vehicle in Texas and shall: (1) issue a disclosure statement on a form provided by or approved by the department; and (2) affix a department-approved disclosure label in a conspicuous location in or on the motor vehicle. (f) The disclosure statement and disclosure label required under subsection (e) of this section shall accompany the motor vehicle through the first retail purchase. No person or entity holding a license or GDN issued by the department under Occupations Code, Chapter 2301 or Transportation Code, Chapter 503 shall remove or cause the 42 TexReg 6348 November 10, 2017 Texas Register

103 removal of the disclosure label until delivery of the motor vehicle to the first retail purchaser. (g) A manufacturer, converter, or distributor shall provide to the department the name, address, and telephone number of the transferee to whom the manufacturer, distributor, or converter transfers the motor vehicle on the disclosure statement within 60 days of each transfer. The selling dealer shall return the completed disclosure statement to the department within 60 days of the retail sale of a reacquired motor vehicle. (h) The manufacturer, converter, or distributor must repair the defect or condition in the motor vehicle that resulted in the vehicle being reacquired and issue a basic warranty excluding non-original equipment manufacturer [non-oem] items or accessories, for a minimum of 12 months or 12,000 miles, whichever comes first. The warranty shall be provided to the first retail purchaser of the motor vehicle. (i) In the event this section conflicts with the terms contained in a cease and desist order, the terms of the cease and desist order shall prevail. (j) The failure of any manufacturer, converter, distributor, or dealer to comply with a final order issued by the final order authority within the time period prescribed in the order may subject the manufacturer, converter, distributor, or dealer to formal action by the department, including the assessment of civil penalties or other sanctions prescribed by Occupations Code, Chapter 2301, for the failure to comply with an order issued by the final order authority. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 217. VEHICLE TITLES AND REGISTRATION SUBCHAPTER B. MOTOR VEHICLE REGISTRATION 43 TAC The Texas Department of Motor Vehicles (department) proposes amendments to , Registration of Fleet Vehicles. EXPLANATION OF PROPOSED AMENDMENTS Amendments are proposed to to implement House Bill 1793, 85th Legislature, Regular Session, which amended Transportation Code, to require the payment of an inspection fee, regardless of whether the inspection occurred in Texas. Amendments are also proposed to to clarify the situations in which the one-time fee of $10 per vehicle is due under Transportation Code, (c)(1), as amended by Senate Bill 2075, 85th Legislature, Regular Session. FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the amendments as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed amendments. Jimmy Archer, Director of the Motor Carrier Division, has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed amendments. PUBLIC BENEFIT AND COST Mr. Archer has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be a rule that is consistent with the statutes. There are no anticipated economic costs for persons required to comply with the proposed amendments. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed amendments may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , which authorizes the department to adopt rules to administer Transportation Code, Chapter 502, Registration of Vehicles. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 502 and Registration of Fleet Vehicles. (a) Scope. A registrant may consolidate the registration of multiple motor vehicles, including trailers and semitrailers, in a fleet instead of registering each vehicle separately. This section prescribes the policies and procedures for fleet registration. (b) Eligibility. A fleet must meet the following requirements to be eligible for fleet registration. (1) No fewer than 25 vehicles will be registered as a fleet; (2) Vehicles may be registered in annual increments for up to eight years; (3) All vehicles in a fleet must be owned by or leased to the same business entity; (4) All vehicles must be vehicles that are not registered under the International Registration Plan; and PROPOSED RULES November 10, TexReg 6349

104 (5) Each vehicle must currently be titled in Texas or be issued a registration receipt, or the registrant must submit an application for a title or registration for each vehicle. (c) Application. (1) Application for fleet registration must be in a form prescribed by the department. At a minimum the form will require: (A) the full name and complete address of the registrant; (B) a description of each vehicle in the fleet, which may include the vehicle's model year, make, model, vehicle identification number, document number, body style, gross weight, empty weight, and for a commercial vehicle, manufacturer's rated carrying capacity in tons; (C) the existing license plate number, if any, assigned to each vehicle; and (D) any other information that the department may require. items: (2) The application must be accompanied by the following (A) in the case of a leased vehicle, a certification that the vehicle is currently leased to the person to whom the fleet registration will be issued; (B) registration fees prescribed by law for the entire registration period selected by the registrant; (C) local fees or other fees prescribed by law and collected in conjunction with registering a vehicle for the entire registration period selected by the registrant; (D) evidence of financial responsibility for each vehicle as required by Transportation Code, , unless otherwise exempted by law; (E) annual proof of payment of Heavy Vehicle Use Tax; (F) the state's portion of the vehicle inspection fee [for the vehicle inspections conducted in Texas]; and (G) any other documents or fees required by law. (d) Registration period. (1) The fleet owner will designate a single registration period for a fleet so the registration period for each vehicle will expire on the same date. (2) The fleet registration period will begin on the first day of a calendar month and end on the last day of a calendar month. (e) Insignia. (1) As evidence of registration, the department will issue distinguishing insignia for each vehicle in a fleet. (2) The insignia shall be included on the license plate and affixed to the vehicle. (3) The insignia shall be attached to the rear license plate if the vehicle has no windshield. (4) The registration receipt for each vehicle shall at all times be carried in that vehicle and be available to law enforcement personnel. (5) Insignia may not be transferred between vehicles, owners, or registrants. (f) Fleet composition. (1) A registrant may add a vehicle to a fleet at any time during the registration period. An added vehicle will be given the same registration period as the fleet and will be issued fleet registration insignia. (2) A registrant may remove a vehicle from a fleet at any time during the registration period. The fleet registrant shall return the fleet registration insignia for that vehicle to the department at the time the vehicle is removed from the fleet. Credit for any vehicle removed from the fleet for the remaining full year increments can be applied to any vehicle added to the fleet or at the time of renewal. No refunds will be given if credit is not used or the account is closed. (3) If the number of vehicles in an account falls below 25 during the registration period, fleet registration will remain in effect. If the number of vehicles in an account is below 25 at the end of the registration period, fleet registration will be canceled. In the event of cancellation, each vehicle shall be registered separately. The registrant shall immediately return all fleet registration insignia to the department. (g) Fees. (1) When a fleet is first established, the department will charge a registration fee for each vehicle for the entire registration period selected. A currently registered vehicle, however, will be given credit for any remaining time on its separate registration. (2) When a vehicle is added to an existing fleet, the department will charge a registration fee that is prorated based on the number of months of fleet registration remaining. If the vehicle is currently registered, this fee will be adjusted to provide credit for the number of months of separate registration remaining. (3) When a vehicle is removed from fleet registration, it will be considered to be registered separately. The vehicle's separate registration will expire on the date that the fleet registration would have expired. The registrant must pay the statutory replacement fee to obtain regular registration insignia before the vehicle may be operated on a public highway. (4) In addition to the registration fees prescribed by Transportation Code, Chapter 502, an owner registering a fleet under this section must pay a one-time fee of $10 per motor vehicle, semitrailer, or trailer in the fleet. This fee is also due as follows: and (A) for each vehicle added to the owner's existing fleet; (B) for each vehicle that a buyer registers as a fleet, even though the seller previously registered some or all of the vehicles as a fleet under this section. (h) Payment. Payment will be made in the manner prescribed by the department. (i) Cancellation. (1) The department will cancel registration for non-payment and lack of proof of annual payment of the Heavy Vehicle Use Tax. (2) The department may cancel registration on any fleet vehicle that is not in compliance with the inspection requirements under Transportation Code, Chapter 548 and the Texas Department of Public Safety rules regarding inspection requirements on the anniversary date(s) of the registration. (3) A vehicle with a cancelled registration may not be operated on a public highway. 42 TexReg 6350 November 10, 2017 Texas Register

105 (4) If the department cancels the registration of a vehicle under this subsection, the registrant can request the department to reinstate the registration by doing the following: (A) complying with the requirements for which the department cancelled the registration; (B) providing the department with notice of compliance on a form prescribed by the department; and (C) for a registration cancelled under paragraph (2) of this subsection, paying an administrative fee in the amount of $10. (5) A registrant is only eligible for reinstatement of the registration within 90 calendar days of the department's notice of cancellation. (6) If a registrant fails to timely reinstate the registration of a cancelled vehicle registration under this section, the registrant: (A) is not entitled to a credit or refund of any registration fees for the vehicle; and (B) must immediately return the registration insignia to the department. (j) Inspection fee. The registrant must pay the department by the deadline listed in the invoice for the state's portion of the vehicle inspection fee [for a vehicle inspection conducted in Texas]. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 217. VEHICLE TITLES AND REGISTRATION The Texas Department of Motor Vehicles (department) proposes amendments to Subchapter H, Deputies, , Deputy Fee Amounts; and Subchapter I, Fees, , Allocation of Processing and Handling Fee. EXPLANATION OF PROPOSED AMENDMENTS Amendments are proposed to and to change the allocation of the processing and handling fee for registration transactions initiated by a deputy dealer. The amendments are proposed in response to the February 27, 2017 letter from the County Tax Assessor-Collector Association that requested that the department adopt a rule reallocating the $1 from a dealer deputy transaction. The amendments also remove from (a) language that has become obsolete. The intent of the amendment is to have $1 that the dealer deputy retained from the processing and handling fee go to the County Tax Assessor-Collector (TAC). FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the amendments as proposed are in effect, there will be fiscal implications for local governments as a result of enforcing or administering the proposed amendments. The predicted effect of the proposed amendments in first year it is enforced will be that $1.159 million will flow to county Tax Assessor-Collectors statewide instead of to the dealer deputies. In the second year the amendments are in effect the predicted effect is that $1.170 million will go to the TACs instead of the dealer deputies. In the third year the amendments are in effect the predicted effect is that $1.188 million will go to the TACs instead of the dealer deputies. In the fourth year the amendments are in effect the predicted effect is that $1.206 million will go to the TACs instead of the dealer deputies. In the fifth year the amendments are in effect the predicted effect is that $1.224 million will go to the TACs instead of the dealer deputies. Jeremiah Kuntz, Director of the Title and Registration Division, has determined that there will be minimal impact on local economies or overall employment as a result of enforcing or administering the proposed amendments. PUBLIC BENEFIT AND COST Mr. Kuntz has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will that county Tax Assessor-Collectors statewide will receive a marginal increase in funds that will allow for an improvement in customer service at the local level. As outlined in the Fiscal Note, there are anticipated economic costs for dealer deputies required to comply with the amendments as proposed. There are no anticipated adverse economic effects on small businesses, micro-businesses, or rural communities. There may be a marginal benefit to rural communities based on the $1 per dealer deputy transaction remaining in the community. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed amendments may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, SUBCHAPTER H. DEPUTIES 43 TAC STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code , which provides the department may adopt rules to administer Transportation Code, 502, Registration of Vehicles; and Transportation Code , which provides the department may adopt rules to prescribe the fees that may be charged or retained by deputies. PROPOSED RULES November 10, TexReg 6351

106 CROSS REFERENCE TO STATUTE Finance Code, Chapter 348; Government Code, Chapter 2054; and Transportation Code, Chapters 502, 504 and Deputy Fee Amounts. (a) Fees. A county tax assessor-collector may authorize a deputy to charge or retain the fee amounts prescribed by this section according to the type of deputy and transaction type. (b) Title transactions. For each motor vehicle title transaction processed: (1) A full service deputy may charge the customer a fee of up to $20, as determined by the full service deputy and approved by the tax assessor-collector. The full service deputy retains the entire fee charged to the customer. (2) A dealer deputy may charge the customer a fee of up to $10, as determined by the dealer deputy and approved by the tax assessor-collector. The dealer deputy retains the entire fee charged to the customer. This section does not preclude a dealer deputy from charging a documentary fee authorized by Finance Code, (c) Registration and registration renewals. For each registration transaction processed: (1) A full service deputy may: (A) retain $1 from the processing and handling fee established by of this title (relating to Fee Amount); and (B) charge a convenience fee of $9, except as limited by of this title (relating to Exclusions). (2) A limited service deputy may retain $1 from the processing and handling fee established by [(3) A dealer deputy may retain $1 from the processing and handling fee established by This section does not preclude a dealer deputy from charging a documentary fee authorized by Finance Code, ] (d) Temporary permit transactions under Transportation Code, or For each temporary permit transaction processed by a full service deputy, the full service deputy may retain the entire processing and handling fee established by (e) Full service deputy convenience fee. The convenience fee authorized by this section is collected by the full service deputy directly from the customer and is in addition to the processing and handling fee established by A full service deputy may not charge any additional fee for a registration or registration renewal transaction. (f) Related transactions by a full service deputy. The limitations of subsections (b), (c), (d), and (e) of this section do not apply to other services that a full service deputy may perform that are related to titles or registrations, but are not transactions that must be performed through the department's automated vehicle registration and title system. Services that are not transactions performed through the department's automated vehicle registration and title system include, but are not limited to, the additional fees a full service deputy may charge for copying, faxing, or transporting documents required to obtain or correct a motor vehicle title or registration. However, the additional fees that a full service deputy may charge for these other services may be limited by the terms of the county tax assessor-collector's authorization to act as deputy. (g) Posting of fees. At each location where a full service deputy provides titling or registration services, the deputy must prominently post a list stating all fees charged for each service related to titling or registration. The fee list must specifically state each service, including the additional fee charged for that service, that is subject to subsections (b), (c), (d), or (e) of this section. The fee list must also state that each service subject to an additional fee under subsection (b), (c), (d), or (e) of this section may be obtained from the county tax assessor-collector without the additional fee. If the full service deputy maintains a website advertising or offering titling or registration services, the deputy must post the fee list described by this subsection on the website. (h) Additional compensation. The fee amounts set forth in this section do not preclude or limit the ability of a county to provide additional compensation to a deputy out of county funds. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 26, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER I. FEES 43 TAC STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code , which provides the department may adopt rules to administer Transportation Code, 502, Registration of Vehicles; and Transportation Code , which provides the department may adopt rules to prescribe the fees that may be charged or retained by deputies. CROSS REFERENCE TO STATUTE Finance Code, Chapter 348; Government Code, Chapter 2054; and Transportation Code, Chapters 502, 504 and Allocation of Processing and Handling Fee. (a) For registration transactions, [registrations that expire on or after January 1, 2017 and registrations that expired prior to January 1, 2017 that are submitted for renewal on or after July 1, 2017,] except as provided in subsection (b) of this section, the fee amount established in of this title (relating to Fee Amount) shall be allocated as follows: (1) If the registration transaction was processed in person at the office of the county tax assessor-collector: (A) the county tax assessor-collector may retain $2.30; and (B) the remaining amount shall be remitted to the department. (2) If the registration transaction was mailed to office of the county tax assessor-collector: 42 TexReg 6352 November 10, 2017 Texas Register

107 and (B) the remaining amount shall be remitted to the department. (A) the county tax assessor-collector may retain $2.30; (3) If the registration transaction was processed through the department or the TxIRP system or is a registration processed under Transportation Code, , , or ; or (b)(5) or (d)(1)(b)(i) of this title (relating to Commercial Vehicle Registration): (A) $2.30 will be remitted to the county tax assessorcollector; and (B) the remaining amount shall be retained by the department. (4) If the registration transaction was processed through the department's online registration portal, the fee established in is discounted by $1: (A) Texas Online receives the amount set pursuant to Government Code, , Fees; and (C) the remaining amount shall be remitted to the department. (B) the county tax assessor-collector may retain $.25; (5) If the registration transaction was processed by a limited service deputy or full service deputy appointed by the county tax assessor-collector in accordance with Subchapter H of this chapter (relating to Deputies): (A) the deputy may retain: (i) the amount specified in (c) of this title (relating to Deputy Fee Amounts). The deputy must remit the remainder of the processing and handling fee to the county tax assessor-collector; and (ii) the convenience fee established in , if the registration transaction is processed by a full service deputy; and (B) the county tax assessor-collector may retain $1.30; (C) the county tax assessor-collector must remit the remaining amount to the department. (6) If the registration transaction was processed by a dealer deputy appointed by the county tax assessor-collector in accordance with Subchapter H of this chapter (relating to Deputies): (A) the deputy must remit the processing and handling fee to the county tax assessor-collector; and (B) the county tax assessor-collector may retain $2.30; (C) the county tax assessor-collector must remit the remaining amount to the department. (b) For transactions under Transportation Code, , the entity receiving the application and processing the transaction collects and retains the entire processing and handling fee established in A full service deputy processing a temporary permit transaction may not charge a convenience fee for that transaction. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 26, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) CHAPTER 219. OVERSIZE AND OVERWEIGHT VEHICLES AND LOADS The Texas Department of Motor Vehicles (department) proposes amendments to Chapter 219, Oversize and Overweight Vehicles and Loads, Subchapter B, General Permits, , General Oversize/Overweight Permit Requirements and Procedures; Subchapter D, Permits for Oversize and Overweight Oil Well Related Vehicles, , Single-Trip Mileage Permits, , Quarterly Hubometer Permits, , Annual Permits, and , Permits for Vehicles Transporting Liquid Products Related to Oil Well Production; and Subchapter E, Permits for Oversize and Overweight Unladen Lift Equipment Motor Vehicles, , Single Trip Mileage Permits, , Quarterly Hubometer Permits, and , Annual Permits. EXPLANATION OF PROPOSED AMENDMENTS Proposed amendments improve the terminology, correct errors, modify the language for consistency with other rules in Chapter 219, delete irrelevant language, delete language that is already found in Chapter 219 or in statute, clarify requirements and procedures, make the rules consistent with current practice, and restructure portions of Chapter 219 due to deletions. For example, an applicant for the first quarter of a quarterly hubometer permit under currently pays an initial $31 processing fee, rather than an estimated fee. The minimum fee for the quarterly hubometer permit is $31, so there is no need for the current refund language in (e) or (e). Proposed amendments also continue the progress in modernizing the permitting process, such as deleting references to facsimiles. Although the department currently accepts and sends certain documents via facsimile, the goal is to eventually eliminate the use of facsimiles. FISCAL NOTE Linda M. Flores, Chief Financial Officer, has determined that for each of the first five years the amendments as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed amendments. Jimmy Archer, Director of the Motor Carrier Division, has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed amendments. PUBLIC BENEFIT AND COST PROPOSED RULES November 10, TexReg 6353

108 Mr. Archer has also determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be updated rules that are consistent with the applicable statutes and current practice. There are no anticipated economic costs for persons required to comply with the proposed amendments. There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. TAKINGS IMPACT ASSESSMENT The department has determined that this proposal affects no private real property interests and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and so does not constitute a taking or require a takings impact assessment under Government Code, SUBMITTAL OF COMMENTS Written comments on the proposed amendments may be submitted to David D. Duncan, General Counsel, Texas Department of Motor Vehicles, 4000 Jackson Avenue, Austin, Texas or by to rules@txdmv.gov. The deadline for receipt of comments is 5:00 p.m. on December 11, SUBCHAPTER B. GENERAL PERMITS 43 TAC STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , , and which authorize the board to adopt rules that are necessary to implement and enforce Chapters 621, 622, and 623. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 621, 622, and General Oversize/Overweight Permit Requirements and Procedures. (a) Purpose and scope. This section contains general requirements relating to oversize/overweight permits, including single-trip permits. Specific requirements for each type of specialty permit are provided for in this chapter. (b) Prerequisites to obtaining an oversize/overweight permit. Unless exempted by law or this chapter, the following requirements must be met prior to the issuance of an oversize/overweight permit. (1) Commercial motor carrier registration or surety bond. Prior to obtaining an oversize/overweight permit, an applicant permitted under the provisions of Transportation Code, Chapter 623, Subchapter D, must be registered as a commercial motor carrier under Chapter 218 of this title (relating to Motor Carriers) or, if not required to obtain a motor carrier registration, file a surety bond with the department as described in subsection (n) of this section. (2) Vehicle registration. A vehicle registered with a permit plate will not be issued an oversize/overweight permit under this subchapter. A permitted vehicle operating under this subchapter must be registered with one of the following types of vehicle registration: (A) current Texas license plates that indicate the permitted vehicle is registered for maximum legal gross weight or the maximum weight the vehicle can transport; (B) Texas temporary vehicle registration; (C) current out of state license plates that are apportioned for travel in Texas; or (D) foreign commercial vehicles registered under Texas annual registration. (c) Permit application. (1) An application for a permit shall be made in a form and by the method prescribed by the department, and at a minimum shall include the following: (A) name, address, telephone number, and address (if requested) of the applicant; (B) applicant's customer identification number; (C) applicant's MCR number or USDOT Number, if applicable; (D) complete load description, including maximum width, height, length, overhang, and gross weight; (E) complete description of vehicle, including truck year, make, license plate number and state of issuance, and vehicle identification number, if required; (F) vehicle axle and tire information including number of axles, distance between axles, axle weights, number of tires, and tire size for overweight permit applications; and (G) any other information required by law. (2) Applications transmitted electronically are considered signed if a digital signature is transmitted with the application and intended by the applicant to authenticate the application. (A) The department may only accept a digital signature used to authenticate an application under procedures that comply with any applicable rules adopted by the Department of Information Resources regarding department use or acceptance of a digital signature. (B) The department may only accept a digital signature to authenticate an application if the digital signature is: (i) unique to the person using it; (ii) capable of independent verification; (iii) under the sole control of the person using it; and (iv) transmitted in a manner that will make it infeasible to change the data in the communication or digital signature without invalidating the digital signature. (d) Maximum permit weight limits. (1) General. An overweight permitted vehicle will not be routed over a load-restricted bridge when exceeding the posted capacity of the bridge, unless a special exception is granted by TxDOT, based on an analysis of the bridge performed by a TxDOT approved licensed professional engineer or by TxDOT. Any analysis by a non-txdot engineer must have final approval from TxDOT. (A) An axle group must have a minimum spacing of four feet, measured from center of axle to center of axle, between each axle in the group to achieve the maximum permit weight for the group. 42 TexReg 6354 November 10, 2017 Texas Register

109 (B) The maximum permit weight for an axle group with spacing of five or more feet between each axle will be based on an engineering study of the equipment conducted by TxDOT. (C) A permitted vehicle will be allowed to have air suspension, hydraulic suspension, and mechanical suspension axles in a common weight equalizing suspension system for any axle group. (D) The department may permit axle weights greater than those specified in this section, for a specific individual permit request, based on an engineering study of the route and hauling equipment performed by a TxDOT approved licensed professional engineer or by TxDOT. Any analysis by a non-txdot engineer must have final approval from TxDOT. (E) A permitted vehicle or combination of vehicles may not exceed the manufacturer's rated tire carrying capacity, unless expressly authorized in the language on the permit based on an analysis performed by a TxDOT approved licensed professional engineer or by TxDOT. Any analysis by a non-txdot engineer must have final approval from TxDOT. (F) Two or more consecutive axle groups having an axle spacing of less than 12 feet, measured from the center of the last axle of the preceding group to the center of the first axle of the following group, will be reduced by 2.5% for each foot less than 12 feet. (2) Maximum axle weight limits. Maximum permit weight for an axle or axle group is based on 650 pounds per inch of tire width or the following axle or axle group weights, whichever is the lesser amount: (A) single axle--25,000 pounds; (B) two axle group--46,000 pounds; (C) three axle group--60,000 pounds; (D) four axle group--70,000 pounds; (E) five axle group--81,400 pounds; (F) axle group with six or more axles--determined by TxDOT based on an engineering study of the equipment, which will include the type of steering system used, the type of axle suspension, the spacing distance between each axle, the number of tires per axle, and the tire size on each axle; or (G) trunnion axles--30,000 pounds per axle if the trunnion configuration has: (i) two axles; (ii) eight tires per axle; (iii) axles a minimum of 10 feet in width; and (iv) at least five feet of spacing between the axles, not to exceed six feet. (3) Weight limits for load restricted roads. Maximum permit weight for an axle or axle group, when traveling on a load restricted road, will be based on 650 pounds per inch of tire width or the following axle or axle group weights, whichever is the lesser amount: (A) single axle--22,500 pounds; (B) two axle group--41,400 pounds; (C) three axle group--54,000 pounds; (D) four axle group--63,000 pounds; (E) five axle group--73,260 pounds; (F) axle group with six or more axles--determined by TxDOT based on an engineering study of the equipment, which will include the type of steering system used, the type of axle suspension, the spacing distance between each axle, the number of tires per axle, and the tire size on each axle; (G) trunnion axles--54,000 pounds; and (H) two or more consecutive axle groups having an axle spacing of less than 12 feet, measured from the center of the last axle of the preceding group to the center of the first axle of the following group will be reduced by 2.5% for each foot less than 12 feet. (e) Permit issuance. (1) General. Upon receiving an application in the form prescribed by the department, the department will review the permit application for the appropriate information and will then determine the most practical route based on information provided by TxDOT. [After a route is selected and a permit number is assigned by the department, an applicant requesting a permit by telephone must legibly enter all necessary information on the permit application, including the approved route and permit number. Permit requests made by methods other than telephone will be returned via facsimile, mail, or electronically.] (2) Routing. (A) A permitted vehicle will be routed over the most practical route available taking into consideration: (i) the size and weight of the overdimension load in relation to vertical clearances, width restrictions, steep grades, and weak or load restricted bridges; (ii) the geometrics of the roadway in comparison to the overdimension load; (iii) sections of highways restricted to specific load sizes and weights due to construction, maintenance, and hazardous conditions; (iv) traffic conditions, including traffic volume; (v) route designations by municipalities in accordance with Transportation Code, ; of the load. (vi) load restricted roads; and (vii) other considerations for the safe transportation (B) When a permit applicant desires a route other than the most practical, more than one permit will be required for the trip unless an exception is granted by the department. (3) Movement to and from point of origin or place of business. A permitted vehicle will be allowed to: (A) move empty oversize and overweight hauling equipment to and from the job site; and (B) move oversize and overweight hauling equipment with a load from the permitted vehicle's point of origin to pick up a permitted load, and to the permitted vehicle's point of origin or the permittee's place of business after dropping off a permitted load, as long as: (i) the load does not exceed legal size and weight limits under Transportation Code, Chapters 621 and 622; and (ii) the transport complies with the permit, including the time period stated on the permit. (f) Payment of permit fees, refunds. PROPOSED RULES November 10, TexReg 6355

110 (1) Payment methods. All permit applications must be accompanied by the proper fee, which shall be payable as provided by of this title (relating to Methods of Payment). (A) Permit Account Card (PAC). Application for a PAC should be made directly to the issuing institution. A PAC must be established and maintained according to the contract provisions stipulated between the PAC holder and the financial institution under contract to the department and the Comptroller of Public Accounts. (B) Escrow accounts. A permit applicant may establish an escrow account with the department for the specific purpose of paying any fee that is related to the issuance of a permit under this subchapter. (i) A permit applicant who desires to establish an escrow account shall complete and sign an escrow account agreement, and shall return the completed and signed agreement to the department with a check in the minimum amount of $305, which shall be deposited to the appropriate fund by the department with the Comptroller of Public Accounts. In lieu of submitting a check for the initial deposit to an applicant's escrow account, the applicant may transfer funds to the department electronically. (ii) Upon initial deposit, and each subsequent deposit made by the escrow account holder, $5 will be charged as an escrow account administrative fee. (iii) The escrow account holder is responsible for monitoring of the escrow account balance. (iv) An escrow account holder must submit a written request to the department to terminate the escrow account agreement. Any remaining balance will be returned to the escrow account holder. (2) Refunds. A permit fee will not be refunded after the permit number has been issued unless such refund is necessary to correct an error made by the permit officer. (g) Amendments. A permit may be amended for the following reasons: (1) vehicle breakdown; (2) changing the intermediate points in an approved permit route; (3) extending the expiration date due to conditions which would cause the move to be delayed; (4) changing route origin or route destination prior to the start date as listed on the permit; (5) changing vehicle size limits prior to the permit start date as listed on the permit, provided that changing the vehicle size limit does not necessitate a change in the approved route; and (6) correcting any mistake that is made due to permit officer error. (h) Requirements for overwidth loads. (1) Unless stated otherwise on the permit, an overwidth load must travel in the outside traffic lane on multi-lane highways, when the width of the load exceeds 12 feet. (2) Overwidth loads are subject to the escort requirements of subsection (k) of this section. (3) A permitted vehicle exceeding 16 feet in width will not be routed on the main lanes of a controlled access highway, unless an exception is granted by TxDOT, based on a route and traffic study. The load may be permitted on the frontage roads when available, if the movement will not pose a safety hazard to other highway users. (4) An applicant requesting a permit to move a load exceeding 20 feet wide will be furnished with a proposed route. The applicant must physically inspect the proposed route to determine if the vehicle and load can safely negotiate it, unless an exception is granted based on a route and traffic study conducted by TxDOT. A permit application and the appropriate fee are required for every route inspection. (A) The applicant must notify the department in writing whether the vehicle and load can or cannot safely negotiate the proposed route. (B) If any section of the proposed route is unacceptable, the applicant shall provide the department with an alternate route around the unacceptable section. (C) Once a route is decided upon and a permit issued, the permit may not be amended unless an exception is granted by the department. (i) Requirements for overlength loads. (1) Overlength loads are subject to the escort requirements stated in subsection (k) of this section. (2) A single vehicle, such as a motor crane, that has a permanently mounted boom is not considered as having either front or rear overhang as a result of the boom because the boom is an integral part of the vehicle. (3) When a single vehicle with a permanently attached boom exceeds the maximum legal length of 45 feet, a permit will not be issued if the boom projects more than 25 feet beyond the front bumper of the vehicle, or when the boom projects more than 30 feet beyond the rear bumper of the vehicle, unless an exception is granted by TxDOT, based on a route and traffic study. (4) Maximum permit length for a single vehicle is 75 feet. (5) A load extending more than 20 feet beyond the front or rearmost portion of the load carrying surface of the permitted vehicle must have a rear escort, unless an exception is granted by TxDOT, based on a route and traffic study. (6) A permit will not be issued for an oversize vehicle and [a vehicle and oversize] load with: (A) more than 25 feet front overhang; or (B) more than 30 feet rear overhang, unless an exception is granted by TxDOT, based on a route and traffic study. (7) An applicant requesting a permit to move an oversize vehicle and load exceeding 125 feet overall length will be furnished with a proposed route. The applicant must physically inspect the proposed route to determine if the oversize vehicle and load can safely negotiate it, unless an exception is granted based on a route and traffic study conducted by TxDOT. A permit application and the appropriate fee are required for every route inspection. (A) The applicant must notify the department in writing whether the oversize vehicle and load can or cannot safely negotiate the proposed route. (B) If any section of the proposed route is unacceptable, the applicant shall provide the department with an alternate route around the unacceptable section. (C) Once a route is decided upon and a permit issued, the permit may not be amended unless an exception is granted by the department. 42 TexReg 6356 November 10, 2017 Texas Register

111 (8) A permitted vehicle that is not overwidth or overheight, and does not exceed 150 feet overall length, may be moved in a convoy consisting of not more than four overlength permitted vehicles. A permitted vehicle that is not overwidth or overheight that exceeds 150 feet, but does not exceed 180 feet overall length, may be moved in a convoy consisting of not more than two overlength permitted vehicles. Convoys are subject to the requirements of subsection (k) of this section. Each permitted vehicle in the convoy must: (A) be spaced at least 1,000 feet, but not more than 2,000 feet, from any other permitted vehicle in the convoy; and (B) have a rotating amber beacon or an amber pulsating light, not less than eight inches in diameter, mounted at the rear top of the load being transported. (j) Requirements for overheight loads. (1) Overheight loads are subject to the escort requirements stated in subsection (k) of this section. (2) An applicant requesting a permit to move an oversize vehicle and load with an overall height of 19 feet or greater will be furnished with a proposed route. The applicant must physically inspect the proposed route to determine if the oversize vehicle and load can safely negotiate it, unless an exception is granted based on a route and traffic study conducted by TxDOT. A permit application and the appropriate fee are required for every route inspection. (A) The applicant must notify the department in writing whether the oversize vehicle and load can or cannot safely negotiate the proposed route. (B) If any section of the proposed route is unacceptable, the applicant shall provide the department with an alternate route around the unacceptable section. (C) Once a route is decided upon and a permit issued, the permit may not be amended unless an exception is granted by the department. (k) Escort vehicle requirements. Escort vehicle requirements are provided to facilitate the safe movement of permitted vehicles and to protect the traveling public during the movement of permitted vehicles. A permittee must provide for escort vehicles and law enforcement assistance when required by TxDOT. The requirements in this subsection do not apply to the movement of manufactured housing, portable building units, or portable building compatible cargo. (1) General. (A) Applicability. The operator of an escort vehicle shall, consistent with applicable law, warn the traveling public when: (i) a permitted vehicle must travel over the center line of a narrow bridge or roadway; (ii) a permitted vehicle makes any turning movement that will require the permitted vehicle to travel in the opposing traffic lanes; (iii) a permitted vehicle reduces speed to cross under a low overhead obstruction or over a bridge; (iv) a permitted vehicle creates an abnormal and unusual traffic flow pattern; or (v) in the opinion of TxDOT, warning is required to ensure the safety of the traveling public or safe movement of the permitted vehicle. (B) Law enforcement assistance. Law enforcement assistance may be required by TxDOT to control traffic when a permitted vehicle is being moved within the corporate limits of a city, or at such times when law enforcement assistance would provide for the safe movement of the permitted vehicle and the traveling public. (C) Obstructions. It is the responsibility of the permittee to contact utility companies, telephone companies, television cable companies, or other entities as they may require, when it is necessary to raise or lower any overhead wire, traffic signal, street light, television cable, sign, or other overhead obstruction. The permittee is responsible for providing the appropriate advance notice as required by each entity. (2) Escort requirements for overwidth loads. Unless an exception is granted based on a route and traffic study conducted by Tx- DOT, an overwidth load must: (A) have a front escort vehicle if the width of the load exceeds 14 feet, but does not exceed 16 feet, when traveling on a two lane roadway; (B) have a rear escort vehicle if the width of the load exceeds 14 feet, but does not exceed 16 feet, when traveling on a roadway of four or more lanes; and (C) have a front and a rear escort vehicle for all roads, when the width of the load exceeds 16 feet. (3) Escort requirements for overlength loads. Unless an exception is granted by TxDOT, based on a route and traffic study, overlength loads must have: (A) a front escort vehicle when traveling on a two lane roadway if the vehicle exceeds 110 feet overall length, but does not exceed 125 feet overall length; (B) a rear escort vehicle when traveling on a multi-lane highway if the vehicle exceeds 110 feet overall length, but does not exceed 125 feet overall length; and (C) a front and rear escort vehicle at all times if the permitted vehicle exceeds 125 feet overall length. (4) Escort requirements for overheight loads. Unless an exception is granted by TxDOT, based on a route and traffic study, overheight loads must have: (A) a front escort vehicle equipped with a height pole to ensure the vehicle and load can clear all overhead obstructions for any permitted vehicle that exceeds 17 feet in height; and (B) a front and rear escort vehicle for any permitted vehicle exceeding 18 feet in height. (5) Escort requirements for permitted vehicles exceeding legal limits in more than one dimension. When a load exceeds more than one dimension that requires an escort under this subsection, front and rear escorts will be required unless an exception is granted by Tx- DOT. (6) Escort requirements for convoys. Convoys must have a front escort vehicle and a rear escort vehicle on all highways at all times. (7) General equipment requirements. The following special equipment requirements apply to permitted vehicles and escort vehicles that are not motorcycles. (A) An escort vehicle must be a single unit with a gross vehicle weight (GVW) of not less than 1,000 pounds nor more than 10,000 pounds. (B) An escort vehicle must be equipped with two flashing amber lights or one rotating amber beacon of not less than eight inches in diameter, affixed to the roof of the escort vehicle, which must PROPOSED RULES November 10, TexReg 6357

112 be visible to the front, sides, and rear of the escort vehicle while actively engaged in escort duties for the permitted vehicle. (C) An escort vehicle must display a sign, on either the roof of the vehicle, or the front and rear of the vehicle, with the words "OVERSIZE LOAD" or "WIDE LOAD." The sign must be visible from the front and rear of the vehicle while escorting the permitted load. The sign must meet the following specifications: (i) at least five feet, but not more than seven feet in length, and at least 12 inches, but not more than 18 inches in height; black lettering; (ii) the sign must have a yellow background with (iii) letters must be at least eight inches, but not more than 10 inches high with a brush stroke at least 1.41 inches wide; and (iv) the sign must be visible from the front or rear of the vehicle while escorting the permitted vehicle, and the signs must not be used at any other time. (D) An escort vehicle must maintain two-way communications with the permitted vehicle and other escort vehicles involved with the movement of the permitted vehicle. (E) Warning flags must be either red or orange fluorescent material, at least 12 inches square, securely mounted on a staff or securely fastened by at least one corner to the widest extremities of an overwidth permitted vehicle, and at the rear of an overlength permitted vehicle or a permitted vehicle with a rear overhang in excess of four feet. (8) Equipment requirements for motorcycles. (A) An official law enforcement motorcycle may be used as a primary escort vehicle for a permitted vehicle traveling within the limits of an incorporated city, if the motorcycle is operated by a highway patrol officer, sheriff, or duly authorized deputy, or municipal police officer. (B) An escort vehicle must maintain two-way communications with the permitted vehicle and other escort vehicles involved with the movement of the permitted vehicle. (l) Restrictions. (1) Restrictions pertaining to road conditions. Movement of a permitted vehicle is prohibited when road conditions are hazardous based upon the judgment of the operator and law enforcement officials. Law enforcement officials shall make the final determination regarding whether or not conditions are hazardous. Conditions that should be considered hazardous include, but are not limited to: snow. (A) visibility of less than 2/10 of one mile; or (B) weather conditions such as wind, rain, ice, sleet, or (2) Daylight and night movement restrictions. (A) A permitted vehicle may be moved only during daylight hours unless: (i) the permitted vehicle is overweight only; (ii) the permitted vehicle is traveling on an interstate highway and does not exceed 10 feet wide and 100 feet long, with front and rear overhang that complies with legal standards; or (iii) the permitted vehicle meets the criteria of clause (ii) of this subparagraph and is overweight. (B) An exception may be granted allowing night movement, based on a route and traffic study conducted by TxDOT. Escorts may be required when an exception allowing night movement is granted. (3) Holiday restrictions. The maximum size limits for a permit issued under Transportation Code, Chapter 623, Subchapter D, for holiday movement is 14 feet wide, 16 feet high, and 110 feet long, unless an exception is granted based on a route and traffic study conducted by TxDOT. The department may restrict holiday movement of specific loads based on a determination that the load could pose a hazard for the traveling public due to local road or traffic conditions. (4) Curfew restrictions. The operator of a permitted vehicle must observe the curfew movement restrictions of any city or county in which the vehicle is operated. However, only the curfew restrictions listed on the permit apply to the permit. (m) General provisions. (1) Multiple commodities. (A) Except as provided in subparagraph (B) of this paragraph, when a permitted commodity creates a single overdimension, two or more commodities may be hauled as one permit load, provided legal axle weight and gross weight are not exceeded, and provided an overdimension of width, length or height is not created or made greater by the additional commodities. For example, a permit issued for the movement of a 12 foot wide storage tank may also include a 10 foot wide storage tank loaded behind the 12 foot wide tank provided that legal axle weight and gross weight are not exceeded, and provided an overdimension of width, length or height is not created. (B) When the transport of more than one commodity in a single load creates or makes greater an illegal dimension of length, width, or height the department may issue an oversize permit for such load subject to each of the following conditions. (i) The permit applicant or the shipper of the commodities files with the department a written certification by the Texas Economic Development and Tourism Office, [Department of Economic Development, approved by the Office of the Governor,] attesting that issuing the permit will have a significant positive impact on the economy of Texas and that the proposed load of multiple commodities therefore cannot be reasonably dismantled. As used in this clause the term significant positive impact means the creation of not less than 100 new full-time jobs, the preservation of not less than 100 existing full-time jobs, that would otherwise be eliminated if the permit is not issued, or creates or retains not less than one percent of the employment base in the affected economic sector identified in the certification. (ii) Transport of the commodities does not exceed legal axle and gross load limits. (iii) The permit is issued in the same manner and under the same provisions as would be applicable to the transport of a single oversize commodity under this section; provided, however, that the shipper and the permittee also must indemnify and hold harmless the department, its board members, officers, and employees from any and all liability for damages or claims of damages including court costs and attorney fees, if any, which may arise from the transport of an oversized load under a permit issued pursuant to this subparagraph. (iv) The shipper and the permittee must file with the department a certificate of insurance on a form prescribed by the department, or otherwise acceptable to the department, naming the department, its board members, officers, and employees as named or additional insurers on its comprehensive general liability insurance pol- 42 TexReg 6358 November 10, 2017 Texas Register

113 icy for coverage in the amount of $5 million per occurrence, including court costs and attorney fees, if any, which may arise from the transport of an oversized load under a permit issued pursuant to this subparagraph. The insurance policy is to be procured from a company licensed to transact insurance business in the State of Texas. (v) The shipper and the permittee must file with the department, in addition to all insurance provided in clause (iv) of this subparagraph, a certificate of insurance on a form prescribed by the department, or otherwise acceptable to the department, naming the department, its board members, officers, and employees as insurers under an auto liability insurance policy for the benefit of said insurers in an amount of $5 million per accident. The insurance policy is to be procured from a company licensed to transact insurance business in the State of Texas. If the shipper or the permittee is self-insured with regard to automobile liability then that party must take all steps and perform all acts necessary under the law to indemnify the department, its board members, officers, and employees as if the party had contracted for insurance pursuant to, and in the amount set forth in, the preceding sentence and shall agree to so indemnify the department, its board members, officers, and employees in a manner acceptable to the department. (vi) Issuance of the permit is approved by written order of the board which written order may be, among other things, specific as to duration and routes. (C) An applicant requesting a permit to haul a dozer and its detached blade may be issued a permit, as a non-dismantable load, if removal of the blade will decrease the overall width of the load, thereby reducing the hazard to the traveling public. (2) Oversize hauling equipment. A vehicle that exceeds the legal size limits, as set forth by Transportation Code, Chapter 621, Subchapter C, may only haul a load that exceeds legal size limits unless otherwise noted in this subchapter, but such vehicle may haul an overweight load that does not exceed legal size limits, except for the special exception granted in (c)(3) of this title (relating to Time Permits). (n) Surety bonds. (1) General. The following conditions apply to surety bonds specified in Transportation Code, (A) The surety bond must: (i) be made payable to the Texas Department of Transportation [department] with the condition that the applicant will pay the Texas Department of Transportation [department] for any damage caused to the highway by the operation of the equipment covered by the surety bond; (ii) be effective the day it is issued and expires at the end of the state fiscal year, which is August 31st. For example, if you obtain a surety bond on August 30th, it will expire the next day at midnight. (iii) include the complete mailing address and zip code of the principal; (iv) be filed with the department and have an original signature of the principal; (v) have a single entity as principal with no other principal names listed; and (vi) A non-resident agent with a valid Texas insurance license may issue a bond on behalf of an authorized insurance company when in compliance with Insurance Code, Chapter (B) A certificate of continuation will not be accepted. (C) The owner of a vehicle bonded under Transportation Code, or , that damages the state highway system as a result of the permitted vehicle's movement will be notified by certified mail of the amount of damage and will be given 30 days to submit payment for such damage. Failure to make payment within 30 days will result in TxDOT placing the claim with the attorney general for collection. (D) The venue of any suit for a claim against a surety bond for the movement of a vehicle permitted under the provisions of Transportation Code, Chapter 623, Subchapter D, will be any court of competent jurisdiction in Travis County. (2) Permit surety bonds. (A) A surety bond required under the provisions of Transportation Code, Chapter 623, Subchapter D, must be submitted on the department's standard surety bond form in the amount of $10,000. (B) A facsimile or electronic copy of the surety bond is acceptable in lieu of the original surety bond, for a period not to exceed 10 days from the date of its receipt in the department. If the original surety bond has not arrived in the department by the end of the 10 days, the applicant will not be issued a permit until the original surety bond has been received in the department. (C) The surety bond requirement does apply to the delivery of farm equipment to a farm equipment dealer. (D) A surety bond is required when a dealer or transporter of farm equipment or a manufacturer of farm equipment obtains a permit. (E) The surety bond requirement does not apply to driving or transporting farm equipment which is being used for agricultural purposes if it is driven or transported by or under the authority of the owner of the equipment. (F) The surety bond requirement does not apply to a vehicle or equipment operated by a motor carrier registered with the department under Transportation Code, Chapters 643 or 645 as amended. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER D. PERMITS FOR OVERSIZE AND OVERWEIGHT OIL WELL RELATED VEHICLES 43 TAC STATUTORY AUTHORITY PROPOSED RULES November 10, TexReg 6359

114 The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , , and which authorize the board to adopt rules that are necessary to implement and enforce Chapters 621, 622, and 623. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 621, 622, and Single-Trip Mileage Permits. (a) General information. (1) Permits issued under this section are subject to the requirements of of this title (relating to General Requirements). (2) A single-trip mileage permit: (A) is limited to a maximum of seven consecutive days; (B) routes the vehicle from the point of origin to the point of destination and has the route listed on the permit; and (C) allows the unit to be returned to the point of origin on the same permit, provided the return trip is made within the time period stated in the permit. (3) A unit exceeding 175,000 pounds gross weight must: (A) have front and rear escort vehicles to prevent traffic from traveling beside the unit as it crosses a bridge; (B) cross all multi-lane bridges by centering the unit on a lane line; (C) cross all two-lane bridges in the center of the bridge; and (D) cross each bridge at a speed not greater than 20 miles per hour. (4) A unit exceeding 12 feet in width must be centered in the outside traffic lane of any highway that has paved shoulders. (b) Maximum permit weight limits. (1) The maximum permit weight for any single axle[, not connected to another axle by a weight equalizing suspension system,] must not exceed 30,000 pounds or 850 pounds per inch of tire width, whichever is less. (2) The maximum permit weight for any group of axles on a unit will be determined by calculating the "W" weight for the group, using the formulas shown in Figure 2: 43 TAC (f), titled "Maximum Permit Weight Formulas," and comparing the calculated "W" weight with the corresponding "W" weight that is established in Figure 1: 43 TAC (f), titled "Maximum Permit Weight Table." (3) The maximum permit weight per inch of tire width for axles that are steerable must not exceed 950 pounds, and the maximum permit weight per inch of tire width for axles that are not steerable must not exceed 850 pounds. (4) A unit that does not have any group of axles that exceeds the limits established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas" will be permitted with a single-trip mileage or quarterly hubometer permit for travel on any route that does not include a load restricted bridge. (5) A unit that has any group of axles that exceeds the limits established by Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas" will be eligible, on an individual case-by-case basis, for a single-trip mileage permit only; permit approval or denial will be based on a detailed route study and an analysis conducted by TxDOT of each bridge on the proposed travel route to determine if the road(s) and bridge(s) [bridges] are capable of sustaining the movement. (6) A road or bridge that has been analyzed and determined to be incapable of sustaining the unit will be excluded from the permit route. (c) Permit application and issuance. (1) An application [Application] for a single-trip mileage permit under this section must be made in accordance with (b) of this title and shall also include the origin and destination points of the unit. [(A) The applicant must submit the completed application to the department by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(i) name, address, telephone number, and address (if requested) of the applicant;] [(ii) origin and destination points of the unit;] [(iii) make and model of the unit;] [(iv) vehicle identification number of the unit;] [(v) license plate number of the unit;] [(vi) size and weight dimensions; and] [(vii) any other information required by law.] (2) [(B)] Upon receipt of the application, the department will review and verify unit size and weight information, check route and mileage to be traveled, compute the permit fee, and advise the applicant of the permit fee. (3) [(2)] [Issuance of single-trip mileage permit.] Upon receipt of the permit fee, the department will advise the applicant of the permit number, and will provide a copy of the permit to the applicant [if requested to do so]. (d) Permit fees and refunds. (1) Minimum fee. The minimum fee for a single-trip mileage permit is either the calculated permit fee or $31, whichever is the greater amount. (2) Permit fee calculation. The fee for a single-trip mileage permit is calculated by multiplying the number of miles traveled, the highway use factor, and the total rate per mile, and then adding the indirect cost share to the product. (A) Highway use factor. The highway use factor for a single trip mileage permit is 0.6. (B) Total rate per mile. The total rate per mile is the combined mileage rates for width, height, and weight for the unit. For a trailer mounted unit, the total rate per mile is based on the overall width, overall height, and all axle weights, including the truck-tractor axles. (i) The mileage rate for width is $.06 per mile for each foot (or fraction thereof) above legal width. (ii) The mileage rate for height is $.04 per mile for each foot (or fraction thereof) above legal height. 42 TexReg 6360 November 10, 2017 Texas Register

115 (iii) The mileage rate for a single axle or any axle within a group that exceeds 20,000 pounds, but is less than or equal to 25,000 pounds, is calculated by multiplying $.045 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. (iv) The mileage rate for a single axle or any axle within a group that exceeds 25,000 pounds, but is less than or equal to 30,000 pounds, is calculated by multiplying $.055 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. [(C) Indirect cost share. The indirect cost share is a prorated share of administering department activities, other than the direct cost of the activities, including the cost of providing statewide support services. The indirect cost share factor is based upon the previous year's expenditures.] (3) Permit fees for trailer mounted units. (A) The permit fee for a trailer mounted unit is based on the overall width, overall height, and all axle weights, including the truck-tractor axles. (B) A unit with two or more axle groups that do not have a spacing of at least 12 feet between the closest axles of the opposing groups must have the permit fee calculated by the following method. (i) The axle group with the lowest weight will have the axle closest to the next axle group temporarily disregarded from its group in order to create a spacing of at least 12 feet between the two groups for fee calculation purposes. disregarded. (ii) An axle group will not have more than one axle (iii) The permit fee for the axle group with the temporarily disregarded axle must be based on the actual weight of the entire axle group minus the legal weight for the remaining axles of the group. (4) Refunds. Fees for permits issued under this section are non-refundable. (e) Amendments. A single-trip mileage permit may not be amended unless an exception is granted by the department. (f) Weight table and formulas. The following table entitled "Maximum Permit Weight Table" is Figure 1: 43 TAC (f), and the list of formulas entitled, "Maximum Permit Weight Formulas," is Figure 2: 43 TAC (f). Figure 1: 43 TAC (f) (No change.) Figure 2: 43 TAC (f) (No change.) Quarterly Hubometer Permits. (a) General information. (1) Permits issued under this section are subject to the requirements of of this title (relating to General Requirements). (2) A quarterly hubometer permit: (A) is effective for three consecutive months [(for example, a permit issued with a beginning date of January 15 will terminate on April 14, or a permit issued with a beginning date of July 1 will terminate on September 30)]; (B) allows the unit to travel on all state-maintained highways; and (C) allows the unit to travel on a state-wide basis. (3) A unit permitted under this subsection must not exceed any of the following dimensions: (A) 12 feet in width; (B) 14 feet, 6 inches in height; and (C) 95 feet in length. (4) With the exception of units that are overlength only, a unit operated with a permit issued under this section must be equipped with a hubometer. The permittee must maintain the hubometer in good working condition. (5) A unit exceeding 175,000 pounds gross weight must: (A) have front and rear escort vehicles to prevent traffic from traveling beside the unit as it crosses a bridge; a lane line; and (B) cross all multi-lane bridges by centering the unit on (C) cross all two-lane bridges in the center of the bridge; (D) cross each bridge at a speed not greater than 20 miles per hour. (b) Maximum permit weight limits. (1) The maximum permit weight for any single axle[, not connected to another axle by a weight equalizing suspension system,] must not exceed 30,000 pounds or 850 pounds per inch of tire width, whichever is less. (2) The maximum permit weight for any group of axles on a unit will be determined by calculating the "W" weight for the group, using the formulas in Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas,"[,] and comparing the calculated "W" weight with the corresponding "W" weight that is established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table." (3) The maximum permit weight per inch of tire width for axles that are steerable must not exceed 950 pounds, and the maximum permit weight per inch of tire width for axles that are not steerable must not exceed 850 pounds. (4) A unit that does not have any group of axles that exceeds the limits established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas" will be permitted with a single-trip mileage or quarterly hubometer permit for travel on any route that does not include a load restricted bridge. (5) A unit that has any group of axles that exceeds the limits established by Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas" will be eligible, on an individual case-by-case basis, for a single-trip mileage permit only; permit approval or denial will be based on a detailed route study and an analysis conducted by TxDOT of each bridge on the proposed travel route to determine if the road(s) and bridge(s) [bridges] are capable of sustaining the movement. (6) A bridge that has been analyzed and determined to be incapable of sustaining the unit will be excluded from the permit route. (c) Initial permit application and issuance. (1) An application for an initial quarterly hubometer permit under this section must be made in accordance with (b) of this title. In addition, the applicant must provide the current hubometer mileage reading and an initial $31 processing fee. [Initial permit application.] PROPOSED RULES November 10, TexReg 6361

116 [(A) The applicant for an initial quarterly hubometer permit must submit a completed application to the department by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(i) name, address, telephone number, and address (if requested) of the applicant;] [(ii) make and model of the unit;] [(iii) vehicle identification number of the unit;] [(iv) license plate number of the unit;] [(v) size and weight dimensions; and] [(vi) any other information required by law.] [(B) Upon receipt of the initial quarterly hubometer permit application, the department will verify unit information, calculate the permit fee, and advise the applicant of the permit fee.] (2) [Issuance of initial quarterly hubometer permit.] Upon verification of the unit information and receipt of the permit fee, the department will provide a copy of the permit to the applicant, as well as a renewal application. [if requested, and will also provide a renewal application form to the applicant.] (d) Permit renewals and closeouts. (1) An application for a permit renewal or closeout must be made on a form and in the manner prescribed by the department. [The applicant must complete and submit a renewal application form to the department for each permit that is to be renewed or closed out.] (2) Upon receipt of the renewal application, the department will verify unit information, check mileage traveled on the last permit, calculate the new permit fee, and advise the applicant of the permit fee. (e) Permit fees [and refunds]. (1) Minimum fee. The minimum fee for a quarterly hubometer permit is either the calculated permit fee or $31, whichever is the greater amount. (2) Fees for overlength units. A unit that is overlength only must obtain a quarterly hubometer permit with a fee of $31, but is not required to have a hubometer. (3) Quarterly hubometer permit fee calculation. The permit fee for a quarterly hubometer permit is calculated by multiplying the hubometer mileage, the highway use factor, and the total rate per mile, and then adding the indirect cost share to the product. (A) Hubometer mileage. Mileage [Hubometer mileage] for a quarterly hubometer permit is determined by the unit's current hubometer mileage reading minus [an amount estimated by the applicant for the first quarterly hubometer permit, or from] the unit's hubometer mileage reading from the previous quarterly hubometer permit. [(i) An applicant requesting a permit for a unit that has traveled in excess of the mileage stated in the previous quarterly hubometer permit must pay for the excess mileage traveled, in addition to the fee for the renewed quarterly hubometer permit.] [(ii) An applicant requesting a permit for a unit that has traveled less than the mileage stated on the previous quarterly hubometer permit will receive a credit on the purchase price of the renewed quarterly hubometer permit for that unit or another unit.] (B) Highway use factor. The highway use factor for a quarterly hubometer permit is 0.3. (C) Total rate per mile. The total rate per mile is the combined mileage rates for width, height, and weight for the unit. The rate per mile for a trailer mounted unit is based on the overall width, overall height, and all axle weights, including the truck-tractor axles. (i) The mileage rate for width is $.06 per mile for each foot (or fraction thereof) above legal width. (ii) The mileage rate for height is $.04 per mile for each foot (or fraction thereof) above legal height. (iii) The mileage rate for a single axle or any axle within a group that exceeds 20,000 pounds, but is less than or equal to 25,000 pounds, is calculated by multiplying $.045 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. (iv) The mileage rate for a single axle or any axle within a group that exceeds 25,000 pounds, but is less than or equal to 30,000 pounds, is calculated by multiplying $.055 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. [(D) Indirect cost share. The indirect cost share is a prorated share of administering department activities, other than the direct cost of the activities, including the cost of providing statewide support services. The indirect cost share factor is based upon the previous year's expenditures.] (4) Permit fees for trailer mounted units. (A) The permit fee for a trailer mounted unit is based on the overall width, overall height, and all axle weights, including the truck-tractor axles. (B) A unit with two or more axle groups that does not have a spacing of at least 12 feet between the closest axles of the opposing groups must have the permit fee calculated by the following method. (i) The axle group with the lowest weight will have the axle closest to the next axle group temporarily disregarded from its group in order to create a spacing of at least 12 feet between the two groups for fee calculation purposes. disregarded. (ii) An axle group will not have more than one axle (iii) The permit fee for the axle group with the temporarily disregarded axle must be based on the actual weight of the entire axle group minus the legal weight for the remaining axles of the group. [(5) Refunds. A refund is made to the applicant when the quarterly hubometer permit process is stopped for all units listed in the applicant's account, provided the amount of the refund exceeds $25.] (f) Amendments. A quarterly hubometer permit may be amended only to indicate: (1) a new hubometer serial number; or (2) a new license plate number Annual Permits. (a) General information. Permits issued under this section are subject to the requirements of of this title (relating to General Requirements). (1) Annual self-propelled oil well servicing unit permits. 42 TexReg 6362 November 10, 2017 Texas Register

117 (A) A unit that does not exceed legal size and weight limits and is registered with a permit plate must purchase an annual permit issued under this section. (B) The fee for an annual self-propelled oil well servicing unit permit is $52 per axle. The indirect cost share is included in this fee. (2) Annual oil field rig-up truck permits. (A) An oil field rig-up truck permitted under this section must not exceed: (i) legal height or length limits, as provided in Transportation Code, Chapter 621, Subchapter C; axle; (ii) 850 pounds per inch of tire width on the front (iii) 25,000 pounds on the front axle; or (iv) legal weight on all other axles. (B) An oil field rig-up truck, operating under an annual permit, must be registered in accordance with Transportation Code, Chapter 502. (C) The annual permit fee for an oil field rig-up truck is $52. The indirect cost share is included in this fee. (D) An annual permit for an oil field rig-up truck allows the unit to travel at night, provided the unit does not exceed nine feet in width. (3) A permit issued under this section may not be amended. (4) A permit issued under this section allows travel on a statewide basis and on all state maintained highways. (b) Permit application and issuance. (1) An application for an annual permit under this section must be made in accordance with (b) of this title. [Initial permit application. An applicant for an annual permit under this section must submit a completed application by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(A) name and address of applicant;] [(B) make and model of the unit;] [(C) vehicle identification number of the unit;] [(D) license plate number of the unit;] [(E) size and weight dimensions; and] [(F) any other information required by law.] (2) [Permit issuance.] Upon receipt of the application and the appropriate fees, the department will provide a copy of the permit to the applicant [if requested, and will also provide a renewal application form to the applicant] Permits for Vehicles Transporting Liquid Products Related to Oil Well Production. (a) General provisions. This section applies to the following vehicles which may secure an annual permit issued under provisions of Transportation Code, Chapter 623, Subchapter G, to haul liquid loads over all state-maintained highways. (1) A vehicle combination consisting of a truck-tractor and semi-trailer specifically designed with a tank and pump unit for transporting: (A) liquid fracing products, liquid oil well waste products, or unrefined liquid petroleum products to an oil well; or (B) unrefined liquid petroleum products or liquid oil well waste products from an oil well not connected to a pipeline. (2) A permit issued under this section is effective for one year beginning on the effective date. (b) Application for permit. (1) An application for an annual permit under this section must be made in accordance with (b) of this title (relating to General Requirements). [A request for an annual permit issued under Transportation Code, Chapter 623, Subchapter G, and this section, must be submitted to the department by telephone, facsimile, mail, or Internet.] (2) The permit request must be received by the department not more than 14 days prior to the date that the permit is to begin. (c) Permit qualifications and requirements. (1) The semi-trailer must be of legal size and weight. (2) The semi-trailer must be registered for the maximum legal gross weight. (3) Only one semi-trailer will be listed on a permit. (4) The permit may be transferred from an existing trailer being removed from service and placed on a new trailer being added to the permittee's fleet, if the permittee supplies the department with: (A) a transfer fee of $31 per permit to cover adminis- (D) trative costs. the existing valid permit number; (B) the make and model of the new trailer; (C) the license number of the new trailer; and (d) Fees. All fees associated with permits issued under this section are payable as described in (f) of this title (relating to General Oversize/Overweight Permit Requirements and Procedures). (1) The permit fee is based on the axles of the semi-trailer and the drive axles of the truck-tractor. The fee for the permit, which includes the indirect cost share, is determined as follows: (A) $52 per axle--to haul liquid oil well waste products or unrefined liquid petroleum products from oil wells not connected by a pipeline and return empty; (B) $52 per axle--to haul liquid products related to oil well production to an oil well and return empty; and (C) $104 per axle--to haul liquid products related to oil well production to an oil well and return with liquid oil well waste products or unrefined liquid petroleum products from an oil well not connected to a pipeline. (2) Each permittee will be charged a $20 issuance fee in addition to the permit fee. (e) Permit movement conditions. The permit load must not cross any load-restricted bridge when exceeding the posted capacity of such. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. PROPOSED RULES November 10, TexReg 6363

118 Filed with the Office of the Secretary of State on October 30, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) SUBCHAPTER E. PERMITS FOR OVERSIZE AND OVERWEIGHT UNLADEN LIFT EQUIPMENT MOTOR VEHICLES 43 TAC STATUTORY AUTHORITY The amendments are proposed under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles (board) with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , , and which authorize the board to adopt rules that are necessary to implement and enforce Chapters 621, 622, and 623. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 621, 622, and Single Trip Mileage Permits. (a) General information. (1) Permits issued under this section are subject to the requirements of of this title (relating to General Requirements for Permits for Oversize and Overweight Unladen Lift Equipment Motor Vehicles). (2) A single-trip mileage permit: (A) is limited to a maximum of seven consecutive days; (B) is routed from the point of origin to the point of destination and has the route listed on the permit; and (C) allows the crane to be returned to the point of origin on the same permit, provided the return trip is made within the time period stated in the permit. [(3) A crane permitted under Transportation Code, Chapter 623, Subchapter J, must be registered under Transportation Code, Chapter 502, for the maximum gross weight applicable to the vehicle under Transportation Code, or have the distinguishing license plates as provided by Transportation Code, if applicable to the vehicle.] (3) [(4)] A crane exceeding 175,000 pounds gross weight must: (A) have front and rear escort vehicles to prevent traffic from traveling beside the crane as it crosses a bridge; (B) cross all multi-lane bridges by centering the crane on a lane line; (C) cross all two-lane bridges in the center of the bridge; and (D) cross each bridge at a speed not greater than 20 miles per hour. (4) [(5)] A crane exceeding 12 feet in width must be centered in the outside traffic lane of any highway that has paved shoulders. (5) [(6)] The permitted vehicle must not cross a load restricted bridge when exceeding the posted capacity of such. (b) Maximum permit weight limits. (1) The maximum permit weight for any single axle[, not connected to another axle by a weight equalizing suspension system,] must not exceed 30,000 pounds or 850 pounds per inch of tire width, whichever is less. (2) The maximum permit weight for any group of axles on a crane is determined by calculating the "W" weight for the group, using the formulas shown in Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," and comparing the calculated "W" weight with the corresponding "W" weight that is established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table." (3) The maximum permit weight per inch of tire width for axles that are steerable must not exceed 950 pounds, and the maximum permit weight per inch of tire width for axles that are not steerable must not exceed 850 pounds. (4) A crane that does not have any group of axles that exceeds the limits established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," will be permitted with a single-trip mileage permit or a quarterly hubometer permit for travel on any route that does not include a load restricted bridge. (5) A crane that has any group of axles that exceeds the limits established by Figure 1: 43 TAC (f),"Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," will be eligible, on an individual case-by-case basis, for a single-trip mileage permit only. Permit approval or denial will be based on a detailed route study and an analysis conducted by TxDOT of each bridge on the proposed travel route to determine if the road(s) and bridge(s) [bridges] are capable of sustaining the movement. (6) A road or bridge that has been analyzed and determined to be incapable of sustaining the crane will be excluded from the permit route. (c) Permit application and issuance. (1) An application for a single-trip mileage permit under this section must be made in accordance with (b) of this title and must also include the origin and destination points of the crane. [Application for single-trip mileage permit.] [(A) An application The applicant must submit the completed application to the department by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(i) name, address, telephone number, and address (if requested) of the applicant;] [(ii) origin and destination points of the crane;] [(iii) make and model of the crane;] [(iv) vehicle identification number of the crane;] [(v) license plate number of the crane;] [(vi) size and weight dimensions; and] [(vii) any other information required by law.] 42 TexReg 6364 November 10, 2017 Texas Register

119 (2) [(B)] Upon receipt of the application, the department will review and verify size and weight information, check the route and mileage to be traveled, compute the permit fee, and advise the applicant of the permit fee. (3) [(2)] [Issuance of single-trip mileage permit.] Upon receipt of the permit fee, the department will advise the applicant of the permit number, and will provide a copy of the permit to the applicant [if requested to do so]. (d) Permit fees and refunds. (1) Minimum fee. The minimum fee for a single-trip permit is either the calculated permit fee or $31, whichever is the greater amount. (2) Permit fee calculation. The permit fee for a single-trip mileage permit is calculated by multiplying the number of miles traveled, the highway use factor, and the total rate per mile, and then adding the indirect cost share to the product. (A) Highway use factor. The highway use factor for a single-trip mileage permit is 0.6. (B) Total rate per mile. The total rate per mile is the combined mileage rates for width, height, and weight for the unit. The rate per mile for a trailer mounted crane is based on the overall width, overall height, and all axle weights, including the truck-tractor axles. (i) The mileage rate for width is $.06 per mile for each foot (or fraction thereof) above legal width. (ii) The mileage rate for height is $.04 per mile for each foot (or fraction thereof) above legal height. (iii) The mileage rate for a single axle or any axle within a group that exceeds 20,000 pounds, but is less than or equal to 25,000 pounds, is calculated by multiplying $.045 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. (iv) The mileage rate for a single axle or any axle within a group that exceeds 25,000 pounds, but is less than or equal to 30,000 pounds, is calculated by multiplying $.055 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. [(C) Indirect cost share. The indirect cost share is a prorated share of administering department activities, other than the direct cost of the activities, including the cost of providing statewide support services. The indirect cost share factor is based upon the previous year's expenditures.] (3) Exceptions to fee computations. A crane with two or more axle groups that does not have a spacing of at least 12 feet between the closest axles of the opposing groups must have the permit fee calculated by the following method. (A) The axle group with the lowest weight will have the axle closest to the next axle group temporarily disregarded from its group in order to create a spacing of at least 12 feet between the two groups for fee calculation purposes. (B) An axle group will not have more than one axle disregarded. (C) The permit fee for the axle group with the temporarily disregarded axle must be based on the actual weight of the entire axle group minus the legal weight for the remaining axles of the group. (4) Refunds. Fees for permits issued under this section are non-refundable. (e) Amendments. A single-trip mileage permit issued under this section may not be amended unless an exception is granted by the department. (f) Weight table and formulas. The following table entitled "Maximum Permit Weight Table" is Figure 1: 43 TAC (f), and the list of formulas entitled "Maximum Permit Weight Formulas," is Figure 2: 43 TAC (f). Figure 1: 43 TAC (f) (No change.) Figure 2: 43 TAC (f) (No change.) Quarterly Hubometer Permits. (a) General information. (1) Permits issued under this section are subject to the requirements of of this title (relating to General Requirements for Permits for Oversize and Overweight Unladen Lift Equipment Motor Vehicles). (2) A quarterly hubometer permit: (A) is effective for three consecutive months [(for example, a permit issued with a beginning date of January 15 will terminate on April 14, or a permit issued with a beginning date of July 1 will terminate on September 30)]; (B) allows the vehicle to travel on all state-maintained highways; and (C) allows the unit to travel on a state-wide basis. (3) A crane permitted under this section must not exceed any of the following dimensions: (A) 12 feet in width; (B) 14 feet, 6 inches in height; or (C) 95 feet in length. [(4) A crane permitted under this section must be registered under Transportation Code, Chapter 502, for the maximum gross weight applicable to the vehicle under Transportation Code, Section , or have the distinguishing license plates as provided by Transportation Code, , if applicable to the vehicle.] (4) [(5)] With the exception of cranes that are overlength only, cranes operated with a quarterly hubometer permit must be equipped with a hubometer. The permittee must maintain the hubometer in good working condition. must: (5) [(6)] A crane exceeding 175,000 pounds gross weight (A) have front and rear escort vehicles to prevent traffic from traveling beside the crane as it crosses a bridge; (B) cross all multi-lane bridges by centering the crane on a lane line; and (C) cross all two-lane bridges in the center of the bridge; (D) cross each bridge at a speed not greater than 20 miles per hour. (6) [(7)] A crane exceeding 12 feet in width must be centered in the outside traffic lane of any highway that has paved shoulders. (7) [(8)] A crane will be permitted for night movement provided that it does not exceed 10 feet 6 inches in width, 14 feet in height, or 95 feet in length. A crane moving at night must be accompanied by a front and rear escort vehicle. PROPOSED RULES November 10, TexReg 6365

120 (8) [(9)] The permitted vehicle must not cross a load restricted bridge when exceeding the posted capacity of the bridge [such]. (9) [(10)] The permit may be amended only to indicate: (A) a new hubometer serial number; or (B) a new license plate number. (b) Maximum permit weight limits. (1) The maximum permit weight for any single axle[, not connected to another axle by a weight equalizing suspension system,] must not exceed 30,000 pounds or 850 pounds per inch of tire width, whichever is less. (2) The maximum permit weight for any group of axles on a crane will be determined by calculating the "W" weight for the group, using the formulas in Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," and comparing the calculated "W" weight with the corresponding "W" weight that is established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table." (3) The maximum permit weight per inch of tire width for axles that are steerable must not exceed 950 pounds, and the maximum permit weight per inch of tire width for axles that are not steerable must not exceed 850 pounds. (4) A crane that does not have any group of axles that exceeds the limits established in Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," will be permitted with a single-trip mileage permit or a quarterly hubometer permit for travel on any route that does not include a load restricted bridge. (5) A crane that has any group of axles that exceeds the limits established by Figure 1: 43 TAC (f), "Maximum Permit Weight Table," and Figure 2: 43 TAC (f), "Maximum Permit Weight Formulas," will be eligible, on an individual case-by-case basis, for a single-trip mileage permit only; permit approval or denial will be based on a detailed route study and an analysis conducted by TxDOT of each bridge on the proposed travel route to determine if the road(s) and bridge(s) [bridges] are capable of sustaining the movement. (6) A bridge that has been analyzed and determined to be incapable of sustaining the crane will be excluded from the permit route. (c) Initial permit application and issuance. (1) An application for an initial quarterly hubometer permit must be made in accordance with (b) of this title. In addition, the applicant must provide the current hubometer mileage reading and an initial $31 processing fee. [Initial permit application.] [(A) A completed application for an initial quarterly hubometer permit must be submitted to the department by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(i) name, address, telephone number, and address (if requested) of the applicant;] [(ii) make and model;] [(iii) the vehicle identification number;] [(iv) license plate number of the vehicle;] [(v) size and weight dimensions; and] [(vi) any other information required by law.] [(B) Upon receipt of the initial quarterly hubometer permit application, the department will verify vehicle information, calculate the permit fee, and advise the applicant of the permit fee.] (2) [Issuance of initial quarterly hubometer permit.] Upon verification of the unit information and receipt of the permit fee, the department will provide a copy of the permit to the applicant [upon request], and will also provide a renewal application form to the applicant. (d) Permit renewals and closeouts. (1) An application for a permit renewal or closeout must be made on a form and in a manner prescribed by the department. [The applicant must complete and submit a renewal application form to the department for each permit that is to be renewed or closed out.] (2) Upon receipt of the renewal application, the department will verify crane information, check mileage traveled on the last permit, calculate the new permit fee, and advise the applicant of the permit fee. (e) Permit fees [and refunds]. (1) Minimum fee. The minimum fee for a quarterly hubometer [single-trip permit or time] permit is either the calculated permit fee or $31, whichever is the greater amount. (2) Fees for overlength units. A crane that is overlength only must obtain a quarterly hubometer permit with a fee of $31, and is not required to have a hubometer. (3) Quarterly hubometer permit fee calculation. The permit fee for a quarterly hubometer permit is calculated by multiplying the hubometer mileage, the highway use factor, and the total rate per mile, and then adding the indirect cost share to the product. (A) Hubometer mileage. Mileage for a quarterly hubometer permit is determined by the crane's current hubometer mileage reading minus [an amount estimated by the applicant for the first quarterly hubometer permit, or from] the crane's hubometer mileage reading from the previous quarterly hubometer permit. [(i) An applicant requesting a permit for a crane that has traveled in excess of the mileage stated in the previous quarterly hubometer permit must pay for the excess mileage traveled, in addition to the fee for the renewed quarterly hubometer permit.] [(ii) An applicant requesting a permit for a crane that has traveled less than the mileage stated on the previous quarterly hubometer permit will receive a credit on the purchase price of the renewed quarterly hubometer permit for that crane or another crane.] (B) Highway use factor. The highway use factor for a quarterly hubometer permit is 0.3. (C) Total rate per mile. The total rate per mile is the combined mileage rates for width, height, and weight for the crane. (i) The mileage rate for width is $.06 per mile for each foot (or fraction thereof) above legal width. (ii) The mileage rate for height is $.04 per mile for each foot (or fraction thereof) above legal height. (iii) The mileage rate for a single axle or any axle within a group that exceeds 20,000 pounds, but is less than or equal to 25,000 pounds, is calculated by multiplying $.045 times the amount by which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. (iv) The mileage rate for a single axle or any axle within a group that exceeds 25,000 pounds, but is less than or equal to 30,000 pounds, is calculated by multiplying $.055 times the amount by 42 TexReg 6366 November 10, 2017 Texas Register

121 which the axle or axle group weight exceeds the legal weight for the axle or axle group and dividing the resultant figure by 1,000 pounds. [(D) Indirect cost share. The indirect cost share is a prorated share of administering department activities, other than the direct cost of the activities, including the cost of providing statewide support services. The indirect cost share factor is based upon the previous year's expenditures.] (4) Special fee provisions. A crane with two or more axle groups that do not have a spacing of at least 12 feet between the closest axles of the opposing groups must have the permit fee calculated by the following method. (A) The axle group with the lowest weight will have the axle closest to the next axle group temporarily disregarded from its group in order to create a spacing of at least 12 feet between the two groups for fee calculation purposes. regarded. (B) An axle group will not have more than one axle dis- (C) The permit fee for the axle group with the temporarily disregarded axle must be based on the actual weight of the entire axle group minus the legal weight for the remaining axles of the group. [(5) Refunds. The department will refund fees for permits issued under this section when the quarterly hubometer permit process is stopped for all cranes listed in the applicant's account, provided the amount of the refund exceeds $25.] Annual Permits. (a) General information. Permits issued under this section are subject to the requirements of of this title (relating to General Requirements for Permits for Oversize and Overweight Unladen Lift Equipment Motor Vehicles). (1) A crane permitted under this section must not exceed: (A) the weight limits established in (d)(1), (2), and (3) of this title (relating to General Oversize/Overweight Permit Requirements and Procedures); (B) a gross weight of 120,000 pounds; (C) legal length and height limits as specified in Transportation Code, Chapter 621, Subchapter C; and (D) 10 feet in width. (2) A permit issued under this section may not be amended. (3) A crane permitted under this section must not cross a load restricted bridge or a load restricted road when exceeding the posted capacity of such. (4) A crane permitted under this section may travel at night with front and rear escort vehicles. is $100. (5) The fee for an annual permit issued under this section (b) Permit application and issuance. (1) Initial permit application. An application for an annual permit under this section must be made in accordance with (b) of this title. [applicant for an annual permit under this section must submit a completed application and the appropriate fees by telephone, facsimile, mail, or Internet. The application shall include, at a minimum, the following information:] [(A) name and address of applicant;] [(B) make and model of the crane;] [(C) vehicle identification number;] [(D) [(E) [(F) license plate number;] size and weight dimensions; and] any other information required by law.] (2) Permit issuance. Upon receipt of the application and the appropriate permit fee, the department will verify the application information and[,] provide the permit to the applicant [if requested, and also provide a renewal application form to the applicant]. The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt. Filed with the Office of the Secretary of State on October 30, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Earliest possible date of adoption: December 10, 2017 For further information, please call: (512) PROPOSED RULES November 10, TexReg 6367

122

123 TITLE 1. ADMINISTRATION PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION CHAPTER 353. MEDICAID MANAGED CARE SUBCHAPTER O. DELIVERY SYSTEM AND PROVIDER PAYMENT INITIATIVES 1 TAC The Texas Health and Human Services Commission (HHSC) adopts an amendment to , concerning Uniform Hospital Rate Increase Program. The amendment is adopted without changes to the proposed text as published in the August 25, 2017, issue of the Texas Register (42 TexReg 4199), and therefore will not be republished. BACKGROUND AND JUSTIFICATION In March of 2017, HHSC adopted rules governing a provider payment initiative through Medicaid managed care organizations (MCOs) called the Uniform Hospital Rate Increase Program (UHRIP) (42 TexReg 1748). Under the UHRIP initiative, a service delivery area (SDA) may apply to receive an increase in certain hospital rates which would vary by class of hospital. Although UHRIP was to begin in September 2017 and be available to any SDA, operational issues necessitated a delay. Such issues included lack of readiness by MCOs, lack of program understanding among providers, and incomplete approvals from the Centers for Medicare & Medicaid Services (CMS). HHSC amends the UHRIP rule in three ways. First, HHSC amends (b)(7) and (8), the definitions of "rural private hospital" and "rural public hospital," to be consistent with a revised definition of "rural hospital" that was adopted in (relating to Inpatient Hospital Reimbursement) to be effective September 1, The definitions in this rule now refer to the definition of "rural hospital" in Second, HHSC adds (k), which allows for a limited December 1, 2017, entry into UHRIP for a subset of SDAs. Specifically, if HHSC received an approval from CMS for any particular SDA by April 15, 2017, that SDA would be able to participate in UHRIP for dates of service beginning December 1, Third, HHSC standardizes references to SDA throughout the section. COMMENTS The 30-day comment period ended September 25, During this period, HHSC received one comment regarding the proposed rule from the Texas Hospital Association. A summary of the comment and HHSC's response follows. Comment: One commenter encouraged HHSC to adopt the proposed rule to allow the Bexar and El Paso Service Delivery Areas (SDAs) to participate in UHRIP beginning on December 1, Response: HHSC thanks the commenter for their support of the rule. STATUTORY AUTHORITY The amendment is adopted under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; Texas Government Code (b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code, Chapter 32; and with Texas Government Code , which authorizes HHSC to implement the Medicaid managed care program. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 26, TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Effective date: December 1, 2017 Proposal publication date: August 25, 2017 For further information, please call: (512) CHAPTER 355. REIMBURSEMENT RATES SUBCHAPTER C. REIMBURSEMENT METHODOLOGY FOR NURSING FACILITIES 1 TAC The Texas Health and Human Services Commission (HHSC) adopts new , concerning Reimbursement Methodology for Preadmission Screening and Resident Review (PASRR) Specialized Services. The rule is adopted without changes to the proposed text published in the August 18, 2017, issue of the ADOPTED RULES November 10, TexReg 6369

124 Texas Register (42 TexReg 4042) and therefore will not be republished. Background and Justification HHSC, under its authority and responsibility to administer and implement rates, adopts this new rule to establish the reimbursement methodology for PASRR Specialized Services. Effective December 1, 2017, HHSC will implement an array of PASRR Specialized Services for clients who reside in nursing facilities as required by the Centers for Medicare & Medicaid Services (CMS) under 42 CFR through This adopted rule is required to develop the rates for the above-referenced services. Comments The 30-day comment period ended September 18, During this period, HHSC did not receive any comments regarding the new rule. Statutory Authority The new rule is adopted under Texas Government Code , which authorizes the Executive Commissioner of HHSC to adopt rules necessary to carry out HHSC's duties; Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas; and Texas Government Code (b), which establishes HHSC as the agency responsible for adopting reasonable rules governing the determination of fees, charges, and rates for medical assistance payments under the Texas Human Resources Code Chapter 32. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 26, TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Effective date: November 15, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) TITLE 34. PUBLIC FINANCE PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS CHAPTER 23. ADMINISTRATIVE PROCEDURES 34 TAC 23.9 The Teacher Retirement System of Texas (TRS) adopts new rule 34 TAC 23.9, concerning communicating information electronically. The new rule is adopted without changes to the proposed text as published in the August 18, 2017 issue of the Texas Register (42 TexReg 4090). The new rule affects and is adopted to implement , Government Code, as amended by Senate Bill 1663, 85th Legislature (Regular Session, 2017). Senate Bill 1663 and adopted new 23.9 allow TRS to use or a website to provide certain information required to be sent to a TRS member or retiree under , Government Code, or that TRS determines would be beneficial for the individual to receive. TRS is currently required to provide participants with certain general information, including a summary of benefits available from TRS, eligibility for the benefits, how to claim or choose the benefits, and a summary of any significant changes made to the plan's terms. TRS is also required to annually provide each active member with a statement of the amounts of the member's accumulated contributions and total accumulated service credit on which benefits are based and an annual statement to each annuitant of the amount of payments made to the annuitant by TRS in the preceding 12 months. TRS complies with the requirements to provide general information by mailing a copy of the Benefits Handbook to new members and making subsequent versions of the handbook and other benefit related information such as brochures and newsletters available on the TRS website and by mailing a copy of the TRS Newsletter that contains notice of significant changes to the plans terms to all members and retirees. Senate Bill 1663 clarified that TRS may provide non-confidential information related to the plans terms to an address provided to TRS by the participant's employer. The new legislation also provides TRS with the authority to send confidential participant information to an address provided by the participant. The adopted new rule clarifies that TRS may distribute non-confidential information required by law to be provided to participants of the plan and any other non-confidential information determined by TRS to be beneficial for distribution by sending the information to a work address for the member or retiree provided by the employer. Under the terms of the adopted rule, confidential information related to a specific member or retiree may be provided electronically to an address provided by the member, retiree, or authorized requestor or to the member's or retiree's TRS web self-service account provided the information is encrypted or TRS has otherwise taken reasonable steps to protect the confidential information from unauthorized disclosure. TRS received no comments on the proposed rule. Section 23.9 is a new rule adopted under the authority of , Government Code, which authorizes the TRS Board of Trustees to adopt rules for the administration of the funds of the system and the transaction of business of the Board. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) TexReg 6370 November 10, 2017 Texas Register

125 CHAPTER 25. MEMBERSHIP CREDIT The Teacher Retirement System of Texas (TRS) adopts amendments to 25.10, concerning student employment and 25.28, concerning payroll report dates. TRS adopts new rules , concerning correction of ineligible participation in TRS and , concerning time period at retirement to complete purchase of service credit. All are adopted without changes to the proposed text as published in the August 18, 2017 issue of the Texas Register (42 TexReg 4091). The adopted amendments to incorporate the legislative change in Senate Bill 1663, 85th Legislature (Regular Session, 2017) that makes student employment not eligible for membership in TRS. The adopted amendments to address the changes Senate Bill 1663 made to , Government Code, that require employers to make monthly reports to TRS, submit member and employer contributions by a stated timeline, and pay late fees if the reports are not timely filed. Adopted new addresses how TRS will administer the correction procedures provided in Senate Bill 1954, 85th Legislature (Regular Session, 2017) for persons eligible to participate in the Optional Retirement Program (ORP) reported in error to TRS. ORP was established as an alternative to TRS for certain employees of institutions of higher education. Adopted new incorporates the time periods adopted in Senate Bill 1664, 85th Legislature (Regular Session, 2017) to complete the purchase of service credit at retirement. All enacted legislation mentioned above takes effect on September 1, The adopted amendments to address the circumstance that, prior to SB 1663, student employment, i.e., employment by a Texas public college or university that is conditioned upon enrollment as a student, is not eligible for membership in TRS, unless the person has other eligible employment during the same payroll period. In that instance, the compensation for the student employment is creditable compensation for TRS purposes. Senate Bill 1663 provides that a person who is a student employee is not permitted to be a member of TRS based on that student employment and that compensation paid for student employment is not subject to member contributions and reporting to TRS and may not be used in benefit computations. This means that, even if the person has other membership eligible employment, the compensation cannot be reported to TRS and will not be used in benefit calculations. The adopted amendments to align the TRS rule with the revised statute. The adopted amendments to affect , Government Code, as amended by Senate Bill 1663, 85th Legislature (Regular Session), 2017, concerning exceptions to membership requirement. The adopted amendments to address the changes made by Senate Bill 1663 that establish different due dates for an employer to file the monthly payroll report and the monthly certified statement for the employment of retirees and TRS' authority to charge a late fee when employers fail to complete the required reports by the established due dates. Currently, all monthly reports are due before the seventh day of the following month. Senate Bill 1663 establishes a later due date for the monthly certified statement for the employment of retirees. The monthly certified statement for the employment of retirees is due before the eleventh day of the following month, except that the certified statement for August will continue to be due before the seventh of September to facilitate the year-end closing of employer reports. The adopted changes to this rule conform the rule to the new statutory due dates for submitting completed reports. In addition, Senate Bill 1663 requires that employers that fail to timely submit reports must pay a late fee for each day that the reports are not filed. The late fee is in addition to penalty interest TRS is currently authorized to charge for depositing member and employer contributions after the required due date. The adopted amended rule implements the late fee requirement effective with the January 2018 reports, which are due in February 2018, and provides a late fee structure based on the number of eligible employees reported by an employer and the number of days the employer's report is late, with a higher fee being charged for the first day it is late. The adopted amendments to also provide that the number of eligible employees used to determine the late fee amount is determined based on the number of eligible employees reported by that employer in May of the preceding year. New employers will be assigned to the smallest employer group until the following year when the number of eligible employees reported in May will be used to establish the appropriate employer group. The adopted amendments to affect , Government Code, as amended by Senate Bill 1663, 85th Legislature (Regular Session, 2017), concerning interest on contributions and fees and deposits in trust. Adopted new , which will be located in Chapter 25, Subchapter M, concerning ORP, implements the requirements of Senate Bill 1954 that establish how to correct the error of reporting a person to TRS who is not eligible for participation in TRS. The error addressed in the legislation is one that is based on a prior election to participate in ORP in lieu of participation in TRS by a person who then vested in participation in ORP by participating for at least one year in that program. The adopted new rule confirms the statutory requirement that the person must be restored to ORP immediately and describes how member and employer contributions held by TRS are directed. Requirements in the new rule include the requirement that the employer and ORP trustee complete required certifications that confirm the amount of compensation paid to the person and contributions that should have been made to ORP and allow TRS to make a direct trustee-to-trustee transfer to the ORP plan trustee of member contributions that should have been made to the ORP plan account plus earnings of 4 percent. After certification by the employer and approval by TRS, the employer is authorized by the rule to take a credit against future contributions owed to TRS for amounts the employer contributed to TRS in lieu of state contributions based on the person's employment, but earnings on the employer contributions may not be taken as a credit by the employer. The rule also addresses how member contributions that are in excess of the amount of ORP participant contributions will be paid directly to the member along with any amounts paid to TRS to purchase service credit when the person was not eligible for membership in TRS. No earnings are authorized on excess contributions and amounts paid to purchase service credit. Adopted new affects Chapter 830, Government Code, as amended by Senate Bill 1954, 85th Legislature (Regular Session, 2017), concerning the Optional Retirement Program. Adopted new implements TRS' authority, as confirmed by Senate Bill 1664, to allow additional time at retirement for a member to complete the purchase of service credit. The legislation provides a member with two months to complete the purchase of service credit other than the purchase of service credit for accumulated state sick or personal leave. Members purchasing service credit for accumulated state sick or personal leave credit were given 90 days to complete the purchase because this type of service credit may only be purchased at retirement. ADOPTED RULES November 10, TexReg 6371

126 An additional 30 day extension is also authorized by the legislation for those members purchasing service credit for accumulated state sick or personal leave by rollover. The adopted new rule clarifies that if the service credit being purchased is required in order to establish eligibility for retirement, the purchase must be completed by the effective date of retirement. It also confirms that the purchase must be completed before the first annuity payment is made and if the purchase cannot be completed within the timeframe provided, the member may either decline to purchase the service credit and keep the original effective date of retirement or establish a new effective date of retirement that will allow sufficient time for the retiree to complete the purchase of the service credit. Adopted new affects the following statutes, as amended by Senate Bill 1664, 85th Legislature (Regular Session, 2017): , Government Code, concerning computation of and payment for credit; , Government Code, concerning credit for accumulated personal or sick leave; , Government Code, concerning effective date of retirement; , Government Code, concerning revocation of retirement; , Government Code, concerning member savings account; and , Government Code, concerning direct rollovers. TRS received no comments on the proposed amended or new rules. SUBCHAPTER A. SERVICE ELIGIBLE FOR MEMBERSHIP 34 TAC The amendments to are adopted under the authority of , Government Code, which authorizes the TRS Board of Trustees (Board) to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER B. COMPENSATION 34 TAC The amendments to are adopted under the authority of , Government Code, which authorizes the TRS Board of Trustees to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER M. OPTIONAL RETIREMENT PROGRAM 34 TAC New is adopted under the authority of , Government Code, which authorizes the TRS Board of Trustees to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER N. INSTALLMENT PAYMENTS 34 TAC New is adopted under the authority of: , Government Code, which authorizes the TRS Board of Trustees to adopt rules for the certification of a member's creditable accumulated state personal or sick leave; , Government Code, which authorizes the Board to adopt rules for the administration of the funds of the system and the transaction of business of the Board; and , Government Code, which authorizes the Board to adopt rules to implement that statute concerning payroll deductions or installment payments for special service credit. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD TexReg 6372 November 10, 2017 Texas Register

127 Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) CHAPTER 31. RETIREMENT EMPLOYMENT AFTER The Teacher Retirement System of Texas (TRS) adopts amended , , and 31.41, concerning employment after retirement, without changes to the proposed text as published in the August 18, 2017, issue of the Texas Register (42 TexReg 4101). Amended 31.2 is adopted with changes to the proposed text as published in the August 18, 2017, issue of the Texas Register (42 TexReg 4101), and is published again in this issue. TRS adopts amendments to these sections to implement Senate Bill (SB) 1663, 85th Legislature (Regular Session, 2017). The changes address the timeline for employers to file the monthly certified statement for the employment of retirees. The changes also address the types of employment relationships between TRS-covered employers and retirees that are considered employment that is subject to limits and interrupts the required 12 full, consecutive calendar month break in service before retirees can undertake full-time employment. The changes apply to the rules for both service and disability retirees. In addition to adopting amendments because of changes required by SB 1663, TRS also adopts amendments to clarify how TRS applies the limit on the number of days that a service or disability retiree may work when combining work as a substitute and any other work for a TRS-covered employer in the same calendar month. Adopted changes to 31.33(d) improve consistency in the rules for disability and service retirees regarding how TRS administers the limits on employment after retirement when a disability retiree combines work as a substitute and any other work for a TRS-covered employer in the same calendar month. Chapter 31 addresses the opportunities and limitations on employment with a TRS-covered employer after retirement and the limitations on the amount of compensation a disability retiree may receive from any source after retirement without forfeiting the disability retirement benefit. Subchapter A provides for general provisions. Section 31.2 requires that a reporting entity furnish TRS with a monthly certified statement of all employment of TRS service or disability retirees. The statement shall contain information required by TRS to administer applicable limitations and necessary for the Executive Director or his designee to classify employment. The adopted amendments to 31.2 clarify when all monthly certified statements and required employer surcharges must be remitted to TRS and provide for penalty interest on unpaid amounts and daily late fees. SB 1663 extended the time for filing this report from before the seventh day of the following calendar month to before the eleventh day of the following calendar month. This deadline is for all calendar months except August. The deadline for filing the monthly certified statement of the employment of retirees for August was maintained by the bill at the current due date: before the seventh day of the following month. The earlier due date for the August report is required in order for TRS to accomplish year end closing in a timely manner. In addition, the adopted amendments confirm TRS' long standing application of the deadline by specifically stating that if the deadline falls on a weekend or federal holiday, the reports and surcharges are due on the last business day before the deadline. Other adopted changes to 31.2 address additional employment relationships with retirees that are considered employment for purposes of the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. The adopted amendments to 31.2 also address the "types" of employment of a retiree that are required to be reported by the employers. In amended section 31.2(b)(5), the reference to the employment of retirees who retired before January 1, 2011 is deleted because the new reporting system will be able to track the effective date of retirement for each retiree. The category of combining substitute and other work is added in 31.2(b)(5) because that type of employment must be reported for TRS to implement subsections (a) and (n) of of the Government Code, which provide that an employed retiree's combination of substitute and other work in the same calendar month may not exceed the number of days per month for work on a one-half-time basis without having a monthly benefit payment withheld. That additional language in 31.2(b)(5) was inadvertently omitted from the proposed text as published and is added back into the adopted rule. The need for the added language was described in the preamble for proposed amendments to 31.2(b)(5) and presented as such for proposal and adoption to TRS' Executive Director, Policy Committee of the TRS Board of Trustees, and the Board itself upon final adoption. In addition, amended 31.2 adds language that indicates how TRS will administer the requirement that TRS-covered employers pay a late fee when failing to meet the statutory deadline for filing monthly reports. The amended rule uses the reference to "failing to attain a completed status" with regard to the filing of a monthly certified statement, rather than "failing to file" a statement, to comport with the terminology used in the reporting system indicating a successful and completed filing of the required information. The late fee structure is addressed in new subsection (d) of 31.2 and is consistent with the late fee structure in amended adopted elsewhere in this issue. Amended subsection (a) of 31.2 delays the implementation of the late fees until the report for January 2018, which is due in February 2018, to allow sufficient time for addressing any problems that may occur with the implementation of the new reporting system. Amended subsection (e) of 31.2 provides that the number of eligible employees used to determine the late fee amount is determined based on the number of eligible employees reported by ADOPTED RULES November 10, TexReg 6373

128 that employer in May of the preceding year. New employers will be assigned to the smallest employer group until the following year, when the number of eligible employees reported in May will be used to establish the appropriate employer group. The adopted amendments affect Chapter 824, Subchapter G, of the Government Code, concerning loss of benefits on resumption of service. Subchapter B concerns employment after service retirement. Section addresses employment that results in the forfeiture of a service retirement annuity. The adopted changes to address changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Section addresses exceptions to forfeiture of a service retirement annuity. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Section provides the requirements for working under the substitute service exception and clarifies that working as a substitute during the required one full calendar month break in service revokes retirement. The rule also clarifies that a retiree may combine work under the one-half time exception and under the substitute service exception in the same calendar month provided the retiree does not work more days than half the number of the work days in that calendar month. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement during the first 12 full, consecutive calendar months following retirement. The adopted changes provide that when such other employment is combined with substitute employment in the same calendar month, such other employment must be included in calculating the number of days that a retiree is allowed to work in the same calendar month. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Other adopted changes to clarify that, when calculating the number of days a retiree may combine substitute and other work in the same calendar month, the total allowed is one-half the number of workdays. The adopted changes clarify that a work day is each Monday through Friday in the calendar month and that working any part of a calendar day, including a Saturday or Sunday, is counted as a day worked. Section provides clarification on how much a retiree may work under the one-half time exception without forfeiting the annuity for that month. The current rule provides that a retiree may work as much as the equivalent of four clock hours for every work day in the month. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Additional changes to clarify that when calculating the number of days a retiree may combine substitute and other work in the same calendar month, the total allowed is one-half the number of workdays. The adopted changes clarify that a work day is each Monday through Friday in the calendar month and that working any part of a calendar day, including a Saturday or Sunday, is counted as a day worked. 42 TexReg 6374 November 10, 2017 Texas Register

129 Section establishes the requirements for observing a break in service of 12 full, consecutive calendar months before returning to full-time employment for retirees who retired January 1, 2011 or thereafter. This rule provides that working as a substitute or under the one-half time exception is considered employment that interrupts the 12-month break in service and that paid leave is also considered employment that must be counted. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. The adopted changes clarify that working in one of these types of relationships is considered employment that interrupts the required 12 full, consecutive calendar month break in service that is required before a retiree may work full-time without the loss of annuities. Subchapter C concerns employment after disability retirement. Section addresses employment that results in the forfeiture of a disability retirement annuity. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement for disability retirees. These types of employment relationships must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each disability retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Section addresses half-time employment up to 90 days. The adopted changes to incorporate changes made in the law by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement for disability retirees. These types of employment relationships must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each disability retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Other adopted changes clarify that when calculating the number of days a disability retiree may combine substitute and other work in the same calendar month, the total allowed is one-half the number of workdays. The adopted changes clarify that a work day is each Monday through Friday in the calendar month and that working any part of a calendar day, including a Saturday or Sunday, is counted as a day worked. Section addresses substitute service up to 90 days. The adopted changes to incorporate changes made in the law by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement for disability retirees. These types of employment relationships must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each disability retiree. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Other adopted changes incorporate language in other rules regarding how the limits on employment after retirement apply to a disability retiree when combining substitute employment with other work. These changes are consistent with current application of the limits by TRS, but have not been specifically addressed in this rule. The adopted changes add language found in other employment after retirement rules regarding how to calculate the number of days a disability retiree may work in a calendar month when combining substitute and other work in the same calendar month: the total allowed is one-half the number of workdays. The adopted changes also clarify that a work day is each Monday through Friday in the calendar month and that working any part of a calendar day, including a Saturday or Sunday, is counted as a day worked. ADOPTED RULES November 10, TexReg 6375

130 Section addresses employment up to three months on a one-time only trial basis. The adopted changes to incorporate changes in the law made by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement for disability retirees and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each disability retiree. These types of employment relationships are considered employment during the three month trial work period that disability retirees may elect on a one-time basis, if the three month trial work period occurs within the first 12 full, consecutive calendar months following the effective date of the disability retirement. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. Section addresses return to work employer pension surcharges. The adopted changes to incorporate changes made in the law by SB 1663 that establish additional employment relationships with retirees that are considered employment subject to the limits on employment after retirement and must be included in the monthly report for the first 12 full, consecutive calendar months following the effective date of retirement for each retiree. The adopted changes clarify that if work in these types of relationships causes a retiree to exceed the limits on employment after retirement during the first 12 full, consecutive months following the retiree's effective date of retirement, surcharges are owed by the employer. The additional employment relationships include performing duties or providing services that an employee of the educational institution would otherwise perform or provide and any of the following: - waiving, deferring, or forgoing compensation for the duties or services; - performing the duties or providing the services as an independent contractor; or - serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. TRS received no comments on the proposed amended rules. SUBCHAPTER A. GENERAL PROVISIONS 34 TAC 31.2 The amendments are adopted under (f) of the Government Code, which authorizes TRS to adopt rules necessary for administering Chapter 824, Subchapter G, of the Government Code concerning loss of benefits on resumption of service, and of the Government Code, which authorizes the TRS Board of Trustees (Board) to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board Monthly Certified Statement. (a) For purposes of administering Government Code, , a reporting entity shall furnish the Teacher Retirement System of Texas (TRS) a monthly certified statement of all employment of TRS service or disability retirees. Except for the monthly certified statement for August of each year, the monthly certified statement and all required employer surcharges must be remitted to TRS before the eleventh day after the last day of the month. The monthly certified statement for August must be remitted before the seventh day of September. If the tenth day of the month, or the sixth day of month for the August monthly certified statement, falls on a weekend or federal holiday, the monthly certified statement and all required employer surcharges are due on the last business day before the due date. Each employer that fails to remit all required employer surcharges to TRS before the eleventh day after the last day of the month or before the seventh day of September for the monthly certified statement for August, shall pay to TRS penalty interest on the unpaid amounts in the amount provided in , Government Code. Effective with the monthly certified statement due for the report month of January 2018, each employer that fails to attain a completed status on all monthly certified statements required by TRS before the eleventh day after the last day of the month or before the seventh day of September for the monthly certified statement for August shall pay, in addition to any deposits and penalty interest owed, the late fee established in subsection (d) of this section for each business day that the monthly certified statement fails to attain a completed status. In addition to the monthly certified statement of the employment of all TRS service or disability retirees, reporting entities must include the following: (1) effective June 20, 2003, information regarding employees of third party entities if the employees are service or disability retirees who were first employed by the third party entity on or after May 24, 2003 and are performing duties or providing services on behalf of or for the benefit of the reporting entity that employees of the reporting entity would otherwise perform or provide; and (2) effective the beginning of the school year, information regarding retirees who retired within 12 full, consecutive calendar months of the month of the monthly certified statement and are performing duties or providing services for or on behalf of the reporting entity that employees of the reporting entity would otherwise perform or provide, and are: (A) waiving, deferring, or forgoing compensation for the services or duties; (B) performing the duties or providing the services as an independent contractor; or (C) serving as a volunteer without compensation and performing the same duties or providing the same services for a reporting entity that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree's effective date of retirement. (b) The monthly certified statement shall contain information required by TRS to administer applicable limitations and necessary for the executive director or his designee to classify employment as one of the following: (1) substitute service; (2) employment that is not more than one-half time; 42 TexReg 6376 November 10, 2017 Texas Register

131 or (3) full-time employment; (4) trial employment of disability retiree for three months; (5) combination of substitute and other work in the same calendar month. (c) For purposes of administering Government Code, and Insurance Code, , a reporting entity shall furnish TRS a monthly certified statement reflecting the TRS service and/or disability retirees working, the amount of salary paid to each retiree the total amount paid on all retirees under of this title, the total amount due under 41.4 of this title (relating to Employer Health Benefit Surcharge), and any other information requested by TRS for the administration of these sections. The monthly certified statement must include information regarding employees of third party entities if the employees are service or disability retirees who were first employed by the third party entity on or after May 24, 2003, and are performing duties or providing service on behalf of or for the benefit of the reporting entity. Effective with the beginning of the school year, the monthly certified statement must include all retirees who are required to be reported to TRS in subsection (a)(2) of this section. (d) Employers that fail to attain a completed status for the monthly certified statement(s) as required in this section before the eleventh day after the last day of the month or before the seventh day of September for the certified monthly statement for August shall pay to TRS, in addition to the required employer surcharges and any applicable penalty interest on the unpaid amounts, the late fee established in this subsection for each business day that the monthly certified statement fails to attain a completed status. The late fees required to be paid are as follows: (1) For employers with fewer than 100 employees, the late fee for the first business day the monthly certified statement fails to attain a completed status is $100. For each subsequent business day that the monthly certified statement fails to attain a completed status, the employer shall pay an additional $10. (2) For employers with at least 100 employees but no more than 500 employees, the late fee for the first business day the monthly certified statement fails to attain a completed status is $250. For each subsequent business day that the monthly certified statement fails to attain a completed status, the employer shall pay an additional $25. (3) For employers with more than 500 employees but no more than 1,000 employees, the late fee for the first business day the report or documentation fails to attain a completed status is $500. For each subsequent business day that the report or documentation fails to attain a completed status, the employer shall pay an additional $50. (4) For employers with more than 1,000 employees, the late fee for the first business day the monthly certified statement fails to attain a completed status is $1,000. For each subsequent business day that the monthly certified statement fails to attain a completed status, the employer shall pay an additional $100. (e) In determining the number of employees for purposes of assessing the late fee in subsection (d) of this section, TRS shall base the fee on the number of employees reflected on the employer's monthly certified statement for May of the preceding school year. New employers will pay late fees for the first school year as provided in subsection (d)(1) of this section. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER B. EMPLOYMENT AFTER SERVICE RETIREMENT 34 TAC The amendments to are adopted under the authority of (f) of the Government Code, which authorizes TRS to adopt rules necessary for administering Chapter 824, Subchapter G, of the Government Code concerning loss of benefits on resumption of service, and of the Government Code, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the board. The amendments affect Chapter 824, Subchapter G, of the Government Code, concerning loss of benefits on resumption of service. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER C. EMPLOYMENT AFTER DISABILITY RETIREMENT 34 TAC , The amendments are adopted under (f) of the Government Code, which authorizes TRS to adopt rules necessary for administering Chapter 824, Subchapter G, of the Government Code concerning loss of benefits on resumption of service, and of the Government Code, which authorizes the board to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board. The amendments affect Chapter 824, Subchapter G, of the Government Code, concerning loss of benefits on resumption of service. ADOPTED RULES November 10, TexReg 6377

132 The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) CHAPTER 41. HEALTH CARE AND INSURANCE PROGRAMS The Teacher Retirement System of Texas (TRS or system) adopts amendments to 41.2, concerning additional enrollment opportunities; 41.6, concerning the required contribution to the TRS-Care fund from each public school; and 41.10, concerning the eligibility to enroll in the TRS-Care health benefit program. TRS also adopts amendments to 41.33, concerning definitions applicable to the TRS-ActiveCare health benefit program. Finally, TRS adopts the repeal of 41.91, concerning the certification of insurance coverage offered by school districts that are not participating entities in TRS-ActiveCare. The amendments and repeal are adopted without changes to the proposed text as published in the August 18, 2017, issue of the Texas Register (42 TexReg 4106). The adopted rule amendments and repeal implement legislation enacted by the 85th Legislature (Regular Session, 2017). Chapter 41 addresses the two health benefit programs (TRS- Care and TRS-ActiveCare) administered by TRS, as trustee, as well as the responsibilities of school districts that do not participate in TRS-ActiveCare to determine the comparability of the health coverage offered by such school districts to their respective employees. Section 41.2, in subchapter A of Chapter 41, concerns additional enrollment opportunities for the TRS-Care program. As noted above, the adopted amendments to 41.2 address recent legislation and upcoming changes to the TRS-Care plans that will take effect on January 1, Adopted new subsection (a)(9) of 41.2 provides that the entire existing subsection (a) of 41.2 will expire December 31, Existing 41.2(a) addresses the current Age 65 Additional Enrollment Opportunity established under subsections (b), (c), (d), and (e) of , Insurance Code. Pursuant to House Bill 3976, 85th Legislature (Regular Session, 2017), those subsections of , Insurance Code, will be repealed effective January 1, Adopted new subsection (b) of 41.2 implements the new statutory enrollment opportunity enacted under House Bill 3976 that is provided to retirees who turn 65 years of age. Under adopted new 41.2(b), the additional enrollment opportunity is extended to surviving spouses who turn age 65. Adopted new 41.2(b), which becomes effective January 1, 2018, provides that the additional enrollment period for retirees and surviving spouses will begin on the date the retiree or surviving spouse reaches 65 years of age and ends 31 calendar days from the end of the month in which the retiree or surviving spouse reaches 65 years of age. Most of the adopted changes in relettered subsection (c) to 41.2 are clarifying, non-substantive amendments. The language adopted for deletion in 41.2(c)(1) is no longer needed because the Age 65 Additional Enrollment Opportunity expires on December 31, Likewise, the adopted changes in relettered subsections (d) and (e) to 41.2 are non-substantive clarifications of existing provisions. The adopted amendment to 41.6, in subchapter A of Chapter 41, addresses the amount each public school must contribute to the TRS-Care fund under (a), Insurance Code, which expresses the amount as a percentage of salary of each active employee employed by the public school. To avoid having to amend 41.6 every time legislation changes the statutory percentage, the adopted rule amendment automatically reflects the then-applicable required amount under Section (a), Insurance Code. Section 41.10, in subchapter A of Chapter 41, concerns the eligibility to enroll in the TRS-Care program. The language adopted for deletion in 41.10(a)(2) is inconsistent with subdivisions (a)(2) and (a)(3) of , Insurance Code. Section 41.33, in subchapter C of Chapter 41, concerns definitions applicable to the TRS-ActiveCare program. Under the federal Patient Protection and Affordable Care Act (the "ACA"), employers must offer affordable coverage to individuals who work an average of more than 30 hours per week; employers who fail to do so risk the imposition of penalties. Under , Insurance Code, TRS pension retirees who have returned to teaching ("RTT Retirees") cannot be considered full-time employees under TRS-ActiveCare. However, under state law, TRS is given the discretion to define individuals who qualify as part-time employees and are therefore eligible for enrollment in TRS-ActiveCare. Paragraph (6)(C) of defines a "part-time employee" for TRS purposes. Unfortunately, in light of the above-noted ACA mandate and potential penalties, the current definition in paragraph (6)(C) is too narrow because it excludes a number of RTT Retirees from eligibility in TRS-ActiveCare. These exclusions place entities participating in TRS-ActiveCare in the precarious position of being unable to offer TRS-ActiveCare coverage to RTT Retirees who, generally speaking, are employed on average at least 30 hours of service per week, or 130 hours of service per month, thus subjecting these entities to possible penalties under the ACA. The adopted changes to broaden the definition of part-time employees to: (i) include individuals who are not eligible for membership in the TRS Pension because of service or disability retirement; and (ii) no longer exclude individuals who waive or waived coverage under TRS-Care. These changes address the concerns expressed above concerning potential employer penalties under the ACA. Section 41.91, in subchapter D of Chapter 41, concerns the certification of insurance coverage offered by school districts that are not participating entities in TRS-ActiveCare. Pursuant to Senate Bill 1664, 85th Legislature (Regular Session, 2017), which amended , Education Code, TRS no longer needs a rule for determining whether a school district's group health coverage is comparable to the basic health coverage provided by the Employees Retirement System of Texas under Chapter 1551, Insurance Code. Also, districts that do not participate in TRS-ActiveCare are no longer required to report to TRS the details of their efforts to offer comparable coverage to their employees. Accordingly, TRS adopts repealing and subchapter D, which only contains 41.9, because the rule is no longer mandated or needed under applicable law. 42 TexReg 6378 November 10, 2017 Texas Register

133 TRS received no comments on the adopted amended or repealed rules. SUBCHAPTER A. RETIREE HEALTH CARE BENEFITS (TRS-CARE) 34 TAC 41.2, 41.6, The amendments are adopted under the authority of , Insurance Code, which authorizes the TRS Board of Trustees to adopt rules it considers reasonably necessary to implement and administer the TRS-Care program. The adopted amendments affect Chapter 1575, Insurance Code, which provides for the establishment and administration of TRS-Care. The adopted amendments to 41.2, 41.6, and affect Chapter 1575, Insurance Code, which provides for the establishment and administration of TRS-Care. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH (TRS- ACTIVECARE) 34 TAC The amendments are adopted under the authority of , Insurance Code, which authorizes the TRS Board of Trustees to adopt rules it considers necessary to implement and administer the TRS-ActiveCare program. The adopted amendments affect Chapter 1579, Insurance Code, which provides for the establishment and administration of TRS- ActiveCare. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) SUBCHAPTER D. COMPARABILITY OF GROUP HEALTH COVERAGES 34 TAC The repeal of is adopted under Senate Bill 1664, 85th Legislature (Regular Session, 2017), which in amending , Education Code, eliminated the requirement and need for the rule. The adopted repeal affects , Education Code, which addresses group health benefits for public school employees. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) CHAPTER 43. CONTESTED CASES 34 TAC 43.4 The Teacher Retirement System of Texas (TRS) adopts amendments to 43.4, concerning decisions subject to review by an adjudicative hearing, without changes to the proposed text as published in the August 18, 2017, issue of the Texas Register (42 TexReg 4111). The adopted amendments implement the authority provided in , Government Code, as amended by Senate Bill 1663, 85th Legislature (Regular Session, 2017), for the TRS Board of Trustees (Board) to waive the requirement of an appeal to the Board from a decision by the executive director or a designee on certain matters. The matters regard the sufficiency of a court order to authorize a change of retirement plan or beneficiary of a joint and survivor annuity when the beneficiary is the spouse or former spouse. The pension plan terms allow a retiree to change the selection of an Option 1, 2, or 5 retirement plan (joint and survivor annuity plans) selected at retirement to a standard annuity. If the beneficiary is the spouse or former spouse, the beneficiary must consent or a court with authority over the marriage of the member and the beneficiary must authorize the change. The plan terms also allow a retiree to change the beneficiary of an Option 1, 2, or 5 retirement plan under certain circumstances. Again, if the beneficiary is the spouse or former spouse, the beneficiary must consent or a court with authority over the marriage of the member and the beneficiary must authorize the change. Currently, an attorney assigned to the Legal-Benefits area in the Legal and Compliance Division reviews the order and makes a recommendation regarding the sufficiency of the order. In the event of a challenge to the determination, current rules regarding administrative appeals apply. The proposed changes to 43.4 would utilize the expertise of qualified staff attorneys ad- ADOPTED RULES November 10, TexReg 6379

134 vising TRS executives to administratively determine a question of law--whether a court order is legally sufficient to authorize the retiree to change the plan or the beneficiary when the retirement plan selected is an Option 1, 2, or 5. The current rule implements the authority of the Board to waive an appeal to the Board regarding a determination by TRS that a domestic relations order is a qualified order. Under the proposed changes, the Executive Director or a designee would make the final decision regarding the sufficiency of the order related to a plan or beneficiary change. A party aggrieved by the Executive Director's or designee's decision must timely file a motion for reconsideration with the executive director to further contest the determination, which the party would do by filing suit for judicial review. TRS received no comments on the proposed rule. The amendments to 43.9 are adopted under the authority of the following statutes: and , Government Code, both as amended by Senate Bill 1663, 85th Legislature (Regular Session, 2017), which authorize the TRS Board of Trustees (Board) by rule to waive the requirement that an appeal under those statutes be to the board; , Government Code, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the system, and the transaction of business of the Board; and (b), Government Code, which authorizes the Board to adopt rules delegating its authority to make a final decision in a contested case to the Executive Director, who may delegate the authority to another employee of the retirement system. The adopted amendments affect the following statutes: and , Government Code, both as amended by Senate Bill 1663, 85th Legislature (Regular Session, 2017), and that respectively concern a post-retirement change in retirement payment plan for certain retirement benefit options and a change of beneficiary after retirement. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD Don Green Chief Financial Officer Teacher Retirement System of Texas Effective date: November 14, 2017 Proposal publication date: August 18, 2017 For further information, please call: (512) TITLE 37. PUBLIC SAFETY AND CORREC- TIONS PART 11. TEXAS JUVENILE JUSTICE DEPARTMENT CHAPTER 343. SECURE JUVENILE PRE-ADJUDICATION DETENTION AND POST-ADJUDICATION CORRECTIONAL FACILITIES SUBCHAPTER B. PRE-ADJUDICATION AND POST-ADJUDICATION SECURE FACILITY STANDARDS 37 TAC , The Texas Juvenile Justice Department (TJJD) adopts amendments to , concerning Specialized Housing, and , concerning Bedding, without changes to the proposed text as published in the August 11, 2017, issue of the Texas Register (42 TexReg 3953). JUSTIFICATION FOR CHANGES The public benefit anticipated as a result of administering the sections is the promotion of the rehabilitative goals of secure preand post-adjudication facilities and successful youth outcomes by encouraging youth to participate in programming. Another anticipated public benefit is the provision of clarifications to the rule text. SECTION-BY-SECTION SUMMARY The amendment to removes the subsection that addresses temporary removal of mattresses. The information in that subsection has been modified and moved to The amended : 1) clarifies that a fitted sheet may be issued instead of a mattress cover; 2) clarifies that the clean linens that must be issued at least once every seven days include a mattress cover (or fitted sheet), sheet, blanket, and pillowcase; 3) adds that a mattress cover, pillow, and/or pillowcase (in addition to a sheet) may be removed and substituted with a blanket if the resident has misused the item(s) or if staff have reason to believe the resident will misuse the item(s); and 4) adds a provision that allows any bedding items (i.e., mattress, pillow, and/or linens) to be removed during program hours from a room or cell that is currently being used for disciplinary seclusion, safety-based seclusion, or resident-initiated separation, regardless of whether there is a specific behavioral or safety-related reason to remove them. Additionally, the amendment to modifies the information currently found in regarding temporary removal of mattresses from any type of specialized housing room/cell. The modified rule text: 1) clarifies that using the mattress in a manner that presents a threat to safety or security (rather than using the mattress for an unintended purpose) is grounds for removing the mattress; 2) adds that the reason for removing a resident's mattress must be documented; and 3) removes the following reason from the list of reasons a mattress may be removed--a resident has exhibited a documented pattern of disruptive behavior in an effort to be assigned to specialized housing to avoid educational instruction. PUBLIC COMMENTS TJJD did not receive any public comments regarding the proposed rulemaking actions. STATUTORY AUTHORITY The amended sections are adopted under Section (a)(4), Human Resources Code, which requires TJJD to adopt reasonable rules that provide minimum standards for the operation of public and private juvenile pre-adjudication and post-adjudication secure facilities. 42 TexReg 6380 November 10, 2017 Texas Register

135 The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 24, TRD Jill Mata General Counsel Texas Juvenile Justice Department Effective date: February 1, 2018 Proposal publication date: August 11, 2017 For further information, please call: (512) CHAPTER 349. GENERAL ADMINISTRATIVE STANDARDS SUBCHAPTER D. COMPLAINTS AGAINST JUVENILE BOARDS 37 TAC The Texas Juvenile Justice Department (TJJD) adopts an amendment to , concerning Administrative Review of Investigation Findings, without changes to the proposed text as published in the August 11, 2017, issue of the Texas Register (42 TexReg 3955). JUSTIFICATION FOR CHANGES The public benefit anticipated as a result of administering the section is the promotion of efficiency in state government by eliminating the possibility of holding two administrative hearings on the same subject matter. SUMMARY OF CHANGES The amended rule removes the provision that allowed the designated perpetrator or administrative designee to submit an appeal to the State Office of Administrative Hearings to challenge the findings of TJJD's administrative review. PUBLIC COMMENTS TJJD did not receive any public comments regarding the proposed rulemaking action. STATUTORY AUTHORITY The amended section is adopted under , Government Code, which requires TJJD to adopt rules of practice stating the nature and requirements of all available formal and informal procedures. The amended section is also adopted under , Family Code, which requires TJJD to adopt rules relating to the investigation and resolution of reports that involve alleged abuse, neglect, or exploitation of a child. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 24, TRD Jill Mata General Counsel Texas Juvenile Justice Department Effective date: November 15, 2017 Proposal publication date: August 11, 2017 For further information, please call: (512) TITLE 43. TRANSPORTATION PART 1. TEXAS DEPARTMENT OF TRANSPORTATION CHAPTER 9. CONTRACT AND GRANT MANAGEMENT SUBCHAPTER C. CONTRACTING FOR ARCHITECTURAL, ENGINEERING, AND SURVEYING SERVICES 43 TAC 9.32 The Texas Department of Transportation (department) adopts amendments to 9.32, concerning Selection Processes, Contract Types, Selection Types, and Projected Contracts. The amendments to 9.32 are adopted without changes to the proposed text as published in the August 11, 2017, issue of the Texas Register (42 TexReg 3956) and will not be republished. EXPLANATION OF ADOPTED AMENDMENTS Updates to the rules related to indefinite deliverable contracts are necessary for more effective management of contracting resources. The amendments increase the limit on the period of time that initial work authorizations may be issued and it streamlines the process by eliminating a step that was required when additional time was needed. Amendments to 9.32(b)(1)(B) increases the period in which an initial work authorization may be issued from two to three years. This amendment allows the department additional time to issue new work, which facilitates better management of contracting resources. With the term of the indefinite deliverable contract limited to five years, this provides sufficient time to initiate and complete work within the term of the contract and provides the department with additional flexibility for planning and procuring replacement contracts. The amendment to 9.32(b)(1)(C) clarifies that the term of the contract is not limited to the same period as the initial period in which a work authorization may be issued. The date may vary depending on the needs of the department. Should the contract term be less than five years, the contract term may be amended by supplemental agreement, but may not extend more than five years beyond the execution date. COMMENTS No comments on the proposed amendments were received. STATUTORY AUTHORITY The amendments are adopted under Transportation Code, , which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department. ADOPTED RULES November 10, TexReg 6381

136 CROSS REFERENCE TO STATUTE Government Code, Chapter 2254, Subchapter A and Transportation Code, The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 26, TRD Joanne Wright Deputy General Counsel Texas Department of Transportation Effective date: November 15, 2017 Proposal publication date: August 11, 2017 For further information, please call: (512) PART 10. TEXAS DEPARTMENT OF MOTOR VEHICLES CHAPTER 217. VEHICLE TITLES AND REGISTRATION The Texas Department of Motor Vehicles (department) adopts amendments to Chapter 217, Vehicle Titles and Registration, Subchapter A, Motor Vehicle Titles, 217.3, Motor Vehicle Titles, and 217.4, Initial Application for Title; and Subchapter D, Non-repairable and Salvage Motor Vehicles, , Definitions, and , Application for Non-repairable or Salvage Vehicle Title. Sections 217.4, , and are adopted without changes to the proposed text as published in the September 8, 2017, issue of the Texas Register (42 TexReg 4596). These rules will not be republished. Section is adopted with changes to published text and will be republished. EXPLANATION OF ADOPTED AMENDMENTS Amendments to update the maximum width and length for a travel trailer as authorized by Senate Bill (SB) 2076, 85th Legislature, Regular Session, 2017, which was effective September 1, An amendment also clarifies that if a trailer or semitrailer having a gross weight of 4,000 pounds or less has been titled previously, it must be titled by any subsequent owner. Proposed amendments to 217.3(4)(C)(i) updated the maximum width and length for manufactured homes, which are defined in Occupations Code, (12). This proposed amendment is incorrect and in conflict with the statute. On further review, clause (i) is unnecessary and inconsistent with the purpose of the subparagraph. As such, this amendment will be adopted with changes by deleting 217.3(4)(C)(i) and re-numbering the succeeding clauses. This amendment makes no substantive changes. Amendments to implement a portion of SB 2076 regarding place of application for title when motor vehicle ownership is transferred and the county tax assessor-collector's office of the county in which the owner resides is closed or may be closed for a protracted period of time as defined by the department. Amendments to (13) define a nonrepairable motor vehicle by reference to the statutory definition. Amendments to (b)(2) implement a portion of SB 2076 regarding the description of a motor vehicle included in an application for a nonrepairable or salvage vehicle title. Amendments to (b) also delete the paragraph (7) language because the information is no longer necessary in an application for a nonrepairable or salvage vehicle title and renumber the remaining paragraphs accordingly. Other amendments update the references to "nonrepairable" motor vehicles to be consistent with statute by deleting the unnecessary hyphen. COMMENTS No comments on the proposed amendments were received. SUBCHAPTER A. MOTOR VEHICLE TITLES 43 TAC 217.3, STATUTORY AUTHORITY The amendments are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , which provides the department may adopt rules to administer Transportation Code, Chapter 501, Certificate of Title Act. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 501 and Motor Vehicle Titles. Unless otherwise exempted by law or this chapter, the owner of any motor vehicle that is required to be registered in accordance with Transportation Code, Chapter 502, shall apply for a Texas title in accordance with Transportation Code, Chapter 501. (1) Motorcycles, motor-driven cycles, autocycles, and mopeds. (A) The title requirements of a motorcycle, motor-driven cycle, autocycle, and moped are the same requirements prescribed for any motor vehicle. (B) A vehicle that meets the criteria for a moped and has been certified as a moped by the Department of Public Safety will be registered and titled as a moped. If the vehicle does not appear on the list of certified mopeds published by that agency, the vehicle will be treated as a motorcycle for title and registration purposes. (2) Farm vehicles. (A) The term "motor vehicle" does not apply to implements of husbandry, which may not be titled. (B) Farm tractors owned by agencies exempt from registration fees in accordance with Transportation Code, , are required to be titled and registered with "Exempt" license plates issued in accordance with Transportation Code, (C) Farm tractors used as road tractors to mow rights of way or used to move commodities over the highway for hire are required to be registered and titled. (D) Farm semitrailers with a gross weight of more than 4,000 pounds that are registered in accordance with Transportation Code, , may be issued a Texas title. 42 TexReg 6382 November 10, 2017 Texas Register

137 (3) Neighborhood electric vehicles. The title requirements of a neighborhood electric vehicle (NEV) are the same requirements prescribed for any motor vehicle. (4) Trailers, semitrailers, and house trailers. Owners of trailers and semitrailers shall apply for and receive a Texas title for any stand alone (full) trailer, including homemade or shopmade full trailers, or any semitrailer having a gross weight in excess of 4,000 pounds. Owners of trailers and semitrailers having a gross weight of 4,000 pounds or less may apply for and receive a Texas title. If a trailer or semitrailer having a gross weight of 4,000 pounds or less has been titled previously, any subsequent owner shall apply for a Texas title for the trailer or semitrailer. House trailer-type vehicles must meet the criteria outlined in subparagraph (C) of this paragraph to be titled. (A) The rated carrying capacity will not be less than one-third of its empty weight. (B) Mobile office trailers, mobile oil field laboratories, and mobile oil field bunkhouses are not designed as dwellings, but are classified as commercial semitrailers and must be registered and titled as commercial semitrailers if operated on the public streets and highways. (C) House trailer-type vehicles and camper trailers must meet the following criteria in order to be titled. (i) A house trailer-type vehicle that is less than eight feet six inches in width or less than 45 feet in length is classified as a travel trailer and shall be registered and titled. (ii) A camper trailer shall be titled as a house trailer and shall be registered with travel trailer license plates. (iii) A recreational park model type trailer that is primarily designed as temporary living quarters for recreational, camping or seasonal use, is built on a single chassis, and is 400 square feet or less when measured at the largest horizontal projection when in the set up mode shall be titled as a house trailer and may be issued travel trailer license plates. (5) Assembled vehicles. (A) An assembled vehicle is a vehicle assembled from the three basic component parts (motor, frame, and body), except that a motorcycle must have a frame and motor, and a trailer or travel trailer will have no motor, and that is: (i) assembled from new or used materials and parts by someone not regulated as a motor vehicle manufacturer; (ii) altered or modified to the extent that it no longer reflects the original manufacturer's configuration; or (iii) assembled from a kit even if a Manufacturer's Certificate of Origin or Manufacturer's Statement of Origin is provided. (B) A newly assembled vehicle, for which a title has never been issued in this jurisdiction or any other, may be titled if: (i) it is assembled and completed with a body, motor, and frame, except that a motorcycle must have a frame and motor, and a trailer or travel trailer will have no motor; (ii) it is not created from different vehicle classes, (as established by the Federal Highway Administration, except as provided by subparagraph (C) of this paragraph), that were never engineered or manufactured to be combined with one another; (iii) it has all safety components required by federal law during the year of assembly, unless the vehicle qualifies and is registered as a custom vehicle or street rod in accordance with Transportation Code, ; this section; (iv) it is not a vehicle described by paragraph (6) of (v) for a vehicle assembled with a body, motor, and frame, the applicant provides proof, on a form prescribed by the department, of a safety inspection performed by an Automotive Service Excellence (ASE) technician with valid certification as a Certified Master Automobile and Light Truck Technician, certifying that the vehicle: (I) is structurally stable; (II) meets the necessary conditions to be operated safely on the roadway; and (III) is equipped and operational with all equipment required by statute or rule as a condition of sale during the year the vehicle was assembled unless it is being inspected pursuant to Subchapter G of this chapter; (vi) for a vehicle assembled with a body, motor, and frame, the applicant submits a copy of the Certified Master Automobile and Light Truck Technician's ASE certification; (vii) the applicant submits a Rebuilt Vehicle Statement; and (viii) the applicant submits the following to establish the vehicle's vehicle identification number: (I) an Application for Assigned or Reassigned Number, and Notice of Assigned Number or Installation of Reassigned Vehicle Identification Number, on forms prescribed by the department; or (II) acceptable proof, as established by the department, of a vehicle identification number assigned by the manufacturer of the component part by which the vehicle will be identified. (C) Component parts from the following vehicle classes may be interchanged with one another or used in the creation of an assembled vehicle: dual tires. (i) (ii) (iii) 2-axle, 4-tire passenger cars; 2-axle, 4 tire pickups, panels and vans; 6-tire dually pickups, of which the rear tires are (D) The ASE inspection for a newly assembled vehicle required under subparagraph (B) of this paragraph is in addition to the inspection required by Transportation Code, Chapter 548, except a vehicle that qualifies and is registered as a custom vehicle or street rod in accordance with Transportation Code, , is exempt from the inspection required under Transportation Code, Chapter 548, for the duration the vehicle is registered as such. (E) An assembled vehicle which has previously been titled and/or registered in this or any other jurisdiction is subject to subparagraph (B)(i) - (iv) of this paragraph, but is not subject to subparagraph (B)(v) - (viii); however, it is subject to the inspection required by Transportation Code, Chapter 548, except a vehicle that qualifies and is registered as a custom vehicle or street rod in accordance with Transportation Code, (F) An assembled vehicle will be titled using the year it was assembled as the model year and "ASSEMBLED" or "ASVE" as the make of the vehicle unless the body of the vehicle is established to the department's satisfaction to be an original body from a particular year and make. An assembled vehicle utilizing an original body may ADOPTED RULES November 10, TexReg 6383

138 be titled by the year and the make of the original body but must reflect a "RECONSTRUCTED" remark. An assembled vehicle not utilizing an original body may obtain a title with a "REPLICA" remark featuring the year and make of the replica if the vehicle resembles a prior model year vehicle. This subparagraph applies regardless of how the vehicle's model year or make was previously identified in this or any other jurisdiction. (6) Not Eligible for Title. The following are not eligible for a Texas title regardless of the vehicle's previous title and/or registration in this or any other jurisdiction: (A) vehicles that are missing or are stripped of their motor, frame, or body, to the extent that it materially alters the manufacturer's original design or makes the vehicle unsafe for on-road operation as determined by the department; (B) vehicles designed or determined by the department to be a dune buggy; (C) vehicles designed or determined by the department to be for on-track racing, unless such vehicles meet Federal Motor Vehicle Safety Standards (FMVSS) for on-road use and are reported to the National Highway Traffic Safety Administration; (D) vehicles designed or determined by the department to be for off-road use only, unless specifically defined as a "motor vehicle" in Transportation Code, Chapter 501; or (E) vehicles assembled, built, constructed, rebuilt, or reconstructed in any manner with: (i) a body or frame from a vehicle which is a "nonrepairable motor vehicle" as that term is defined in Transportation Code, (9); or (ii) a motor or engine from a vehicle which is flood damaged, water damaged, or any other term which may reasonably establish the vehicle from which the motor or engine was obtained is a loss due to a water related event. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: September 8, 2017 For further information, please call: (512) SUBCHAPTER D. NONREPAIRABLE AND SALVAGE MOTOR VEHICLES 43 TAC , STATUTORY AUTHORITY The amendments are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , which provides the department may adopt rules to administer Transportation Code, Chapter 501, Certificate of Title Act. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 501 and 502. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David. D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: September 8, 2017 For further information, please call: (512) CHAPTER 217. VEHICLE TITLES AND REGISTRATION The Texas Department of Motor Vehicles (department) adopts amendments to Chapter 217, Vehicle Titles and Registration, Subchapter B, Motor Vehicle Registration, , Specialty License Plates, Symbols, Tabs, and Other Devices; and Subchapter I, Fees, , Registration Transaction, without changes in the proposed text as published in the September 8, 2017, issue of the Texas Register (42 TexReg 4603). The rules will not be republished. EXPLANATION OF ADOPTED AMENDMENTS Amendments to and implement House Bill 561, 85th Legislature, Regular Session, 2017, which added Transportation Code, , License Plates for Package Delivery Vehicles, authorizing the department to issue a license plate for a vehicle operated by a motor carrier for the purpose of picking up and delivering mail, parcels, and packages. The amendments add "Package Delivery" to (c)(3)(B) to the list of vehicles that are issued one plate. The amendments add (k), package delivery vehicle, to establish the procedure and requirements to issue a "Package Delivery" license plate. The amendments include a department fee of $25 for each plate issued. The amendments add (6) to include issuance of a package delivery plate to the list of transactions defined as a registration transaction for purposes of the processing and handling fee. COMMENTS No comments on the proposed amendments were received. SUBCHAPTER B. REGISTRATION 43 TAC STATUTORY AUTHORITY MOTOR VEHICLE 42 TexReg 6384 November 10, 2017 Texas Register

139 The amendments are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , which authorizes the board to adopt rules to implement and administer Transportation Code, Chapter 504; and Transportation Code, (b), which requires the department by rule to establish a procedure to issue license plates to be used only for operation in accordance with Transportation Code, Chapter 551, Subchapter G, Package Delivery Vehicles. The amendment to is authorized by Transportation Code, , which directs the department to collect a fee to cover the expenses of collecting registration fees for issuance of a license plate. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 502, 551, and 663, and The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: September 8, 2017 For further information, please call: (512) SUBCHAPTER I. FEES 43 TAC STATUTORY AUTHORITY The amendments are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; and more specifically, Transportation Code, , which authorizes the board to adopt rules to implement and administer Transportation Code, Chapter 504; and Transportation Code, (b), which requires the department by rule to establish a procedure to issue license plates to be used only for operation in accordance with Transportation Code, Chapter 551, Subchapter G, Package Delivery Vehicles. The amendment to is authorized by Transportation Code, , which directs the department to collect a fee to cover the expenses of collecting registration fees for issuance of a license plate. CROSS REFERENCE TO STATUTE Transportation Code, Chapters 502, 551, and 663, and The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: September 8, 2017 For further information, please call: (512) CHAPTER 217. VEHICLE TITLES AND REGISTRATION SUBCHAPTER G. INSPECTIONS 43 TAC The Texas Department of Motor Vehicles (department) adopts amendments to Chapter 217, Vehicle Titles and Registration, Subchapter G, Inspections, ,Purpose and Scope; , Definitions; and , Inspection Requirements. The department also adopts new , Identification Number Inspection. Section and are adopted without changes to the proposed text as published in the July 21, 2017, issue of the Texas Register (42 TexReg 3633). These rules will not be republished. Section is adopted with changes to clarify the purpose and scope; and is adopted with changes to correct the citation to Transportation Code, , which defines the educational requirements for a person to perform inspections under These rules will be republished. EXPLANATION OF ADOPTED AMENDMENTS AND NEW SECTION Amendments to broaden the purpose and scope of the subchapter, clarifying that it prescribes not only the policies and procedures related to inspection of street rods and custom vehicles, but also to accurately confirm the identity of any motor vehicle; and clarify the department approved training programs which if successfully completed qualify a person to conduct identification number inspections. Amendments to add a definition for "altered from the manufacturer's original design," and clarify the definitions of "custom vehicle" and "street rod" by referring to the statutory definitions in Transportation Code, The amendments also result in a renumbering of the definitions. Amendments to change the section name to "Custom Vehicle and Street Rod Inspection Requirements" to clarify that this section pertains only to the inspection requirements for those types of vehicles. The amendments also clarify language pertaining to when a specific piece of equipment may be required on a custom vehicle or street rod. New , Identification Number Inspection, implements a portion of Senate Bill 2076, 85th Legislature, Regular Session, 2017, which added Transportation Code, , Identification Number Inspection. Section (c) specifies that an inspection under the section may be performed only by a person ADOPTED RULES November 10, TexReg 6385

140 who has successfully completed an appropriate training program as determined by department rule and who is one of the listed categories of persons authorized to conduct such inspections. The purpose of this new section is to ensure properly trained auto theft investigators currently authorized to conduct identification number inspections are able to continue doing so and identify the training available to individuals authorized to conduct identification number inspections in Senate Bill Section specifies that a person is qualified to perform an identification number inspection if the person has completed (1) Intermediate or Advanced Motor Vehicle Burglary and Theft Investigator Training provided by the Texas Auto Burglary and Theft Prevention Authority; (2) Auto Theft School (Parts 1 and 2) provided by the Texas Department of Public Safety; or (3) the Auto Theft Course provided by the National Insurance Crime Bureau. SB 2076 also created an alternative identification number inspection to be established by department rule. The department intends to work with stakeholders to establish this process and identify transactions subject to this inspection type prior to proposing a new rule. COMMENTS The department received comments from W. (Bill) Smith, Chief, Special Investigations Unit, Tax Assessor-Collector and Voter Registrar Office, Harris County; Doug Clements, Commander, South Plains Auto Theft Task Force; Stan Davis; Fred Lohmann, National Insurance Crime Bureau (NICB); Ricardo Porras, Jr., Auto Theft Task Force, Program Director/Unit Commander, El Paso Police Department; Scott Ellis, DPS-CID (Legacy MVTS); and Ismael Gomez, Auto Theft Unit, Reserve Investigator, San Patricio County Sheriff's Office. COMMENTS: Several commenters expressed concerns that the department's proposed rule allows inexperienced non-law enforcement employees and/or department personnel to perform VIN inspections pursuant to , Transportation Code. The commenters believe that only experienced auto theft investigator taskforce members, Texas Department of Public Safety (DPS), and NICB agents are qualified to conduct the VIN inspections, and therefore, the department by rule should not expand the types of persons who may conduct VIN inspections. RESPONSE: The department agrees with the commenters that only properly trained individuals should be authorized to conduct VIN inspections. However, no changes have been made to the rule since the rule does not expand who is authorized to conduct VIN inspections. In enacting SB 2076, 85th Texas Legislature, Regular Session, the Texas Legislature amended Chapter 501, Transportation Code, by adding new (c)(1-4) which sets forth the persons who the Legislature believes, if qualified, may perform the VIN inspections pursuant to , Transportation Code. In subsection (c), the Legislature provided that an inspection under this section may be performed only by a person who has successfully completed an appropriate training program as determined by department rule. Those persons who successfully complete one of the appropriate training programs would be considered as qualified to conduct VIN inspections in Texas. Thus, in furtherance of (c), the department's sole purpose in proposing new rule is to establish the appropriate training programs contemplated by statute. The new statute, not the department's proposed new rule, sets forth those persons who, if qualified, may conduct VIN inspections. It is not the department's intent to erode the integrity of current VIN inspection processes, and the language of the proposed rule will not affect that existing system. Currently, the department does not have commissioned auto theft investigators, nor are there plans to provide training for department employees to conduct VIN inspections at this time. The department appreciates the concerns expressed by its law enforcement stakeholders. The department will continue to work with all stakeholders before expanding training to ensure that those persons contemplated under the statute are appropriately trained and that proper safeguards are in place to maintain the integrity of VIN inspections in Texas. STATUTORY AUTHORITY The amendments and new section are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department; and more specifically, Transportation Code, CROSS REFERENCE TO STATUTE Transportation Code, , , , and Purpose and Scope. This subchapter prescribes the policies and procedures necessary to protect the public by requiring inspection of street rods and custom vehicles, accurately identify the identity of a motor vehicle, and provides department approved training programs which if successfully completed qualify a person to conduct vehicle identification number inspections Identification Number Inspection. In addition to any other requirement specified by Transportation Code, , a person is qualified to perform an inspection under , Transportation Code, if that person has completed one of the following training programs: (1) Intermediate or Advanced Motor Vehicle Burglary and Theft Investigator Training provided by the Texas Automobile Burglary and Theft Prevention Authority; (2) Auto Theft School (Parts 1 and 2) provided by the Texas Department of Public Safety; or (3) Auto Theft Course provided by the National Insurance Crime Bureau. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: July 21, 2017 For further information, please call: (512) CHAPTER 218. MOTOR CARRIERS 42 TexReg 6386 November 10, 2017 Texas Register

141 SUBCHAPTER E. CONSUMER PROTECTION 43 TAC The Texas Department of Motor Vehicles (department) adopts amendments to Chapter 218, Motor Carriers, Subchapter E, Consumer Protection, , Claims, without changes to the proposed text as published in the June 23, 2017, issue of the Texas Register (42 TexReg 3262). The rule will not be republished. EXPLANATION OF ADOPTED AMENDMENTS Amendments to increase the protection for consumers and modify the language for consistency and clarity. An amendment eliminates one of the two exceptions to the requirement for a household goods carrier to issue an acknowledgment letter to its consumer who files a claim. The acknowledgment letter includes important information to educate the consumer about the consumer's rights, the department's toll-free consumer helpline, the claims process, and deadlines regarding the claims process. The current exceptions to the requirement for the household goods carrier to issue the acknowledgment letter within 20 days after receipt of a claim are: 1) the claim has been resolved; and 2) the household goods carrier has initiated communication with the claimant regarding the claim. An amendment eliminates the exception for initiating communication. What constitutes "initiating communication" is often difficult to define and does not ensure that the consumer receives necessary information to protect the consumer's rights. For example, if the household goods carrier "initiates communication" by leaving a voice mail that says it called about the claim, this action provides no protection for the consumer and should not excuse providing the acknowledgment letter to the consumer. COMMENT The department received one comment from the Southwest Movers Association, stating that any amendments to should have input from the Household Goods Rules Advisory Committee before moving forward. RESPONSE TO COMMENT Transportation Code, states the Household Goods Rules Advisory Committee shall examine the rules adopted by the department under Transportation Code, (a) and (b) to make recommendations on modernizing and streamlining the rules. The proposed amendments to primarily deal with the issue of consumer protection. Also, the department spoke to the executive director of the Southwest Movers Association about the amendments to , which the association was able to discuss at a recent meeting held by the association. STATUTORY AUTHORITY The amendments are adopted under Transportation Code, , which provides the board of the Texas Department of Motor Vehicles with the authority to adopt rules that are necessary and appropriate to implement the powers and the duties of the department under the Transportation Code; Transportation Code, , which authorizes the department to adopt rules to administer Transportation Code, Chapter 643; and more specifically, Transportation Code, (a), which requires the department to adopt rules to protect a consumer using the service of a motor carrier who is transporting household goods for compensation. CROSS REFERENCE TO STATUTE Transportation Code, Chapter 643. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on October 25, TRD David D. Duncan General Counsel Texas Department of Motor Vehicles Effective date: November 14, 2017 Proposal publication date: June 23, 2017 For further information, please call: (512) ADOPTED RULES November 10, TexReg 6387

142

143 TABLES AND GRAPHICS November 10, TexReg 6389

144 42 TexReg 6390 November 10, 2017 Texas Register

145 TABLES AND GRAPHICS November 10, TexReg 6391

146

147 Office of Consumer Credit Commissioner Notice of Rate Ceilings The Consumer Credit Commissioner of Texas has ascertained the following rate ceilings by use of the formulas and methods described in and , Texas Finance Code. The weekly ceiling as prescribed by and for the period of 11/06/17-11/12/17 is 18% for Consumer 1 /Agricultural/Commercial 2 credit through $250,000. The weekly ceiling as prescribed by and for the period of 11/06/17-11/12/17 is 18% for Commercial over $250, Credit for personal, family or household use. 2 Credit for business, commercial, investment or other similar purpose. TRD Leslie L. Pettijohn Commissioner Office of Consumer Credit Commissioner Filed: October 31, 2017 Texas Education Agency Public Notice of Texas Request of a Waiver from 1.0 Percent State Cap on the Percentage of Students Who Take an Alternate Assessment Purpose and Scope of Waiver Request. Texas is requesting a waiver from the U.S. Department of Education (USDE) regarding the 1.0 percent threshold on the percentage of students statewide who participate in alternate assessments aligned with alternate academic achievement standards (AA-AAAS) during the school year. The USDE is allowing states to request a waiver of the 1.0 percent cap in the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the Every Student Succeeds Act (ESSA), 1111(b)(2)(D)(i)(I), on the number of students who participate in alternate assessments aligned with alternate academic achievement standards (AA-AAAS). As described in 34 Code of Federal Regulations 200.6(c)(3), a state may not prohibit a district from assessing more than 1.0 percent of its assessed students with an AA-AAAS. However, a state must require a district that assesses more than 1.0 percent of its assessed students in any subject with an AA-AAAS to submit information to the state justifying the need to exceed the 1.0 percent threshold. States must provide appropriate guidance and oversight of each district that is required to submit such an explanation and must make the explanation publicly available, provided that it does not reveal personally identifiable information about an individual student. As a result, Texas is seeking a waiver from this requirement pursuant to 8401(b) of the ESEA, as amended by the ESSA. Specifically, Texas is requesting a limited waiver of 1111(b)(2)(D)(i)(I) of the ESEA, as amended by the ESSA, so that the state's assessment system may have slightly more than 1.0 percent of students taking the AA-AAAS during the school year. The requested waiver would be effective through the school year. Texas will verify that each district that assesses more than 1.0 percent of its assessed students using an AA-AAAS followed the state's guidelines for participation in the AA-AAAS and will address any disproportionality in the percentage of students in any subgroup taking an AA-AAAS. A copy of the waiver request is available on the Texas Education Agency website at Public Comments. The public comment period on the waiver request begins November 10, 2017, and ends December 11, Comments on the waiver request may be submitted electronically to assessmentwaiver@tea.texas.gov. Further Information. For more information, contact Julie Guthrie, director of special assessment projects, in the Division of Student Assessment by mail at 1701 North Congress Avenue, Austin, Texas 78701; by telephone at (512) ; or by at assessmentwaiver@tea.texas.gov. TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Filed: November 1, 2017 Request for Applications Concerning the Pathways in Technology Early College High Schools Planning Grant Eligible Applicants. The Texas Education Agency (TEA) is requesting applications under RFA # from eligible applicants, which include local educational agencies (LEAs) that (a) serve students in Grades 9-12; or (b) will begin serving students in Grade 9 or students in Grades 9 and 10 in the first year of implementation ( school year) and will progressively scale up by adding at least one grade level per year. Recipients of the Industry Cluster Name Innovative Academy - The Next Generation of Early College High School (RFA # ) are not eligible for the Pathways in Technology Early College High Schools (P-TECH) Planning Grant. Description. The purpose of the P-TECH Planning Grant is to solicit grant applications from eligible applicants who, upon receipt of the grant, will engage in 16 months of planning with support from TEA's selected technical assistance provider to establish the foundational components of the P-TECH Campus, as outlined in Texas Education Code (TEC), Grantees will be required to serve students in the P-TECH program beginning in the school year. Dates of Project. The P-TECH Planning Grant will be implemented during the school year. Applicants should plan for a starting date of no earlier than February 23, 2018, and an ending date of no later than June 15, IN ADDITION November 10, TexReg 6393

148 Project Amount. Approximately $500,000 is available for funding the P-TECH Planning Grant. It is anticipated that approximately 10 grants will be awarded in the amount of up to $50,000 each. This project is funded 100 percent with state funds. Selection Criteria. Applications will be selected based on the ability of each applicant to carry out all requirements contained in the RFA. Reviewers will evaluate applications based on the overall quality and validity of the proposed grant programs and the extent to which the applications address the primary objectives and intent of the project. Applications must address each requirement as specified in the RFA to be considered for funding. TEA reserves the right to select from the highest-ranking applications those that address all requirements in the RFA. TEA is not obligated to approve an application, provide funds, or endorse any application submitted in response to this RFA. This RFA does not commit TEA to pay any costs before an application is approved. The issuance of this RFA does not obligate TEA to award a grant or pay any costs incurred in preparing a response. Applicants' Conference. A live webinar will be held on Thursday, November 30, Registration for the webinar will be posted on the TEA Grant Opportunities web page at ProgramSearch.aspx. In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view all documents that pertain to this RFA. The applicants' conference webinar will be available to all potential applicants and will provide general and clarifying information about the grant program and RFA. Requesting the Application. The complete RFA will be posted on the TEA Grant Opportunities web page at ProgramSearch.aspx for viewing and downloading. In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view and download all documents that pertain to this RFA. Further Information. In order to make sure that no prospective applicant obtains a competitive advantage because of acquisition of information unknown to other prospective applicants, any and all questions must be submitted in writing to ptech@tea.texas.gov, the TEA contact information provided in the program guidelines of the RFA, no later than Friday, December 1, All questions and the written answers thereto will be posted on the TEA Grant Opportunities web page in the format of Frequently Asked Questions (FAQs) by Monday, December 11, In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view all documents that pertain to this RFA. Deadline for Receipt of Applications. Applications must be received in the TEA Document Control Center by 5:00 p.m. (Central Time), Tuesday, January 9, 2018, to be eligible to be considered for funding. TEA will not accept applications by . Applications may be delivered to the TEA visitors' reception area on the second floor of the William B. Travis Building, 1701 North Congress Avenue (at 17th Street and North Congress, two blocks north of the Capitol), Austin, Texas or mailed to Document Control Center, Grants Administration Division, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Filed: November 1, 2017 Request for Applications Concerning the Pathways in Technology Early College High Schools Success Grant Eligible Applicants. The Texas Education Agency (TEA) is requesting applications under RFA # from eligible applicants, which include local educational agencies (LEAs) that (a) serve students in Grades 9-12; or (b) are already serving students in Grades 9, 9-10, or 9-11 and will progressively scale up by adding at least one grade level per year. Eligible applicants must also (a) have been implementing a program similar to Pathways in Technology Early College High Schools (P-TECH) that allows students to earn industry credentials and associate degrees, engage in appropriate work-based education at every grade level, and participate in programs that create a seamless transition to additional education or the competitive job market; (b) have established partnerships with at least one institution of higher education (IHE) as defined in a written agreement; and (c) have established a partnership or partnerships with employers as defined in written agreements. Recipients of the Industry Cluster Name Innovative Academy - The Next Generation of Early College High School (RFA # ) are not eligible for the P-TECH Success Grant. Description. The purpose of the P-TECH Success Grant Program is to solicit grant applications from eligible applicants who will spend 28 months strengthening and refining current practices that will advance their existing P-TECH (or P-TECH similar) campus to distinguished levels of performance, as measured by the P-TECH Blueprint. Grantees who receive the grant will be designated as a P-TECH campus for the school year and are required to work with TEA's selected technical assistance provider for the 28-month grant period. Activities or initiatives by grantees may include, but are not limited to, aligning current practices to the P-TECH Blueprint, continuation of collaborative leadership and decision-making committees, establishing systems for formal data review as well as the creation of data response plans, strengthening student recruitment systems, and increasing opportunities for students to master basic skills and prepare for more rigorous academic classes. Dates of Project. The P-TECH Success Grant will be implemented during the and school years. Applicants should plan for a starting date of no earlier than February 23, 2018, and an ending date of no later than June 15, Project Amount. Approximately $1.4 million is available for funding the P-TECH Success Grant. It is anticipated that approximately 14 grants will be awarded in the amount of up to $100,000 each. This project is funded 100 percent with state funds. Selection Criteria. Applications will be selected based on the ability of each applicant to carry out all requirements contained in the RFA. Reviewers will evaluate applications based on the overall quality and validity of the proposed grant programs and the extent to which the applications address the primary objectives and intent of the project. Applications must address each requirement as specified in the RFA to be considered for funding. TEA reserves the right to select from the highest-ranking applications those that address all requirements in the RFA. TEA is not obligated to approve an application, provide funds, or endorse any application submitted in response to this RFA. This RFA does not commit TEA to pay any costs before an application is approved. 42 TexReg 6394 November 10, 2017 Texas Register

149 The issuance of this RFA does not obligate TEA to award a grant or pay any costs incurred in preparing a response. Applicants' Conference. A live webinar will be held on Thursday, November 30, Registration for the webinar will be posted on the TEA Grant Opportunities web page at ProgramSearch.aspx. In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view all documents that pertain to this RFA. The applicants' conference webinar will be available to all potential applicants and will provide general and clarifying information about the grant program and RFA. Requesting the Application. The complete RFA will be posted on the TEA Grant Opportunities web page at ProgramSearch.aspx for viewing and downloading. In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view and download all documents that pertain to this RFA. Further Information. In order to make sure that no prospective applicant obtains a competitive advantage because of acquisition of information unknown to other prospective applicants, any and all questions must be submitted in writing to ptech@tea.texas.gov, the TEA contact information provided in the program guidelines of the RFA, no later than Friday, December 1, All questions and the written answers thereto will be posted on the TEA Grant Opportunities web page in the format of Frequently Asked Questions (FAQs) by Monday, December 11, In the "Search Options" box, select the name of the RFA from the drop-down list. Scroll down to the "Application and Support Information" section to view all documents that pertain to this RFA. Deadline for Receipt of Applications. Applications must be received in the TEA Document Control Center by 5:00 p.m. (Central Time), Tuesday, January 9, 2018, to be eligible to be considered for funding. TEA will not accept applications by . Applications may be delivered to the TEA visitors' reception area on the second floor of the William B. Travis Building, 1701 North Congress Avenue (at 17th Street and North Congress, two blocks north of the Capitol), Austin, Texas or mailed to Document Control Center, Grants Administration Division, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Filed: November 1, 2017 Texas Commission on Environmental Quality Agreed Orders The Texas Commission on Environmental Quality (TCEQ, agency, or commission) staff is providing an opportunity for written public comment on the listed Agreed Orders (AOs) in accordance with Texas Water Code (TWC), TWC, requires that before the commission may approve the AOs, the commission shall allow the public an opportunity to submit written comments on the proposed AOs. TWC, requires that notice of the proposed orders and the opportunity to comment must be published in the Texas Register no later than the 30th day before the date on which the public comment period closes, which in this case is December 11, TWC, also requires that the commission promptly consider any written comments received and that the commission may withdraw or withhold approval of an AO if a comment discloses facts or considerations that indicate that consent is inappropriate, improper, inadequate, or inconsistent with the requirements of the statutes and rules within the commission's jurisdiction or the commission's orders and permits issued in accordance with the commission's regulatory authority. Additional notice of changes to a proposed AO is not required to be published if those changes are made in response to written comments. A copy of each proposed AO is available for public inspection at both the commission's central office, located at Park 35 Circle, Building C, 1st Floor, Austin, Texas 78753, (512) and at the applicable regional office listed as follows. Written comments about an AO should be sent to the enforcement coordinator designated for each AO at the commission's central office at P.O. Box 13087, Austin, Texas and must be received by 5:00 p.m. on December 11, Written comments may also be sent by facsimile machine to the enforcement coordinator at (512) The commission's enforcement coordinators are available to discuss the AOs and/or the comment procedure at the listed phone numbers; however, TWC, provides that comments on the AOs shall be submitted to the commission in writing. (1) COMPANY: Bizome Investments, LLC dba TJ'S SUPER STOP; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: East Towakoni, Rains County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; PENALTY: $4,687; ENFORCEMENT COORDINATOR: James Fisher, (512) ; REGIONAL OFFICE: 2916 Teague Drive, Tyler, Texas , (903) (2) COMPANY: Chevron Phillips Chemical Company LP; DOCKET NUMBER: IWD-E; IDENTIFIER: RN ; LO- CATION: Pasadena, Harris County; TYPE OF FACILITY: plastic materials and resins manufacturing facility; RULES VIOLATED: TWC, (a)(1), 30 TAC (1), and Texas Pollutant Discharge Elimination System Permit Number WQ , Effluent Limitations and Monitoring Requirements Number 1, Outfall 101, by failing to comply with permitted effluent limitations; PENALTY: $9,675; Supplemental Environmental Project offset amount of $3,870; ENFORCEMENT COORDINATOR: Farhaud Abbaszadeh, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (3) COMPANY: City of Arlington; DOCKET NUMBER: WQ-E; IDENTIFIER: RN ; LOCATION: Arlington, Tarrant County; TYPE OF FACILITY: wastewater collection system; RULE VIOLATED: TWC, (a)(1), by failing to prevent the unauthorized discharge of wastewater into or adjacent to water of the state; PENALTY: $13,125; Supplemental Environmental Project offset amount of $13,125; ENFORCEMENT COORDINATOR: Melissa Castro, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (4) COMPANY: DCP Operating Company, LP; DOCKET NUM- BER: AIR-E; IDENTIFIER: RN ; LOCATION: Crane, Crane County; TYPE OF FACILITY: oil and gas production plant; RULES VIOLATED: 30 TAC (a)(1)(B) and (4), Federal Operating Permit (FOP) Number O2913, Special Terms and Conditions (STC) Number 2.F, and Texas Health and Safety Code (THSC), (b), by failing to submit initial notifications for Incident Numbers , , and no later than 24 hours after the discovery of the emissions events; and 30 TAC (b)(2)(F), (2), and (4), Standard Permit IN ADDITION November 10, TexReg 6395

150 Registration Number 79063, FOP Number O2913, STC Number 8, and THSC, (b), by failing to prevent unauthorized emissions; PENALTY: $12,240; ENFORCEMENT COORDINATOR: Carol McGrath, (210) ; REGIONAL OFFICE: 9900 West IH-20, Suite 100, Midland, Texas 79706, (432) (5) COMPANY: Homes by Wade, L.L.C.; DOCKET NUMBER: WQ-E; IDENTIFIER: RN ; LOCATION: Longview, Harrison County; TYPE OF FACILITY: residential construction; RULES VIOLATED: 30 TAC (a)(4) and 40 Code of Federal Regulations (c), by failing to obtain authorization to discharge stormwater associated with construction activities; and TWC, (a)(2), by failing to prevent the unauthorized discharge of sediment into or adjacent to any water in the state; PENALTY: $2,188; ENFORCEMENT COORDINATOR: Larry Butler, (512) ; REGIONAL OFFICE: 2916 Teague Drive, Tyler, Texas , (903) (6) COMPANY: I-45 Shell Truck Stop, LLC; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Fairfield, Freestone County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; PENALTY: $9,000; ENFORCEMENT COOR- DINATOR: Larry Butler, (512) ; REGIONAL OFFICE: 6801 Sanger Avenue, Suite 2500, Waco, Texas , (254) (7) COMPANY: Idealease of Houston, L.L.C.; DOCKET NUM- BER: PST-E; IDENTIFIER: RN ; LOCATION: Houston, Harris County; TYPE OF FACILITY: fleet refueling facility; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; 30 TAC , by failing to report a suspected release to the agency within 24 hours of discovery; and 30 TAC , by failing to investigate a suspected release of a regulated substance within 30 days of discovery; PENALTY: $17,172; ENFORCEMENT COORDINATOR: Carlos Molina, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (8) COMPANY: LeRoy Cavaness; DOCKET NUMBER: MLM-E; IDENTIFIER: RN ; LOCATION: San Angelo, Tom Green County; TYPE OF FACILITY: unauthorized municipal solid waste (MSW) site; RULES VIOLATED: 30 TAC 330.7(a), by failing to obtain authorization from the TCEQ prior to engaging in any activity of storage, processing, removal, or disposal of MSW; 30 TAC (a) and (c), by failing to cause, suffer, allow, or permit the unauthorized disposal of MSW; and 30 TAC and Texas Health and Safety Code, (b), by failing to cause, suffer, allow, or permit outdoor burning within the state of Texas; PENALTY: $6,037; ENFORCEMENT COORDINATOR: Stephanie McCurley, (512) ; REGIONAL OFFICE: 622 South Oakes, Suite K, San Angelo, Texas , (325) (9) COMPANY: Pasadena Independent School District; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCA- TION: Pasadena, Harris County; TYPE OF FACILITY: fleet refueling station; RULES VIOLATED: 30 TAC (a)(2) and (b)(2) and TWC, (d), by failing to ensure the underground storage tank (UST) corrosion protection system is operated and maintained in a manner that will ensure continuous corrosion protection, and failing to protect from corrosion all components of the UST system which are designed to convey, contain, or store regulated substances by electrically isolating the components from the corrosive elements of the surrounding soil, backfill, groundwater, or any other water, and from other metallic components by installing the component in an open area where periodic visual inspection of all parts of the component for the presence of corrosion or released substances is practicable; 30 TAC (i) and TWC, (c)(2), by failing to inspect all sumps, including dispenser sumps, manways, overspill containers or catchment basins associated with a UST system at least once every 60 days to assure that their sides, bottoms, and any penetration points are maintained liquid tight and free of any liquid or debris; 30 TAC 334.7(d)(3), by failing to notify the agency of any change or additional information regarding the USTs within 30 days of the occurrence of the change or addition; 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the USTs for releases at a frequency of at least once every month; and 30 TAC (b)(1)(B), by failing to maintain UST records and make them immediately available for inspection upon request by agency personnel; PENALTY: $12,375; ENFORCEMENT COORDINATOR: John Fennell, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (10) COMPANY: PERFORMANCE CONTRACTING, INCORPO- RATED; DOCKET NUMBER: IHW-E; IDENTIFIER: RN ; LOCATION: Pasadena, Harris County; TYPE OF FA- CILITY: hazardous and nonhazardous industrial waste transportation; RULE VIOLATED: 30 TAC 335.2(b), by failing to cause, suffer, allow, or permit, the unauthorized disposal of industrial solid waste; PENALTY: $1,250; ENFORCEMENT COORDINATOR: John Paul Fennell, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (11) COMPANY: Reliant Processing Group LLC; DOCKET NUM- BER: IWD-E; IDENTIFIER: RN ; LOCA- TION: Muleshoe, Bailey County; TYPE OF FACILITY: carbon dioxide manufacturing, storage, and distribution facility; RULES VI- OLATED: TWC, (a)(1) and 30 TAC and (2), by failing to maintain authorization to discharge wastewater into or adjacent to any water in the state; PENALTY: $5,625; ENFORCEMENT COORDINATOR: Ariel Ramirez, (512) ; REGIONAL OFFICE: th Street, Suite 100, Lubbock, Texas , (806) (12) COMPANY: Rio Bonito RV Resort II, LLC; DOCKET NUM- BER: EAQ-E; IDENTIFIER: RN ; LOCA- TION: Liberty Hill, Williamson County; TYPE OF FACILITY: construction site; RULE VIOLATED: 30 TAC (a)(1), by failing to obtain approval of an Edwards Aquifer Protection Plan prior to commencing a regulated activity over the Edwards Aquifer Contributing Zone; PENALTY: $938; ENFORCEMENT COOR- DINATOR: Steven Van Landingham, (512) ; REGIONAL OFFICE: Park 35 Circle, Building A, Austin, Texas 78753, (512) (13) COMPANY: SARFRAZ BUSINESS INCORPORATED dba Fuel Express; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Hempstead, Waller County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and (2)(A)(i) and TWC, (a) and (c)(1), by failing to monitor the underground storage tanks (USTs) for releases at a frequency of at least once every month, and failing to equip each separate pressurized line with an automatic line leak detector; 30 TAC , by failing to report a suspected release to the TCEQ within 24 hours of discovery; and 30 TAC (3), by failing to file a release determination report with the commission within 45 days after a suspected release has occurred; PENALTY: $5,313; ENFORCEMENT COORDINATOR: Keith Frank, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) TexReg 6396 November 10, 2017 Texas Register

151 (14) COMPANY: SAWANI GROUP, INCORPORATED dba J AND N Mini Mart 2; DOCKET NUMBER: PST-E; IDENTI- FIER: RN ; LOCATION: Katy, Harris County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(2) and TWC, (a), by failing to provide release detection for the pressurized piping associated with the underground storage tank system; PENALTY: $2,563; ENFORCE- MENT COORDINATOR: Had Darling, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (15) COMPANY: Southwest Independent School District; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCA- TION: San Antonio, Bexar County; TYPE OF FACILITY: fleet refueling operations; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tank for releases at a frequency of at least once every month; 30 TAC , by failing to report a suspected release to the TCEQ within 24 hours of discovery; and 30 TAC , by failing to investigate a suspected release of regulated substance within 30 days of discovery; PENALTY: $8,625; ENFORCEMENT COORDINATOR: John Fennell, (512) ; REGIONAL OFFICE: Judson Road, San Antonio, Texas , (210) (16) COMPANY: SUNSHINE FOOD MART, INCORPORATED dba Sunshine Food Mart; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Nacogdoches, Nacogdoches County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; PENALTY: $3,750; ENFORCEMENT COORDINATOR: Caleb Olson, (512) ; REGIONAL OFFICE: 3870 Eastex Freeway, Beaumont, Texas , (409) (17) COMPANY: Turnpike USA Investments Incorporated dba Quick Stop; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Greenville, Hunt County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; PENALTY: $2,438; ENFORCEMENT COORDINATOR: David Carney, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (18) COMPANY: United States Border Patrol; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Laredo, Webb County; TYPE OF FACILITY: fleet refueling facility; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; and 30 TAC (c)(3)(A), by failing to ensure that the emergency shutoff valves are securely anchored at the base of the dispensers; PENALTY: $4,875; ENFORCEMENT COORDINATOR: John Fennell, (512) ; REGIONAL OFFICE: 707 East Calton Road, Suite 304, Laredo, Texas , (956) (19) COMPANY: Vinton Steel LLC; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LOCATION: Vinton, El Paso County; TYPE OF FACILITY: public water supply; RULES VIOLATED: 30 TAC (h)(1) and (j) and Texas Health and Safety Code, , by failing to notify the executive director (ED) and receive an approval prior to making any significant change or addition to the system's production, treatment, storage, pressure maintenance, or distribution facilities; and 30 TAC (c)(3)(A), by failing to receive final approval of the well completion data by the ED prior to placing a public drinking water well into service; PENALTY: $100; ENFORCEMENT COORDINATOR: Yuliya Dunaway, (210) ; REGIONAL OFFICE: 401 East Franklin Avenue, Suite 560, El Paso, Texas , (915) (20) COMPANY: Weatherford Aerospace, LLC; DOCKET NUM- BER: AIR-E; IDENTIFIER: RN ; LOCATION: Weatherford, Parker County; TYPE OF FACILITY: aerospace manufacturing plant; RULES VIOLATED: 30 TAC (b)(2)(E)(i) and (c) and (4), Federal Operating Permit (FOP) Number O1470, Special Terms and Conditions (STC) Number 8, New Source Review (NSR) Permit Number 1618, Special Conditions (SC) Number 10.C, and Texas Health and Safety Code (THSC), (b), by failing to maintain records for the silicone tube usage rate; 30 TAC (c) and (4), FOP Number O1470, STC Number 8, NSR Permit Number 1618, SC Number 6.F, and THSC, (b), by failing to test the scrubbing solution ph on a daily basis; and 30 TAC (4) and (2)(B) and (C), FOP Number O1470, General Terms and Conditions, and THSC, (b), by failing to submit a deviation report within 30 days after the end of the reporting period; PENALTY: $28,888; ENFORCEMENT COORDINATOR: Raime Hayes-Falero, (713) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) TRD Charmaine Backens Director, Litigation Division Texas Commission on Environmental Quality Filed: October 31, 2017 Enforcement Orders An agreed order was adopted regarding Phillips 66 Company, Docket No MLM-E on November 1, 2017, assessing $22,042 in administrative penalties with $4,408 deferred. Information concerning any aspect of this order may be obtained by contacting John Fennell, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Eastlake Rv, LP, Docket No MWD-E on November 1, 2017, assessing $18,011 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Claudia Corrales, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Corpus Christi, Docket No MLM-E on November 1, 2017, assessing $15,712 in administrative penalties with $3,142 deferred. Information concerning any aspect of this order may be obtained by contacting Farhaud Abbaszadeh, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Bishop, Docket No MWD-E on November 1, 2017, assessing $27,750 in administrative penalties with $5,550 deferred. Information concerning any aspect of this order may be obtained by contacting Sandra Douglas, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding West Travis County Public Utility Agency, Docket No MWD-E on November 1, 2017, assessing $10,001 in administrative penalties with $2,000 deferred. Information concerning any aspect of this order may be obtained by contacting Ross Luedtke, Enforcement Coordinator at IN ADDITION November 10, TexReg 6397

152 (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Jerry Ung dba KU Food Mart and K. U. FOOD MART, L.P. dba KU Food Mart, Docket No PST-E on November 1, 2017, assessing $21,106 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Audrey Liter, Staff Attorney at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding 1265 LLC, Docket No MLM-E on November 1, 2017, assessing $8,322 in administrative penalties with $1,664 deferred. Information concerning any aspect of this order may be obtained by contacting Sandra Douglas, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Red Oak, Docket No PST-E on November 1, 2017, assessing $7,689 in administrative penalties with $1,537 deferred. Information concerning any aspect of this order may be obtained by contacting Stephanie McCurley, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas A default order was adopted regarding Tank Works, Inc. dba Brazos Bend Home & Ranch, Docket No PWS-E on November 1, 2017, assessing $1,858 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Elizabeth Carroll Harkrider, Staff Attorney at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Liverpool, Docket No PWS-E on November 1, 2017, assessing $610 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Ryan Rutledge, Staff Attorney at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas A default order was adopted regarding Mike Jason Tilley, Docket No LII-E on November 1, 2017, assessing $1,206 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Eric Grady, Staff Attorney at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Frost, Docket No MWD-E on November 1, 2017, assessing $28,500 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Ryan Rutledge, Staff Attorney at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Lubbock, Docket No IWD-E on November 1, 2017, assessing $42,500 in administrative penalties with $8,500 deferred. Information concerning any aspect of this order may be obtained by contacting Larry Butler, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Chevron Phillips Chemical Company LP, Docket No AIR-E on November 1, 2017, assessing $9,600 in administrative penalties with $1,920 deferred. Information concerning any aspect of this order may be obtained by contacting Abigail Lindsey, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Air Products LLC, Docket No AIR-E on November 1, 2017, assessing $8,025 in administrative penalties with $1,605 deferred. Information concerning any aspect of this order may be obtained by contacting Abigail Lindsey, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Beaumont, Docket No MWD-E on November 1, 2017, assessing $6,000 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Steven Van Landingham, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Aminaben Enterprises, Inc. dba 24 Seven 11, Docket No PST-E on November 1, 2017, assessing $9,268 in administrative penalties with $1,853 deferred. Information concerning any aspect of this order may be obtained by contacting James Baldwin, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Fiesta Mart, L.L.C. dba Fiesta Mart 64, Docket No PST-E on November 1, 2017, assessing $9,317 in administrative penalties with $1,863 deferred. Information concerning any aspect of this order may be obtained by contacting Jonathan Nguyen, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Zapata County, Docket No MWD-E on November 1, 2017, assessing $28,012 in administrative penalties with $5,602 deferred. Information concerning any aspect of this order may be obtained by contacting Austin Henck, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding Del Grande Mobile Home Owners' Association, Inc., Docket No MWD-E on November 1, 2017, assessing $20,250 in administrative penalties with $4,050 deferred. Information concerning any aspect of this order may be obtained by contacting Ariel Ramirez, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas. An agreed order was adopted regarding Maas Ventures, LLC dba Mega Fuel 11, Docket No PST-E on November 1, 2017, assessing $8,244 in administrative penalties with $1,648 deferred. Information concerning any aspect of this order may be obtained by contacting Jonathan Nguyen, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Skellytown, Docket No MWD-E on November 1, 2017, assessing $28,500 in administrative penalties with $5,700 deferred. Information concerning any aspect of this order may be obtained by contacting Claudia Corrales, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas An agreed order was adopted regarding City of Cushing, Docket No PWS-E on November 1, 2017, assessing $175 in administrative penalties. Information concerning any aspect of this order may be obtained by contacting Ronica Rodriguez, Enforcement Coordinator at (512) , Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas TRD TexReg 6398 November 10, 2017 Texas Register

153 Bridget C. Bohac Chief Clerk Texas Commission on Environmental Quality Filed: November 1, 2017 Notice of Hearing City of Alamo SOAH Docket No TCEQ Docket No MWD Permit No. WQ APPLICATION. City of Alamo, 420 North Tower Road, Alamo, Texas 78516, has applied to the Texas Commission on Environmental Quality (TCEQ) for a renewal of Texas Pollutant Discharge Elimination System (TPDES) Permit No. WQ , which authorizes the discharge of treated domestic wastewater at an annual average flow not to exceed 2,000,000 gallons per day. TCEQ received this application on June 18, The facility is located approximately 14,000 feet south along South Tower Road from the intersection of Tower Road and U.S. 83 Business Highway or approximately 17,000 feet south from the intersection of South Tower Road with U.S. 83 Expressway in Hidalgo County, Texas The treated effluent is discharged to Hidalgo County Drainage Ditch #2; thence to the Arroyo Colorado Above Tidal in Segment No of the Nueces-Rio Grande Basin. The unclassified receiving water use is minimal aquatic life use for Hidalgo County Drainage #2. The designated uses for Segment No are intermediate aquatic life use and primary contact recreation. The TCEQ Executive Director has prepared a draft permit which, if approved, would establish the conditions under which the facility must operate. The Executive Director has made a preliminary decision that this permit, if issued, meets all statutory and regulatory requirements. The permit application, Executive Director's preliminary decision, and draft permit are available for viewing and copying at the City of Alamo City Hall, City Hall Building, 420 North Tower Road, Alamo, Texas. As a public courtesy, we have provided the following Web page to an online map of the site or the facility's general location. The online map is not part of the application or the notice: For the exact location, refer to the application. CONTESTED CASE HEARING. The State Office of Administrative Hearings (SOAH) will conduct a formal contested case hearing at: 10:00 a.m. - December 14, 2017 Alamo Municipal Court 502 Duranta Street Alamo, Texas The contested case hearing will be a legal proceeding similar to a civil trial in state district court. The hearing will address the disputed issues of fact identified in the TCEQ order concerning this application issued on September 25, In addition to these issues, the judge may consider additional issues if certain factors are met. The hearing will be conducted in accordance with Chapter 2001, Texas Government Code; Chapter 26, Texas Water Code; and the procedural rules of the TCEQ and SOAH, including 30 TAC Chapter 80 and 1 TAC Chapter 155. The hearing will be held unless all timely hearing requests have been withdrawn or denied. To request to be a party, you must attend the hearing and show you would be adversely affected by the application in a way not common to members of the general public. Any person may attend the hearing and request to be a party. Only persons named as parties may participate at the hearing. In accordance with 1 Tex. Admin. Code (a), Notice of Hearing, "Parties that are not represented by an attorney may obtain information regarding contested case hearings on the public website of the State Office of Administrative Hearings at or in printed format upon request to SOAH." INFORMATION. If you need more information about the hearing process for this application, please call the Public Education Program, toll free, at (800) General information about the TCEQ can be found at our website at Further information may also be obtained from the City of Alamo at the address stated above or by calling Mr. Luciano Ozuna, Jr., City Manager, City of Alamo, at (956) Persons with disabilities who need special accommodations at the hearing should call the SOAH Docketing Department at (512) , at least one week prior to the hearing. Issued: October 25, 2017 TRD Bridget C. Bohac Chief Clerk Texas Commission on Environmental Quality Filed: November 1, 2017 Notice of Public Hearing on Assessment of Administrative Penalties and Requiring Certain Actions of INU USA INC DBA Little Elm Gas & More SOAH Docket No TCEQ Docket No PST-E The Texas Commission on Environmental Quality (TCEQ or the Commission) has referred this matter to the State Office of Administrative Hearings (SOAH). An Administrative Law Judge with the State Office of Administrative Hearings will conduct a public hearing at: 10:00 a.m. - November 30, 2017 William P. Clements Building 300 West 15th Street, 4th Floor Austin, Texas The purpose of the hearing will be to consider the Executive Director's Preliminary Report and Petition mailed September 7, 2017 concerning assessing administrative penalties against and requiring certain actions of INU USA INC dba Little Elm Gas & More, for violations in Denton County, Texas, of: Tex. Water Code (a) and 30 Tex. Admin. Code (b)(2)(A)(ii), , and The hearing will allow INU USA INC dba Little Elm Gas & More, the Executive Director, and the Commission's Public Interest Counsel to present evidence on whether a violation has occurred, whether an administrative penalty should be assessed, and the amount of such penalty, if any. The first convened session of the hearing will be to es- IN ADDITION November 10, TexReg 6399

154 tablish jurisdiction, afford INU USA INC dba Little Elm Gas & More, the Executive Director of the Commission, and the Commission's Public Interest Counsel an opportunity to negotiate and to establish a discovery and procedural schedule for an evidentiary hearing. Unless agreed to by all parties in attendance at the preliminary hearing, an evidentiary hearing will not be held on the date of this preliminary hearing. Upon failure of INU USA INC dba Little Elm Gas & More to appear at the preliminary hearing or evidentiary hearing, the factual allegations in the notice will be deemed admitted as true, and the relief sought in the notice of hearing may be granted by default. The specific allegations included in the notice are those set forth in the Executive Director's Preliminary Report and Petition, attached hereto and incorporated herein for all purposes. INU USA INC dba Little Elm Gas & More, the Executive Director of the Commission, and the Commission's Public Interest Counsel are the only designated parties to this proceeding. Legal Authority: Tex. Water Code and chs. 7 and 26 and 30 Tex. Admin. Code chs. 70 and 334; Tex. Water Code 7.058, and the Rules of Procedure of the Texas Commission on Environmental Quality and the State Office of Administrative Hearings, including 30 Tex. Admin. Code and and ch. 80, and 1 Tex. Admin. Code ch Further information regarding this hearing may be obtained by contacting Clayton Smith, Staff Attorney, Texas Commission on Environmental Quality, Litigation Division, Mail Code 175, P.O. Box 13087, Austin, Texas , telephone (512) Information concerning your participation in this hearing may be obtained by contacting Vic McWherter, Public Interest Counsel, Mail Code 103, at the same P. O. Box address given above, or by telephone at (512) Any document filed prior to the hearing must be filed with TCEQ's Office of the Chief Clerk and SOAH. Documents filed with the Office of the Chief Clerk may be filed electronically at or sent to the following address: TCEQ Office of the Chief Clerk, Mail Code 105, P.O. Box 13087, Austin, Texas Documents filed with SOAH may be filed via fax at (512) or sent to the following address: SOAH, 300 West 15th Street, Suite 504, Austin, Texas When contacting the Commission or SOAH regarding this matter, reference the SOAH docket number given at the top of this notice. In accordance with 1 Tex. Admin. Code (a), Notice of Hearing, "Parties that are not represented by an attorney may obtain information regarding contested case hearings on the public website of the State Office of Administrative Hearings at or in printed format upon request to SOAH." Persons who need special accommodations at the hearing should call the SOAH Docketing Department at (512) , at least one week before the hearing. Issued: October 30, 2017 TRD Bridget C. Bohac Chief Clerk Texas Commission on Environmental Quality Filed: November 1, 2017 Notice of Texas Commission on Environmental Quality's Action on Proposed General Permit Number TXG On October 4, 2017, at a regularly scheduled public meeting, the Texas Commission on Environmental Quality (TCEQ or commission) approved the re-issuance of Texas Pollutant Discharge Elimination System general permit number TXG The general permit authorizes discharges of facility wastewater, contact stormwater, and stormwater associated with industrial activities into or adjacent to water in the state from petroleum bulk stations and terminals. Texas Water Code, (d) and 30 Texas Administrative Code (TAC) 205.3(e) require the executive director (ED) of the TCEQ to respond to all timely filed public comments. The ED must make these responses publicly available and must file them with the Office of the Chief Clerk at least 10 days before the commission considers whether to approve the general permit. Additionally, 30 TAC 205.3(e)(4) requires notice of the commission's action on the proposed general permit and the text of the response to comments to be published in the Texas Register. No public comments were received on the draft permit. This notice satisfies the requirement to publish notice of the commission's action on the proposed general permit. TRD Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: October 31, 2017 Notice of Water Rights Application Notice issued October 25, 2017 APPLICATION NO ; Targa Terminals LLC, 1050 Jefferson Rd., Pasadena, Texas 77506, Applicant, has applied for a water use permit to divert and use not to exceed 138 acre-feet of water per year from two points located on the Houston Ship Channel, San Jacinto River Basin, for industrial purposes in Harris County. The application was received on April 25, Additional information and fees were received on January 10, 2017, and March 23, The application was declared administratively complete and filed with the Office of the Chief Clerk on April 14, The TCEQ Executive Director has completed the technical review of the application and prepared a draft permit. The draft permit, if granted, would contain special conditions including, but not limited to, installing a measuring device. The application and Executive Director's draft permit are available for viewing and copying at the Office of the Chief Clerk, Park 35 Circle, Building F., Austin, Texas Written public comments and requests for a public meeting should be submitted to the Office of the Chief Clerk, at the address provided in the information section below, within 30 days of the date of newspaper publication of the notice. To view the complete issued notice, view the notice on our website at or call the Office of the Chief Clerk at (512) to obtain a copy of the complete notice. When searching the website, type in the issued date range shown at the top of this document to obtain search results. A public meeting is intended for the taking of public comment, and is not a contested case hearing. The Executive Director can consider approval of an application unless a written request for a contested case hearing is filed. To request a contested case hearing, you must submit the following: (1) your name (or for a group or association, an official representative), mailing address, daytime phone number, and fax number, if any; (2) applicant's name and permit number; (3) the statement (I/we) request a contested case hearing; and (4) a brief and specific description of how you would be affected by the application in a way not common to the general public. You may also submit any proposed conditions to the requested application which would satisfy your concerns. Requests for a contested case 42 TexReg 6400 November 10, 2017 Texas Register

155 hearing must be submitted in writing to the TCEQ Office of the Chief Clerk at the address provided in the information section below. If a hearing request is filed, the Executive Director will not issue the requested permit and may forward the application and hearing request to the TCEQ Commissioners for their consideration at a scheduled Commission meeting. Written hearing requests, public comments or requests for a public meeting should be submitted to the Office of the Chief Clerk, MC 105, TCEQ, P.O. Box 13087, Austin, Texas For information concerning the hearing process, please contact the Public Interest Counsel, MC 103, at the same address. For additional information, individual members of the general public may contact the Public Education Program at (800) General information regarding the TCEQ can be found at our website at Si desea información en español, puede llamar al (800) TRD Bridget C. Bohac Chief Clerk Texas Commission on Environmental Quality Filed: October 31, 2017 Update to the Water Quality Management Plan The Texas Commission on Environmental Quality (TCEQ or commission) requests comments from the public on the draft October 2017 Update to the WQMP for the State of Texas. Download the draft October 2017 WQMP Update at or view a printed copy at the TCEQ Library, Building A, Park 35 Circle, Austin, Texas. The WQMP is developed and promulgated in accordance with the requirements of Federal Clean Water Act, 208. The draft update includes projected effluent limits of specific domestic dischargers, which may be useful for planning in future permit actions. The draft update may also contain service area populations for listed wastewater treatment facilities, designated management agency information, and total maximum daily load (TMDL) revisions. Once the commission certifies a WQMP update, it is submitted to the United States Environmental Protection Agency (EPA) for approval. For some Texas Pollutant Discharge Elimination System (TPDES) permits, the EPA's approval of a corresponding WQMP update is a necessary precondition to TPDES permit issuance by the commission. Deadline All comments must be received at the TCEQ no later than 5:00 p.m. on December 12, How to Submit Comments Comments must be submitted in writing to: Nancy Vignali Texas Commission on Environmental Quality Water Quality Division, MC 150 P.O. Box Austin, Texas Comments may also be faxed to (512) , but must be followed up with written comments by mail within three working days of the fax date or by the comment deadline, whichever is sooner. For further information, or questions, please contact Ms. Vignali at (512) or by at Nancy.Vignali@tceq.texas.gov. TRD Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: October 31, 2017 Texas Ethics Commission List of Late Filers Below is a list from the Texas Ethics Commission naming the filers who failed to pay the penalty fine for failure to file the report, or filing a late report, in reference to the specified filing deadline. If you have any questions, you may contact Michelle Gonzales at (512) Deadline: Semiannual Report due January 15, 2016 for Committees Linda F. King, Wharton County Republican Party Executive Committee (CEC), 1404 Linwood Dr., Wharton, Texas Deadline: Semiannual Report due July 15, 2016 for Committees Todd Smith, Texas Conservative Tea Party Coalition, 2204 Hazeltine Ln, Austin, Texas Deadline: 30 Day Before Election Report due October 11, 2016 for Committees Michael L. Kennedy, Smith County Republicans, 211 Coventry St., Bullard, Texas Deadline: 8 Day Before Election Report due October 31, 2016 for Committees Michael L. Kennedy, Smith County Republicans, 211 Coventry St., Bullard, Texas Deadline: Semiannual Report due January 17, 2017 for Committees Michael L. Kennedy, Smith County Republicans, 211 Coventry St., Bullard, Texas Antoine Noun, United Republicans of Texas, Kuykendahl, Ste. 101, Houston, Texas Deadline: Semiannual Report due July 17, 2017 for Committees Tommy J. Azopardi, Texans for Economic Development, P.O. Box , Austin, Texas Linda F. King, Wharton County Republican Party Executive Committee (CEC), 1404 Linwood Dr., Wharton, Texas Antoine Noun, United Republicans of Texas, Kuykendahl, Ste. 101, Houston, Texas Deadline: Lobby Activities Report due April 11, 2016 Frank J Corte, Jr., P.O. Box , San Antonio, Texas Deadline: Lobby Activities Report due July 10, 2017 Bradley O'Furey, 221 E. 9th St., Ste. 302, Austin, Texas Gabriel G. Sepulveda, 1122 Colorado St., Ste. 200, Austin, Texas Deadline: Lobby Activities Report due September 11, 2017 Frank J Corte, Jr., P.O. Box , San Antonio, Texas IN ADDITION November 10, TexReg 6401

156 Matthew Duncan Geske, 777 Taylor St., Ste. 900, Fort Worth, Texas Bradley O'Furey, 221 E. 9th St., Ste. 302, Austin, Texas ($500) Lucinda Dean Saxon, 2204 Hayfield Sq., Pflugerville, Texas Jennifer E. Sellers, 511 Clover Flat Rd., Cedar Park, Texas TRD Seana Willing Executive Director Texas Ethics Commission Filed: October 26, 2017 General Land Office Notice and Opportunity to Comment on Requests for Consistency Agreement/Concurrence Under the Texas Coastal Management Program On January 10, 1997, the State of Texas received federal approval of the Coastal Management Program (CMP) (62 Federal Register pp ). Under federal law, federal agency activities and actions affecting the Texas coastal zone must be consistent with the CMP goals and policies identified in 31 TAC Chapter 501. Requests for federal consistency review were deemed administratively complete for the following project(s) during the period of October 23, 2017 to October 30, As required by federal law, the public is given an opportunity to comment on the consistency of proposed activities in the coastal zone undertaken or authorized by federal agencies. Pursuant to 31 TAC , , and , the public comment period extends 30 days from the date published on the Texas General Land Office web site. The notice was published on the web site on Friday, November 3, The public comment period for this project will close at 5:00 p.m. on Tuesday, December 5, FEDERAL AGENCY ACTIVITIES: Applicant: Bureau of Ocean Energy Management (BOEM) Location: Gulf of Mexico Project Description: BOEM proposes to offer for lease in proposed GOM Regionwide Lease Sale 250 most available unleased blocks in the Western and Central Planning Areas (WPA and CPA, respectively), and a small portion of the Eastern Planning Area (EPA) not subject to Congressional moratorium. The proposed GOM regionwide lease sale area includes all available unleased blocks within the WPA, CPA, and EPA except for whole blocks and portions of blocks deferred by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the boundary of the Flower Garden Banks National Marine Sanctuary. The final decision on whether and how to proceed with the lease sale and the lease blocks available for leasing will be announced in the Record of Decision, and, if the decision is to proceed, a Final Notice of Sale. Absent additional analysis, the proposed lease sale area may be smaller than, but would not be larger than, the area considered herein. The proposed regionwide lease sale area encompasses about million acres. The estimated amount of resources projected to be developed as a result of this proposed regionwide lease sale is billion barrels of oil and trillion cubic feet of gas. BOEM proposes to hold GOM Regionwide Lease Sale 250 in March CMP Project No: F4 FEDERAL AGENCY ACTIONS: Applicant: Web Fleeting, LP Location: The project site is located in the confluence of the San Jacinto River and the Houston Ship Channel, at Market Street, in Channelview, Harris County, Texas. LATITUDE & LONGITUDE (NAD 83): Project Description: The applicant proposes to dredge approximately 120 acres of the Old River Channel to accommodate the existing barge terminal. Approximately 50,000 cubic yards of material would be removed, to a depth of 14 feet with one foot of overdredging. The applicant would either use a barge-mounted, hydraulic cutter head or land-based, long-armed trackhoes. The applicant also proposes to install 42 piling-style dolphins within the fleeting area. The five proposed disposal areas, consist of upland placement and dredged material placement areas. The applicant is currently sampling the proposed dredged area, and will coordinate with the Corps, EPA and TCEQ regarding the findings. Dredged placement will be evaluated further when sampling is completed and coordinated. Associated Application: U.S. Army Corps of Engineers (USACE) permit application #SWG This application will be reviewed pursuant to Section 10 of the Rivers and Harbors Act of 1899 and Section 404 of the Clean Water Act (CWA). CMP Project No: F1 Applicant: Florida Gas Transmission, LLC (FGT) Location: The project site is located Matagorda, Jefferson, and Orange Counties, Texas. Project Description: FGT is proposing the East-West Project (Project) which would provide new capacity of 275 million cubic feet per day on FGT's pipeline system in the western division to meet the demand for additional transportation and delivery of natural gas to the proposed Port Arthur - Motiva Meter and Regulator (M&R) Station and the Wilson - Coastal Bend M&R Station in Jefferson and Wharton Counties, Texas respectively. FGT would install two new receipt points and M&R stations, (Eunice-ANR and Gillis-Trunkline) on FGT's mainline to provide the new capacity. FGT proposes to construct and operate about 13.3 miles of 12-inch-diameter lateral pipeline, about 12 miles 16-inch-diameter lateral and connection pipeline, and four new M&R stations and auxiliary and appurtenant facilities in Wharton, Matagorda, Jefferson, and Orange Counties, Texas, and Calcasieu and Acadia Parishes, Louisiana. FGT would also install station piping and valves at existing Compressor Station 6 in Orange County, Texas on FGT's 24-inch-diameter mainline at MP so that Compressor Station 6 would be able to flow gas bi-directionally on the mainline. Type of Application: Federal Energy Regulatory Commission (FERC) Docket No. CP , which will be reviewed pursuant to Section 7(c) of the Natural Gas Act (NGA). CMP Project No: F1 Applicant: Texas Eastern Transmission, LP & Pomelo Connector Pipeline, LLC Location: The project site is in Nueces, Brazoria, Chambers, Vidor and Matagorda Counties, Texas. Project Description: Texas Eastern proposes to install, construct, own, and operate: a new 8,400 horsepower (hp) gas turbine unit (Petronila Compressor Station) in Nueces County, Texas; a new 8,400 hp gas turbine unit at its existing Blessing Compressor Station in Matagorda County, Texas; piping modifications at its existing Angleton Station property in Brazoria County, Texas; clean burn emission work and piping modifications at its existing Mont Belvieu 42 TexReg 6402 November 10, 2017 Texas Register

157 Compressor Station in Chambers County, Texas; and piping modifications at its existing Vidor Compressor Station in Orange County, Texas. These facilities are collectively referred to as the South Texas Expansion Project (STEP). Texas Eastern amended their application to also install, construct, own, operate, and maintain: a new tie-in to the Pomelo Connector Pipeline at Texas Eastern's proposed Petronila Compressor Station; new gas release measurement (GRM) equipment and associated enclosures at its new Petronila, existing Mont Belvieu, and existing Vidor Compressor Stations; new gas coolers at its existing Blessing Compressor Station; and acquire (by lease) capacity on Pomelo's proposed approximately 14-mile-long pipeline (which would interconnect with Texas Eastern's proposed Petronila Compressor Station). The amendment changes the Project's targeted in-service date from May 1, 2017 to October 1, It also removes the metering and regulating (M&R) station initially proposed for the Petronila Compressor Station site from STEP's scope. Pomelo proposes to construct, own, and operate approximately 14 miles of 30-inch-dimeter pipeline, a new 5,000 hp compressor station (Pomelo Compressor Station), and approximately 0.2 mile of new 30-inch-diameter pipeline, and associated aboveground facilities in Nueces County. Pomelo has requested to engage in certain construction, operation, maintenance, and abandonment activities under blanket construction certificate authorization, and has requested abandonment authorization enabling Pomelo to lease all of the capacity of the Pomelo Connector Pipeline to Texas Eastern upon the in-service date. Together, these facilities are referred to as the Pomelo Connector Pipeline Project (Pomelo Project). Together, these projects would provide capacity to transport up to 400,000 dekatherms per day (Dth/d) or 400 million cubic feet per day (MMcf/d) of natural gas. Type of Application: Federal Energy Regulatory Commission (FERC) Docket Nos. CP , CP ; and CP which will be reviewed pursuant to Section 7(b) and Section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's regulations to obtain a Certificate of Public Convenience and Necessity (Certificate) from the Commission and to abandon, construct, modify, and operate natural gas pipeline facilities in Texas. CMP Project No: F1 Applicant: Brownsville Navigation District Location: Project is located along the southern shoreline of the Brownsville Ship Channel at the end of R.L. Ostos Road within the City of Brownsville, in Cameron County, Texas. Project Description: The applicant proposes to construct an approximately 60-acre spool base facility to be operated by Subsea 7. Construction of the facility would include dredging a 3-sided vessel slip (dredge slip) with bulkhead, installation of articulated block mat revetment for slope protection on the vessel slip approach and along the vessel slip bulkhead, and installation of one mooring structure and one breasting structure with catwalks. Construction of various ancillary structures would include the facility (office building and equipment storage), a load out area (pipe rack) for joining pipe units, an egress access road, two drainage corridors, and required security fencing. The access road and drainage corridors would extend from the proposed dock on the Brownsville Ship Channel to State Highway (SH) 4. The proposed dredge slip would be dredged within an approximate 13-acre area within the proposed project site. The entire dredge slip, including the approach, would have dimensions of approximately 1,000 feet long by 900 feet wide to accommodate 160-meter-long pipelay vessels. An approximate 450-foot by 900-foot portion of the dredge slip would be dredged below the observed high tide line (HTL). The approximate elevation of the bottom of the dredged slip would be -35 feet MLT, with an additional 2 feet allowable over depth. Approximately 654,000 cubic yards of dredge material would be hydraulically and/or mechanically excavated and removed to construct the proposed dredge slip. Side slopes of the proposed dredge slip approach would be at a 3:1 side slope. Articulated block mat revetment would be placed on lower portions of both the eastern and western slopes of the dredge slip approach. Excavated material would be placed in an authorized Dredged Material Placement Area (DMPA). The preferred placement areas would be located adjacent to the proposed project site, either DMPA 7, 5, or 5A. The bulkhead, to be constructed in uplands, would be made of steel sheet pile. Dredging of the approximately 13-acre basin would result in approximately 7.6 acres of permanent impact below Mean High Water (MHW). This impact area (7.6 acres) is comprised of the following habitats: 0.02 acres of estuarine marsh, 0.10 acre of mangrove, 2.03 acres of tidal flats, 3.43 acres of shallow open water (0.0 ft. to -6.0 ft.), and 2.05 acres of deep open water (-6.0 ft. to -47 ft.). In addition to dredging of the basin, approximately 0.02 acre (1,024 square feet) of over-water structures, including the catwalks, would be constructed within Section 10 waters (waterward of MHW). The proposed pipe rack area would measure approximately 5,000 feet long by 150 feet wide, and would extend south from the proposed bulkhead, terminating approximately 500 feet from SH 4. Base material (clay-like material) and limestone (top 2 feet) would be placed within the central and southern portions of the proposed project area to construct the facility, pipe rack, and access road, and two drainage corridors would be constructed on either side of the pipe rack and access road to allow sufficient drainage off the facility. The proposed access road would measure approximately 24 feet wide and would extend an additional 505 feet south of the pipe rack area to SH 4. The drainage corridors would measure approximately 20 feet wide and 1 mile long, extending the entire length of the project, and would drain into the roadside ditch located along SH 4. Furthermore, four reinforced concrete pipe (RCP) culverts would be installed under the proposed pipe rack and access road in order to maintain the existing hydrology within the central and southern portions of the proposed project area. The RCP culverts would be installed within one ephemeral stream, one freshwater wetland, and two drainage features, including a roadside ditch along SH 4. Construction of the proposed spool base facility, placement of articulated block mat shoreline revetment, and the pipe rack/access road would result in approximately 3.03 acres of impact to jurisdictional habitats. This impact area (3.03 acres) is comprised of the following habitats: 0.02 acre of ephemeral stream, 1.44 acres of freshwater wetlands, 1.32 acres of mudflat, 0.10 acre of tidal flat, 0.14 acre of shallow open water (< 6 feet deep), and 0.01 acre to deep open water (> 6 feet deep). Type of Application: U.S. Army Corps of Engineers (USACE) permit application #SWG This application will be reviewed pursuant to Section 10 of the Rivers and Harbors Act of 1899 and Section 404 of the Clean Water Act (CWA). Note: The consistency review for this project may be conducted by the Texas Commission on Environmental Quality as part of its certification under Section 401 of the CWA. CMP Project No: F1 Further information on the applications listed above, including a copy of the consistency certifications or consistency determinations for inspection, may be obtained from Ms. Allison Buchtien, P.O. Box 12873, Austin, Texas , or via at federal.consistency@glo.texas.gov. Comments should be sent to Ms. Buchtien at the above address or by . TRD Anne L. Idsal Chief Clerk/Deputy Land Commissioner General Land Office Filed: November 1, 2017 IN ADDITION November 10, TexReg 6403

158 Licensing Actions for Radioactive Materials Department of State Health Services 42 TexReg 6404 November 10, 2017 Texas Register

159 IN ADDITION November 10, TexReg 6405

160 42 TexReg 6406 November 10, 2017 Texas Register

161 TRD Barbara L. Klein Interim General Counsel Department of State Health Services Filed: November 1, 2017 Texas Lottery Commission Scratch Ticket Game Number 2075 "The Glitter is Gold" 1.0 Name and Style of Scratch Ticket Game. A. The name of Scratch Ticket Game No is "THE GLITTER IS GOLD". The play style is "key number match". 1.1 Price of Scratch Ticket Game. A. The price for Scratch Ticket Game No shall be $10.00 per Scratch Ticket. 1.2 Definitions in Scratch Ticket Game No A. Display Printing - That area of the Scratch Ticket outside of the area where the overprint and Play Symbols appear. B. Latex Overprint - The removable scratch-off covering over the Play Symbols on the front of the Scratch Ticket. C. Play Symbol - The printed data under the latex on the front of the Scratch Ticket that is used to determine eligibility for a prize. Each Play Symbol is printed in Symbol font in black ink in positive except for dual-image games. The possible black Play Symbols are: 01, 02, 03, 04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, GOLD BAR SYMBOL, 24K SYMBOL, $5.00, $10.00, $20.00, $25.00, $50.00, $100, $200, $500, $1,000, $10,000 and $250,000. D. Play Symbol Caption - The printed material appearing below each Play Symbol which explains the Play Symbol. One caption appears under each Play Symbol and is printed in caption font in black ink in positive. The Play Symbol Caption which corresponds with and verifies each Play Symbol is as follows: IN ADDITION November 10, TexReg 6407

162 42 TexReg 6408 November 10, 2017 Texas Register

163 E. Serial Number - A unique 13 (thirteen) digit number appearing under the latex scratch-off covering on the front of the Scratch Ticket. The Serial Number is for validation purposes and cannot be used to play the game. The format will be: F. Bar Code - A 24 (twenty-four) character interleaved two (2) of five (5) Bar Code which will include a four (4) digit game ID, the seven (7) digit Pack number, the three (3) digit Scratch Ticket number and the ten (10) digit Validation Number. The Bar Code appears on the back of the Scratch Ticket. G. Pack-Ticket Number - A 14 (fourteen) digit number consisting of the four (4) digit game number (2075), a seven (7) digit Pack number, and a three (3) digit Scratch Ticket number. Scratch Ticket numbers start with 001 and end with 050 within each Pack. The format will be: H. Pack - A Pack of the "THE GLITTER IS GOLD" Scratch Ticket Game contains 050 Tickets, packed in plastic shrink-wrapping and fanfolded in pages of one (1). The Packs will alternate. One will show the front of Ticket 001 and back of 050 while the other fold will show the back of Ticket 001 and front of 050. I. Non-Winning Scratch Ticket - A Scratch Ticket which is not programmed to be a winning Scratch Ticket or a Scratch Ticket that does not meet all of the requirements of these Game Procedures, the State Lottery Act (Texas Government Code, Chapter 466), and applicable rules adopted by the Texas Lottery pursuant to the State Lottery Act and referenced in 16 TAC, Chapter 401. J. Scratch Ticket Game, Scratch Ticket or Ticket - Texas Lottery "THE GLITTER IS GOLD" Scratch Ticket Game No Determination of Prize Winners. The determination of prize winners is subject to the general Scratch Ticket validation requirements set forth in Texas Lottery Rule , Instant Game Rules, these Game Procedures, and the requirements set out on the back of each Scratch Ticket. A prize winner in the "THE GLITTER IS GOLD" Scratch Ticket Game is determined once the latex on the Scratch Ticket is scratched off to expose 54 (fifty-four) Play Symbols. If a player matches any of the GOLD NUMBERS Play Symbols to any of the WINNING NUMBERS Play Symbols, the player wins the prize for that number. If the player reveals a "GOLD BAR" Play Symbol, the player wins DOUBLE the prize for that symbol. If the player reveals a "24K" Play Symbol, the player wins ALL 24 PRIZES instantly! No portion of the Display Printing nor any extraneous matter whatsoever shall be usable or playable as a part of the Scratch Ticket. 2.1 Scratch Ticket Validation Requirements. A. To be a valid Scratch Ticket, all of the following requirements must be met: 1. Exactly 54 (fifty-four) Play Symbols must appear under the Latex Overprint on the front portion of the Scratch Ticket; 2. Each of the Play Symbols must have a Play Symbol Caption underneath, unless specified, and each Play Symbol must agree with its Play Symbol Caption; 3. Each of the Play Symbols must be present in its entirety and be fully legible; 4. Each of the Play Symbols must be printed in black ink except for dual image games; IN ADDITION November 10, TexReg 6409

164 5. The Scratch Ticket shall be intact; 6. The Serial Number, Retailer Validation Code and Pack-Scratch Ticket Number must be present in their entirety and be fully legible; 7. The Serial Number must correspond, using the Texas Lottery's codes, to the Play Symbols on the Scratch Ticket; 8. The Scratch Ticket must not have a hole punched through it, be mutilated, altered, unreadable, reconstituted or tampered with in any manner; 9. The Scratch Ticket must not be counterfeit in whole or in part; 10. The Scratch Ticket must have been issued by the Texas Lottery in an authorized manner; 11. The Scratch Ticket must not have been stolen, nor appear on any list of omitted Scratch Tickets or non-activated Scratch Tickets on file at the Texas Lottery; 12. The Play Symbols, Serial Number, Retailer Validation Code and Pack-Scratch Ticket Number must be right side up and not reversed in any manner; 13. The Scratch Ticket must be complete and not miscut, and have exactly 54 (fifty-four) Play Symbols under the Latex Overprint on the front portion of the Scratch Ticket, exactly one Serial Number, exactly one Retailer Validation Code, and exactly one Pack-Scratch Ticket Number on the Scratch Ticket; 14. The Serial Number of an apparent winning Scratch Ticket shall correspond with the Texas Lottery's Serial Numbers for winning Scratch Tickets, and a Scratch Ticket with that Serial Number shall not have been paid previously; 15. The Scratch Ticket must not be blank or partially blank, misregistered, defective or printed or produced in error; 16. Each of the 54 (fifty-four) Play Symbols must be exactly one of those described in Section 1.2.C of these Game Procedures; 17. Each of the 54 (fifty-four) Play Symbols on the Scratch Ticket must be printed in the Symbol font and must correspond precisely to the artwork on file at the Texas Lottery; the Scratch Ticket Serial Numbers must be printed in the Serial font and must correspond precisely to the artwork on file at the Texas Lottery; and the Pack-Scratch Ticket Number must be printed in the Pack-Scratch Ticket Number font and must correspond precisely to the artwork on file at the Texas Lottery; 18. The Display Printing on the Scratch Ticket must be regular in every respect and correspond precisely to the artwork on file at the Texas Lottery; and 19. The Scratch Ticket must have been received by the Texas Lottery by applicable deadlines. B. The Scratch Ticket must pass all additional validation tests provided for in these Game Procedures, the Texas Lottery's Rules governing the award of prizes of the amount to be validated, and any confidential validation and security tests of the Texas Lottery. C. Any Scratch Ticket not passing all of the validation requirements is void and ineligible for any prize and shall not be paid. However, the Executive Director may, solely at the Executive Director's discretion, refund the retail sales price of the Scratch Ticket. In the event a defective Scratch Ticket is purchased, the only responsibility or liability of the Texas Lottery shall be to replace the defective Scratch Ticket with another unplayed Scratch Ticket in that Scratch Ticket Game (or a Scratch Ticket of equivalent sales price from any other current Texas Lottery Scratch Ticket Game) or refund the retail sales price of the Scratch Ticket, solely at the Executive Director's discretion. Programmed Game Parameters. A. A Ticket can win up to twenty-four (24) times in accordance with the approved prize structure. B. Adjacent Non-Winning Tickets within a Pack will not have matching Play Symbol and Prize Symbol patterns. Two (2) Tickets have matching Play Symbol and Prize Symbol patterns if they have the same Play Symbols and Prize Symbols in the same spots. C. The top Prize Symbol will appear on every Ticket, unless otherwise restricted by other parameters, play action or prize structure. D. Non-winning GOLD NUMBERS Play Symbols will all be different. E. Each Ticket will have six (6) different WINNING NUMBERS Play Symbols. F. Non-winning Prize Symbols will never appear more than three (3) times. G. The "GOLD BAR" (DBL) and "24K" (WINALL) Play Symbols will never appear in the WINNING NUMBERS Play Symbol spots. H. The "GOLD BAR" (DBL) and "24K" (WINALL) Play Symbols will only appear as dictated by the prize structure. I. On Tickets that contain the "24K" (WINALL) Play Symbol, none of the WINNING NUMBERS Play Symbols will match any of the GOLD NUMBERS Play Symbols and the "GOLD BAR" (DBL) Play Symbol will not appear. J. Non-winning Prize Symbols will never be the same as the winning Prize Symbol(s). K. No prize amount in a non-winning spot will correspond with the GOLD NUMBERS Play Symbol (i.e., 10 and $10). 2.3 Procedure for Claiming Prizes. A. To claim a "THE GLITTER IS GOLD" Scratch Ticket Game prize of $10.00, $20.00, $25.00, $50.00, $100 or $500, a claimant shall sign the back of the Scratch Ticket in the space designated on the Scratch Ticket and present the winning Scratch Ticket to any Texas Lottery Retailer. The Texas Lottery Retailer shall verify the claim and, if valid, and upon presentation of proper identification, if appropriate, make payment of the amount due the claimant and physically void the Scratch Ticket; provided that the Texas Lottery Retailer may, but is not required, to pay a $25.00, $50.00, $100 or $500 Scratch Ticket Game. In the event the Texas Lottery Retailer cannot verify the claim, the Texas Lottery Retailer shall provide the claimant with a claim form and instruct the claimant on how to file a claim with the Texas Lottery. If the claim is validated by the Texas Lottery, a check shall be forwarded to the claimant in the amount due. In the event the claim is not validated, the claim shall be denied and the claimant shall be notified promptly. A claimant may also claim any of the above prizes under the procedure described in Section 2.3.B and Section 2.3.C of these Game Procedures. B. To claim a "THE GLITTER IS GOLD" Scratch Ticket Game prize of $1,000, $10,000 or $250,000, the claimant must sign the winning Scratch Ticket and present it at one of the Texas Lottery's Claim Centers. If the claim is validated by the Texas Lottery, payment will be made to the bearer of the validated winning Scratch Ticket for that prize upon presentation of proper identification. When paying a prize of $600 or more, the Texas Lottery shall file the appropriate income reporting form with the Internal Revenue Service (IRS) and shall withhold federal income tax at a rate set by the IRS if required. In the event that the claim is not validated by the Texas Lottery, the claim shall be denied and the claimant shall be notified promptly. C. As an alternative method of claiming a "THE GLITTER IS GOLD" Scratch Ticket Game prize, the claimant must sign the winning Scratch 42 TexReg 6410 November 10, 2017 Texas Register

165 Ticket, thoroughly complete a claim form, and mail both to: Texas Lottery Commission, P.O. Box 16600, Austin, Texas The Texas Lottery is not responsible for Scratch Tickets lost in the mail. In the event that the claim is not validated by the Texas Lottery, the claim shall be denied and the claimant shall be notified promptly. D. Prior to payment by the Texas Lottery of any prize, the Texas Lottery shall deduct: 1. A sufficient amount from the winnings of a prize winner who has been finally determined to be: a. delinquent in the payment of a tax or other money to a state agency and that delinquency is reported to the Comptroller under Government Code ; b. in default on a loan made under Chapter 52, Education Code; or c. in default on a loan guaranteed under Chapter 57, Education Code; and 2. delinquent child support payments from the winnings of a prize winner in the amount of the delinquency as determined by a court or a Title IV-D agency under Chapter 231, Family Code. E. If a person is indebted or owes delinquent taxes to the State, other than those specified in the preceding paragraph, the winnings of a person shall be withheld until the debt or taxes are paid. 2.4 Allowance for Delay of Payment. The Texas Lottery may delay payment of the prize pending a final determination by the Executive Director, under any of the following circumstances: A. if a dispute occurs, or it appears likely that a dispute may occur, regarding the prize; B. if there is any question regarding the identity of the claimant; C. if there is any question regarding the validity of the Scratch Ticket presented for payment; or D. if the claim is subject to any deduction from the payment otherwise due, as described in Section 2.3.D of these Game Procedures. No liability for interest for any delay shall accrue to the benefit of the claimant pending payment of the claim. 2.5 Payment of Prizes to Persons Under 18. If a person under the age of 18 years is entitled to a cash prize under $600 from the "THE GLITTER IS GOLD" Scratch Ticket Game, the Texas Lottery shall deliver to an adult member of the minor's family or the minor's guardian a check or warrant in the amount of the prize payable to the order of the minor. 2.6 If a person under the age of 18 years is entitled to a cash prize of $600 or more from the "THE GLITTER IS GOLD" Scratch Ticket Game, the Texas Lottery shall deposit the amount of the prize in a custodial bank account, with an adult member of the minor's family or the minor's guardian serving as custodian for the minor. 2.7 Scratch Ticket Claim Period. All Scratch Ticket prizes must be claimed within 180 days following the end of the Scratch Ticket Game or within the applicable time period for certain eligible military personnel as set forth in Texas Government Code Any rights to a prize that is not claimed within that period, and in the manner specified in these Game Procedures and on the back of each Scratch Ticket, shall be forfeited. 2.8 Disclaimer. The number of prizes in a game is approximate based on the number of Scratch Tickets ordered. The number of actual prizes available in a game may vary based on number of Scratch Tickets manufactured, testing, distribution, sales and number of prizes claimed. A Scratch Ticket Game may continue to be sold even when all the top prizes have been claimed. 3.0 Scratch Ticket Ownership. A. Until such time as a signature is placed upon the back portion of a Scratch Ticket in the space designated, a Scratch Ticket shall be owned by the physical possessor of said Scratch Ticket. When a signature is placed on the back of the Scratch Ticket in the space designated, the player whose signature appears in that area shall be the owner of the Scratch Ticket and shall be entitled to any prize attributable thereto. Notwithstanding any name or names submitted on a claim form, the Executive Director shall make payment to the player whose signature appears on the back of the Scratch Ticket in the space designated. If more than one name appears on the back of the Scratch Ticket, the Executive Director will require that one of those players whose name appears thereon be designated by such players to receive payment. B. The Texas Lottery shall not be responsible for lost or stolen Scratch Tickets and shall not be required to pay on a lost or stolen Scratch Ticket. 4.0 Number and Value of Scratch Ticket Prizes. There will be approximately 6,000,000 Scratch Tickets in Scratch Ticket Game No The approximate number and value of prizes in the game are as follows: IN ADDITION November 10, TexReg 6411

166 A. The actual number of Scratch Tickets in the game may be increased or decreased at the sole discretion of the Texas Lottery Commission. 5.0 End of the Scratch Ticket Game. The Executive Director may, at any time, announce a closing date (end date) for the Scratch Ticket Game No without advance notice, at which point no further Scratch Tickets in that game may be sold. The determination of the closing date and reasons for closing will be made in accordance with the Scratch Ticket closing procedures and the Instant Game Rules. See 16 TAC (j). 6.0 Governing Law. In purchasing a Scratch Ticket, the player agrees to comply with, and abide by, these Game Procedures for Scratch Ticket Game No. 2075, the State Lottery Act (Texas Government Code, Chapter 466), applicable rules adopted by the Texas Lottery pursuant to the State Lottery Act and referenced in 16 TAC, Chapter 401, and all final decisions of the Executive Director. TRD Bob Biard General Counsel Texas Lottery Commission Filed: October 31, 2017 North Central Texas Council of Governments Request for Proposals for Midlothian - Waxahachie Regional Trail Preliminary Engineering Study The North Central Texas Council of Governments (NCTCOG) is seeking consultant assistance to prepare a design development schematic and environmental summary for a Regional Veloweb shared-use path (trail) facility in Ellis County, Texas, approximately 11 miles in length generally along Waxahachie Creek and the Union Pacific Railroad from the existing Waxahachie city trail in Getzendaner Park east of IH35E to near Midlothian Parkway at Hawkins Springs Park in Midlothian. Proposals must be received no later than 5:00 p.m. Central Time, on Friday, December 22, 2017, to Patricia Rohmer, P.E., Project Engineer, North Central Texas Council of Governments, 616 Six Flags Drive, Arlington, Texas The full RFP, including selection criteria and other desired elements will be available at by the close of business on Friday, November 10, NCTCOG encourages participation by disadvantaged business enterprises and does not discriminate on the basis of age, race, color, religion, sex, national origin, or disability. TRD R. Michael Eastland Executive Director North Central Texas Council of Governments Filed: November 1, 2017 Public Utility Commission of Texas Notice of Application for Sale, Transfer, or Merger Notice is given to the public of an application filed with the Public Utility Commission of Texas (commission) on October 27, 2017, under the Public Utility Regulatory Act, Tex. Util. Code Ann and Docket Style and Number: Application of Flat Top Holdings, LLC, for Approval Under of the Public Utility Regulatory Act, Docket Number The Application: On October 27, 2017, Flat Top Holdings, LLC, filed an application for approval of the conveyance of certain passive equity interests in Flat Top to MidAmerican Wind Tax Equity Holdings, LLC, 42 TexReg 6412 November 10, 2017 Texas Register

167 a Delaware limited liability company, a wholly owned subsidiary of Berkshire Hathaway Energy Company, an Iowa corporation, and Citicorp North America, Inc., a Delaware corporation, an indirect, wholly owned subsidiary of Citigroup, Inc., (the investors). Following the proposed transaction, the combined generation owned and controlled by Flat Top, investors and their affiliates and will equal approximately 1,850.0 MW, or approximately 1.99% of the installed capacity in ER- COT or capable delivery into ERCOT. Persons wishing to intervene or comment on the action sought should contact the commission as soon as possible as an intervention deadline will be imposed. A comment or request to intervene should be mailed to P.O. Box 13326, Austin, Texas , or by phone at (512) or toll-free at (888) Hearing and speech-impaired individuals with text telephone (TTY) may contact the commission through Relay Texas by dialing All comments should reference Docket Number TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: November 1, 2017 Notice of Application to Amend a Sewer Certificate of Convenience and Necessity Notice is given to the public of the filing with the Public Utility Commission of Texas on October 25, 2017, of an application to amend a sewer certificate of convenience and necessity (CCN) in Guadalupe County. Docket Style and Number: Application of Guadalupe-Blanco River Authority to Amend a Sewer Certificate of Convenience and Necessity in Guadalupe County, Docket Number The Application: Guadalupe-Blanco River Authority filed an application to amend its sewer certificate of convenience and necessity number in Guadalupe County. The service area being requested includes an area totaling approximately 7,345 acres, with no current customers. Persons wishing to intervene or comment on the action sought should contact the commission by mail at P. O. Box 13326, Austin, Texas , or by phone at (512) or toll-free at (888) A deadline for intervention in this proceeding will be established. Hearing and speech-impaired individuals with text telephone (TTY) may contact the commission through Relay Texas by dialing All comments should reference Docket Number TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: October 27, 2017 Notice of Application to Amend Water and Sewer Certificates of Convenience and Necessity Notice is given to the public of the filing with the Public Utility Commission of Texas on October 27, 2017, of an application to amend water and sewer certificates of convenience and necessity (CCN) in Montgomery County. Docket Style and Number: Application of C&R Water Supply, Inc. to Amend its Water and Sewer Certificates of Convenience and Necessity in Montgomery County, Docket Number The Application: C&R Water Supply, Inc. filed an application to amend water certificate of convenience and necessity (CCN) number and sewer CCN number in Montgomery County. The service areas being requested comprise a acre tract and a acre tract totaling approximately acres and 9 current customers. Persons wishing to intervene or comment on the action sought should contact the commission by mail at P.O. Box 13326, Austin, Texas , or by phone at (512) or toll-free at (888) A deadline for intervention in this proceeding will be established. Hearing and speech-impaired individuals with text telephone (TTY) may contact the commission through Relay Texas by dialing All comments should reference Docket Number TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: October 30, 2017 Notice of Petition for Amendment to a Water Certificate of Convenience and Necessity by Expedited Release Notice is given to the public of the filing with the Public Utility Commission of Texas (commission) on September 22, 2017, of a petition to amend a water certificate of convenience and necessity (CCN) by expedited release in Denton County. Docket Style and Number: Petition of Mike Hopkins, Executor of the Estate of Herman H. Hopkins to Amend the City of Denton's Certificate of Convenience and Necessity in Denton County by Expedited Release, Docket Number The Petition: A petition was filed by Mike Hopkins, as executor of the estate of Herman H. Hopkins, for expedited release of acres from City of Denton's water certificate of convenience and necessity No in Denton County under Texas Water Code (a-5) and 16 Texas Administrative Code (l). Persons wishing to comment on the action sought should contact the commission no later than November 22, 2017, by mail at P.O. Box 13326, Austin, Texas , or by phone at (512) or toll-free at (888) Hearing and speech-impaired individuals with text telephone (TTY) may contact the commission through Relay Texas by dialing All comments should reference Docket Number TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: October 26, 2017 Request for Comment Commission staff requests interested parties provide written comment in response to the questions listed below. As discussed at the October 26, 2017 open meeting, transmission cost allocation and rate design, the assignment of interconnection costs, and the "loads in SCED" proposal should not be referenced in comments. These issues will be considered in separate projects. IN ADDITION November 10, TexReg 6413

168 1. What market design reforms, if any, are necessary to support efficient investment and retirement decisions in the Electric Reliability Council of Texas (ERCOT) region? 2. Do wholesale electricity prices in ERCOT fully reflect the value of supply during normal conditions? During shortage conditions? If not, what changes should be made? 3. Are the reliability contributions of units subject to operator-initiated commitment being undervalued due to mitigation or for any other reason? Are the current pricing rules sufficient to control for the locational effect of reliability deployments? If the current pricing rules are not sufficient, what changes should be made? 4. Are out-of-market payments for renewable generation interfering with competitive outcomes in ERCOT's wholesale electricity market? If so, please describe this effect and provide any relevant analysis. How should any interference be corrected, if at all? 5. Given recent retirement announcements, should the commission defer certain changes to the market design to observe market dynamics over summer 2018 or longer? 6. Please comment on the appropriate allocation of the excess revenues collected under marginal loss pricing. How should this surplus be distributed and why? 7. Please provide any other comment regarding the merits of the specific proposals set forth in the FTI Consulting Report or in the written comments filed by the Independent Market Monitor or other parties in this project. Interested parties may file comments by submitting 16 copies to the commission's filing clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 13326, Austin, Texas Comments may be delivered in person to the commission's Central Records office, located on the 8th floor of the William B. Travis Building at 1701 North Congress Avenue. Comments longer than ten pages should also be filed via the commission's electronic filer at Initial comments are due by December 1, Reply comments are due by December 22, All responses should reference Project No Please contact Julia Harvey at (512) or with questions regarding this notice. TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: October 27, 2017 Texas Department of Transportation Public Hearing Notice - Statewide Transportation Improvement Program The Texas Department of Transportation (department) will hold a public hearing on Monday, November 27, 2017, at 10:00 a.m. at 200 East Riverside Drive, Second Floor, Room 2B1 in Austin, Texas to receive public comments on the November 2017 Quarterly Revisions to the Statewide Transportation Improvement Program (STIP) for FY The STIP reflects the federally funded transportation projects in the FY Transportation Improvement Programs (TIPs) for each Metropolitan Planning Organization (MPO) in the state. The STIP includes both state and federally funded projects for the nonattainment areas of Dallas-Fort Worth, El Paso, and Houston. The STIP also contains information on federally funded projects in rural areas that are not included in any MPO area, and other statewide programs as listed. Title 23, United States Code, 134 and 135 require each designated MPO and the state, respectively, to develop a TIP and STIP as a condition to securing federal funds for transportation projects under Title 23 or the Federal Transit Act (49 USC 5301, et seq.). Section 134 requires an MPO to develop its TIP in cooperation with the state and affected public transit operators and to provide an opportunity for interested parties to participate in the development of the program. Section 135 requires the state to develop a STIP for all areas of the state in cooperation with the designated MPOs and, with respect to non-metropolitan areas, in consultation with affected local officials, and further requires an opportunity for participation by interested parties as well as approval by the Governor or the Governor's designee. A copy of the proposed November 2017 Quarterly Revisions to the FY STIP will be available for review, at the time the notice of hearing is published, at each of the department's district offices, at the department's Transportation Planning and Programming Division offices located in Building 118, Second Floor, 118 East Riverside Drive, Austin, Texas, or (512) , and on the department's website at: Persons wishing to speak at the hearing may register in advance by notifying Lori Morel, Transportation Planning and Programming Division, at (512) not later than Wednesday, November 22, 2017, or they may register at the hearing location beginning at 9:00 a.m. on the day of the hearing. Speakers will be taken in the order registered. Any interested person may appear and offer comments or testimony, either orally or in writing; however, questioning of witnesses will be reserved exclusively to the presiding authority as may be necessary to ensure a complete record. While any persons with pertinent comments or testimony will be granted an opportunity to present them during the course of the hearing, the presiding authority reserves the right to restrict testimony in terms of time or repetitive content. Groups, organizations, or associations should be represented by only one speaker. Speakers are requested to refrain from repeating previously presented testimony. Persons with disabilities who have special communication or accommodation needs or who plan to attend the hearing may contact the Transportation Planning and Programming Division, at 118 East Riverside Drive, Austin, Texas , (512) Requests should be made no later than Wednesday, November 22, Every reasonable effort will be made to accommodate the needs. Interested parties who are unable to attend the hearing may submit comments regarding the proposed November 2017 Quarterly Revisions to the FY STIP to Peter Smith, P.E., Director of Transportation Planning and Programming, P.O. Box , Austin, Texas In order to be considered, all written comments must be received at the Transportation Planning and Programming office by 4:00 p.m. on Monday, December 11, TRD Joanne Wright Deputy General Counsel Texas Department of Transportation Filed: October 30, 2017 Public Hearing Notice - Unified Transportation Program The Texas Department of Transportation (department) will hold a public hearing on Thursday, November 30, 2017, at 10:00 a.m. at 118 East Riverside Drive, First Floor ENV Conference Room, in Austin, Texas to receive public comments on the proposed updates to the 2018 Unified Transportation Program (UTP). 42 TexReg 6414 November 10, 2017 Texas Register

169 The UTP is a 10-year program that guides the development and authorizes construction of transportation projects and projects involving aviation, public transportation, and the state's waterways and coastal waters. The Texas Transportation Commission has adopted rules located in Title 43, Texas Administrative Code, Chapter 16, governing the planning and development of transportation projects, which include guidance regarding public involvement related to adoption of the UTP and approval of any updates to the program. Information regarding the proposed updates to the 2018 UTP will be available at each of the department's district offices, at the department's Transportation Planning and Programming Division offices located in Building 118, Second Floor, 118 East Riverside Drive, Austin, Texas, or (512) , and on the department's website at: Persons wishing to speak at the hearing may register in advance by notifying the Transportation Planning and Programming Division, at (512) not later than Wednesday, November 29, 2017, or they may register at the hearing location beginning at 9:00 a.m. on the day of the hearing. Speakers will be taken in the order registered. Any interested person may appear and offer comments or testimony, either orally or in writing; however, questioning of witnesses will be reserved exclusively to the presiding authority as may be necessary to ensure a complete record. While any persons with pertinent comments or testimony will be granted an opportunity to present them during the course of the hearing, the presiding authority reserves the right to restrict testimony in terms of time or repetitive content. Groups, organizations, or associations should be represented by only one speaker. Speakers are requested to refrain from repeating previously presented testimony. Persons with disabilities who have special communication or accommodation needs or who plan to attend the hearing may contact the Transportation Planning and Programming Division, at 118 East Riverside Drive Austin, Texas , (512) Requests should be made no later than three days prior to the hearing. Every reasonable effort will be made to accommodate the needs. Interested parties who are unable to attend the hearing may submit comments regarding the updates to the 2018 UTP to Peter Smith, Director of the Transportation Planning and Programming Division, P.O. Box , Austin, Texas Interested parties may also submit comments regarding the updates to the 2018 UTP by phone at (800) In order to be considered, all comments must be received at the Transportation Planning and Programming office by 4:00 p.m. on December 11, TRD Joanne Wright Deputy General Counsel Texas Department of Transportation Filed: October 27, 2017 Request for Proposals - Traffic Safety Program In accordance with 43 TAC et seq., the Texas Department of Transportation (TxDOT) is requesting project proposals to support the targets and strategies of its traffic safety program to reduce the number of motor vehicle related crashes, injuries, and fatalities in Texas. These targets and strategies form the basis for the Federal Fiscal Year 2019 (FY 2019) Texas Highway Safety Plan (HSP). Authority and responsibility for funding of the traffic safety grant program derives from the National Highway Safety Act of 1966 (23 USC 401 et seq.,), and the Texas Traffic Safety Act of 1967 (Transportation Code, Chapter 723). The Traffic Safety Section (TRF-TS) is an integral part of TxDOT and works through 25 districts for local projects. The program is administered at the state level by TxDOT's Traffic Operations Division (TRF). The executive director of TxDOT is the designated Governor's Highway Safety Representative. The following is information related to the FY 2019 General Traffic Safety Grants-Request for Proposals (RFP). Please review the full FY 2019 RFP located online at: This request for proposals does not include solicitations for Selective Traffic Enforcement Program (STEP) proposals. Information regarding STEP proposals for FY 2019 can be found at: and FY 2019 STEP proposals will be submitted under a separate process. General Proposals for highway safety funding are due to the TRF-TS no later than 5:00 p.m. CST, January 11, All questions regarding the development of proposals must be submitted by sending an to: TRF_RFP@txdot.gov by 5:00 p.m. CST, on December 1, A list of the questions with answers (Q&A document) will be posted at: by 5:00 p.m. CST, on December 8, A webinar on general proposal submissions via the Traffic Safety egrants system will be hosted by the TRF-TS Austin headquarters staff. The webinar will be conducted on Friday, November 17, 2017, from 9:00 a.m. CST to 12:00 p.m. CST. For access information please go to The Program Needs Section of the RFP includes a Performance Measures chart which outlines the targets, strategies, and performance measures for each of the Traffic Safety Program Areas. TRF-TS is seeking proposals in all program areas, but is particularly interested in proposals which address the specific program needs listed in the High Priority Program Needs subsection of the Program Needs Section of the RFP. The proposals must be completed using egrants, which can be found by going to TRD Joanne Wright Deputy General Counsel Texas Department of Transportation Filed: October 27, 2017 Texas Water Development Board Request for Applications for Fiscal Year 2018 Agricultural Water Conservation Grants The Texas Water Development Board (TWDB) solicits a request for applications for Fiscal Year 2018 Agricultural Water Conservation Grants. The total amount of the grants to be awarded under this request for applications by the TWDB shall not exceed $600,000 from the Agricultural Water Conservation Fund. The rules governing the Agricultural Water Conservation Fund (31 Texas Administrative Code, Chapter 367) and application instructions are available upon request from the TWDB. Summary of the Request for Applications Solicitation Date (Opening): Date published in the Texas Register Due Date (Closing): 12:00 p.m., Wednesday, February 14, 2018 Anticipated Award Date: May 2018 Estimated Total Funding: up to $600,000 total IN ADDITION November 10, TexReg 6415

170 Eligible Grant Amount: up to $150,000 per project in categories 1, 2, and 3; up to $100,000 in category 4, subject to Board approval Eligible applicants: state agencies and political subdivisions (as defined by 31 Texas Administrative Code, Chapter 367) Contact: Cameron Turner, Agricultural Water Conservation, Texas Water Development Board, P.O. Box 13231, Austin, Texas , Phone: (512) , Agricultural Water Conservation Grant Categories Applications should be consistent with the format provided in the Agricultural Water Conservation Grant Application Instructions document. Please contact the TWDB if you intend to apply. Applications should be in response to the following grant categories. 1. Equipment cost share and technology transfer (Up to $150,000 per selected project; minimum 50 percent local match requirement) Funding is available for the purchase of agricultural water conservation equipment designed to monitor irrigation water use, implement irrigation scheduling, and/or improve upon irrigation efficiency. Examples of eligible equipment may include, but are not limited to, soil moisture monitoring devices, remote management of irrigation systems, telemetry, supervisory control and data acquisition, weather stations, and metering equipment. Funding recipients should submit annual reports with irrigation water use data and an estimate of water savings for a period of five years following installation of the equipment. 2. Demonstrations of innovative and alternative production systems (Up to $150,000 per selected project; minimum 50 percent local match requirement) Funding is available in this category for projects involving demonstrations of agricultural water conservation best management practices, innovative technologies, and alternative production systems. Potential types of projects might include hydroponic, aquaponic, greenhouse, or high-tunnel production systems. Projects should consist of field day demonstrations, research, and education activities to promote adoption of these advanced water conservation technologies by agricultural producers. Additional details and the exact scope of the study will be negotiated with the selected applicant(s). Funding recipients must provide quarterly progress reports and a comprehensive final report upon project completion. 3. Planning and design for irrigation system improvements (Up to $150,000 per selected project; minimum 50 percent local match requirement) Funding is available in this category for planning and design of irrigation system improvements. Potential projects might include development of plans, engineering designs, and environmental assessments for irrigation conveyance system improvement projects. Additional details and the exact scope of the study will be negotiated with the selected applicant(s). Funding recipients must report progress on a quarterly basis and provide a draft and final report upon completion of the project. 4. Feasibility study of irrigating with produced water (Up to $100,000 per selected project; no minimum local match requirement) Funding is available in this category to determine the feasibility of irrigating with produced water from the oil and gas sector. Projects should identify any legal requirements, permitting constraints, barriers to entry, and end user needs and include an analysis of the cost associated with using produced water for agricultural irrigation purposes. Projects may identify or involve a variety of potential end users but should specifically identify the potential for conserving freshwater for irrigation of agricultural products. Priority consideration may be given to applicants with established technologies and experience in the industry. Additional details and the exact scope of the study will be negotiated with the selected applicant(s). Funding recipients must report progress on a quarterly basis and provide a draft and final report upon completion of the project. Grant Amount Through this announcement, the TWDB has up to $600,000 available from the Agricultural Water Conservation Fund for Fiscal Year 2018 agricultural water conservation grants. The TWDB awards these funds through a statewide competitive grants process. The TWDB evaluates all proposals based upon the specific criteria set forth in this solicitation and application instructions. Unless otherwise specified in the individual grant category, eligible expenses typically include the cost of the capital equipment, materials, labor, preparation, installation, or administration directly associated with implementing and completing a conservation program or project. Overhead or indirect costs are not allowed as an eligible expense for reimbursement through the TWDB agricultural water conservation grants. Application Criteria and Selection Process Prior to technical review, each application will be screened for completeness and compliance with the provisions of this notice. Incomplete applications and those that do not meet the provisions of this notice may be eliminated from competition. Applications meeting the provisions of this notice will be scored by a technical review panel. 31 TAC and require that in reviewing an application for an agricultural water conservation grant, the TWDB shall consider the following administrative and technical criteria: commitment of the applicant to agricultural water conservation; benefits that will be gained by making the grant; degree to which the applicant has used other available resources to finance the use for which the application is being made; and the willingness and ability of the applicant to raise revenue and provide matching funds. Prior to approving a grant, the TWDB must find that the grant funds will supplement rather than replace money of the applicant and serve the public interest. The TWDB shall include a finding that the grant will assist in the implementation of a water conservation water management strategy identified in the most recent applicable approved regional water plan or state water plan and further water conservation in the state. The technical review panel will evaluate the applications using the following criteria: sound and practical approach for implementing project as per the Request for Applications guidelines; clearly identified tasks, products, and reporting timelines; staff with the technical expertise needed to carry out the project; and proposed costs estimate (budget) that are reasonable and adequately justified. Priority consideration may be given to projects that promote the adoption of best management practices and water saving innovations; have higher levels of local match; and/or, include educational components directed at agricultural producers. All applicants should establish a metric for measuring and reporting water savings or improvements in water use efficiency as a direct result of project funding. Funding and Partial Funding Provisions The TWDB reserves the right to reject all proposals and make no awards under this announcement. In addition, the TWDB reserves 42 TexReg 6416 November 10, 2017 Texas Register

171 the right to partially fund proposals by funding discrete activities, portions, or phases of a proposed project. TWDB also reserves the right to award funding in an amount greater than the stated limit per project. If the TWDB decides to partially fund a proposal, it will do so in a manner that does not prejudice any applicants or affect the basis upon which the proposal, or portion thereof, was evaluated or selected for award, and that maintains the integrity of the competition and the evaluation/selection process. The TWDB reserves the right to reject parts of, any, or all applications if staff determines that the application(s) does not adequately meet the required criteria or if the funding available is less than the requested funding. The TWDB retains the right to not award contract funds. Negotiations with Selected Applicants The applicable scope of work, deliverables, tasks timelines, and contract amount will be negotiated after the TWDB selects the most qualified applicants. Failure to arrive at mutually agreeable terms of a contract with the most qualified applicant shall constitute a rejection of the Board's offer and may result in subsequent negotiations with the next most qualified applicant. Deadline for Submission of Applications Applicants should submit four double-sided, double-spaced paper copies and one digital copy of completed applications to the TWDB on or before 12:00 p.m. on Wednesday, February 14, Applications can be directed either in person to Phyllis Thomas, Texas Water Development Board, Stephen F. Austin Building, Room 640E, 1700 North Congress Avenue, Austin, Texas 78701; or by mail to Phyllis Thomas, Texas Water Development Board, P.O. Box Capitol Station, Austin, Texas Application instructions are available upon request from Cameron Turner, (512) , cameron.turner@twdb.texas.gov, or online at TRD Todd Chenoweth General Counsel Texas Water Development Board Filed: November 1, 2017 IN ADDITION November 10, TexReg 6417

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173 How to Use the Texas Register Information Available: The sections of the Texas Register represent various facets of state government. Documents contained within them include: Governor - Appointments, executive orders, and proclamations. Attorney General - summaries of requests for opinions, opinions, and open records decisions. Texas Ethics Commission - summaries of requests for opinions and opinions. Emergency Rules - sections adopted by state agencies on an emergency basis. Proposed Rules - sections proposed for adoption. Withdrawn Rules - sections withdrawn by state agencies from consideration for adoption, or automatically withdrawn by the Texas Register six months after the proposal publication date. Adopted Rules - sections adopted following public comment period. Texas Department of Insurance Exempt Filings - notices of actions taken by the Texas Department of Insurance pursuant to Chapter 5, Subchapter L of the Insurance Code. Review of Agency Rules - notices of state agency rules review. Tables and Graphics - graphic material from the proposed, emergency and adopted sections. Transferred Rules - notice that the Legislature has transferred rules within the Texas Administrative Code from one state agency to another, or directed the Secretary of State to remove the rules of an abolished agency. In Addition - miscellaneous information required to be published by statute or provided as a public service. Specific explanation on the contents of each section can be found on the beginning page of the section. The division also publishes cumulative quarterly and annual indexes to aid in researching material published. How to Cite: Material published in the Texas Register is referenced by citing the volume in which the document appears, the words TexReg and the beginning page number on which that document was published. For example, a document published on page 2402 of Volume 40 (2015) is cited as follows: 40 TexReg In order that readers may cite material more easily, page numbers are now written as citations. Example: on page 2 in the lower-left hand corner of the page, would be written 40 TexReg 2 issue date, while on the opposite page, page 3, in the lower right-hand corner, would be written issue date 40 TexReg 3. How to Research: The public is invited to research rules and information of interest between 8 a.m. and 5 p.m. weekdays at the Texas Register office, James Earl Rudder Building, 1019 Brazos, Austin. Material can be found using Texas Register indexes, the Texas Administrative Code section numbers, or TRD number. Both the Texas Register and the Texas Administrative Code are available online at: The Texas Register is available in an.html version as well as a.pdf version through the internet. For website information, call the Texas Register at (512) Texas Administrative Code The Texas Administrative Code (TAC) is the compilation of all final state agency rules published in the Texas Register. Following its effective date, a rule is entered into the Texas Administrative Code. Emergency rules, which may be adopted by an agency on an interim basis, are not codified within the TAC. The TAC volumes are arranged into Titles and Parts (using Arabic numerals). The Titles are broad subject categories into which the agencies are grouped as a matter of convenience. Each Part represents an individual state agency. The complete TAC is available through the Secretary of State s website at The Titles of the TAC, and their respective Title numbers are: 1. Administration 4. Agriculture 7. Banking and Securities 10. Community Development 13. Cultural Resources 16. Economic Regulation 19. Education 22. Examining Boards 25. Health Services 28. Insurance 30. Environmental Quality 31. Natural Resources and Conservation 34. Public Finance 37. Public Safety and Corrections 40. Social Services and Assistance 43. Transportation How to Cite: Under the TAC scheme, each section is designated by a TAC number. For example in the citation 1 TAC 27.15: 1 indicates the title under which the agency appears in the Texas Administrative Code; TAC stands for the Texas Administrative Code; is the section number of the rule (27 indicates that the section is under Chapter 27 of Title 1; 15 represents the individual section within the chapter). How to Update: To find out if a rule has changed since the publication of the current supplement to the Texas Administrative Code, please look at the Index of Rules. The Index of Rules is published cumulatively in the blue-cover quarterly indexes to the Texas Register. If a rule has changed during the time period covered by the table, the rule s TAC number will be printed with the Texas Register page number and a notation indicating the type of filing (emergency, proposed, withdrawn, or adopted) as shown in the following example. TITLE 1. ADMINISTRATION Part 4. Office of the Secretary of State Chapter 91. Texas Register 1 TAC (P)

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