Volume 43 Number 1 January 5, 2018 Pages 1-136

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1 Volume 43 Number 1 January 5, 2018 Pages 1-136

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 ATTORNEY GENERAL Opinions...5 PROPOSED RULES TEXAS RACING COMMISSION GENERAL PROVISIONS 16 TAC RACETRACK LICENSES AND OPERATIONS 16 TAC PARI-MUTUEL WAGERING 16 TAC TEXAS EDUCATION AGENCY ASSESSMENT 19 TAC , STATE BOARD FOR EDUCATOR CERTIFICATION PROVISIONS FOR EDUCATOR PREPARATION CANDIDATES 19 TAC 227.1, 227.5, , , , TAC PROFESSIONAL EDUCATOR PREPARATION AND CERTIFICATION 19 TAC GENERAL CERTIFICATION PROVISIONS 19 TAC CLASSROOM CERTIFICATION STANDARDS 19 TAC , TAC , TEXAS STATE BOARD OF EXAMINERS OF PSYCHOLOGISTS COMPLAINTS AND ENFORCEMENT 22 TAC TEXAS DEPARTMENT OF PUBLIC SAFETY PRIVATE SECURITY 37 TAC TAC , TAC TAC WITHDRAWN RULES TEXAS DEPARTMENT OF LICENSING AND REGULATION VEHICLE TOWING AND BOOTING 16 TAC TAC ADOPTED RULES TEXAS DEPARTMENT OF AGRICULTURE PESTICIDES 4 TAC TAC , 7.131, TAC , 7.153, TAC TAC 7.192, TAC TAC TAC , TAC TAC TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS UNIFORM MULTIFAMILY RULES 10 TAC PUBLIC UTILITY COMMISSION OF TEXAS SUBSTANTIVE RULES APPLICABLE TO WATER AND SEWER SERVICE PROVIDERS 16 TAC TEXAS DEPARTMENT OF LICENSING AND REGULATION TEMPORARY COMMON WORKER EMPLOYERS 16 TAC 64.1, 64.10, 64.20, 64.70, 64.72, BOILERS 16 TAC 65.1, TAC TAC TAC TAC TAC TAC 65.63, TAC TAC TAC TAC , , WARRANTORS OF VEHICLE PROTECTION PRODUCTS TABLE OF CONTENTS 43 TexReg 3

4 16 TAC 71.1, 71.10, 71.20, 71.22, 71.70, 71.80, ELECTRICIANS 16 TAC BARBERS 16 TAC 82.10, 82.20, 82.22, 82.23, 82.29, 82.40, 82.50, 82.52, 82.54, , 82.78, 82.80, , TAC COSMETOLOGISTS 16 TAC 83.10, , 83.29, 83.31, 83.40, , 83.54, , 83.78, 83.80, , TAC VEHICLE STORAGE FACILITIES 16 TAC , , , , , , , , , , TAC , VEHICLE TOWING AND BOOTING 16 TAC 86.10, , , , TAC , TEXAS EDUCATION AGENCY HEALTH AND SAFETY 19 TAC TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM CREDITABLE SERVICE 34 TAC TEXAS DEPARTMENT OF PUBLIC SAFETY COMMERCIAL VEHICLE REGULATIONS AND ENFORCEMENT PROCEDURES 37 TAC TAC TAC RULE REVIEW Proposed Rule Reviews Texas Racing Commission...97 State Board for Educator Certification...97 Adopted Rule Reviews Texas Racing Commission...98 TABLES AND GRAPHICS IN ADDITION Comptroller of Public Accounts Notice to Persons Interested in Energy Efficiency Building Codes for Non-Single Family Residential, Commercial, and Industrial Construction Texas Council for Developmental Disabilities Request for Proposals: Leadership and Advocacy Training by Local Self-Advocacy Organizations Request for Proposals: TCDD Public Policy Fellows Commission on State Emergency Communications Public Notice of Workshop Next Generation Texas Commission on Environmental Quality Agreed Orders Correction of Error - Notice of Rate Change to the Low-Level Radioactive Waste Maximum Disposal Rates and Opportunity for a Contested Case Hearing Notice of Intent to Perform Removal Action at the Cass County Treating Company State Superfund Site, Linden, Cass County, Texas Notice of Public Comment Period and Public Meetings Concerning Proposed Revisions to the Texas Emissions Reduction Plan Guidelines for Emissions Reduction Incentive Grants, RG-388 and the TERP Guidelines for the Drayage Truck Incentive Program, RG Notice of Water Quality Application Notice of Water Rights Application Texas Facilities Commission Request for Proposals # Texas Health and Human Services Commission Notice of Public Hearing on Proposed Medicaid Payment Rates for the 2018 Annual Healthcare Common Procedure Code System for Diagnostic and Radiology Services Texas Higher Education Coordinating Board Request for Qualifications - Bond and Student Loan Program Counsel Texas Department of Insurance Notice of Public Hearing Texas Lottery Commission Scratch Ticket Game Number 2024 "Wild 9's" Scratch Ticket Game Number 2067 "Stacks of Cash" Scratch Ticket Game Number 2078 "Weekly Grand" Public Utility Commission of Texas Notice of Application for a Service Provider Certificate of Operating Authority Notice of Application for Sale, Transfer, or Merger Texas Water Development Board Request for Application for Flood Protection Grants TABLE OF CONTENTS 43 TexReg 4

5 Opinions Opinion No. KP-0176 The Honorable Dan Patrick Lieutenant Governor of Texas Post Office Box Austin, Texas Re: Whether handgun license holders may carry handguns on the premises of a church that does not post signs excluding handguns and whether churches are exempt from the private security fees charged to private institutions (RQ-0196-KP) S U M M A R Y Unless a church provides effective oral or written notice prohibiting the carrying of handguns on its property, a license holder may carry a handgun on church property as the law otherwise allows. The regulations of the Private Security Act, including the fees required thereunder, do not apply to Texas churches when providing volunteer security services consistent with the requirements of section of the Occupations Code. 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: December 22, 2017 ATTORNEY GENERAL January 5, TexReg 5

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7 TITLE 16. ECONOMIC REGULATION PART 8. TEXAS RACING COMMISSION CHAPTER 303. GENERAL PROVISIONS SUBCHAPTER D. TEXAS BRED INCENTIVE PROGRAMS DIVISION 2. PROGRAM FOR HORSES 16 TAC The Texas Racing Commission proposes amendments to 16 TAC , Quarter Horse Rules. The amendments would change from August 15 to December 31 the date a Texas-bred Quarter Horse broodmare must return to Texas in order to keep its Texas-bred accreditation. This would allow such broodmares to leave the state but still maintain accreditation as long as they return to Texas no later than December 31, allowing them to compete in prestigious races that take place between September and December. FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERN- MENT Chuck Trout, Executive Director, has determined that for the first five-year period the proposed amendments are in effect, there will be no fiscal implications for local or state government as a result of enforcing the amendments. ANTICIPATED PUBLIC BENEFIT AND COST Mr. Trout has determined that for each year of the first five years that the proposed amendments are in effect, the anticipated public benefit will be the ability of accredited Texas-bred Quarter Horse broodmares to race nationally, benefiting Texas owners and breeders as well as the Texas racing industry generally. There is no anticipated economic cost to persons required to comply with the amendments, as the proposed rule is more permissive than the current rule. LOCAL EMPLOYMENT IMPACT STATEMENT Mr. Trout has determined that the proposed amendments will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code GOVERNMENT GROWTH IMPACT STATEMENT For each year of the first five years that the amendments are in effect, the government growth impact is as follows: the amendments do not create or eliminate a government program; the amendments do not create any new employee positions or eliminate any existing employee positions; implementation of the amendments does not require an increase or decrease in future legislative appropriations to the agency; implementation of the amendments will not require an increase or decrease in fees paid to the agency; the amendments do not create a new regulation; the amendments limit an existing regulation by expanding the length of time an accredited Texas-bred Quarter Horse broodmare can be outside of Texas without losing its accreditation; the amendments do not increase or decrease the number of individuals subject to the rule's applicability; and the amendments may positively affect this state's economy by allowing accredited Texas-bred Quarter Horse broodmares to spend longer periods of time in other states, increasing the profile and desirability of Texas-bred Quarter Horses and potentially earning purses for Texas owners and breed awards for Texas breeders. EFFECT ON SMALL AND MICRO-BUSINESSES The proposed amendments will have no adverse economic effect on small or micro-businesses, and, therefore, preparation of an economic impact statement and a regulatory flexibility analysis is not required. IMPACT ON EMPLOYMENT CONDITIONS There are no negative impacts upon employment conditions in this state as a result of the proposed amendments. ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES There will be no adverse effect on rural communities as a result of the proposed amendments. Since the agency has determined that the amendments will have no adverse economic effect on rural communities, preparation of an economic impact statement and a regulatory flexibility analysis, as detailed under Texas Government Code , is not required. EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES The amendments will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by providing greater opportunities for accredited Texas-bred Quarter Horse broodmares to race outside of Texas. PUBLIC COMMENTS All comments or questions regarding the proposed amendments may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas , telephone (512) , or fax (512) STATUTORY AUTHORITY The amendments are proposed under Texas Revised Civil Statutes Annotated, Article 179e, 3.02, which authorizes the PROPOSED RULES January 5, TexReg 7

8 Commission to adopt rules to administer the Act and to make rules relating exclusively to horse racing. The amendments implement Texas Revised Civil Statutes Annotated, Article 179e Quarter Horse Rules. (a) (No change.) (b) Eligibility for Accreditation. (1) (No change.) (2) ATB Broodmares. (A) - (C) (No change.) (D) A mare may leave Texas for [breeding, medical, or] racing purposes without losing its accreditation provided the mare returns to Texas each year before December 31 and remains in Texas until foaling. A mare may leave Texas for breeding or medical purposes without losing its accreditation provided the mare returns to Texas each year before August 15 and remains in Texas until foaling. [August 15.] All foals of an ATB broodmare are eligible to be accredited as ATB horses provided the mare is bred to an ATB stallion at least every other breeding. TQHA may require documentation regarding breeding activity to prove eligibility for accreditation. (3) (No change.) (c) - (f) (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 December 21, TRD Devon Bijansky General Counsel Texas Racing Commission Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) CHAPTER 309. RACETRACK LICENSES AND OPERATIONS SUBCHAPTER A. RACETRACK LICENSES DIVISION 1. GENERAL PROVISIONS 16 TAC The Texas Racing Commission proposes new 16 TAC , Supplemental Fee. The section would impose a one-time supplemental license fee on the racing associations to pay for an efficiency, economy, and effectiveness audit as requested by the associations. The new section would allocate the cost of the audit equally among the associations and would provide for refunds in the event that the Commission collected more than necessary for the audit. The proposed new rule is necessary to raise revenue to pay for the audit. FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERN- MENT Chuck Trout, Executive Director, has determined that for the first five-year period the rule is in effect, there will be no negative fiscal implications for local or state government as a result of enforcing the new rule. In the event that the audit reveals opportunities for the Commission to improve the efficiency of its operations, there could be cost savings to state government. ANTICIPATED PUBLIC BENEFIT AND COST Mr. Trout has determined that for each year of the first five years that the new section is in effect, the anticipated public benefit will be the ability of the Commission to use the audit results to improve, if needed, the efficiency, economy, and/or effectiveness of the agency's operations. An additional public benefit is the continued existence of the Racing Commission, as the audit (and, consequently, the supplemental fee to fund it) is part of an agreement among nine of the ten licensed racing associations to support the Commission through the payment of fees. The tenth association, while not in support of the full industry agreement, has also expressed support for the audit and the supplemental fee. The only probable economic cost to persons required to comply with the rule is the cost to the racing associations of the audit, which they volunteered to pay for as part of their proposal to address the Commission's funding issues. LOCAL EMPLOYMENT IMPACT STATEMENT Mr. Trout has determined that the proposed rule will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code GOVERNMENT GROWTH IMPACT STATEMENT For each year of the first five years that the new section is in effect, the government growth impact is as follows: the new section does not create or eliminate a government program; the new section does not create any new employee positions or eliminate any existing employee positions; implementation of the rule does not require an increase or decrease in future legislative appropriations to the agency; implementation of the rule will increase the fees paid to the agency by the racetracks on a one-time basis in the first year only; the new section creates a new one-time regulation; the new section does not expand, limit, or repeal any existing regulations; the new section does not increase or decrease the number of individuals subject to the rule's applicability; and the proposed rule positively affects this state's economy by enabling all of the economic activity associated with pari-mutuel racing in Texas to continue. EFFECT ON SMALL AND MICRO-BUSINESSES The new section will have no adverse economic effect on small or micro-businesses, and therefore preparation of an economic impact statement and a regulatory flexibility analysis is not required. IMPACT ON EMPLOYMENT CONDITIONS There are no negative impacts upon employment conditions in this state as a result of the proposed new section. ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES There will be no adverse effect on rural communities as a result of the proposed rules. Since the agency has determined that the proposed rules will have no adverse economic effect on rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code , is not required. EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES 43 TexReg 8 January 5, 2018 Texas Register

9 The new section will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by providing the revenue the agency requires to undergo the audit, potentially revealing opportunities for greater efficiency that will ultimately benefit the racing industry, whose fees support the agency. PUBLIC COMMENTS All comments or questions regarding the proposed new section may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas , telephone (512) , or fax (512) STATUTORY AUTHORITY The new section is proposed under Texas Revised Civil Statutes Annotated, Article 179e, 3.02, which authorizes the Commission to adopt rules to administer the Act, and 5.01, which requires the Commission to set fees in amounts reasonable and necessary to cover the costs of regulating, overseeing, and licensing live and simulcast racing at racetracks, and under 6.18, which authorizes the Commission to prescribe a reasonable annual fee to be paid by each racetrack licensee to pay the costs of administering and enforcing the Act. The new section implements Texas Revised Civil Statutes Annotated, Article 179e Supplemental Fee. (a) Purpose of Fee. The fee in this section is necessary to pay the Commission's costs to procure an independent audit of the economy, efficiency and effectiveness of its operations, as requested by the racing industry, and the fees collected under this section shall only be used for this purpose. (b) Amount of Fee. In addition to the license fees prescribed by 309.8, Racetrack License Fees, a licensed racing association shall pay a supplemental license fee to the Commission in an amount that equals the total cost of the audit, not to exceed $200,000, divided by the number of racing associations in good standing in Texas. (c) The supplemental fee shall be due 15 days after the Commission sends an invoice to the association. (d) Refunds. In the event that the total amount the Commission collects under this section exceeds its actual costs, any amount remaining shall be refunded to paying associations in equal shares not later than December 31, 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 December 21, TRD Devon Bijansky General Counsel Texas Racing Commission Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) CHAPTER 321. PARI-MUTUEL WAGERING SUBCHAPTER C. REGULATION OF LIVE WAGERING DIVISION 2. DISTRIBUTION OF PARI-MUTUEL POOLS 16 TAC The Texas Racing Commission proposes amendments to 16 TAC , Super Hi-Five. The amendments would permit licensed racing associations to offer a unique payout option as a fourth option to the existing super hi-five wager. FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERN- MENT Chuck Trout, Executive Director, has determined that for the first five-year period the amendments are in effect, there will be no fiscal implications for local or state government as a result of enforcing the amendments. ANTICIPATED PUBLIC BENEFIT AND COST Mr. Trout has determined that for each year of the first five years that the proposed amendments are in effect, the anticipated public benefit will be the ability of racing associations to offer an additional wagering option, supporting the industry through additional purse funds and raising tax revenue for the state. There is no anticipated economic cost to persons required to comply with the amendments, as the proposed rule is more permissive than the current rule. LOCAL EMPLOYMENT IMPACT STATEMENT Mr. Trout has determined that the proposed amendments will not affect the local economy, so the agency is not required to prepare a local employment impact statement under Government Code GOVERNMENT GROWTH IMPACT STATEMENT For each year of the first five years that the amendments are in effect, the government growth impact is as follows: the amendments do not create or eliminate a government program; the amendments do not create any new employee positions or eliminate any existing employee positions; implementation of the amendments does not require an increase or decrease in future legislative appropriations to the agency; implementation of the amendments will not require an increase or decrease in fees paid to the agency; the amendments do not create a new regulation; the amendments do not expand or repeal an existing regulation but limit an existing regulation in that they permit an additional option to racing associations offering the Super Hi-Five wager; the amendments do not increase or decrease the number of individuals subject to the rule's applicability; and the amendments do not adversely affect the state's economy but may positively affect the economy. EFFECT ON SMALL AND MICRO-BUSINESSES The amendments will have no adverse economic effect on small or micro-businesses, and therefore preparation of an economic impact statement and a regulatory flexibility analysis is not required. IMPACT ON EMPLOYMENT CONDITIONS There are no negative impacts upon employment conditions in this state as a result of the proposed amendments. ADVERSE ECONOMIC EFFECT ON RURAL COMMUNITIES PROPOSED RULES January 5, TexReg 9

10 There will be no adverse economic effect on rural communities as a result of the proposed amendments. Since the agency has determined that the amendments will have no adverse economic effect on rural communities, preparation of an economic impact statement and a regulatory flexibility analysis, as detailed under Texas Government Code , is not required. EFFECT ON AGRICULTURAL, HORSE, AND GREYHOUND INDUSTRIES The amendments will have a neutral to positive effect on the state's agricultural, horse breeding, horse training, greyhound breeding, and greyhound training industry by supporting the industry through additional purse funds. PUBLIC COMMENTS All comments or questions regarding the proposed amendments may be submitted in writing within 30 days following publication of this notice in the Texas Register to Jean Cook, Assistant to the Executive Director for the Texas Racing Commission, at P.O. Box 12080, Austin, Texas , telephone (512) , or fax (512) STATUTORY AUTHORITY The amendments are proposed under Texas Revised Civil Statutes Annotated, Article 179e, 3.02, which authorizes the Commission to adopt rules to administer the Act. The amendments implement Texas Revised Civil Statutes Annotated, Article 179e Super Hi-Five. (a) (No change.) (b) A person purchasing a super hi-five ticket shall select the five animals that will finish first, second, third, fourth, and fifth in one race. The pool shall be distributed only to the holders of tickets who [that] select the same order of finish as officially posted. (c) If no super hi-five ticket is sold for the winning combination, then the net pool shall be carried over and paid out in the following manner: (1) (No change.) (2) An association can, at its option, offer [announce] a consolation pool[,] equal to 25% of the net pool[, will be offered]. The offering of a consolation pool shall be announced at least 72 hours in advance of the first day upon which a consolation pool will be offered, and shall be publicized. Notice of the consolation pool may be announced, by way of example, via press release, internet, simulcast signal, and on-track announcements. (3) If there are no ticket holders who selected first-place, second-place, third-place, fourth-place, and fifth-place finishers in order and a consolation pool is offered, then a consolation pool shall be established. The consolation pool shall be [equal to 25% of the net pool and] distributed as a single price pool among those ticket holders and paid out as follows: (A) - (E) (No change.) (d) Unique winning ticket option. (1) Unique winning ticket, as used in this subsection, shall be defined as having occurred when there is one and only one winning ticket whose combination finished in correct sequence as the first five betting interests, to be verified by the unique serial number assigned by the totalisator company that issued the winning ticket. In the event that there is more than one winning ticket whose combination finished in correct sequence as the first five betting interests, a unique winning ticket shall be deemed to not have occurred. (2) If an association elects to offer the unique winning ticket option, the net super hi-five pool shall be distributed to winning wagers in the following order of precedence, based on the official order of finish: (A) as a single price pool, including any applicable carry-over, to the holder of a unique winning ticket whose combination finished in correct sequence as the first five betting interests, but if there is no such unique winning ticket, then (B) the net pool shall be divided into two separate pools. The major pool of the net pool shall be paid as a carryover into the next regularly scheduled super hi-five pool. The remaining minor pool shall be paid as a super hi-five consolation pool, which shall be equally divided among those ticket holders who correctly select the first five interests in order, but if there are no such wagers, then (C) the entire net pool shall be carried over into the next regularly scheduled super hi-five pool. (3) The association shall specify the minimum monetary amount of a unique winning ticket wager with prior approval of the executive secretary. (4) Prior to the start of the race meet, the association shall specify the percentages for a major and minor pool with prior approval of the executive secretary. (5) A written request to distribute the super hi-five pool plus any carryover on a specific date and performance may be submitted by the association to the executive secretary for approval. The request must be for a specified date no greater than one year from the date the request is submitted and contain justification for the distribution, an explanation of the benefit to be derived, and the intended date and performance for the distribution. Should the super hi-five net pool and any applicable carryover be designated for distribution on a specified date and performance in which there is no unique winning ticket, the entire pool shall be distributed using the method described in subsection (i) of this section. (6) Unless otherwise stated in writing by the Commission under paragraph (5) of this subsection, on the last super hi-five race on the final day of the meeting, the net pool, including any applicable carryover, shall be distributed using the method described in subsection (i) of this section. (e) [(d)] The minimum number of wagering interests required to offer super hi-five wagering in a race shall be seven actual starters. If scratches cause the number of horses in a race to fall below seven, then the super hi-five pool for that race shall be canceled. (f) [(e)] Super hi-five wagers on races in which wagering has been canceled or the race declared no contest shall be refunded. Any carryover pool added to the net pool of a super hi-five race which is canceled shall carry forward to be added to the next consecutive super hi-five wagering pool. (g) [(f)] If fewer [less] than five animals finish and the race is declared official by the stewards or judges, payout [then pay off] shall be made to ticket holders selecting the finishing animals in order of finish as provided above, disregarding any selections beyond the number of betting interests. (h) [(g)] In the event of a dead heat in any finishing position, the wagers shall be paid as follows: 43 TexReg 10 January 5, 2018 Texas Register

11 (1) all [All] wagers selecting either of the dead-heat positions with the correct non-dead-heat position shall be winners and share in the pool; and (2) payouts [Payouts] will be calculated by splitting the pool equally between each winning combination, then dividing split pools by the number of winning tickets. A dead heat will produce separate and distinct payouts respective to each winning combination. (i) [(h)] If on the final day of a race meeting or on a designated mandatory payout date the pool has not been distributed under subsection (b), [or] (c), or (d) of this section, then the net pool for that performance plus any carryover from previous performances shall be paid out in the following manner: (1) To those who selected first-place, second-place, thirdplace, and fourth-place finishers in order. If there are no such wagers, then (2) To those who selected first-place, second-place, and third-place finishers in order. If there are no such wagers, then (3) To those who selected first-place and second-place finishers in order. If there are no such wagers, then (4) To those who selected the first-place finisher. (j) [(i)] If the final or designated mandatory payoff performance is canceled or the pool has not been distributed under subsection (i) [(h)] of this section, the pool shall be deposited in an interest-bearing account approved by the executive secretary. The pool plus all accrued interest shall then be carried over and added to the super hi-five pari-mutuel pool in the following race meeting on a date and performance designated by the executive secretary. (k) [(j)] If an animal is scratched or declared a nonstarter, no further tickets may be issued designating such animal and all super hi-five tickets previously issued designating such animal shall be refunded and the money deducted from the gross super hi-five pool. (l) [(k)] For purposes of statutory deductions and commissions, the net amount does not include any amounts carried over from any previous super hi-five pool. (m) [(l)] The association may select a distinctive name for the super hi-five, with prior approval of the executive secretary. 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 December 21, TRD Devon Bijansky General Counsel Texas Racing Commission Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) TITLE 19. EDUCATION PART 2. TEXAS EDUCATION AGENCY CHAPTER 101. ASSESSMENT SUBCHAPTER AA. COMMISSIONER'S RULES CONCERNING THE PARTICIPATION OF ENGLISH LANGUAGE LEARNERS IN STATE ASSESSMENTS DIVISION 2. GRADE 10 AND EXIT-LEVEL ASSESSMENTS FOR CERTAIN ENGLISH LANGUAGE LEARNERS 19 TAC , The Texas Education Agency (TEA) proposes repeals of and , concerning exit-level assessments for certain English language learners (ELLs). The proposed repeals would align the commissioner rules with the requirements of Senate Bill (SB) 463 and SB 1005, 85th Texas Legislature, Regular Session, 2017, by removing inapplicable language resulting from the elimination of Texas Assessment of Knowledge and Skills (TAKS). Section , Scope of Rules, identifies students first enrolled in Grade 9 or higher prior to the school year, or first enrolled in Grade 10 or higher in the school year as those to whom the provision applies. These students were required to pass all or certain parts of the TAKS exit-level tests for graduation. Section , English Language Learners at the Exit Level, specifies that ELLs are not eligible for an exemption from TAKS exit-level testing requirements for graduation on the basis of limited English proficiency. However, ELLs who are recent immigrants may be granted a postponement of the administration of the TAKS exit-level assessment under specific circumstances. As a result of amendments to TEC, , based on SB 463 and SB 1005, 85th Texas Legislature, Regular Session, 2017, the TAKS exit-level assessments will no longer be administered beginning with the school year. Recent amendments to 19 TAC and allow former students, who were required to pass the TAKS exit-level assessments for graduation, to earn a high school diploma through alternative options. Thus, the commissioner rules, 19 TAC and , which allow for a postponement of the TAKS exitlevel assessments, are no longer needed and are proposed to be repealed. The proposed repeals would have no procedural and reporting implications. The proposed repeals would have no locally maintained paperwork requirements. FISCAL NOTE. Penny Schwinn, chief deputy commissioner for academics, has determined that for the first five-year period the repeals are in effect, there will be no additional costs for state or local government as a result of enforcing or administering the repeals. There is no effect on local economy for the first five years that the proposed repeals are in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed repeals do not impose a cost on regulated persons and, therefore, are not subject to Texas Government Code, GOVERNMENT GROWTH IMPACT. The TEA has determined that the proposed repeals do have a government growth impact pursuant to Texas Government Code, The proposal would repeal existing regulations. The proposed repeals would align the commissioner rules with the requirements PROPOSED RULES January 5, TexReg 11

12 of SB 463 and SB 1005, 85th Texas Legislature, Regular Session, 2017, by removing inapplicable language resulting from the elimination of TAKS. PUBLIC BENEFIT/COST NOTE. Ms. Schwinn has determined that for each year of the first five years the repeals are in effect the public benefit anticipated as a result of enforcing the repeals would be the prevention of confusion that may result from references to exit-level assessments that are no longer offered. There is no anticipated economic cost to persons who are required to comply with the proposed repeals. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct adverse 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 January 5, 2018, and ends February 5, 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 rules@tea.texas.gov. 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 January 5, STATUTORY AUTHORITY. The repeals are proposed under Texas Education Code (TEC), , as amended by Senate Bill (SB) 463 and SB 1005, 85th Texas Legislature, Regular Session, 2017, which establishes the secondary-level performance required to receive a Texas high school diploma, establishes alternate assessment options for students who entered Grade 9 prior to the school year or Grade 10 or above in the school year, and requires the commissioner to establish satisfactory performance levels on the alternate assessments; and TEC, , which provides the parameters by which a student may be administered an accommodated or alternative assessment instrument or may be granted an exemption from or a postponement of the administration of an assessment instrument for students with limited English proficiency; recent unschooled immigrants; students in a grade for which no assessment in their primary language is available; and unschooled asylees or refugees. CROSS REFERENCE TO STATUTE. The repeals implement Texas Education Code, , as amended by SB 463 and SB 1005, 85th Texas Legislature, Regular Session, 2017, and Scope of Rules English Language Learners at the Exit Level. 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) PART 7. STATE BOARD FOR EDUCATOR CERTIFICATION CHAPTER 227. PROVISIONS FOR EDUCATOR PREPARATION CANDIDATES The State Board for Educator Certification (SBEC) proposes amendments to 227.1, 227.5, , , , , and , concerning provisions for educator preparation candidates. The proposed amendments would implement the statutory requirements of Senate Bill (SB) 1839 and House Bills (HBs) 2039 and 1508, 85th Texas Legislature, Regular Session, The proposed amendments would also implement changes based on stakeholder input and Texas Education Agency (TEA) staff recommendations. The SBEC rules in 19 TAC Chapter 227 are organized as follows: Subchapter A, Admission to Educator Preparation Programs, and Subchapter B, Preliminary Evaluation of Certification Eligibility. These subchapters provide for rules that establish requirements for admission to an EPP and preliminary evaluation of certification eligibility. Following is a description of the proposed amendments General Provisions Language would be amended to incorporate the requirements of the Texas Occupations Code, , , and , as added by HB 1508, 85th Texas Legislature, Regular Session, New subsection (d) would require EPPs to notify applicants and admitted candidates about the potential ineligibility of an individual who had been convicted of an offense for issuance of a certificate upon completion of an EPP, the current SBEC rules regarding the eligibility of a person with a criminal history for a certificate, and their right to request a preliminary criminal history evaluation letter. This letter would provide the applicant or admitted candidate with an evaluation from TEA staff advising of potential ineligibility for educator certification based on the individual's self-reported criminal history. New subsection (e) would require an EPP to refund tuition, application fees, and examination fees paid by an individual if the EPP failed to provide the required notice to an individual who was denied a certificate because the individual was convicted of an offense prior to the EPP providing notice. Based on input from EPP stakeholders, the proposed language would limit the examination fee liability of an EPP to examinations that were required to be passed to meet the admission requirements of the EPP and/or examinations that the EPP approved a candidate to attempt to prevent an EPP from having to refund testing fees from examinations unrelated to the individual's participation in that EPP. New subsection (f) is being proposed to address deadlines in this chapter that cannot be met because of a disaster that results in the governor of Texas declaring a state of disaster. This amendment would allow TEA staff to extend deadlines in this chapter for up to 90 days to accommodate persons in the disaster areas identified by the governor's declaration. 43 TexReg 12 January 5, 2018 Texas Register

13 Definitions Language would be amended to add a definition for undergraduate degree. New paragraph (15) would define undergraduate degree as a bachelor's degree earned from and conferred by an accredited institution of higher education (IHE). This definition would clarify various requirements that require an undergraduate degree and to distinguish between a bachelor's degree and an associate's degree. The rules related to career and technology education certificates that allow a high school diploma or associate's degree for admission to an EPP would not be affected by the addition of this definition Admission Criteria Language would be amended in (a)(3)(B)(ii) and (a)(4)(d) to clarify admission criteria for applicants who had previously been admitted to an EPP and are seeking to be re-admitted to the same EPP. Current rules prohibit TEA staff from providing test approval through the Pre-Admission Content Test (PACT) route if an individual is seeking admission to an EPP that had previously provided test approval to the individual. The proposed amendment would prohibit TEA staff from providing test approval through the PACT route if an individual is seeking admission to an EPP that had previously provided test approval for any certification examination within the same certification class. Classes of certification include superintendent, principal, classroom teacher, reading specialist, master teacher, school librarian, school counselor, and educational diagnostician. This proposed amendment would strengthen the Accountability System for Educator Preparation (ASEP) as it relates to the performance standard for certification examination results by requiring EPPs to be accountable for all tests for which they provided test approval. Language would be added in proposed (a)(5) to require an EPP to check the credentials of an applicant who is seeking an initial certificate in a class other than classroom teacher to determine if the applicant already meets the admission requirements and the certification, experience, and/or degree requirements for issuance of a standard certificate. The EPP would need to inform an applicant in writing prior to admission of any deficiency that exists at the time of admission that would cause the individual to be ineligible for a standard certificate if the requirement is not met at the time the individual applies for a standard certificate. This proposed amendment would decrease the number of individuals who complete an EPP and pass the certification examination but are ineligible for a standard certificate because they do not meet the certification, experience, and/or degree requirement for the standard certificate. Language would be amended in proposed new subsections (f) and (g) to incorporate the requirements of the TEC, (c), as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, New subsection (f) would set an admission requirement for educators who want to add the Early Childhood: Prekindergarten-Grade 3 certificate to their credentials. An EPP may admit an educator to its program for the purpose of completing the course of instruction that is required for the issuance of an Early Childhood: Prekindergarten-Grade 3 certificate if the educator holds a valid standard, provisional, or one-year classroom teacher certificate that has been issued by the SBEC and allows them to teach all subjects in Prekindergarten, Kindergarten, Grade 1, Grade 2, or Grade 3. New subsection (g) would set admission requirements for educators who do not hold a certificate that allows them to teach all subjects in Prekindergarten, Kindergarten, Grade 1, Grade 2, or Grade 3. An educator who is not already certified to teach all subjects in these grades must complete the program requirements for an initial certificate, including clinical teaching or an internship, to be eligible for issuance of an Early Childhood: Prekindergarten-Grade 3 certificate. Provisional and professional certificates are lifetime certificates that were issued prior to September 1, Standard certificates are certificates that were issued on or after September 1, 1999, and are required to be renewed every five years Contingency Admission Based on EPP stakeholder input, language would be amended in (e) to allow an EPP at an IHE to contingently admit an applicant who had been provided coursework and training by the IHE into a master's degree program leading to initial certification if the coursework and training was provided by the IHE at the undergraduate level to fulfill prerequisites for the post-baccalaureate program. Language would also be amended in this subsection to allow an EPP at an IHE to contingently admit an applicant who had been provided coursework and training by the IHE into a post-baccalaureate or alternative certification program if the coursework and training was provided by the IHE at the post-baccalaureate level as part of another program of study. This proposed amendment would allow an EPP at an IHE to contingently admit candidates who had completed coursework or training at the undergraduate or graduate level at the same IHE Formal Admission Based on EPP stakeholder input, language would be amended in (f) to allow an EPP at an IHE to formally admit an applicant who had been provided coursework and training by the IHE into a master's degree program leading to initial certification if coursework and training was provided by the IHE at the undergraduate level to fulfill prerequisites for the post-baccalaureate program. Language would also be amended in this subsection to allow an EPP at an IHE to formally admit an applicant who had been provided coursework and training by the IHE into a post-baccalaureate or alternative certification program if the coursework and training was provided by the IHE at the post-baccalaureate level as part of another program of study. This proposed amendment would allow an EPP at an IHE to formally admit candidates who had completed coursework or training at the undergraduate or graduate level at the same IHE Implementation Date Language would be amended so that the rules that were in effect on the date an EPP candidate was admitted to an EPP would determine the admission requirements applicable to that candidate. This proposed amendment would make the implementation of this chapter consistent with the implementation of the requirements for EPPs as provided in Chapter 228. Subchapter B. Preliminary Evaluation of Certification Eligibility Language would be amended in (a) to cite the correct rule reference for the preliminary criminal history evaluation fee. The current fee for this evaluation is $50. The proposed amendment to 227.1(d) would have an additional procedural requirement because an EPP would be required to develop a procedure to notify applicants and admitted candidates about the potential ineligibility of an individual who had been convicted of an offense for issuance of a certificate upon completion of an EPP, the current SBEC rules regarding the eligibility of a person with a criminal history for a certificate, and PROPOSED RULES January 5, TexReg 13

14 their right to request a preliminary criminal history evaluation letter. The proposed amendment to (a)(5) would have an additional procedural requirement because an EPP would be required to develop a procedure to check the credentials of an applicant who is seeking an initial certificate in a class other than classroom teacher to determine if the applicant already meets the certification, experience, and/or degree requirements for issuance of a standard certificate. The proposed amendment to 227.1(d) would have an additional locally maintained paperwork requirement because an EPP would be required to notify applicants and admitted candidates about the potential ineligibility of an individual who had been convicted of an offense for issuance of a certificate upon completion of an EPP, the current SBEC rules regarding the eligibility of a person with a criminal history for a certificate, and their right to request a preliminary criminal history evaluation letter. The proposed amendment to (a)(5) would have an additional locally maintained paperwork requirement because an EPP would be required to check the credentials of an applicant who is seeking an initial certificate in a class other than classroom teacher to determine if the applicant already meets the certification, experience, and/or degree requirements for issuance of a standard certificate. FISCAL NOTE. Ryan Franklin, associate commissioner for educator leadership and quality, has determined that for the first five-year period the amendments are in effect, there will be no additional fiscal implications for state and local governments and there are no additional costs to entities required to comply with the proposed amendments. There is no effect on local economy for the first five years that the proposed amendments are in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed amendments do not impose a cost on regulated persons, another state agency, a special district, or local government and, therefore, is not subject to Texas Government Code, PUBLIC BENEFIT/COST NOTE. Mr. Franklin has determined that for each year of the first five years the amendments are in effect the public benefit anticipated as a result of enforcing the amendments would be clear guidance for applicants and EPPs on requirements for admission to EPPs as well as eligibility for a preliminary evaluation of certification eligibility. There is no anticipated economic cost to persons who are required to comply with the proposed amendments. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct adverse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, , is required. GOVERNMENT GROWTH IMPACT: The TEA staff has determined that the proposed amendments do have a government growth impact pursuant to Texas Government Code, The proposed rules in 227.1(d) and (e) would create a new regulation to incorporate the requirements of the TOC, , , and , as added by HB 1508, 85th Texas Legislature, Regular Session, The proposed rule in 227.1(d) would require EPPs to notify applicants and admitted candidates about the potential ineligibility of an individual who had been convicted of an offense for issuance of a certificate upon completion of an EPP, the current SBEC rules regarding the eligibility of a person with a criminal history for a certificate, and their right to request a criminal history evaluation letter. The proposed rule in 227.1(e) would require an EPP to refund tuition, application fees, and examination fees paid by an individual if the EPP failed to provide the required notice to an individual who was denied a certificate because the individual was convicted of an offense. The proposed rules in (e) and (f) would limit an existing regulation that prohibits an EPP at an IHE to admit individuals who had previously completed coursework or training at an IHE. The proposed rules would also decrease the number of individuals who would not be eligible for admission to an EPP at an IHE because they were subject to the rule's applicability. The proposed rules would allow an EPP at an IHE to admit an applicant into a master's degree program leading to initial certification if coursework and training was provided by the IHE at the undergraduate level to fulfill prerequisites for the post-baccalaureate program. The proposed rules would also allow an EPP at an IHE to admit an applicant into a post-baccalaureate or alternative certification program if coursework and training was provided by the IHE at the post-baccalaureate level as part of another program of study. REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the proposed amendments at the March 2, 2018 meeting in accordance with the SBEC board operating policies and procedures. All requests for a public hearing on the proposed amendments submitted under the Administrative Procedure Act must be received by the Department of Educator Leadership and Quality, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701, Attention: Mr. Ryan Franklin, associate commissioner for educator leadership and quality, not more than 14 calendar days after notice of the proposal has been published in the Texas Register on January 5, SUBCHAPTER A. ADMISSION TO EDUCATOR PREPARATION PROGRAMS 19 TAC 227.1, 227.5, , , , STATUTORY AUTHORITY. The amendments are proposed under the Texas Education Code (TEC), , which authorizes the SBEC to regulate and oversee all aspects of the certification, continuing education, and standards of conduct of public school educators, and states that in proposing rules under the TEC, Chapter 21, Subchapter B, the SBEC shall ensure that all candidates for certification or renewal of certification demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state; TEC, (b)(1), which requires the SBEC to propose rules that provide for the regulation of educators and the general administration of the TEC, Chapter 21, Subchapter B, in a manner consistent with the TEC, Chapter 21, Subchapter B; TEC, (a), which requires the SBEC to propose rules establishing training requirements a person must accomplish to obtain a certificate, enter an internship, or enter an induction-year program; TEC, (g)(2) and (3), which requires each educator preparation program (EPP) to provide certain information related to the effect of supply and demand forces on the educator workforce 43 TexReg 14 January 5, 2018 Texas Register

15 of the state and the performance over time of the EPP; TEC, , which requires the SBEC to adopt rules setting certain admission requirements for EPPs; TEC, (c), as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, 2017, which requires the SBEC to adopt rules establishing eligibility requirements for an Early Childhood: Prekindergarten-Grade 3 certificate; TEC, (a), which authorizes the SBEC to propose rules providing for educator certification programs as an alternative to traditional EPPs; TEC, (a), which requires a person who applies for a teaching certificate for which SBEC rules require a bachelor's degree must possess a bachelor's degree received with an academic major or interdisciplinary academic major, including reading, other than education, that is related to the curriculum as prescribed under the TEC, Chapter 28, Subchapter A; TOC, , as added by HB 1508, 85th Texas Legislature, Regular Session, 2017, which sets the definitions of "licensing authority" and "occupational license" to have the meanings assigned to those terms by the TOC, Section ; TOC, , as added by HB 1508, 85th Texas Legislature, Regular Session, 2017, which requires EPPs to provide applicants and enrollees certain notice regarding potential ineligibility for a certificate based on convicted offenses, the SBEC rules regarding the certificate eligibility of an individual with a criminal history, and the right of the individual to request a criminal history evaluation letter; and TOC, , as added by HB 1508, 85th Texas Legislature, Regular Session, 2017, which requires an EPP to refund tuition, application fees, and examination fees paid by an individual if the EPP failed to provide the required notice under the TOC, , to an individual who was denied a certificate because the individual was convicted of an offense. CROSS REFERENCE TO STATUTE. The amendments implement the Texas Education Code, (TEC), ; (b)(1); (a) and (g)(2) and (3); ; (c), as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, 2017; (a); (a); and Texas Occupations Code (TOC), , , and , as added by HB 1508, 85th Texas Legislature, Regular Session, General Provisions. (a) It is the responsibility of the education profession as a whole to attract applicants and to retain educators who demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state. (b) Educator preparation programs should inform all applicants that: (1) pursuant to the Texas Education Code (TEC), , candidates must undergo a criminal history background check prior to employment as an educator; and (2) pursuant to the TEC, , candidates must undergo a criminal history background check prior to clinical teaching. (c) Educator preparation programs (EPPs) shall inform all applicants, in writing, of the following: (1) the admission requirements as specified in this chapter; (2) the requirements for program completion as specified in Chapter 228 of this title (relating to Educator Preparation Requirements); and (3) in accordance with TEC, (e)(3): (A) the effect of supply and demand forces on the educator workforce in this state; and five years. (B) the performance over time of the EPP for the past (d) EPPs shall notify, in writing by mail, personal delivery, facsimile, , or an electronic notification, each applicant to and enrollee in the EPP of the following regardless of whether the applicant or enrollee has been convicted of an offense: (1) the potential ineligibility of an individual who has been convicted of an offense for issuance of a certificate on completion of the EPP; (2) the current State Board for Educator Certification (SBEC) rules prescribed in of this title (relating to Eligibility of Persons with Criminal History for a Certificate under Texas Occupations Code, Chapter 53, and Texas Education Code, Chapter 21); and (3) the right to request a criminal history evaluation letter as provided in Chapter 227, Subchapter B, of this title (relating to Preliminary Evaluation of Certification Eligibility). (e) If the SBEC determines that an EPP has failed to provide the notice required by subsection (d) of this section to an individual entitled to receive the notice and that the individual's application for a certificate for which the EPP prepares the individual was denied because the individual has been convicted of an offense prior to the EPP providing notice, the SBEC shall order the EPP to: (1) refund the amount of any tuition paid by the individual to the EPP; and (2) pay to the individual an amount equal to the total of the following, as applicable: (A) the amount of any application fees paid by the individual to the SBEC; and (B) the amount of any examination fees paid by the individual to the SBEC and/or to a provider of examinations required for certification. An EPP is not liable for examination fees if the examination was not required to be passed to meet the admission requirements of the EPP and/or the EPP did not provide test approval for the examination. (f) If the governor of Texas declares a state of disaster consistent with the Texas Government Code, , Texas Education Agency (TEA) staff may extend deadlines in this chapter for up to 90 days as necessary to accommodate persons in the affected disaster areas Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Accredited institution of higher education--an institution of higher education that, at the time it conferred the degree, was accredited or otherwise approved by an accrediting organization recognized by the Texas Higher Education Coordinating Board. (2) Alternative certification program--an approved educator preparation program, delivered by entities described in (a) of this title (relating to Governance of Educator Preparation Programs), specifically designed as an alternative to a traditional undergraduate certification program, for individuals already holding at least a bachelor's degree from an accredited institution of higher education. (3) Applicant--An individual seeking admission to an educator preparation program for any class of certificate. PROPOSED RULES January 5, TexReg 15

16 (4) Candidate--An individual who has been formally or contingently admitted to an educator preparation program; also referred to as an enrollee or participant. (5) Certification category--a certificate type within a certification class; also known as certification field. (6) Certification class--a certificate, as described in of this title (relating to Classes of Certification), that has defined characteristics; also known as certification field. (7) Clinical teaching--an assignment, as described in of this title (relating to Preparation Program Coursework and/or Training). (8) Content certification examination--a standardized test or assessment required by statute or State Board for Educator Certification rule that governs an individual's admission to an educator preparation program or certification as an educator. (9) Contingency admission--conditional admission to an educator preparation program when an applicant meets all admission requirements specified in of this title (relating to Admission Criteria) except graduation and degree conferred from an accredited institution of higher education. (10) Educator preparation program--an entity that must be approved by the State Board for Educator Certification to recommend candidates in one or more classes of certificates. (11) Formal admission--admission to an educator preparation program when an applicant meets all admission requirements specified in of this title (relating to Admission Criteria). (12) Incoming class--individuals contingently or formally admitted between September 1 and August 31 of each year by an educator preparation program. (13) Post-baccalaureate program--an educator preparation program, delivered by an accredited institution of higher education and approved by the State Board for Educator Certification to recommend candidates for certification, that is designed for individuals who already hold at least a bachelor's degree from an accredited institution of higher education and are seeking an additional degree. (14) Semester credit hour--one semester credit hour is equal to 15 clock-hours at an accredited institution of higher education. (15) Undergraduate degree--a bachelor's degree earned from and conferred by an accredited institution of higher education Admission Criteria. (a) The educator preparation program (EPP) delivering educator preparation shall require the following minimum criteria of all applicants seeking initial certification in any class of certificate, unless specified otherwise, prior to admission to the program. (1) For an undergraduate university program, an applicant shall be enrolled in an accredited institution of higher education (IHE). (2) For an alternative certification program or post-baccalaureate program, an applicant shall have, at a minimum, a bachelor's degree earned from and conferred by an accredited IHE. (3) For an undergraduate university program, alternative certification program, or post-baccalaureate program, to be eligible for admission into an EPP, an applicant shall have a grade point average (GPA) of at least 2.5 before admission. (A) The GPA shall be calculated from an official transcript as follows: (i) 2.5 on all coursework previously attempted by the person at an accredited IHE: (I) at which the applicant is currently enrolled (undergraduate university program formal admission, alternative certification program contingency admission, or post-baccalaureate program contingency admission); or (II) from which the most recent bachelor's degree or higher from an accredited IHE was conferred (alternative certification program formal admission or post-baccalaureate program formal admission); or (ii) 2.5 in the last 60 semester credit hours on all coursework previously attempted by the person at an accredited IHE: (I) at which the applicant is currently enrolled (undergraduate university program formal admission, alternative certification program contingency admission, or post-baccalaureate program contingency admission). If an applicant has less than 60 semester credit hours on the official transcript from the accredited IHE at which the applicant is currently enrolled, the EPP shall use grades from all coursework previously attempted by a person at the most recent accredited institution(s) of higher education, starting with the most recent coursework from the official transcript(s), to calculate a GPA for the last 60 semester credit hours; or (II) from which the most recent bachelor's degree or higher from an accredited IHE was conferred. If an applicant has hours beyond the most recent degree, an EPP may use grades from the most recent 60 hours of coursework from an accredited IHE (alternative certification program formal admission or post-baccalaureate program formal admission). (B) An exception to the minimum GPA requirement may be granted by the program director only in extraordinary circumstances and may not be used by a program to admit more than 10% of any incoming class of candidates. An applicant is eligible for this exception if: (i) documentation and certification from the program director that an applicant's work, business, or career experience demonstrates achievement equivalent to the academic achievement represented by the GPA requirement; and (ii) in accordance with the Texas Education Code, (b), an applicant must pass an appropriate content certification examination as specified in paragraph (4)(C) and (D) of this subsection for each subject in which the applicant seeks certification prior to admission. Applicants who do not meet the minimum GPA requirement and have previously been admitted into an EPP may request permission to register for an appropriate content certification examination if the applicant is not seeking admission to the same EPP that previously granted test approval for a certification examination in the same certification class. (C) An applicant who is seeking a career and technical education (CTE) certificate that does not require a degree from an accredited IHE is exempt from the minimum GPA requirement. (D) An applicant who does not meet the minimum GPA requirement and is seeking certification in a class other than classroom teacher must perform at or above a score equivalent to a 2.5 GPA on the Verbal Reasoning, Quantitative Reasoning, and Analytic Writing sections of the GRE (Graduate Record Examinations) revised General Test. The State Board for Educator Certification will use equivalency scores established by the Educational Testing Service, and the Texas Education Agency (TEA) will publish those equivalency scores annually on the TEA website. 43 TexReg 16 January 5, 2018 Texas Register

17 (4) For an applicant who will be seeking an initial certificate in the classroom teacher class of certificate, the applicant shall have successfully completed, prior to admission, at least: (A) a minimum of 12 semester credit hours in the subject-specific content area for the certification sought, unless certification sought is for mathematics or science at or above Grade 7; or (B) 15 semester credit hours in the subject-specific content area for the certification sought if the certification sought is for mathematics or science at or above Grade 7; or (C) a passing score on a comparable content certification examination administered by a vendor on the TEA-approved vendor list published by the commissioner of education on the TEA website for the calendar year during which the applicant seeks admission; or (D) for an applicant who has not previously been admitted into an EPP, a passing score on a content certification examination administered by a TEA-approved vendor. An applicant who has previously been admitted into an EPP may request permission to register for a content certification examination if an applicant is not seeking admission to the same EPP that previously granted test approval for a certification examination in the same certification class. (5) For an applicant who will be seeking an initial certificate in a class other than classroom teacher, the applicant shall meet the minimum requirements for admission described in Chapter 239 of this title (relating to Student Services Certificates); Chapter 241 of this title (relating to Principal Certificate); and Chapter 242 of this title (relating to Superintendent Certificate). If an applicant has not met the minimum certification, degree, and/or experience requirement(s) for issuance of a standard certificate prior to admission, the EPP shall inform the applicant in writing of any deficiency prior to admission. (6) [(5)] An applicant must demonstrate basic skills in reading, written communication, and mathematics by meeting the requirements of the Texas Success Initiative under the rules established by the Texas Higher Education Coordinating Board (THECB) in Part 1, Chapter 4, Subchapter C, of this title (relating to Texas Success Initiative), including one of the requirements established by 4.54 of this title (relating to Exemptions, Exceptions, and Waivers). (7) [(6)] An applicant must demonstrate the English language proficiency skills as specified in of this title (relating to General Requirements). (A) An applicant for CTE certification that does not require a bachelor's degree from an accredited IHE may satisfy the English language proficiency requirement with an associate's degree or high school diploma or the equivalent that was earned at an accredited IHE or an accredited high school in the United States. (B) An applicant to a university undergraduate program that leads to a bachelor's degree may satisfy the English language proficiency requirement by meeting the English language proficiency requirement of the accredited IHE at which the applicant is enrolled. (8) [(7)] An applicant must submit an application and participate in either an interview or other screening instrument to determine if the EPP applicant's knowledge, experience, skills, and aptitude are appropriate for the certification sought. (9) [(8)] An applicant must fulfill any other academic criteria for admission that are published and applied consistently to all EPP applicants. (b) An EPP may adopt requirements in addition to and not in conflict with those required in this section. (c) An EPP may not admit an applicant who: (1) has been reported as completing all EPP requirements by another EPP in the same certification category or class, unless the applicant only needs certification examination approval; or (2) has been employed for three years in a public school under a permit or probationary certificate as specified in Chapter 230, Subchapter D, of this title (relating to Types and Classes of Certificates Issued), unless the applicant is seeking clinical teaching that may lead to the issuance of an initial standard certificate. (d) An EPP may admit an applicant for CTE certification who has met the experience and preparation requirements specified in Chapter 230 of this title (relating to Professional Educator Preparation and Certification) and Chapter 233 of this title (relating to Categories of Classroom Teaching Certificates). (e) An EPP may admit an applicant who has met the minimum academic criteria through credentials from outside the United States that are determined to be equivalent to those required by this section using the procedures and standards specified in Chapter 245 of this title (relating to Certification of Educators from Other Countries). An EPP at an entity that is accredited by an accrediting organization recognized by the THECB may use its own foreign credential evaluation service to meet the requirement described in (a)(2) of this title (relating to Application Procedures), if the entity is in good standing with its accrediting organization. (f) An applicant is eligible to enroll in an EPP for the purpose of completing the course of instruction that is required for the issuance of an Early Childhood: Prekindergarten-Grade 3 certificate if the individual holds a valid standard, provisional, or one-year certificate specified in of this title (relating to Types of Certificates) in a certificate category that allows the applicant to teach all subjects in Prekindergarten, Kindergarten, Grade 1, Grade 2, or Grade 3. (g) An applicant who does not hold a valid standard, provisional, or one-year certificate specified in of this title in a certificate category that allows the applicant to teach all subjects in Prekindergarten, Kindergarten, Grade 1, Grade 2, or Grade 3 must complete the program requirements for initial certification to be eligible for issuance of an Early Childhood: Prekindergarten-Grade 3 certificate Contingency Admission. (a) An applicant may be accepted into an alternative certification program or post-baccalaureate program on a contingency basis pending receipt of an official transcript showing degree conferred, as specified in (a)(2) of this title (relating to Admission Criteria), provided that: (1) the applicant is currently enrolled in and expects to complete the courses and other requirements for obtaining, at a minimum, a bachelor's degree at the end of the semester in which admission to the program is sought; (2) all other admission requirements specified in of this title have been met; (3) the EPP must notify the applicant of the offer of contingency admission in writing by mail, personal delivery, facsimile, , or an electronic notification; and (4) the applicant must accept the offer of contingency admission in writing by mail, personal delivery, facsimile, , or an electronic notification. (b) The effective date of contingency admission shall be included in the offer of contingency admission. PROPOSED RULES January 5, TexReg 17

18 (c) An EPP must notify the Texas Education Agency within seven calendar days of a candidate's contingency admission. (d) An applicant admitted on a contingency basis may begin program training and may be approved to take a certification examination, but shall not be recommended for a probationary certificate until the bachelor's degree or higher from an accredited institution of higher education (IHE) has been conferred. (e) Except as provided by this section, an alternative certification program or post-baccalaureate program, prior to admission on a contingency basis, shall not provide coursework, training, and/or examination approval to an applicant that leads to initial certification in any class of certificate. A post-baccalaureate or alternative certification program at an IHE may admit an applicant if coursework and training was provided by the same IHE as part of: [the degree to be conferred.] (1) the degree to be conferred; (2) a prerequisite for a master's degree leading to initial certification; or (3) a different post-baccalaureate program of study. (f) The contingency admission will be valid for only the fall, spring, or summer semester for which the contingency admission was granted and may not be extended for another semester. The end of each semester shall be consistent with the common calendar established by the Texas Higher Education Coordinating Board Formal Admission. (a) For an applicant to be formally admitted to an educator preparation program (EPP), the applicant must meet all the admission requirements specified in of this title (relating to Admission Criteria). (b) For an applicant to be formally admitted to an EPP, the EPP must notify the applicant of the offer of formal admission in writing by mail, personal delivery, facsimile, , or an electronic notification. (c) For an applicant to be considered formally admitted to the EPP, the applicant must accept the offer of formal admission in writing by mail, personal delivery, facsimile, , or an electronic notification. (d) The effective date of formal admission shall be included in the offer of formal admission. (e) An EPP must notify the Texas Education Agency within seven calendar days of a candidate's formal admission. (f) Except as provided by of this title (relating to Contingency Admission), an alternative certification program or post-baccalaureate program, prior to formal admission, shall not provide coursework, training, and/or examination approval to an applicant that leads to initial certification in any class of certificate. A post-baccalaureate or alternative certification program at an institution of higher education (IHE) may admit an applicant if coursework and training was provided by the same IHE as part of: [a previous degree that was conferred.] (1) a previous degree that was conferred; (2) a prerequisite for a master's degree leading to initial certification; or (3) a different post-baccalaureate program of study Implementation Date. The provisions of this chapter that were in effect on the date an educator preparation program (EPP) candidate was admitted to an EPP shall determine the program requirements applicable to that candidate. [This subchapter applies to an applicant who is admitted to an educator preparation program on or after January 1, 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) SUBCHAPTER B. PRELIMINARY EVALUATION OF CERTIFICATION ELIGIBILITY 19 TAC STATUTORY AUTHORITY. The amendment is proposed under the Texas Occupations Code (TOC), , as added by HB 1508, 85th Texas Legislature, Regular Session, 2017, which specifies that a licensing authority may charge a person requesting an evaluation under the TOC, Chapter 53, Subchapter D, a fee adopted by the authority. Fees adopted by a licensing authority under the TOC, Chapter 53, Subchapter D, must be in an amount sufficient to cover the cost of administering this subchapter. CROSS REFERENCE TO STATUTE. The amendment implements the Texas Occupations Code, Application. (a) A request for preliminary criminal history evaluation must be preceded by payment of the required criminal history evaluation fee specified in (a)(19) [(a)(20)] of this title (relating to Schedule of Fees for Certification Services). (b) A request for preliminary criminal history evaluation must include the following: (1) a signed and dated application, in the form provided on the Texas Education Agency (TEA) website, containing contact information and the date and description of each offense requested to be evaluated; (2) an attached statement of the circumstances upon which the arrest is based and the disposition relating to each offense to be evaluated; (3) court documentation relating to each offense, including, at a minimum, the formal disposition of the offense(s) and related charge(s) (e.g., Judgment, Order of Probation, Sentence, Deferred Adjudication Order, etc.); and (4) a copy of the receipt for the request for preliminary criminal history evaluation fee. (c) All required documents and information specified in subsection (b) of this section must be provided with the request for preliminary criminal history evaluation. Any documents or information not provided in the original request will not be considered reasonably available. 43 TexReg 18 January 5, 2018 Texas Register

19 (d) The preliminary criminal history evaluation will be based solely on the application and court or law enforcement documents provided. Any information not provided by the requestor shall be considered not reasonably available at the time of the request and may be considered at the time the requestor subsequently applies for a certificate issued by the State Board for Educator Certification. Additional documentation that should be provided, if possible, includes the following: (1) the formal charge(s) (e.g., indictment, information, or complaint); (2) evidence that the condition(s) of the court have been met (e.g., completion of probation, receipt for restitution, etc.); and (3) any available law enforcement report(s) describing the offense or the investigation of the offense. (e) The application, the statement of circumstances, the required court documentation, and a copy of the receipt for the request for preliminary criminal history evaluation fee must be submitted to the TEA division responsible for educator investigations by United States certified mail, return receipt requested, to the address provided on the application or by facsimile to the facsimile number provided on the application. (f) A request for preliminary criminal history evaluation is incomplete unless it includes a copy of the receipt for the request for preliminary criminal history evaluation fee, a completed application, a statement of circumstances, and the required court documentation. The TEA staff will take no action on a request that is incomplete. (g) All documents submitted in connection with a request for preliminary criminal history evaluation, whether complete or incomplete, will not be returned to the requestor. All documents will be retained or destroyed by the TEA in accordance with the TEA records retention schedule. 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) CHAPTER 230. PROFESSIONAL EDUCATOR PREPARATION AND CERTIFICATION SUBCHAPTER C. ASSESSMENT OF EDUCATORS 19 TAC The State Board for Educator Certification (SPEC) proposes an amendment to , concerning assessment of educators. The proposed amendment would update the figure in subsection (e) with the appropriate required examinations for Texas certificate issuance and incorporate language that strengthens the provisions concerning test security and confidentiality integrity. Additional technical changes are being proposed for clarification purposes. The SPEC is statutorily authorized to regulate and oversee all aspects of the certification of public school educators. SPEC is also statutorily authorized to ensure that all candidates for certification or renewal of certification demonstrate the knowledge and skills necessary to improve the performance of the diverse population of this state. The SPEC rules in 19 TAC Chapter 230, Professional Educator Preparation and Certification, Subcategory C, Assessment of Educators, establish guidelines and procedures for the assessment of educators. The proposed amendment to 19 TAC Chapter 230, Subcategory C, , would update the list of required examinations for certificates issued by the SPEC and adopted in rule as Figure: (e). The proposed amendment would also incorporate language that broadens the scope of persons that should comply with the test security and confidentiality integrity provisions outlined in this chapter. This change would require candidates for certification to comply with the same provisions as current educators regarding test security and confidentiality integrity provisions Educator Assessment Language would be amended in subsection (e) to update Figure: 19 TAC (e) and provide the most current list of examinations required for issuance of Texas certificates. The updated figure would incorporate minor technical edits to add six certificate references, correct six certificate names, and delete information for thirteen certificates that will no longer be issued by the SPEC by the anticipated effective date of the proposed amendment to 19 TAC The following changes, organized by Certificate TAB Reference, are reflected in updated proposed Figure: 19 TAC (e): 233.6: deleted Bilingual Generalist: Grades Each and Bilingual Generalist: Grades : added Core Subjects: Grades Each and Core Subjects: Grades : deleted English as a Second Language Generalist: Grades Each and English as a Second Language Generalist: Grades : corrected title of School Counselor Certificate, Prekindergarten changed to Early Childhood : added Dance: Grades : corrected title of Reading Specialist Certificate, Prekindergarten changed to Early Childhood 233.2: deleted Generalist: Grades Each and Generalist: Grades : deleted Journalism: Grades 8-12 certificate : added Junior Reserve Officer Training Certificate: Grades : added Korean: Early Childhood-Grade 12 and Portuguese: Early Childhood-Grade : corrected title of School Librarian Certificate, Prekindergarten changed to Early Childhood PROPOSED RULES January 5, TexReg 19

20 : corrected title of Master Reading Teacher Certificate, Prekindergarten changed to Early Childhood 233.4: deleted Physics/Mathematics: Grades 8-12 and Mathematics/Physical Science/Engineering: Grades : corrected title of Principal Certificate, added Early Childhood-Grade : corrected title of Superintendent Certificate, added Early Childhood-Grade : deleted Business Education: Grades 6-12, Marketing Education: Grades 8-12, Health Science Technology Education: Grades 8-12, and Trade and Industrial Education: Grades 8-12 certificates These proposed changes would ensure accurate information in rule on required tests for certificate issuance. Language would be amended in subsections (g)(1), (2), and (4), renumbered as subsection (g)(3), to add the word "candidate" to the list of persons required to comply with test security and confidentiality integrity. The proposed amendment would clarify that candidates who participate in the development, design, construction, review, field testing, or validation of an examination; who administer an examination; and/or who is an examinee complies with the same provisions of this subsection currently only required of educators. This proposed change would clarify that these provisions apply to anyone involved in activities related to taking, administering and/or scoring a test, developing and/or reviewing certification tests, or providing input on recommended test cut scores or test passing standards, resulting in better test security and the confidentiality integrity of Subclassified examinations. Language would be amended to delete current subsection (g)(3) based on TEA staff's recommendation to extend the expectations of compliance related to test security and confidentiality integrity to include candidates seeking certification as an educator, as referenced in subsection (a), and/or candidates seeking a standard certificate as an educator, based on completion of an approved educator preparation program (APE), as referenced in subsection (b). The information deleted in current subsection (g)(3) would be addressed in subsection (g)(5) to include candidates to the list of individuals for whom sanctions could apply for violation of this subsection regarding test security and confidentiality integrity. New subsection (g)(4) would clarify that an educator or candidate should not solicit information about the contents of an examination or conduct himself or herself in a way that violates test security or confidentiality integrity. This change would further clarify expectations of ethical behavior related to educator testing and activities related to certificate issuance. Language would be amended in subsection (g)(5) to clarify penalties that apply respectively to candidates for certification and to certified educators for violations of this section to address an increase in test cheating incidents in recent years. Language in current subsection (g)(5)(c) would be moved as part of subsection (g)(5)(a) to clarify that under the SPEC's authority, disallowance from examination is a possible form of sanction for educators. Minor technical edits are also recommended to conform with Texas Register format and style requirements and to reflect the term "confidentiality integrity" in the first sentence of subsection (g). The proposed amendment to 19 TAC Chapter 230, Subcategory C, would clarify examination requirements for certificate issuance and update provisions concerning test security and confidentiality integrity, sending a clear message to educators, certification candidates, and individuals about the high-stakes nature of certification examinations and the importance of ethical behavior in all aspects of educator testing. The proposed amendment would have no additional procedural and reporting implications. The proposed amendment would have no additional locally maintained paperwork requirements. FISCAL NOTE. Ryan Franklin, associate commissioner for educator leadership and quality, has determined that for the first five-year period the amendment is in effect, there will be no additional fiscal implications for state or local government and no additional costs to entities as a result of enforcing or administering the amendment. There is no effect on local economy for the first five years that the proposed amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed amendment does not impose a cost on regulated persons, another state agency, a special district, or local government and, therefore, is not subject to Texas Government Code, PUBLIC BENEFIT/COST NOTE. Mr. Franklin has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment would be the continuation of requirements relating to certification, fees, procedures for testing and certificate issuance, educational aides, and permits for professional educator preparation and certification. There is no anticipated economic cost to persons who are required to comply with the proposed amendment. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct adverse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, , is required. GOVERNMENT GROWTH IMPACT: The TEA staff has determined that the proposed amendment does not have a government growth impact pursuant to Texas Government Code, REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins January 5, 2018, and ends February 5, The SPEC will take registered oral and written comments on the proposed amendment at the March 2, 2018 meeting in accordance with the SPEC board operating policies and procedures. All requests for a public hearing on the proposed amendment submitted under the Administrative Procedure Act must be received by the Department of Educator Leadership and Quality, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701, Attention: Mr. Ryan Franklin, associate commissioner for educator leadership and quality, not more than 14 calendar days after notice of the proposal has been published in the Texas Register on January 5, STATUTORY AUTHORITY. The amendment is proposed under the Texas Education Code (TEC), , which charges the SPEC with regulating and overseeing all aspects of the certification, continuing education, and standards of conduct for public school educators to ensure that all candidates for certification demonstrate the knowledge and skills necessary to improve the 43 TexReg 20 January 5, 2018 Texas Register

21 performance of the diverse student population of this state; TEC, (a), which authorizes the SPEC to adopt rules as necessary to implement its procedures; TEC, (b)(1), which requires the SPEC to propose rules that provide for the regulation of educators and the general administration of the TEC, Chapter 21, Subcategory B, in a manner consistent with the TEC, Chapter 21, Subcategory B; TEC, (b)(4), which requires the SPEC to propose rules that specify the requirements for the issuance and renewal of an educator certificate; TEC, (b)(7), which authorizes the SPEC to adopt rules as necessary to provide for educator disciplinary proceedings, including the suspension or revocation of an educator certificate; TEC, (b)(8), which authorizes the SPEC to adopt rules as necessary for the adoption, amendment, and enforcement of an educator's code of ethics; TEC, (c), which authorizes the SPEC to adopt rules as necessary to establish fees for the issuance and maintenance of an educator's certificate; TEC, (a)(1), which authorizes the SPEC to adopt rules as necessary to use the results of certification examinations as part of the accountability system for educator preparation programs; TEC, , which authorizes the SPEC to propose rules prescribing comprehensive examinations for each class of certificate issued by the board; the maximum time between test retakes and the total number of test attempts per certification candidate; guidelines for development and administration of examinations for educators who have a hearing impairment; and the guidelines for maintaining confidentiality of examination results; and Texas Occupations Code, , which authorizes the SPEC to adopt rules as necessary to provide examination accommodations for persons with dyslexia. CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code, ; (a), (b)(1), (4), (7), and (8), and (c); (a)(1); ; and the Texas Occupations Code (TOC), Educator Assessment. (a) - (d) (No change.) (e) The appropriate examination(s) required for certification are specified in the figure provided in this subsection. Figure: 19 TAC (e) [Figure: 19 TAC (e)] (f) (No change.) (g) The following provisions concern test security and confidentiality [confidential] integrity. (1) An educator or candidate who participates in the development, design, construction, review, field testing, or validation of an examination shall not reveal or cause to be revealed the contents of the examination to any other person. (2) An educator or candidate who administers an examination shall not: (A) allow or cause an unauthorized person to view any part of the examination; (B) copy, reproduce, or cause to be copied or reproduced any part of the examination; (C) reveal or cause to be revealed the contents of the examination; (D) correct, alter, or cause to be corrected or altered any response to a test item contained in the examination; (E) provide assistance with any response to a test item contained in the examination or cause assistance to be provided; or (F) the examination. deviate from the rules governing administration of [(3) An educator who violates subsection (a) or (b) of this section is subject to sanction in accordance with the provisions of the TEC, (b)(7), and Chapter 249 of this title (relating to Disciplinary Proceedings, Sanctions, and Contested Cases).] not: (3) [(4)] An educator or candidate who is an examinee shall (A) copy, reproduce, or cause to be copied or reproduced any test item contained in the examination; (B) provide assistance with any response to a test item contained in the examination, or cause assistance to be provided; (C) solicit or accept assistance with any response to a test item contained in the examination; (D) deviate from the rules governing administration of the examination; or (E) otherwise engage in conduct that amounts to cheating, deception, or fraud. (4) An educator, candidate, or other test taker shall not: (A) solicit information about the contents of test items on an examination that the educator, candidate, or other test taker has not already taken from an individual who has had access to those items, or offer information about the contents of specific test items on an examination to individuals who have not yet taken the examination; or (B) otherwise engage in conduct that amounts to violations of test security or confidentiality integrity, including cheating, deception, or fraud. (5) A person [An educator] who violates this subsection is subject to: (A) sanction, including, but not limited to, disallowance and exclusion from future examinations either in perpetuity or for a period of time that serves the best interests of the education profession, in accordance with the provisions of the TEC, (b)(7), and Chapter 249 of this title (relating to Disciplinary Proceedings, Sanctions, and Contested Cases); and/or (B) denial of certification in accordance with the provisions of the TEC, (b)(7), and Chapter 249 of this title; and/or (C) [(B)] voiding of a score from an examination in which a violation specified in this subsection occurred as well as a loss of a test attempt for purposes of the retake limit in subsection (a) of this section.[; and] [(C) disallowance and exclusion from future examinations either in perpetuity or for a period of time that serves the best interests of the education profession.] 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 December 21, TRD PROPOSED RULES January 5, TexReg 21

22 Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) CHAPTER 232. GENERAL CERTIFICATION PROVISIONS SUBCHAPTER A. CERTIFICATE RENEWAL AND CONTINUING PROFESSIONAL EDUCATION REQUIREMENTS 19 TAC The State Board for Educator Certification (SBEC) proposes an amendment to , concerning certificate renewal and continuing professional education (CPE) requirements. The proposed amendment would implement changes resulting from the 85th Texas Legislature, Regular Session, 2017, which include adding new CPE topics for all educators. The proposed amendment would also add minimum requirements for several CPE topics for individuals holding standard classroom teacher, principal, and school counselor certificates. 19 TAC Chapter 232, General Certification Provisions, establishes the renewal requirements relating to types and classes of certificates issued, CPE hours to be completed, and the national criminal history record information review. Classroom teachers are required to participate in 150 hours of CPE activities every five years to maintain their standard certificates. Principals, school counselors, and other non-teacher educators are required to participate in 200 hours of CPE activities every five years to maintain their standard certificates. Educators are required to maintain evidence of their CPE activities. When an educator applies to renew his or her certificate, he or she must verify through an affidavit whether he or she is in compliance with renewal requirements, including CPE activities. When an educator is selected for a CPE audit, the educator must provide Texas Education Agency (TEA) staff with documentation that supports certificate renewal. The proposed amendment to 19 TAC would add several CPE topics for classroom teachers and principals and add minimum requirements for several CPE topics for classroom teachers, principals, and school counselors. The proposed changes are designed to fulfill the new statutory requirements and provide consistency across certification classes. Proposed changes to subsection (c)(4) would add several required CPE topics for individuals who hold a standard classroom teacher certificate. These topics were added by the TEC, , as amended by SB 1839 and SB 7, 85th Texas Legislature, Regular Session, SB 1839 requires an individual who holds a standard classroom teacher certificate to participate in CPE activities regarding digital learning, digital teaching, and integrating technology into classroom instruction. SB 7 requires an individual who holds a standard classroom teacher certificate to participate in CPE activities regarding understanding appropriate relationships, boundaries, and communications between educators and students. Additional changes to subsection (c)(4) would require an individual who holds a standard classroom teacher certificate that is renewed on or after June 1, 2019, to complete CPE activities every five years that are directly related to each of the CPE topics included in this subsection. These topics include: collecting and analyzing information that will improve effectiveness in the classroom; recognizing early warning indicators that a student may be at risk of dropping out of school; digital learning, digital teaching, and integrating technology into classroom instruction; educating students with disabilities, including mental health disorders; educating students who are educationally disadvantaged; educating English language learners; educating students at risk of dropping out of school; and understanding appropriate relationships, boundaries, and communications between educators and students. This change in renewal requirements is a result of the clear legislative intent of SB 7 to require training on understanding appropriate relationships, boundaries, and communications between educators and students. The remaining topics were first added to statute under HB 642, 83rd Texas Legislature, Regular Session, While the legislative intent for these topics was less clear in HB 642, requiring training in each of the topics in subsection (c)(4) would provide a consistent implementation of the statutory requirements. The implementation date of June 1, 2019, would give educators one year from the effective date of the proposed amendment to participate in the required CPE activities. The current requirement that prohibits an individual who holds a standard classroom teacher certificate from applying more than 37.5 hours of CPE activities (25% of 150 hours) in the topics listed in subsection (c)(4)(a)-(h) toward certification renewal requirements is not changed by this proposed amendment. Proposed changes to subsection (c)(5) would add several required CPE topics for individuals who hold a standard principal certificate. These topics were added by the TEC, , as amended by SB 1839 and SB 7, 85th Texas Legislature, Regular Session, SB 1839 requires an individual who holds a standard principal certificate to participate in CPE activities regarding digital learning, digital teaching, and integrating technology into campus curriculum and instruction. SB 7 requires an individual who holds a standard principal certificate to participate in CPE activities regarding preventing, recognizing, and reporting sexual conduct between an educator and student. With the implementation of SB 7, both principals and superintendents are subject to sanctions for failure to report inappropriate educator student relationships. Mandating this education, consistent with SB 7, will ensure that each principal is aware of the reporting requirement and is prepared to protect students and avoid sanctions. Additional changes to subsection (c)(5) would require an individual who holds a standard principal certificate that is renewed on or after June 1, 2019, to complete CPE activities every five years that are directly related to each of the CPE topics included in subsection (c)(5)(a)-(j). These topics include: collecting and analyzing information; making decisions and managing time; supervising student discipline and managing behavior; recognizing early warning indicators that a student may be at risk of dropping out of school; digital learning, digital teaching, and integrating technology into campus curriculum and instruction; educating students with disabilities, including mental health disorders; educating students who are educationally disadvantaged; educating English language learners; educating students at risk of dropping out of school; and preventing, recognizing, and reporting any sexual conduct between an educator and student. This change in renewal requirements is a result of the clear legislative intent of SB 7 to require training on preventing, recognizing, and reporting any sexual conduct between an educator 43 TexReg 22 January 5, 2018 Texas Register

23 and student. The remaining topics were first added to statute under HB 642, 83rd Texas Legislature, Regular Session, While the legislative intent for these topics was less clear in HB 642, requiring training in each of the topics in subsection (c)(5) would provide a consistent implementation of the statutory requirements. The implementation date of June 1, 2019, would give educators one year from the effective date of the proposed amendment to participate in the required CPE activities. The current requirement that prohibits an individual who holds a standard principal certificate from applying more than 50 hours of CPE activities (25% of 200 hours) in the topics listed in subsection (c)(5)(a)-(j) toward certification renewal requirements is not changed by this proposed amendment. Proposed changes to subsection (c)(6) would require an individual who holds a standard school counselor certificate that is renewed on or after June 1, 2019, to complete CPE activities every five years that are directly related to the each of the CPE topics included in subsection (c)(6)(a)-(d). These topics include: assisting students in developing high school graduation plans; implementing dropout prevention strategies; informing students concerning college admissions, including college financial aid resources and application procedures; and informing students concerning career opportunities. While there were no recent legislative changes that required an amendment to subsection (c)(6), this amendment is being proposed so that there is consistency between the classroom teacher, principal, and school counselor certificate renewal rules. The implementation date of June 1, 2019, would give educators one year from the effective date of the proposed amendment to participate in the required CPE activities. The current requirement that prohibits an individual who holds a standard school counselor certificate from applying more than 50 hours of CPE activities (25% of 200 hours) in the topics listed in subsection (c)(6)(a)-(d) toward certification renewal requirements is not changed by this proposed amendment. Proposed new subsection (j) would include CPE requirements for classroom teachers and principals that were added by the TEC, , as amended by SB 179, 85th Texas Legislature, Regular Session, This new subsection would allow CPE requirements for classroom teachers and principals to include instruction regarding how grief and trauma affect student learning and behavior and how evidence-based, grief-informed, and trauma-informed strategies support the academic success of students affected by grief and trauma. Proposed new subsection (k)(1) would include CPE requirements for all certificate classes that were added by the TEC, , as amended by SB 1839, 85th Texas Legislature, Regular Session, This new subsection would allow an educator to receive credit toward CPE requirements for completion of education courses that use technology to increase the educator's digital literacy. Proposed new subsection (k)(2) would include CPE requirements for all certificate classes that were added by the TEC, , as amended by SB 1839, 85th Texas Legislature, Regular Session, This new subsection would allow an educator to receive credit toward CPE requirements for completion of education courses that assist the educator in the use of digital technology in learning activities that improve teaching, assessment, and instructional practices. The proposed amendment to 19 TAC would also include technical edits to conform with Texas Register style and formatting requirements. The proposed amendment would have no additional procedural and reporting implications. The proposed amendment would have no additional locally maintained paperwork requirements. FISCAL NOTE. Ryan Franklin, associate commissioner for educator leadership and quality, has determined that for the first fiveyear period the amendment is in effect, there will be no additional fiscal implications for state and local governments and there are no additional costs to entities required to comply with the proposed amendment. While the proposed amendment would create minimum requirements for several CPE topics for individuals holding standard classroom teacher, principal, and school counselor certificates, many of the CPE activity options are provided at no or low cost. There is no effect on local economy for the first five years that the proposed amendment is in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed amendment does not impose a cost on regulated persons, another state agency, a special district, or local government and, therefore, is not subject to Texas Government Code, PUBLIC BENEFIT/COST NOTE. Mr. Franklin has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of enforcing the amendment would be clarified certificate renewal requirements relating to the content of the required CPE hours. The proposed amendment will ensure that each teacher and principal receives education in preventing inappropriate educator student relationships and other critical areas. This benefits the educator by helping the educator create proper boundaries and avoid complaints or discipline. The proposed amendment benefits students by helping ensure that teachers do not engage students in inappropriate relationships. There is no anticipated economic cost to persons who are required to comply with the proposed amendment. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct adverse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, , is required. GOVERNMENT GROWTH IMPACT: The TEA staff has determined that the proposed amendment does have a government growth impact pursuant to Texas Government Code, The proposed amendment in 19 TAC (c)(4), (5), and (6) would expand existing regulation to require individuals who hold standard classroom teacher, principal, and/or school counselor certificates to complete CPE activities in certain topics. The expansion of the existing regulation is a result of a consistent interpretation of changes to the TEC, , as amended by SB 1839 and SB 7, 85th Texas Legislature, Regular Session, 2017, and HB 642, 83rd Texas Legislature, Regular Session, REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the proposed amendment at the March 2, 2018 meeting in accordance with the SBEC board operating policies and procedures. All requests for a public hearing on the proposed amendment submitted under the Administrative Procedure Act PROPOSED RULES January 5, TexReg 23

24 must be received by the Department of Educator Leadership and Quality, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701, Attention: Mr. Ryan Franklin, associate commissioner for educator leadership and quality, not more than 14 calendar days after notice of the proposal has been published in the Texas Register on January 5, STATUTORY AUTHORITY. The amendment is proposed under the Texas Education Code (TEC), (a), which states that a person may not be employed as a teacher, teacher intern or teacher trainee, librarian, educational aide, administrator, educational diagnostician, or school counselor by a school district unless the person holds an appropriate certificate or permit issued as provided by the TEC, Chapter 21, Subchapter B; TEC, (f), which clarifies and places certain limits on provisions authorizing termination of an educator's contract for failure to maintain a valid certificate; TEC, , which authorizes the SBEC to regulate and oversee all aspects of the certification, continuing education, and standards of conduct of public school educators; TEC, (b)(1), which requires the SBEC to propose rules that provide for the regulation of educators and the general administration of the TEC, Chapter 21, Subchapter B, in a manner consistent with the TEC, Chapter 21, Subchapter B; TEC, (b)(4), which requires the SBEC to propose rules that specify the requirements for the issuance and renewal of an educator certificate; TEC, (b)(9), which requires the SBEC to propose rules that provide for continuing education requirements; TEC, , as added by SB 1839, 85th Texas Legislature, Regular Session, 2017, which requires the SBEC to propose rules that provide for CPE credit related to digital technology instruction; and TEC, , as amended by SB 7, SB 179, and SB 1839, 85th Texas Legislature, Regular Session, 2017, which requires the SBEC to propose rules establishing a process for identifying continuing education courses and programs that fulfill educators' continuing education requirements. CROSS REFERENCE TO STATUTE. The amendment implements the Texas Education Code, (TEC), (a); (f); ; (b)(1), (4), and (9); , as added by Senate Bill (SB) 1839, 85th Texas Legislature, Regular Session, 2017; and , as amended by SB 7, SB 179, and SB 1839, 85th Texas Legislature, Regular Session, Number and Content of Required Continuing Professional Education Hours. (a) The appropriate number of clock-hours of continuing professional education (CPE), as specified in of this title (relating to Number of Required Continuing Professional Education Hours by Classes of Certificates), must be completed during each five-year renewal period. (b) One semester credit hour earned at an accredited institution of higher education is equivalent to 15 CPE clock-hours. (c) At least 80% of the CPE activities shall be directly related to the certificate(s) being renewed and focus on the standards required for the initial issuance of the certificate(s), including: (1) content area knowledge and skills; (2) professional ethics and standards of conduct; (3) professional development, which should encompass topics such as the following: (A) district and campus priorities and objectives; (B) child development, including research on how children learn; (C) classroom management; (D) applicable federal and state laws; (E) diversity and special needs of student populations; (F) increasing and maintaining parental involvement; (G) integration of technology into educational practices; (H) ensuring that students read on or above grade level; (I) diagnosing and removing obstacles to student achievement; and (J) instructional practices. (4) An individual who holds a classroom teacher certificate that is renewed on or after June 1, 2019, must complete CPE activities directly related to each of the topics in subparagraphs (A)-(H) of this paragraph. Not more than 25% of the CPE activities for an individual who holds a classroom teacher certificate shall include instruction in the following topics [regarding]: (A) collecting and analyzing information that will improve effectiveness in the classroom; (B) recognizing early warning indicators that a student may be at risk of dropping out of school; (C) digital learning, digital teaching, and integrating technology into classroom instruction; [and] (D) educating students with disabilities, including mental health disorders; [diverse student populations, including:] [(i) students with disabilities, including mental health disorders;] [(ii) students who are educationally disadvantaged;] [(iii) students of limited English proficiency; and] [(iv) students at risk of dropping out of school.] (E) educating students who are educationally disadvantaged; (F) educating English language learners; (G) educating students at risk of dropping out of school; and (H) understanding appropriate relationships, boundaries, and communications between educators and students. (5) An individual who holds a principal certificate that is renewed on or after June 1, 2019, must complete CPE activities directly related to each of the topics listed in subparagraphs (A)-(J) of this paragraph. Not more than 25% of the CPE activities for an individual who holds a principal certificate shall include instruction in the following topics [regarding]: (A) collecting and analyzing information; [effective and efficient management, including:] [(i) collecting and analyzing information;] [(ii) making decisions and managing time; and] [(iii) supervising student discipline and managing behavior;] (B) making decisions and managing time; 43 TexReg 24 January 5, 2018 Texas Register

25 (C) supervising student discipline and managing behavior; (D) [(B)] recognizing early warning indicators that a student may be at risk of dropping out of school; (E) [(C)] digital learning, digital teaching, and integrating technology into campus curriculum and instruction; [and] (F) [(D)] educating students with disabilities, including mental health disorders; [diverse student populations, including:] [(i) students with disabilities, including mental health disorders;] (G) educating students who are educationally disadvantaged; and [(ii) students who are educationally disadvantaged;] [(iii) students of limited English proficiency; and] [(iv) students at risk of dropping out of school.] (H) educating English language learners; (I) educating students at risk of dropping out of school; (J) preventing, recognizing, and reporting any sexual conduct between an educator and student that is prohibited under the Texas Penal Code, 21.12, or for which reporting is required under the Texas Education Code (TEC), (6) An individual who holds a school counselor certificate that is renewed on or after June 1, 2019, must complete CPE activities directly related to each of the topics listed in subparagraphs (A)-(D) of this paragraph. Not more than 25% of the CPE activities for an individual who holds a school counselor certificate shall include instruction in the following topics [regarding]: (A) assisting students in developing high school graduation plans; (B) implementing dropout prevention strategies; [and] (C) informing students concerning college admissions, including college financial aid resources and application procedures; and[:] [(i) college admissions, including college financial aid resources and application procedures; and] (D) informing students concerning career opportunities. [(ii) career opportunities.] (d) Educators are encouraged to identify CPE activities based on results of his or her annual appraisal required under the TEC [Texas Education Code], Chapter 21, Subchapter H. (e) The required CPE for educators who teach students with dyslexia must include training regarding new research and practices in educating students with dyslexia. The required training may be satisfied through an online course approved by Texas Education Agency staff. (f) An educator eligible to renew multiple classes of certificates issued during the same renewal period may satisfy the requirements specified in of this title for any class of certificate issued for less than the full five-year period by completing a prorated number of the required CPE clock-hours. Educators must complete a minimum of one-fifth of the additional CPE clock-hours for each full calendar year that the additional class of certificate is valid. (g) An educator may fulfill up to 12 clock-hours of required CPE activities by participating in a mental health first aid training program offered by a local mental health authority under the Texas Health and Safety Code, The number of clock-hours of CPE an educator may fulfill under this subsection may not exceed the number of clock-hours the educator actually spends participating in a mental health first aid training program. (h) An educator may receive credit toward CPE requirements for completion of an instructional course on the use of an automated external defibrillator (AED) that meets the guidelines for AED training approved under Texas Health and Safety Code, , in accordance with the TEC [Texas Education Code (TEC)], (i) An educator may receive credit toward CPE requirements for completion of suicide prevention training that meets the guidelines for suicide prevention training approved under the TEC, (j) Continuing education requirements for a classroom teacher and principal may include instruction regarding how grief and trauma affect student learning and behavior and how evidence-based, grief-informed, and trauma-informed strategies support the academic success of students affected by grief and trauma. (k) An educator may receive credit toward CPE requirements for completion of education courses that: (1) use technology to increase the educator's digital literacy; and (2) assist the educator in the use of digital technology in learning activities that improve teaching, assessment, and instructional practices. 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) CHAPTER 235. CLASSROOM CERTIFICA- TION STANDARDS SUBCHAPTER B. ELEMENTARY SCHOOL CERTIFICATE STANDARDS The State Board for Educator Certification (SBEC) proposes new , , , and , concerning elementary school certificate standards. The proposed new sections would implement recent legislation from the 85th Texas Legislative Session, 2017, specify the educator standards required for the Early Childhood: Prekindergarten-Grade 3 certification as well as the pedagogy and professional responsibilities (PPR) educator standards required for the Early Childhood-Grade 6 certification. The proposed new chapter reflects feedback provided by the SBEC-appointed Classroom Teacher Standards Advisory Committee for the Early Childhood: PROPOSED RULES January 5, TexReg 25

26 Prekindergarten-Grade 3 and Early Childhood-Grade 6 PPR standards. The SBEC is statutorily authorized to regulate and oversee all aspects of the certification of public school educators. SBEC is also statutorily authorized to ensure that all candidates for certification or renewal of certification demonstrate the knowledge and skills necessary to improve the performance of the diverse population of this state. At the March and June 2017 SBEC meetings, the Board and Texas Education Agency (TEA) staff discussed the desire to establish the educator standards for the classroom teacher into rule and to provide Early Childhood: Prekindergarten-Grade 3 Content Standards and Early Childhood: Prekindergarten-Grade 3 Science of Teaching Reading Standards for elementary teachers that are aligned with the Texas Essential Knowledge and Skills (TEKS) and the Texas Prekindergarten Guidelines and reflect best practices to better prepare beginning teachers of early learners. At the June 9, 2017 SBEC meeting, the Board approved the Classroom Teacher Standards Advisory Committee to begin the work of recommending Early Childhood: Prekindergarten-Grade 3 Content Standards and the Early Childhood: Prekindergarten-Grade 3 Science of Teaching Reading Standards for teachers of early learners. At the August 4, 2017 SBEC meeting, TEA staff updated the SBEC on the activities completed by the advisory committee for the Early Childhood: Prekindergarten-Grade 3 Content Standards and Early Childhood: Prekindergarten-Grade 3 Science of Teaching Reading Standards. TEA staff also updated the Board on recent legislation requiring the Early Childhood: Prekindergarten-Grade 3 certificate. The Early Childhood: Prekindergarten-Grade 3 Content Standards would focus specifically on the grade bands that serve students up to the age of eight, which defines the classification "early childhood." In developing the Early Childhood: Prekindergarten-Grade 3 Content Standards, the goal is to place greater emphasis on the developmentally appropriate content knowledge and skills that are most critical for early childhood practitioners entering the field. This goal is rooted in the theory that by narrowing the grade bands for more rigorous, relevant, and reliable content, the preparation and support of Early Childhood-Grade 3 (EC-3) candidates will improve, thereby producing more effective educators that can improve student outcomes. The Classroom Teacher Standards Advisory Committee utilized the TEKS for Kindergarten-Grade 5, the Texas Prekindergarten Guidelines, and the National Association for the Education of Young Children (NAEYC) Standards for Early Childhood Professional Preparation in the development of these standards. The Early Childhood: Prekindergarten-Grade 3 Science of Teaching Reading Standards would focus on the understanding that reading is an essential skill for every student's future academic success, which requires effective instruction from the students' earliest years. The science of teaching reading is comprised of complex knowledge and skills. Educators are not currently required to demonstrate a deep understanding of the science of teaching reading as a bar for entry into the EC-3 classroom. This is due to the breadth of content that must be covered in the current certification pathway. Therefore, the Classroom Teacher Standards Advisory Committee targeted standards within the current English Language Arts and Reading (ELAR) Core Subjects standards specifically focused on early reading development, allowing for the development of a wider breadth and depth of standards specifically addressing the science of teaching reading, while also ensuring that the standards are focused, rigorous, and relevant. The goal would be to establish a clear message that all educators must have a clear understanding of the knowledge and skills associated with the science of teaching reading as a bar for entry into the classroom, regardless of an educator's assigned content area, ultimately impacting educator preparation and performance, and, thus, improving student outcomes. The Classroom Teacher Standards Advisory Committee utilized the TEKS for Kindergarten-Grade 5 and the Prekindergarten Guidelines in the development of these standards. Upon completion of drafting the standards to be included for an Early Childhood: Prekindergarten-Grade 3 certificate, TEA staff identified an opportunity to strengthen the existing Early Childhood-Grade 6 (EC-6) certificate by applying the same methodology and advice provided to grade-band the existing Early Childhood-Grade 12 (EC-12) PPR by prioritizing standards for an EC-6 PPR. This will allow the EC-6 certified individuals to have the same grade-band focused PPR as the EC-3, 4-8, and 7-12 educators. At the October SBEC meeting, the SBEC agreed with this approach and directed TEA staff to provide proposed draft rule text for the EC-6 PPR standards along with the standards included for an Early Childhood: Prekindergarten-Grade 3 certificate. Subchapter B. Elementary School Certificate Standards Chapter 235, Subchapter B, incorporates all elementary school classroom teacher certificate standards under one subchapter. Division 1. Early Childhood: Prekindergarten-Grade 3 Chapter 235, Subchapter B, Division 1, Early Childhood: Prekindergarten-Grade 3, complies with TEC, , as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, In addition to the rule for the PPR educator standards required of candidates seeking the EC-3 classroom teacher certificate, the proposed new rules would specify the content and science of teaching reading educator standards required of candidates seeking the EC-3 classroom teacher certificate. The rules adopted under Division 1 would apply to candidates admitted to an educator preparation program (EPP) on or after September 1, Content Standards, Early Childhood: Prekindergarten- Grade 3 Proposed new subsection (a) would clarify the content standards for EC-3 classroom teachers of early learners, including the Prekindergarten Guidelines and Kindergarten-Grade 5 TEKS, with an emphasis on Kindergarten-Grade 3 TEKS. Content standards span Kindergarten-Grade 5 TEKS to ensure classroom teachers can meet the needs of all early learners and vertically align instruction. Proposed new subsection (b) would specify the standards needed in regards to a teacher's content knowledge and expertise in child development. Proposed new subsection (c) would specify the standards needed in regards to a teacher's content knowledge in English language arts and reading. Proposed new subsection (d) would specify the standards needed in regards to a teacher's content knowledge in mathematics. Proposed new subsection (e) would specify the standards needed in regards to a teacher's content knowledge in science. Proposed new subsection (f) would specify the standards needed in regards to a teacher's content knowledge in social studies. Proposed new 43 TexReg 26 January 5, 2018 Texas Register

27 subsection (g) would specify the standards needed in regards to a teacher's content knowledge in fine arts. Proposed new subsection (h) would specify the standards needed in regards to a teacher's content knowledge in health education. Proposed new subsection (i) would specify the standards needed in regards to a teacher's content knowledge in physical education Science of Teaching Reading Standards, Early Childhood: Prekindergarten-Grade 3 Proposed new subsection (a) would clarify the Science of Teaching Reading Standards for EC-Grade 3 classroom teachers of early learners focused on the instruction of early reading, including the Prekindergarten Guidelines and Kindergarten-Grade 5 English Language Arts and Reading TEKS, with an emphasis on Kindergarten-Grade 3 TEKS. Proposed new subsection (b) would specify the standards needed in regards to a teacher's content knowledge and expertise in the components of reading. Proposed new subsection (c) would specify the standards needed in regards to a teacher's ability to plan and delivery early reading instruction. Division 2. Early Childhood-Grade 6 Proposed new 19 TAC Chapter 235, Subchapter B, Division 2, Early Childhood-Grade 6, would specify the PPR educator standards required of candidates seeking the EC-6 classroom teacher certificate Pedagogy and Professional Responsibilities Standards, Early Childhood-Grade 6 Proposed new subsection (a) would clarify the PPR standards for EC-6 for classroom teachers of early learners and are aligned with classroom teaching expectations as outlined in 19 TAC Chapter 149, Commissioner's Rules Concerning Educator Standards. Proposed new subsection (b) would specify the standards needed in regards to a teacher's ability to plan and deliver instruction. Proposed new subsection (c) would specify the standards needed in regards to a teacher's ability to ensure high levels of learning, social-emotional development, and achievement outcomes for all students, taking into consideration each student's educational and developmental backgrounds and focusing on each student's needs. Proposed new subsection (d) would specify the standards needed in regards to a teacher's content knowledge and expertise. Proposed new subsection (e) would specify the standards needed in regards to a teacher's ability to manage a safe and supportive learning environment. Proposed new subsection (f) would specify the standards needed in regards to a teacher's ability to apply data-driven practices. Proposed new subsection (g) would specify the standards needed in regards to a teacher's ability to abide by educator professional practices and responsibilities Implementation Date, Early Childhood-Grade 6 The proposed new section would clarify that the provisions of this subchapter apply to candidates admitted to an EPP on or after September 1, The proposed new sections would have no additional procedural and reporting implications. The proposed new sections would have no additional locally maintained paperwork requirements. FISCAL NOTE. Ryan Franklin, associate commissioner for educator leadership and quality, has determined that for the first five-year period the new sections are in effect, there will be no additional fiscal implications for state or local government and no additional costs to entities as a result of enforcing or administering the new sections. There is no effect on local economy for the first five years that the proposed new sections are in effect; therefore, no local employment impact statement is required under Texas Government Code, The proposed new sections do not impose a cost on regulated persons, another state agency, a special district, or local government and, therefore, are not subject to Texas Government Code, PUBLIC BENEFIT/COST NOTE. Mr. Franklin has determined that for each year of the first five years the new sections are in effect the public benefit anticipated as a result of enforcing the new sections would be more rigorous, relevant, and reliable requirements for the preparation, certification, and testing of elementary classroom teachers upon entry into the profession and retention of these qualified professionals. There is no anticipated economic cost to persons who are required to comply with the proposed new sections. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSI- NESSES, AND RURAL COMMUNITIES. There is no direct adverse economic impact for small businesses, microbusinesses, and rural communities; therefore, no regulatory flexibility analysis, specified in Texas Government Code, , is required. GOVERNMENT GROWTH IMPACT: The TEA staff has determined that the proposed new sections do not have a government growth impact pursuant to Texas Government Code, REQUEST FOR PUBLIC COMMENT. The public comment period on the proposal begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the proposed new sections at the March 2, 2018 meeting in accordance with the SBEC board operating policies and procedures. All requests for a public hearing on the proposed new sections submitted under the Administrative Procedure Act must be received by the Department of Educator Leadership and Quality, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701, Attention: Mr. Ryan Franklin, associate commissioner for educator leadership and quality, not more than 14 calendar days after notice of the proposal has been published in the Texas Register on January 5, DIVISION 1. EARLY CHILDHOOD: PREKINDERGARTEN-GRADE 3 19 TAC , STATUTORY AUTHORITY. The new sections are proposed under the Texas Education Code (TEC), (a), which states that a person may not be employed as a teacher, teacher intern or teacher trainee, librarian, educational aide, administrator, educational diagnostician, or school counselor by a school district unless the person holds an appropriate certificate or permit issued as provided by the TEC, Chapter 21, Subchapter B; TEC, , which charges the SBEC with regulating and overseeing all aspects of the certification, continuing education, and standards of conduct for public school educators to ensure that all candidates for certification demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state; TEC, (4), which states that the SBEC shall, for each class of educator certificate, appoint an advisory committee composed of members of that class to recommend standards for that class to the board; TEC, (b)(1), which requires the SBEC to propose rules PROPOSED RULES January 5, TexReg 27

28 that provide for the regulation of educators and the general administration of the TEC, Chapter 21, Subchapter B, in a manner consistent with the TEC, Chapter 21, Subchapter B. TEC, (b)(2) and (4), require the SBEC to propose rules that specify the classes of educator certificates to be issued, including emergency certificates, and the requirements for the issuance and renewal of an educator certificate; TEC, , as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, 2017, which requires the SBEC to create a Prekindergarten-Grade 3 certificate. CROSS REFERENCE TO STATUTE. The new sections implement the Texas Education Code (TEC), (a); ; (4); (b)(1), (2), and (4); and , as added by Senate Bill (SB) 1839 and House Bill (HB) 2039, 85th Texas Legislature, Regular Session, Content Standards, Early Childhood: Prekindergarten-Grade 3. (a) Early Childhood: Prekindergarten-Grade 3 Content Standards. The content standards identified in this section are targeted for classroom teachers of early learners (birth through age eight). The standards address the discipline that deals with the content knowledge required to teach early learners. The standards address content knowledge in Prekindergarten-Grade 5, with an emphasis on Prekindergarten-Grade 3, in order to meet the needs of all learners and address vertical alignment. The standards align with the Texas Prekindergarten Guidelines, Chapter 110 of this title (relating to Texas Essential Knowledge and Skills for English Language Arts and Reading), Chapter 111 of this title (relating to Texas Essential Knowledge and Skills for Mathematics), Chapter 112 of this title (relating to Texas Essential Knowledge and Skills for Science), Chapter 113 of this title (relating to Texas Essential Knowledge and Skills for Social Studies), Chapter 115 of this title (relating to Texas Essential Knowledge and Skills for Health Education), Chapter 116 of this title (relating to Texas Essential Knowledge and Skills for Physical Education), Chapter 117 of this title (relating to Texas Essential Knowledge and Skills for Fine Arts), and The National Association for the Education of Young Children Professional Preparation Standards. (b) Child Development. The Early Childhood: Prekindergarten-Grade 3 classroom teachers use their understanding of young children's characteristics and needs, and of multiple interacting influences on children's development and learning, to create environments that are healthy, respectful, supportive, and challenging for each child. Early Childhood: Prekindergarten-Grade 3 classroom teachers must: (1) know and understand young children's characteristics and needs, from birth through age 8; (2) know and understand the multiple influences on early development and learning; and (3) use developmental knowledge to create healthy, respectful, supportive, and challenging learning environments for young children. (c) English Language Arts and Reading. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 English Language Arts and Reading Texas Essential Knowledge and Skills (TEKS), with an emphasis on Kindergarten-Grade 3, and Emergent Early Literacy Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (d) Mathematics. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Mathematics TEKS, with an emphasis on Kindergarten-Grade 3, and Mathematics Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (e) Science. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Science TEKS, with an emphasis on Kindergarten-Grade 3, and Science Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (f) Social Studies. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Social Studies TEKS, with an emphasis on Kindergarten-Grade 3, and Social Studies Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (g) Fine Arts, including Theatre, Art, and Music. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Theatre, Art, and Music TEKS, with an emphasis on Kindergarten-Grade 3, and Fine Arts Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (h) Health Education. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Health Education TEKS, with an emphasis on Kindergarten-Grade 3, and Physical Development Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills. (i) Physical Education. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Physical Education TEKS, with an emphasis on Kindergarten-Grade 3, and Physical Development Texas Prekindergarten Guidelines and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade-level skills Science of Teaching Reading Standards, Early Childhood: Prekindergarten-Grade 3. (a) Early Childhood: Prekindergarten-Grade 3 Science of Teaching Reading (STR) standards. The STR standards identified in this section are targeted for classroom teachers of early learners (birth through age eight). The standards address the discipline that deals with the theory and practice of teaching early reading. The standards inform proper teaching techniques, strategies, teacher actions, teacher judgements, and decisions by taking into consideration theories of learning, understandings of students and their needs, and the backgrounds and interests of individual students. The standards are also aligned with the Texas Prekindergarten Guidelines and Chapter 110 of this title (relating to Texas Essential Knowledge and Skills for English Language Arts and Reading). The standards address early reading content knowledge in Prekindergarten-Grade 5, with an emphasis on Prekindergarten-Grade 3, in order to meet the needs of all learners and address vertical alignment. (b) Reading Development. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of Kindergarten-Grade 5 Texas Essential Knowledge and Skills (TEKS) 43 TexReg 28 January 5, 2018 Texas Register

29 and Texas Prekindergarten Guidelines pertaining to reading and apply knowledge of developmentally appropriate, research- and evidence-based assessment and instructional practices to promote students' development of grade level skills within the following components of reading: (1) oral language development; (2) print awareness; (3) phonological and phonemic awareness; (4) phonics; (5) fluency; (6) vocabulary development; (7) comprehension of literary text; (8) comprehension of informational text; and (9) beginning strategies and reading comprehension skills. (c) Reading Pedagogy. The Early Childhood: Prekindergarten-Grade 3 classroom teachers demonstrate understanding of the principles of reading instruction and assessment and use a range of instructional strategies and assessment methods to promote students' development of foundational reading skills, including: (1) implementing both formal and informal methods of measuring student progress in early reading development; (2) designing and executing developmentally appropriate, standards-driven instruction that reflect evidence-based best practices; and (3) acquiring, analyzing, and using background information (familial, cultural, educational, linguistic, and developmental characteristics) to engage all students in reading, including students with exceptional needs and English language learners. 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) DIVISION 2. EARLY CHILDHOOD-GRADE 6 19 TAC , STATUTORY AUTHORITY. The new sections are proposed under the Texas Education Code (TEC), (a), which states that a person may not be employed as a teacher, teacher intern or teacher trainee, librarian, educational aide, administrator, educational diagnostician, or school counselor by a school district unless the person holds an appropriate certificate or permit issued as provided by the TEC, Chapter 21, Subchapter B; TEC, , which charges the SBEC with regulating and overseeing all aspects of the certification, continuing education, and standards of conduct for public school educators to ensure that all candidates for certification demonstrate the knowledge and skills necessary to improve the performance of the diverse student population of this state; TEC, (4), which states that the SBEC shall, for each class of educator certificate, appoint an advisory committee composed of members of that class to recommend standards for that class to the board; TEC, (b)(1), which requires the SBEC to propose rules that provide for the regulation of educators and the general administration of the TEC, Chapter 21, Subchapter B, in a manner consistent with the TEC, Chapter 21, Subchapter B. TEC, (b)(2) and (4), require the SBEC to propose rules that specify the classes of educator certificates to be issued, including emergency certificates, and the requirements for the issuance and renewal of an educator certificate; TEC, , as added by SB 1839 and HB 2039, 85th Texas Legislature, Regular Session, 2017, which requires the SBEC to create a Prekindergarten-Grade 3 certificate. CROSS REFERENCE TO STATUTE. The new sections implement the Texas Education Code (TEC), (a); ; (4); (b)(1), (2), and (4); and , as added by Senate Bill (SB) 1839 and House Bill (HB) 2039, 85th Texas Legislature, Regular Session, Pedagogy and Professional Responsibilities Standards, Early Childhood-Grade 6. (a) Early Childhood-Grade 6 pedagogy and professional responsibilities (PPR) standards. The PPR standards identified in this section are targeted for classroom teachers of students in Early Childhood-Grade 6. The standards address the discipline that deals with the theory and practice of teaching to inform skill-based training and development. The standards inform proper teaching techniques, strategies, teacher actions, teacher judgements, and decisions by taking into consideration theories of learning, understandings of students and their needs, and the backgrounds and interests of individual students. The standards are also aligned with the Commissioner's Teacher Standards in 19 TAC Chapter 149 of this title (relating to Commissioner's Rules Concerning Educator Standards). (b) Instructional Planning and Delivery. Early Childhood-Grade 6 classroom teachers demonstrate understanding of instructional planning and delivery by providing standards-based, data-driven, differentiated instruction that engages students and makes learning relevant for today's learners. Early Childhood-Grade 6 classroom teachers must: (1) develop lessons that build coherently toward objectives based on course content, curriculum scope and sequence, and expected student outcomes; (2) effectively communicate goals, expectations, and objectives to help all students reach high levels of achievement; (3) connect students' prior understanding and real-world experiences to new content and contexts, maximizing learning opportunities; (4) plan instruction that is developmentally appropriate, is standards driven, and motivates students to learn; (5) use a range of instructional strategies, appropriate to the content area, to make subject matter accessible to all students; (6) differentiate instruction, aligning methods and techniques to diverse student needs, including acceleration, remediation, and implementation of individual education plans; (7) plan student groupings, including pairings and individualized and small-group instruction, to facilitate student learning; PROPOSED RULES January 5, TexReg 29

30 (8) integrate the use of oral, written, graphic, kinesthetic, and/or tactile methods to teach key concepts; (9) ensure that the learning environment features a high degree of student engagement by facilitating discussion and student-centered activities as well as leading direct instruction; (10) encourage all students to overcome obstacles and remain persistent in the face of challenges, providing them with support in achieving their goals; (11) set high expectations and create challenging learning experiences for students, encouraging them to apply disciplinary and cross-disciplinary knowledge to real-world problems; (12) provide opportunities for students to engage in individual and collaborative critical thinking and problem solving; (13) monitor and assess students' progress to ensure that their lessons meet students' needs; (14) provide immediate feedback to students in order to reinforce their learning and ensure that they understand key concepts; and (15) adjust content delivery in response to student progress through the use of developmentally appropriate strategies that maximize student engagement. (c) Knowledge of Student and Student Learning. Early Childhood-Grade 6 classroom teachers work to ensure high levels of learning, social-emotional development, and achievement outcomes for all students, taking into consideration each student's educational and developmental backgrounds and focusing on each student's needs. Early Childhood-Grade 6 classroom teachers must: (1) create a community of learners in an inclusive environment that views differences in learning and background as educational assets; (2) connect learning, content, and expectations to students' prior knowledge, life experiences, and interests in meaningful contexts; (3) understand the unique qualities of students with exceptional needs, including disabilities and giftedness, and know how to effectively address these needs through instructional strategies and resources; (4) understand the role of language and culture in learning and know how to modify their practice to support language acquisition so that language is comprehensible and instruction is fully accessible; (5) understand how learning occurs and how learners develop, construct meaning, and acquire knowledge and skills; and (6) identify readiness for learning and understand how development in one area may affect students' performance in other areas. (d) Content Knowledge and Expertise. Early Childhood-Grade 6 classroom teachers exhibit an understanding of content, discipline, and related pedagogy as demonstrated through the quality of the design and execution of lessons and the ability to match objectives and activities to relevant state standards. Early Childhood-Grade 6 classroom teachers must: (1) have expertise in how their content vertically and horizontally aligns with the grade-level/subject area continuum, leading to an integrated curriculum across grade levels and content areas; (2) identify gaps in students' knowledge of subject matter and communicate with their leaders and colleagues to ensure that these gaps are adequately addressed across grade levels and subject areas; (3) keep current with developments, new content, new approaches, and changing methods of instructional delivery within their discipline; (4) organize curriculum to facilitate student understanding of the subject matter; (5) understand, actively anticipate, and adapt instruction to address common misunderstandings and preconceptions; (6) promote literacy and the academic language within the discipline and make discipline-specific language accessible to all learners; (7) teach both the key content knowledge and the key skills of the discipline; and (8) make appropriate and authentic connections across disciplines, subjects, and students' real world experiences. (e) Learning Environment. Early Childhood-Grade 6 classroom teachers interact with students in respectful ways at all times, maintaining a physically and emotionally safe, supportive learning environment that is characterized by efficient and effective routines, clear expectations for student behavior, and organization that maximizes student learning. Early Childhood-Grade 6 classroom teachers must: (1) embrace students' backgrounds and experiences as an asset in their learning; (2) maintain and facilitate respectful, supportive, positive, and productive interactions with and among students; (3) establish and sustain learning environments that are developmentally appropriate and respond to students' needs, strengths, and personal experiences; (4) create a physical classroom set-up that is flexible and accommodates the different learning needs of students; (5) implement behavior management systems to maintain an environment where all students can learn effectively; (6) maintain a culture that is based on high expectations for student performance and encourages students to be self-motivated, taking responsibility for their own learning; (7) maximize instructional time, including managing transitions; (8) manage and facilitate groupings in order to maximize student collaboration, participation, and achievement; and (9) communicate regularly, clearly, and appropriately with parents and families about student progress, providing detailed and constructive feedback and partnering with families in furthering their students' achievement goals. (f) Data-Driven Practices. Early Childhood-Grade 6 classroom teachers use formal and informal methods to assess student growth aligned to instructional goals and course objectives and regularly review and analyze multiple sources of data to measure student progress and adjust instructional strategies and content delivery as needed. Early Childhood-Grade 6 classroom teachers must: (1) gauge student progress and ensure mastery of content knowledge and skills by providing assessments aligned to instructional objectives and outcomes that are accurate measures of student learning; (2) analyze and review data in a timely, thorough, accurate, and appropriate manner, both individually and with colleagues, to monitor student learning; and 43 TexReg 30 January 5, 2018 Texas Register

31 (3) design instruction, change strategies, and differentiate their teaching practices to improve student learning based on assessment outcomes. (g) Professional Practices and Responsibilities. Early Childhood-Grade 6 classroom teachers consistently hold themselves to a high standard for individual development, collaborate with other educational professionals, communicate regularly with stakeholders, maintain professional relationships, comply with all campus and school district policies, and conduct themselves ethically and with integrity. Early Childhood-Grade 6 classroom teachers must: (1) reflect on their own strengths and professional learning needs, using this information to develop action plans for improvement; (2) seek out feedback from supervisor, coaches, and peers and take advantage of opportunities for job-embedded professional development; (3) adhere to the educators' code of ethics in of this title (relating to Code of Ethics and Standard Practices for Texas Educators), including following policies and procedures at their specific school placement(s); (4) communicate consistently, clearly, and respectfully with all members of the campus community, administrators, and staff; and (5) serve as advocates for their students, focusing attention on students' needs and concerns and maintaining thorough and accurate student records Implementation Date, Early Childhood-Grade 6. The provisions of this subchapter apply to an applicant who is admitted to an educator preparation program for the Classroom Teacher Certificate on or after 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 December 21, TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) TITLE 22. EXAMINING BOARDS PART 21. TEXAS STATE BOARD OF EXAMINERS OF PSYCHOLOGISTS CHAPTER 469. COMPLAINTS AND ENFORCEMENT 22 TAC The Texas State Board of Examiners of Psychologists proposes an amendment to rule 469.7, Persons with Criminal Backgrounds. The Board's intent behind this proposed amendment is to more accurately describe the crimes which the Board considers as directly related to the practice of psychology. The proposed amendment would delete references to offenses such as disorderly conduct, intoxication offenses, and gambling to name a few examples. The proposed amendment is also intended to provide better clarity to future applicants with a criminal history, so that they may better understand how their criminal history may impact a future license application with the Board. FISCAL NOTE. Darrel D. Spinks, Executive Director of the Board, has determined that for the first five-year period the proposed rule amendments are in effect, there will be no additional estimated cost, reduction in costs, or loss or increase in revenue to the state or local governments as a result of enforcing or administering the rule. Additionally, Mr. Spinks has determined that enforcing or administering the rule does not have foreseeable implications relating to the costs or revenues of state or local government. PUBLIC BENEFIT. Mr. Spinks has determined for the first fiveyear period the proposed rule amendment is in effect, there will be a benefit to licensees and the general public because the proposed amendment will provide greater clarity regarding what crimes the Board considers to directly relate to the practice of psychology. Mr. Spinks has also determined that for each year of the first five years the rules is in effect, the public benefit anticipated as a result of enforcing the rule will be to help the Board protect the public. PROBABLE ECONOMIC COSTS. Mr. Spinks has determined for the first five-year period the proposed rule amendment is in effect, there will be no additional economic costs to persons required to comply with this rule. SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COM- MUNITY IMPACT STATEMENT. Mr. Spinks has determined for the first five-year period the proposed rule amendment is in effect, there will be no adverse effect on small businesses, micro-businesses, or rural communities. REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MI- CRO-BUSINESSES AND RURAL COMMUNITIES. Since Mr. Spinks has determined that there are no anticipated adverse economic effects on small businesses, micro-businesses, or rural communities then the Board is not required to prepare a regulatory flexibility analysis pursuant to Tex. Gov't Code LOCAL EMPLOYMENT IMPACT STATEMENT. Mr. Spinks has determined that the proposed rule amendment will have no impact on local employment or a local economy. Thus, the Board is not required to prepare a local employment impact statement pursuant to Tex. Gov't Code REQUIREMENT FOR RULES INCREASING COSTS TO REG- ULATED PERSONS. The proposed amendment does not impose any new or additional costs to regulated persons, state agencies, special districts, or local governments therefore, pursuant to the Tex. Gov't Code , no repeal or amendment of another rule is required because the proposed amendment is necessary to protect the health, safety, and welfare of the residents of this state and the licensing and because regulatory costs imposed by the Board on licensees is not expected to increase. GOVERNMENT GROWTH IMPACT STATEMENT. For the first five-year period the proposed rule is in effect, the Board estimates that the proposed amendment will have no effect on government growth. The proposed amendment does not create or PROPOSED RULES January 5, TexReg 31

32 eliminate a government program; it does not require the creation or elimination of employee positions; it does not require the increase or decrease in future legislative appropriations to the agency; it does not require an increase or decrease in fees paid to the agency; it does not create a new regulation; it does not expand or repeal an existing regulation; it does not increase or decrease the number of individuals subject to the rule's applicability; and it does not positively or adversely affect the state's economy. TAKINGS IMPACT ASSESSMENT. Mr. Spinks has determined that there are no private real property interests affect by the proposed rule amendment. Thus the Board is not required to prepare a takings impact assessment pursuant to Tex. Gov't Code REQUEST FOR PUBLIC COMMENTS. Comments on the proposed amendment may be submitted to Brenda Skiff, Public Information Officer, Texas State Board of Examiners of Psychologists, 333 Guadalupe, Ste 2-450, Austin, Texas 78701, within 30 days of publication of this proposal in the Texas Register. Comments may also be submitted via fax to (512) , or via to Open.Records@tsbep.texas.gov. The Board specifically invites comments from the public on the issues of whether or not the proposed amendment will have an adverse economic effect on small businesses; if the proposed amendment is believed to have an adverse effect on small businesses, estimate the number of small businesses believed to be impacted by the rule, describe and estimate the economic impact of the rule on small businesses, offer alternative methods of achieving the purpose of the rule; then explain how the Board may legally and feasibly reduce that adverse effect on small businesses considering the purpose of the statute under which the proposed rule is to be adopted, finally describe how the health, safety, environmental and economic welfare of the state will be impacted by the various proposed methods. See (c)and (c-1) of the Tex. Gov't Code. STATUTORY AUTHORITY. The amendment is proposed under Tex. Occ. Code, Title 3, Subtitle I, Chapter 501, which provides the Texas State Board of Examiners of Psychologists with the authority to make all rules, not inconsistent with the Constitution and Laws of this State, which are reasonably necessary for the proper performance of its duties and regulations of proceedings before it. Additionally, the Board proposes the amendment pursuant to the authority found in (a) of the Tex. Occ. Code which vests the Board with the authority to adopt rules necessary to perform its duties and regulate its proceedings. The Board also proposes the amendment pursuant to the authority found in (b) of the Tex. Occ. Code which vests the Board with the authority to adopt rules under which licenses expire on various dates during the year. No other code, articles or statutes are affected by this section Persons with Criminal Backgrounds. (a) The Board may revoke or suspend an existing valid license, disqualify a person from receiving or renewing a license, or deny to a person the opportunity to be examined for a license due to a felony or misdemeanor conviction, or a plea of guilty or nolo contendere followed by deferred adjudication, if the offense directly relates to the performance of the activities of a licensee and the conviction directly affects such person's present fitness to perform as a licensee of this Board. (b) Criminal History Evaluation Letters. (1) In compliance with Chapter 53 of the Texas Occupations Code, the Board will provide criminal history evaluation letters. (2) A person may request the Board to provide a criminal history evaluation letter if the person is planning to enroll or is enrolled in an educational program that prepares the person for a license with this Board and the person has reason to believe that the person is ineligible for licensure due to a conviction or deferred adjudication for a felony or misdemeanor offense. (3) The requestor must submit to the Board a completed Board application form requesting an evaluation letter, the required fee, and certified copies of court documentation about all convictions and resolution to the Board. (4) Requestors must obtain a fingerprint criminal history record check after they have submitted an application for a criminal history evaluation letter. (5) The Board has the authority to investigate a request for a criminal history evaluation letter and may require that the requestor provide additional information about the convictions and other dispositions if requested by the Board. (6) The Board will provide a written response to the requestor within 90 days of the Board's receipt of the request, unless a more extensive investigation is required or the requestor fails to comply with a Board investigation. The Board's evaluation letter will state the Board's determination on each ground for potential ineligibility presented by the requestor. (7) In the absence of new evidence known to but not disclosed by the requestor or not reasonably available to the Board at the time the letter is issued, the Board's ruling on the request determines the requestor's eligibility only with respect to the grounds for potential ineligibility set out in the letter. (c) The Board shall revoke an existing valid license, disqualify a person from receiving or renewing a license, or deny to a person the opportunity to be examined for a license due to a felony conviction under Section 35A.02 of the Texas Penal Code, concerning Medicaid fraud. (d) No person currently serving a sentence in a penal institution or correctional facility following a felony conviction is eligible to obtain or renew his/her license. (e) In determining whether a criminal conviction directly relates to the performance of a licensee, the Board shall consider the factors listed in the Texas Occupations Code, Chapter 53. (f) These crimes which the Board considers as directly related to the performance of a licensee: (1) offenses listed in Article 42A.054 of the Code of Criminal Procedure; (2) any felony offense wherein the judgment reflects an affirmative finding regarding the use or exhibition of a deadly weapon; (3) any criminal violation of the Psychologists' Licensing Act; (4) any criminal violation of Chapter 35 (Insurance Fraud) or Chapter 35A (Medicaid Fraud) of the Penal Code; (5) any criminal violation of Chapter 32, Subchapter B (Forgery) of the Penal Code; 43 TexReg 32 January 5, 2018 Texas Register

33 (6) any criminal violation of Sections (Deceptive Business Practices), (Commercial Bribery), (Misapplication of Fiduciary Property), (Securing Execution of Document by Deception), (Deceptive Preparation and Marketing of Academic Product), (Fraudulent Use or Possession of Identifying Information), (Fraudulent, Substandard, or Fictitious Degree), or (Exploitation of Child, Elderly or Disabled Individual) of the Penal Code; (7) any criminal violation of Chapter 37 (Perjury and Other Falsification) of the Penal Code; (8) any offense involving the failure to report abuse; (9) any criminal violation of Section (Barratry and Solicitation of Professional Employment) of the Penal Code; (10) any criminal violation involving a federal health care program, including 42 USC Section 1320a-7b (Criminal penalties for acts involving Federal health care programs; (11) any state or federal offense not otherwise listed herein, committed by a licensee while engaged in the practice of psychology; and (12) any attempt, solicitation, or conspiracy to commit an offense listed herein. [(f) Those crimes which the Board considers as directly related to the performance of a licensee include but are not limited to:] [(1) a misdemeanor and/or felony offense under the following titles of the Texas Penal Code:] [(A) Title 5, pertaining to offenses against the person (for example, homicide, kidnapping, sexual offenses, and assaultive offenses);] [(B) Title 7, pertaining to offenses against property (for example, arson, robbery, burglary, theft, fraud, money laundering, and insurance fraud);] [(C) Title 8, pertaining to offenses against public administration (for example, bribery, perjury, and obstruction of justice);] [(D) Title 9, pertaining to offenses against public order and decency (for example, disorderly conduct and public indecency);] [(E) Title 10, pertaining to offenses against public health and safety (for example, weapons offenses, gambling, and intoxication offenses); and] [(F) Title 4, pertaining to the offenses of attempting or conspiring to commit the offenses listed in subparagraphs (A) - (F) of this paragraph.] [(2) any criminal violation of the Psychologists' Licensing Act or other statutes regulating or pertaining to the profession of psychology;] [(3) any criminal violation of statutes regulating other professions in the healing arts, which includes, but is not limited to medicine and nursing;] [(4) any crime involving moral turpitude;] [(5) any offense involving the failure to report abuse;] [(6) any state or federal drug offense, including violations of the Controlled Substances and Dangerous Drugs Act; and] [(7) any other misdemeanor or felony that the Board may consider in order to promote the public safety and welfare, as well as the intent of the Act and these rules.] (g) In determining whether a criminal conviction directly affects present fitness of the licensee, the Board shall consider the factors listed in Texas Occupations Code, (h) It shall be the responsibility of the licensee to secure and provide to the Board the recommendations of the prosecution, law enforcement, and correctional authorities regarding all criminal offenses. (i) The licensee shall also furnish proof in such form as may be required by the Board that he/she maintained a record of steady employment and has supported his/her dependents and has otherwise maintained a record of good conduct and has paid all outstanding court costs, supervision fees, fines and restitution as may have been ordered in all criminal cases in which he/she has been convicted. 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 December 18, TRD Darrel D. Spinks Executive Director Texas State Board of Examiners of Psychologists Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) TITLE 37. PUBLIC SAFETY AND CORREC- TIONS PART 1. TEXAS DEPARTMENT OF PUBLIC SAFETY CHAPTER 35. PRIVATE SECURITY SUBCHAPTER B. REGISTRATION AND LICENSING 37 TAC The Texas Department of Public Safety (the department) proposes amendments to 35.26, concerning Reclassification, Assignment, and Termination. Amendments to are necessary to allow assignments or terminations of a company license with the consent of a majority of the registered owners or by written consent of the qualified manager. Suzy Whittenton, Chief Financial Officer, has determined that for each year of the first five-year period this rule is in effect there will be no fiscal implications for state or local government, or local economies. Ms. Whittenton has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities required to comply with this rule as proposed. There is no anticipated economic cost to individuals who are required to comply with the rule as proposed. There is no anticipated negative impact on local employment. In addition, Ms. Whittenton has also determined that for each year of the first five-year period the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be greater clarity in the administrative rules governing the private security industry. PROPOSED RULES January 5, TexReg 33

34 The department has determined this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule that 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. The department has determined that Chapter 2007 of the Texas Government Code does not apply to this proposal. Accordingly, the department is not required to complete a takings impact assessment regarding this proposal. Pursuant to Texas Government Code, , the department has prepared a Government Growth Impact Statement and determined for each year of the first five-year period the rule is in effect, the proposed rule will not have any impact as described by Texas Government Code, Comments on this proposal may be submitted to Steve Moninger, Regulatory Services Division, Department of Public Safety, P.O. Box 4087, MSC-0240, Austin, Texas , or by at Select "Private Security". Comments must be received no later than thirty (30) days from the date of publication of this proposal. These amendments are proposed pursuant to Texas Government Code, (3), which authorizes the Public Safety Commission to adopt rules considered necessary for carrying out the department's work, and Texas Occupations Code, (b), which authorizes the department to adopt rules to administer Texas Occupations Code, Chapter Texas Government Code, (3) and Texas Occupations Code, (b) are affected by this proposal Reclassification, [and] Assignment, and Termination. (a) When a Class A or B license is reclassified as a Class C license, a fee in the amount of the difference in the cost of the licenses shall be paid. There shall be no refund when a Class C license is reclassified as a Class A or Class B license. (b) The department may approve the assignment of a company license to the spouse or heir(s) of a deceased owner provided: (1) A copy of the owner's death certificate is filed with the department; (2) A copy of the Will, Order Admitting Will to Probate, Letters of Testament, Affidavit of Heirship with two affiants' signatures, or Order of Heirship is filed with the department; and (3) In the case of the death of a qualified manager, that a replacement manager is qualified within ninety (90) days. (c) Other assignments will be permitted only under one of the conditions detailed in this subsection: [where the majority owners of the original licensee maintain majority ownership of the proposed assignee.] (1) the ownership in the assignor and assignee will remain the same; (2) the registered owners holding at least 25% ownership in the original license, and collectively holding a majority ownership interest, consent to the assignment; or (3) if there is an insufficient number of registered owners holding at least 25% ownership in the original license to potentially hold a majority in ownership interest in the license, the license may be assigned by written consent of the qualified manager or an individual designated and verified by affidavit by the qualified manager as authorized to assign the license. (d) The assignor must provide the department written documentation establishing the intended date of assignment[,] and notarized statements establishing the consent of a majority of the owners of the current license, or if applicable, the qualified manager, from the appropriate individuals. The assignee must ensure any new owners required to register are currently [have been] approved by the department. The assignee may not perform regulated services prior to the proposed date of assignment or the date of the department's approval of all required registration applications for new owners, whichever is later. The assignor must cease performance of all regulated services on the earlier of either the proposed date of assignment or the date of surrender or termination of any related owner registrations. (e) [(d)] An additional assignment fee will be assessed as provided by this chapter upon assignment of a license under subsection (b) or (c) of this section. (f) A license may only be terminated by consent of the registered owners holding at least 25% in the licensed company and collectively holding a majority ownership interest, unless the ownership structure of the company has an insufficient number of such owners to potentially represent a majority, in which case the license may be terminated by written consent of the qualified manager or an individual designated by the qualified manager verified by affidavit by the manager as authorized to terminate the license. The license holder must provide the department written documentation reflecting the intended date of termination and the consent of the appropriate individuals in the form of notarized statements. (g) An assignment or termination effected by written consent of the qualified manager may be overturned within thirty (30) calendar days of the department's receipt of the qualified manager's consent documentation by majority vote of the entity's board of directors or the equivalent level decision making body of the licensee. Documentation of the vote must be received by the department within ten (10) business days of the board's decision. 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) SUBCHAPTER H. LETTER OF AUTHORITY 37 TAC , The Texas Department of Public Safety (the department) proposes amendments to and , concerning Letter of Authority. These amendments are necessary to clarify the authority of entities holding Private Business or Governmental 43 TexReg 34 January 5, 2018 Texas Register

35 Letters of Authority to employ personal protection officers, and to clarify the authority of entities holding Private Business Letters of Authority to employ noncommissioned security officers. Suzy Whittenton, Chief Financial Officer, has determined that for each year of the first five-year period these rules are in effect there will be no fiscal implications for state or local government, or local economies. Ms. Whittenton has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities required to comply with these rules as proposed. There is no anticipated economic cost to individuals who are required to comply with the rules as proposed. There is no anticipated negative impact on local employment. In addition, Ms. Whittenton has also determined that for each year of the first five-year period the rules are in effect, the public benefit anticipated as a result of enforcing the rules will be greater clarity in the administrative rule requirements applicable to private and governmental Letters of Authority. The department has determined this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule that 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. The department has determined that Chapter 2007 of the Texas Government Code does not apply to this proposal. Accordingly, the department is not required to complete a takings impact assessment regarding this proposal. Pursuant to Texas Government Code, , the department has prepared a Government Growth Impact Statement and determined for each year of the first five-year period the rule is in effect, the proposed rule will not have any impact as described by Texas Government Code, Comments on this proposal may be submitted to Steve Moninger, Regulatory Services Division, Department of Public Safety, P.O. Box 4087, MSC-0240, Austin, Texas , or by at Select "Private Security". Comments must be received no later than thirty (30) days from the date of publication of this proposal. These amendments are proposed pursuant to Texas Government Code, (3), which authorizes the Public Safety Commission to adopt rules considered necessary for carrying out the department's work, and Texas Occupations Code, (b), which authorizes the department to adopt rules to administer Texas Occupations Code, Chapter Texas Government Code, (3) and Texas Occupations Code, (b) are affected by this proposal Private Business Letter of Authority. (a) The security department of a private business, as defined in the Act, must obtain a letter of authority [in order] to employ a commissioned security officer or personal protection officer. (b) To employ [A security department of a private business that employs] in a noncommissioned [non commissioned] capacity an individual meeting the conditions of (d) of the Act, a security department of a private business must obtain a letter of authority and register the individual with the department [guard company license]. (c) A security department of a private business shall not provide guard company services to a third party. (d) The holder of a private business letter of authority must qualify a manager who meets the requirements of the Act as they pertain to the manager of a security services contractor and maintain on file with the department the name of the individual responsible to ensure the commissioned security officer's compliance and ensure records are maintained in accordance with applicable laws and rules. (e) A private business letter of authority is valid for one year and may be renewed by submitting the department approved renewal application and the required renewal fee no earlier than ninety (90) days prior to expiration Governmental Letter of Authority. (a) A political subdivision that employs a commissioned private security officer or personal protection officer must obtain a governmental letter of authority. (b) The governmental letter of authority is valid for one (1) year and may be renewed by submitting the department approved renewal application and required renewal fee no earlier than ninety (90) days prior to expiration. (c) The holder of the governmental letter of authority must designate and maintain on file with the department the name of the individual responsible for ensuring the commissioned security officer's compliance with the Act and this chapter and for ensuring records are maintained in accordance with this chapter. 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) SUBCHAPTER L. TRAINING 37 TAC The Texas Department of Public Safety (the department) proposes amendments to , concerning Certificates of Completion, Training Records, and Notifications. Amendments to this section are proposed in response to 85th Legislative Session, HB 1508 which amended Occupations Code, Chapter 53 regarding notice requirements. The proposal clarifies the legislation and provides a simplified mechanism by which licensees may comply with the legislation. Suzy Whittenton, Chief Financial Officer, has determined that for each year of the first five-year period this rule is in effect there will be no fiscal implications for state or local government, or local economies. Ms. Whittenton has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or ru- PROPOSED RULES January 5, TexReg 35

36 ral communities required to comply with the rule as proposed. There is no anticipated economic cost to individuals who are required to comply with the rule as proposed. There is no anticipated negative impact on local employment. In addition, Ms. Whittenton has also determined that for each year of the first five-year period the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be an increase in the information relating to license eligibility made available to prospective private security licensees, consistent with new legislation. The department has determined this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule that 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. The department has determined that Chapter 2007 of the Texas Government Code does not apply to this proposal. Accordingly, the department is not required to complete a takings impact assessment regarding this proposal. Pursuant to Texas Government Code, , the department has prepared a Government Growth Impact Statement and determined for each year of the first five-year period the rule is in effect, the proposed rule will expand the notice requirements for certain private security training providers. The change in rule is proposed in response to amendments to Occupations Code Chapter 53 made during the 85th Legislative Session by HB Comments on this proposal may be submitted to Steve Moninger, Regulatory Services Division, Department of Public Safety, P.O. Box 4087, MSC-0240, Austin, Texas , or by at Select "Private Security". Comments must be received no later than thirty (30) days from the date of publication of this proposal. These amendments are proposed pursuant to Texas Government Code, (3), which authorizes the Public Safety Commission to adopt rules considered necessary for carrying out the department's work, and Texas Occupations Code, (b), which authorizes the department to adopt rules to administer Texas Occupations Code, Chapter Texas Government Code, (3) and Texas Occupations Code, (b) are affected by this proposal Certificates of Completion, [and] Training Records, and Notifications. (a) A department approved training school shall: (1) Issue an original certificate of completion to each qualifying student within seven (7) days after the student qualifies; (2) Maintain adequate records to show attendance, progress and grades of students and maintain on file a copy of each certificate issued to students at the department approved training school; (3) Make all required records available to investigators employed by the department for inspection during reasonable business hours; and (4) Retain all training records for twenty-four (24) months from the date of completion of training. (5) Notify each applicant or enrollee of the potential ineligibility of an individual who has been convicted of an offense, the current guidelines provided in 35.4 of this title (relating to Guidelines for Disqualifying Criminal Offenses), and the right to request a criminal history evaluation letter under Occupations Code, As provided in Occupations Code, , failure to comply with this subsection may result in an order to refund tuition paid and reimburse the individual's application and training fees. Failure to comply with an order to refund tuition or reimburse fees may result in suspension of the school license until payment is made, pursuant to of the Act. The figure in this paragraph provides the recommended text of the notice. Direct communication of this text to the prospective applicant, whether by or other correspondence, or on the application for admission to a course, is sufficient to establish compliance with this section. Figure: 37 TAC (a)(5) (b) The certificate of completion shall reflect the particular course or courses completed by a student during the training period. (1) Certificates of completion for Level II shall contain the: (A) Name and approval number of the school; (B) Date of completion; (C) Name, signature, and approval number of training instructor; and (D) Full name and last six (6) digits of social security number of student. (2) Certificates of completion for Level III and IV shall contain the: (A) Name and approval number of the school; (B) Date of firearm training completion (Level III only); (C) Name, signature, and approval number of classroom and/or firearm training instructor; (D) Full name and last six (6) digits of the social security number of student; and (E) The specific date of firearm qualification along with the name and approval number of the firearms instructor on those certificates designating completion of Level III. (3) Certificate of completion for firearms qualification (firearm proficiency) shall contain the: (A) Name and approval number of the school; (B) Name, signature, and approval number of firearms training instructor; (C) Full name and last six (6) digits of the social security number of student; (D) Firearms completion date; (E) Note the category of firearm as defined in this chapter; (F) Note the caliber of firearm; and (G) Be on a certificate form designed or approved by the department. 43 TexReg 36 January 5, 2018 Texas Register

37 (4) Certificates of completion for alarm systems installation or sales training shall contain: (A) The name and approval number of the school; (B) The name, signature and approval number of training instructor: (C) The full name and last six (6) digits of the social security number of student; and (D) The date of final completion of the entire course; (E) The words "Has successfully completed the alarm installers or alarm systems salespersons alarm training school approved by the Texas Department of Public Safety." 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) SUBCHAPTER M. CONTINUING EDUCATION 37 TAC The Texas Department of Public Safety (the department) proposes amendments to , concerning Continuing Education Requirements. The proposed amendment to subsection (a) of is intended to clarify that it is the registrant's responsibility to ensure compliance with the continuing education requirements prior to submission of the renewal application, and to address an inconsistency between the information required to be submitted at renewal and the information required to be provided to the student by the school in The proposed amendments to subsection (b) are intended to address the situation in which registered owners also perform regulated services in their individual capacities. The current rule does not expressly address the continuing education requirements for such individuals, referring only to those who are registered as a specific type of private security registrant (other than owners), or to nonparticipating owners (providing an exemption). Current rule does not specifically address participating owners. The proposed language clarifies this by addressing owners who are involved in the business ("participating owners"), and distinguishing those participating owners who also independently perform regulated services from those who do not. Suzy Whittenton, Chief Financial Officer, has determined that for each year of the first five-year period this rule is in effect there will be no fiscal implications for state or local government, or local economies. Ms. Whittenton has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities required to comply with the rule as proposed. There is no anticipated economic cost to individuals who are required to comply with the rule as proposed. There is no anticipated negative impact on local employment. In addition, Ms. Whittenton has also determined that for each year of the first five-year period the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be greater clarity in the continuing education administrative rules applicable to the private security industry. The department has determined this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule that 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. The department has determined that Chapter 2007 of the Texas Government Code does not apply to this proposal. Accordingly, the department is not required to complete a takings impact assessment regarding this proposal. Pursuant to Texas Government Code, , the department has prepared a Government Growth Impact Statement and determined for each year of the first five-year period the rule is in effect, the proposed rule will not have any impact as described by Texas Government Code, Comments on this proposal may be submitted to Steve Moninger, Regulatory Services Division, Department of Public Safety, P.O. Box 4087, MSC-0240, Austin, Texas , or by at Select "Private Security". Comments must be received no later than thirty (30) days from the date of publication of this proposal. These amendments are proposed pursuant to Texas Government Code, (3), which authorizes the Public Safety Commission to adopt rules considered necessary for carrying out the department's work, and Texas Occupations Code, (b), which authorizes the department to adopt rules to administer Texas Occupations Code, Chapter Texas Government Code, (3), and Texas Occupations Code, (b), are affected by this proposal Continuing Education Requirements. (a) An application to renew a [A] license, registration, endorsement, or commission may not be submitted [renewed] until the required minimum hours of department approved continuing education credits have been earned in accordance with the Act and this chapter. Proof of the required continuing education must be maintained by the employer and contained in the personnel file of the registrant's employing company. All registrants shall indicate they have completed the required minimum hours of department approved continuing education credits on their application for renewal. A renewal application shall also include the name of the school, school number, [seminar number, seminar] date of attendance, number of hours attended, and courses of instruction attended [and credits earned]. (b) Participating owners, partners, and shareholders, who perform services regulated under the Act on behalf of the licensed company, shall comply with the continuing education requirements of this section applicable to the regulated service provided. Participating own- PROPOSED RULES January 5, TexReg 37

38 ers, partners, and shareholders, who do not otherwise perform services regulated under the Act, shall complete a total of eight (8) hours of continuing education, including seven (7) hours in the subject matter that relates to the type of regulated service provided by the licensee, and one (1) hour of ethics. For purposes of this section, participating refers to involvement in decisions governing the operation of the regulated company. Nonparticipating owners, partners, or shareholders;[,] noncommissioned security officers, and all individuals not required to obtain a registration, endorsement, commission or license under the Act [administrative support personnel] are specifically exempted from the continuing education requirements. (c) All registrants not specifically addressed in this section shall complete a total of eight (8) hours of continuing education, seven (7) hours of which must be in subject matter that relates to the type of registration held, and one (1) hour of which must cover ethics. Following the initial registration period, qualified managers of Class B licensed companies may take a one (1) hour course devoted to changes in laws and rules applicable to the security industry, as a substitute for the above one (1) hour ethics requirement. (d) Private investigators and managers of Class A and Class C licenses with more than fifteen (15) years of continued registration as a private investigator or manager of a Class A or Class C license shall complete a total of twelve (12) hours of continuing education, eight (8) hours of which must be in subject matter that relates to the type of registration held, two (2) hours of which must cover ethics, and two (2) hours of which must involve the review of the Act and the rules of this chapter. (e) Private Investigators and managers of Class A and Class C licenses with less than fifteen (15) years of continued registration as a private investigator or manager of a Class A or Class C license shall complete a total of eighteen (18) hours of continuing education, fourteen (14) of which must be in subject matter that relates to the type of registration held, two (2) hours of which must cover ethics, and two (2) hours of which must involve the review of the Act and the rules of this chapter. (f) Any person registered as a private investigator who fails to complete the required continuing education during the twenty-four (24) months of an initial registration is not eligible to make a new or renewal application until such time as the training requirement for the previous registration period has been satisfied. (g) Commissioned security officers and personal protection officers shall complete six (6) hours of continuing education. Continuing education for commissioned security officers and personal protection officers must be taught by schools and instructors approved by the department to instruct commissioned security officers as defined in the Act. Commissioned security officers shall submit a firearms proficiency certificate along with the renewal application. (h) During the first twelve (12) months of initial registration, each person employed as an alarm system installer or alarm systems salesperson must complete Alarm Level I training, consisting of sixteen (16) hours of classroom instruction or equivalent online course as approved by the department, with two (2) hours covering the National Electrical Code (NEC) as it applies to low voltage. Any person employed as an alarm systems installer or alarm systems salesperson must earned eight (8) hours of continuing education credits in an alarm related field, with one (1) hour covering the National Electrical Code (NEC) as it applies to low voltage, during each subsequent twenty-four (24) month period. This requirement must be satisfied prior to the expiration date of registration in order to renew the registration. (i) For the protection of the installer and the general public, the work of an alarm system installer who has not completed the required sixteen (16) hours of instruction must be overseen by an installer who has completed the required sixteen (16) hours of instruction. The oversight required under this section need not involve direct physical supervision, but the overseeing installer is responsible for ensuring the installation complies with all applicable requirements and regulations. (j) Any person registered as an alarm systems installer or salesperson who fails to complete sixteen (16) hours of training during the twenty-four (24) months of initial licensure, or who fails to complete eight (8) hours of continuing education during any subsequent licensing period is not eligible to make a new or renewal application until such time as all training requirements for the previous license period have been satisfied. (k) Alarm monitors shall complete four (4) hours of continuing education in subject matter that relates to the duties and responsibilities of an alarm monitor. (l) All persons registered or licensed as locksmiths must complete sixteen (16) hours of continuing education every two (2) years. (m) Attendees of continuing education courses shall maintain certificates of completion furnished by the school director in their files for a period of two (2) years. Attendees shall furnish the department with copies of all certificates of completion upon 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Earliest possible date of adoption: February 4, 2018 For further information, please call: (512) TexReg 38 January 5, 2018 Texas Register

39 TITLE 16. ECONOMIC REGULATION PART 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION CHAPTER 86. VEHICLE TOWING AND BOOTING 16 TAC The Texas Department of Licensing and Regulation withdraws the proposed repeal of , which appeared in the October 13, 2017, issue of the Texas Register (42 TexReg 5622). Filed with the Office of the Secretary of State on December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: December 21, 2017 For further information, please call: (512) TAC The Texas Department of Licensing and Regulation withdraws the proposed amended which appeared in the October 13, 2017, issue of the Texas Register (42 TexReg 5622). Filed with the Office of the Secretary of State on December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: December 21, 2017 For further information, please call: (512) WITHDRAWN RULES January 5, TexReg 39

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41 TITLE 4. AGRICULTURE PART 1. TEXAS DEPARTMENT OF AGRICULTURE CHAPTER 7. PESTICIDES SUBCHAPTER H. STRUCTURAL PEST CONTROL SERVICE The Texas Department of Agriculture (Department or TDA) adopts 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 7.194, without changes to the proposal in the November 10, 2017 issue of the Texas Register (42 TexReg 6268). Further, the Department adopts new Division 1, 7.114, without changes; Division 2, , without changes; Division 3, , and 7.156, with changes; Division 5, , with changes; and Division 6, 7.192, without changes to the proposal made in the November 10, 2017 issue as published in the Texas Register. The adoption 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. Throughout the rule making process, the Department consulted the Structural Pest Control Advisory Committee (Committee) as required by the Texas Occupations Code, During open Committee meetings, members and industry stakeholders were updated on the rules and the Committee's input was taken into consideration and incorporated into the rule proposal prior to publication. No written comments were received from Committee members after the proposal was published. The Department received public comments from Mr. Jake Plevelich, on behalf of the National Pest Management Association (NPMA). The Department also received comments from Todd Kercheval, on behalf of the Texas Pest Control Association (TPCA). In addition, the Department also received comments from Grover Campbell, on behalf of the Texas Association of School Boards. The Department recognizes NPMA and TPCA's concerns that the rule proposal process was burdensome, as the rules were repealed in whole and proposed as new. However, amendments and changes to some sections resulted in the reorganization and renumbering of the rules, which would have resulted in confusion to a reader of the proposal because of extensive bracketing and underlining. Additionally, since rules were added and deleted in Division 2, it was necessary to repeal the rules in their entirety in order to properly number and the new rules in the proposal. The NPMA and TPCA have requested delayed implementation of the rules in order to ensure affected industry members have time to understand and comply with required changes. The Department provides extensive compliance assistance following any rule change, and will do so here. TDA will provide technical assistance to industry, applicants and licensees as long as necessary, upon request. TDA is confident that, with the assistance of stakeholders and TDA, applicants and licensees will develop a good understanding of the new rules. Accordingly, TDA declines to delay the implementation of the rules, and has filed this adoption so that the rules will become effective 20 days from the date of filing. TPCA members commented that the new requirement to maintain all records for two calendar years following the calendar year in which the record was created ("two calendar year requirement") will increase costs by requiring new and/or additional recordkeeping and storage. In consideration of industry's comments, the Department has decided to narrow and revise the proposed rules so that the two calendar year requirement applies only to sections regarding verifiable training records for apprentices and technicians, and continuing education for certified applicators. Division 3, 7.144, Division 5, and 7.174, along with and 7.178, have been revised to mirror the previous requirement that records be maintained for two years total. DIVISION 1. GENERAL PROVISIONS 4 TAC The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) ADOPTED RULES January 5, TexReg 41

42 DIVISION 2. LICENSES 4 TAC , 7.131, The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 3. COMPLIANCE AND ENFORCEMENT 4 TAC , 7.153, The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 5. TREATMENT STANDARDS 4 TAC The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 6. STRUCTURAL PEST CONTROL ADVISORY COMMITTEE 4 TAC 7.192, The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) SUBCHAPTER H. STRUCTURAL PEST CONTROL SERVICE DIVISION 1. GENERAL PROVISIONS 4 TAC TexReg 42 January 5, 2018 Texas Register

43 The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 2. LICENSES 4 TAC The adoption 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 adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 3. COMPLIANCE AND ENFORCEMENT 4 TAC , The adoption 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 adoption 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) years. 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; ADOPTED RULES January 5, TexReg 43

44 (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; 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: 43 TexReg 44 January 5, 2018 Texas Register

45 (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: (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 request. (3) make the consumer information sheet available upon (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. ADOPTED RULES January 5, TexReg 45

46 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 5. TREATMENT STANDARDS 4 TAC The adoption 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 adoption 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) years 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 43 TexReg 46 January 5, 2018 Texas Register

47 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) years. 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 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 ADOPTED RULES January 5, TexReg 47

48 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 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) years 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); and (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; (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: Visible evidence of the following conditions must be re- (e) ported: (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) (E) sill plates; and foundation wall. (7) fireplace; and (8) weep holes. (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; 43 TexReg 48 January 5, 2018 Texas Register

49 (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; (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) years 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 (2) years. (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. ADOPTED RULES January 5, TexReg 49

50 (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 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) years. 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) years 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 43 TexReg 50 January 5, 2018 Texas Register

51 Department. Department approved hands-on-training includes the following: (A) Inspect structure and identify pest(s) prior to fumigation; (B) Prepare disclosure documents pursuant to the provisions of 7.174, of this title; (C) Measure structure and calculate volume; (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) years. 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 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) DIVISION 6. STRUCTURAL PEST CONTROL ADVISORY COMMITTEE 4 TAC The adoption 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. ADOPTED RULES January 5, TexReg 51

52 The code affected by the adoption is Occupations Code, Chapter 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 December 20, TRD Jessica Escobar Assistant General Counsel Texas Department of Agriculture Effective date: January 9, 2018 Proposal publication date: November 10, 2017 For further information, please call: (512) TITLE 10. COMMUNITY DEVELOPMENT PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS CHAPTER 10. UNIFORM MULTIFAMILY RULES SUBCHAPTER D. UNDERWRITING AND LOAN POLICY 10 TAC The Texas Department of Housing and Community Affairs (the "Department") adopts the amendments to 10 TAC Chapter 10, Subchapter D, , concerning Underwriting and Loan Policy. Section and are adopted without changes to text as published in the October 27, 2017, issue of the Texas Register (42 TexReg 5923) and will not be republished. Sections and are adopted with changes and will be republished. REASONED JUSTIFICATION. The Department finds that the adoption of the sections will result in a more consistent approach to governing underwriting and analysis activity and to the awarding of funding or assistance through the Department and to minimize repetition. The comments and responses include both administrative clarifications and corrections to the Underwriting and Loan Policy rules based on the comments received. After each comment title numbers are shown in parentheses. These numbers refer to the person or entity that made the comment as reflected at the end of the reasoned response. If comment resulted in recommended language changes to the proposed Underwriting and Loan Policy as presented to the Board in October, such changes are indicated. SUMMARY OF PUBLIC COMMENT AND STAFF RECOMMEN- DATIONS. Public comments were accepted through November 27, 2017, with comments received from (1) Texas Affiliation of Affordable Housing Providers (TAAHP), (2) Darrell Jack, Apartment MarketData, (3) Rural Rental Housing Association (RRHA) (d)(2)(J) Other Operating Expenses (3) COMMENT SUMMARY: Commenter (3) suggests that the "Return To Owner" (RTO) as determined and limited by the United States Department of Agriculture (USDA) be included as an operating expense for purposes of calculating the Debt Coverage Ratio. The rationale is that USDA controls the RTO and effectively pays and considers the RTO in establishing the rents paid by USDA under rental assistance agreements. Because USDA considers the RTO as an expense item and TDHCA does not, the Debt Coverage Ratio under (d)(4)(D) is in many cases exceeds the 1.35:1 times limitation. In most cases this results in a reduction to tax credit allocations on USDA properties. Commenter states that the treatment of the RTO in this manner does not result in over subsidizing the transaction because of control by USDA of the operating budgets and RTO. STAFF RESPONSE: Staff agrees that the different treatment of the RTO by the Department and USDA creates inconsistencies in the operating assumptions used to determine feasibility, debt coverage ratios and subsidy amounts. These inconsistencies are causing, in some cases, less tax credit equity to be made available for the rehabilitation of some of the USDA financed/subsidized properties. The RTO is controlled by USDA and included as an operating expense in their budget, which is then used for the determination of rents. TDHCA excludes the RTO as an operating expense. Use of the higher USDA rents and the Department's lower operating expenses many times results in a DCR above the 1.35 times maximum (sometimes significantly above). The high DCR requires the Department to assume additional debt in the tax credit sizing which lowers the tax credit equity. While staff agrees that a change to the rule to address this issue is likely warranted, a change now represents a new concept that was not included in the draft rule published for public comment. Staff will work with the interested parties and consider a proposed rule change for the 2019 rules. Staff recommends no changes based on this comment at this time (d)(4)(D) Acceptable Debt Coverage Ratio (1) COMMENT SUMMARY: Commenter (1) suggests that the calculated minimum debt coverage ratio should be applied to mustpay debt only and not to loans where repayment is subject to available cash flow. This includes cash flow loans made by TD- HCA. Additionally, the commenter suggests that the 2017 language allowing Direct Loans to be reclassified as grants should be retained. STAFF RESPONSE: The minimum debt coverage ratio is a stress test and risk assessment tool used to evaluate the ability of the net operating income generated by a property to service and pay all of the Owner's obligations including debt service. The minimum debt coverage ratio is only applied to "priority or foreclosable lien" financing. If a loan has contingent or cash flow repayment provisions but is foreclosable then it is generally included in the DCR because of the repayment requirements. If a loan is cash flow only without monetary default or foreclosure provisions then it is not included in the debt coverage ratio test. The Department fully expects repayment on its Direct Loans except for loans otherwise intended to be forgivable pursuant to the relevant NOFA. Applications are underwritten pursuant to all NOFA provisions and the Direct Loan rules. Cash flow loans are generally required for subordinate financing to FHA senior debt. In most cases the funds being used by the Department to make Direct Loans originate from funds received from repayment on existing loans. Therefore, the analysis of the risk of non-repay- 43 TexReg 52 January 5, 2018 Texas Register

53 ment is very important to the program's ability to make future loans. Staff recommends no changes based on this comment (i)(1) Gross Capture Rate (1), (2) COMMENT SUMMARY: Commenter (1) requests an increase in the Gross Capture Rate from 10% to 15% for both elderly and general population developments in larger jurisdictions (populations above 500,000). This change is requested in order to account for high growth areas where available census data does not accurately reflect the pace of population growth. Commenter (2) suggests an increase in the Gross Capture Rate from 10% to 15% on general population, Tax-Exempt Bond Developments in MSAs with populations greater than 1 million where the localized occupancy rates are high. STAFF RESPONSE: There are many sub-markets within larger cities that are experiencing high growth. Not all sub-markets within the larger cities are experiencing this growth. The data sources currently used to calculate demand do not reflect the most current conditions in some high-growth areas. The 10% capture rate is proving to be a limiting factor for development in areas where it is apparent that demand exists but the data sources are lagging behind actual demand. Staff believes this situation is most relevant to Tax-Exempt Bond Developments because they are generally large properties going into areas where demand is understated either due to lagging growth data or in areas where qualifying residents don't currently reside simply due to the lack of affordable housing in the area. Staff has not seen capture rate issues on smaller developments including 9% transactions in any MSA. Staff agrees that increasing the capture rate on Tax-Exempt Bond Developments in certain localized areas of high growth and high demand is warranted. As a result, Staff proposes changes to paragraph B to increase the capture rate in these situations. (Page 23 of 47) (B) is outside a Rural Area and targets the general population, and the Gross Capture Rate or any AMGI band capture rate exceeds 10 percent (or 15 percent for Tax-Exempt Bond Developments located in an MSA (as defined in the HTC Site Demographics Characteristics Report) with a population greater than 1 million if the average physical occupancy is 92.5% or greater for all stabilized affordable housing developments located within a 20 minute drive time, as supported by the Market Analyst, from the subject Development); or (d)(9)(E)(i)(III) Household Size-Appropriate and (d)(9)(E)(iii)(I) Household Size COMMENT SUMMARY: Commenter (1) requests a change in the occupancy standards used in the market analysis from 1.5-persons per bedroom to 2-persons per bedroom for general population developments to be consistent with HUD occupancy standards. Additionally, commenter states that this standard is consistent with standards used by many management companies. STAFF RESPONSE: The 1.5-persons per bedroom is the assumed occupancy used by Section 42 for determining rent limits. HUD uses a 2-person per bedroom as an occupancy standard. TDHCA's occupancy standards under (b)(1)(C) require that owners provide written policies and procedures containing tenant selection criteria using a minimum of 2 persons per bedroom unless otherwise constrained by local code or occupancy standards. From a market analysis perspective, the increase from 1.5 persons to 2 persons per bedroom will lower the individual unit capture rates on 2-bedroom and 4-bedroom units. As a result, Staff proposes changes throughout (d) to reflect the 2-person occupancy standard where applicable to be consistent with other rules. (Pages 31 and 32 of 47) (d)(9)(E)(i)(III) Household Size-Appropriate. Adjust the household projections or target household projections, as applicable, for the appropriate household size for the proposed Unit type by number of Bedrooms proposed and rent restriction category based on 2 persons per Bedroom or one person for Efficiency Units (d)(9)(E)(i)(IV)(-b-) the upper end of each income band equal to the applicable gross median income limit for the largest appropriate household size based on 2 persons per Bedroom (round up) or one person for Efficiency Units (d)(9)(E)(iii)(I) Maximum eligible income is equal to the applicable gross median income limit for the largest appropriate household size (d)(9)(E)(iii)(II)(-b) appropriate household size is defined as 2 persons per Bedroom (rounded up); and (d)(9)(E)(iii)(III)(-b) appropriate household size is defined as 2 persons per Bedroom (rounded up); and (d)(8) Secondary Market Area (1) COMMENT SUMMARY: Commenter (1) requests that TDHCA retain the Secondary Market Area ("SMA") as part of the Underwriting process for projects for which expansion of the Primary Market Area is needed to justify demand originating from the SMA. Commenter states that the need for using an SMA should be at the discretion of the Market Analyst based on appropriate supporting documentation such as job growth, commute distances, lack of affordable housing supply, high occupancy rates, loss of affordable housing inventory, attributes of the Development's location or features that will draw prospective tenants to the area, and other housing issues in general. Commenter states that the 25% limitation of demand coming from an SMA seems reasonable and they are not requesting a change to that percentage of Gross Demand. STAFF RESPONSE: Very few market studies are currently using an SMA to justify demand. When used, staff believes most SMAs used by Market Analysts are excessively large based on staff's research of where demand actually comes from. In some cases, the SMA suggests that significant demand will come from hundreds of miles away from the subject site. Data collected during file reviews conducted by the Compliance Division suggests that most residents move from within the zip code in which they currently reside. Current rule requires the Market Analyst to justify demand coming from an SMA. The proposed rule assumes that 10% of the demand indicated in a PMA, as determined by the Market Analyst, will be coming from outside the PMA and automatically included as additional demand. Additionally, the proposed rule eliminates the requirement that any unstabilized developments outside the PMA be considered as additional supply. In most cases, because Market Analysts are not using SMAs, capture rates will be lower than currently being calculated because of the automatic consideration of this additional demand. Other changes in the proposed rule also work to use a more realistically determination of demand and capture rates, including the change to the person per bedroom limitation and the revised treatment of stabilized developments in the PMA. Use of demand from "ther sources"is retained in the rule if justified by the Market Analyst. ADOPTED RULES January 5, TexReg 53

54 Elimination of the SMA was discussed at a market study roundtable prior to the Board's approval of the proposed rule in October. The general consensus of participants at the round-table was to remove the SMA. Staff recommends no changes based on this comment (d)(10)(B) and (C) Value Estimates (3) COMMENT SUMMARY: Commenter (3) requests that for certain properties, the Department allow for a valuation that is determined by USDA in the Department's cost analysis. The USDA valuation on these properties is based on a market estimate that can include rents above or below the USDA rents currently on the property. In either case, the valuation used by the Department is based on an as-restricted valuation. STAFF RESPONSE: Staff agrees that there is inconsistency between the valuations used by the Department and USDA in the transfer of the USDA properties. Rather than make a change to the value estimates in the Appraisal Rules, staff recommends that the transfer value as approved by USDA be used in the acquisition cost analysis by the Department under (e)(1)(C) and (D)(iv). (Page 17 and 18 of 47) (e)(1)(C) In no instance will the acquisition cost utilized by the Underwriter exceed the lesser of the original acquisition cost evidenced by clause (ii)(i) of this subparagraph plus costs identified in clause (ii)(ii)(-b-) of this subparagraph, or if applicable the "as-is" value conclusion evidenced by clause (ii)(ii)(-a-) of this subparagraph or the transfer value approved by USDA. Acquisition cost is limited to appraised land value for transactions which include existing buildings that will be demolished. The resulting acquisition cost will be referred to as the "Adjusted Acquisition Cost." (e)(1)(C) the Underwriter will use the value that best corresponds to the circumstances presently affecting the Development that will continue to affect the Development after transfer to the new owner in determining the building value. These circumstances include but are not limited to operating subsidies, rental assistance, transfer values approved by USDA and/or property tax exemptions. Any value of existing favorable financing will be attributed prorata to the land and buildings. CLARIFICATION CHANGE: In addition to above changes resulting from public comment, staff has included a clarification to (d)(10)(E)(i) with respect to Relevant Supply. The change clarifies that in the case of a subject development that already has occupied units, only the Units to be absorbed are considered as supply in the capture rate analysis. (Page 35 of 47) (d)(10)(E)(i) the proposed subject Units to be absorbed; The Board approved the final order adopting the amended 10 TAC Chapter 10, Subchapter D, , concerning Underwriting and Loan Policy on December 14, STATUTORY AUTHORITY. The amended sections are adopted pursuant to Tex. Gov't Code, , which authorizes the Department to adopt rules. The adopted amendments affect no other code, article or statute Underwriting Rules and Guidelines. (a) General Provisions. Pursuant to Texas Government Code, and (b), the Board is authorized to adopt underwriting standards as set forth in this section. Furthermore for Housing Credit Allocation, 42(m)(2) of the Internal Revenue Code of 1986 (the "Code"), requires the tax credits allocated to a Development not to exceed the amount necessary to assure feasibility. Additionally, 24 CFR Parts 92 and 93, as further described in CPD Notice require the Department to adopt rules and standards to determine the appropriate Multifamily Direct Loan feasibility. The rules adopted pursuant to the Texas Government Code and the Code are developed to result in an Underwriting Report ("Report") used by the Board in decision making with the goal of assisting as many Texans as possible by providing no more financing than necessary based on an independent analysis of Development feasibility. The Report generated in no way guarantees or purports to warrant the actual performance, feasibility, or viability of the Development. (b) Report Contents. The Report provides a synopsis and reconciliation of the Application information submitted by the Applicant. For the purpose of this Subchapter the term Application includes additional documentation submitted after the initial award of funds that is relevant to any subsequent reevaluation. The Report contents will be based upon information that is provided in accordance with and within the timeframes set forth in the current Qualified Allocation Plan ("QAP") (10 TAC Chapter 11) or a Notice of Funds Availability ("NOFA"), as applicable, and the Uniform Multifamily Rules (10 TAC Chapter 10, Subchapters A - E and G). (c) Recommendations in the Report. The conclusion of the Report includes a recommended award of funds or Housing Credit Allocation Amount and states any feasibility or other conditions to be placed on the award. The award amount is based on the lesser of the following: (1) Program Limit Method. For Housing Credit Allocations, this method is based upon calculation of Eligible Basis after applying all cost verification measures and program limits as described in this section. The Applicable Percentage used is defined in 10.3 of this chapter (relating to Definitions). For Department programs other than Housing Tax Credits, this method is based upon calculation of the funding limit in current program rules or NOFA at the time of underwriting. (2) Gap Method. This method evaluates the amount of funds needed to fill the gap created by Total Housing Development Cost less total non-department-sourced funds or Housing Tax Credits. In making this determination, the Underwriter resizes any anticipated deferred developer fee downward (but not less than zero) before reducing the amount of Department funds or Housing Tax Credits. In the case of Housing Tax Credits, the syndication proceeds needed to fill the gap in permanent funds are divided by the syndication rate to determine the amount of Housing Tax Credits. In making this determination and based upon specific conditions set forth in the Report, the Underwriter may assume adjustments to the financing structure (including treatment of cash flow loans as if fully amortizing over its term) or make adjustments to any Department financing, such that the cumulative Debt Coverage Ratio ("DCR") conforms to the standards described in this section. For Housing Tax Credit Developments at cost certification, timing adjusters may be considered as a reduction to equity proceeds for this purpose. Timing adjusters must be consistent with and documented in the original partnership agreement (at admission of the equity partner) but relating to causes outside of the Developer's or Owner's control. The equity partner must provide a calculation of the amount of the adjuster to be used by the Underwriter. (3) The Amount Requested. The amount of funds that is requested by the Applicant. For Housing Tax Credit Developments (exclusive of Tax-Exempt Bond Developments) this amount is limited to the amount requested in the original Application documentation. 43 TexReg 54 January 5, 2018 Texas Register

55 (d) Operating Feasibility. The operating feasibility of a Development funded by the Department is tested by analyzing its Net Operating Income ("NOI") to determine the Development's ability to pay debt service and meet other financial obligations throughout the Affordability Period. NOI is determined by subtracting operating expenses, including replacement reserves and taxes, from rental and other income sources. (1) Income. In determining the first year stabilized pro forma, the Underwriter evaluates the reasonableness of the Applicant's income pro forma by determining the appropriate rental rate per unit based on subsidy contracts, program limitations including but not limited to utility allowances, actual rents supported by rent rolls and Market Rents and other market conditions. Miscellaneous income, vacancy and collection loss limits as set forth in subparagraphs (B) and (C) of this paragraph, respectively, are used unless well-documented support is provided and independently verified by the Underwriter. (A) Rental Income. The Underwriter will review the Applicant's proposed rent schedule and determine if it is consistent with the representations made throughout the Application. The Underwriter will independently calculate a Pro Forma Rent for comparison to the Applicant's estimate in the Application. (i) Market Rents. The Underwriter will use the Market Analyst's conclusion of Market Rent if reasonably justified and supported by the attribute adjustment matrix of Comparable Units as described in of this chapter (relating to Market Analysis Rules and Guidelines). Independently determined Market Rents by the Underwriter may be used based on rent information gained from direct contact with comparable properties, whether or not used by the Market Analyst and other market data sources. For a Development that contains less than 15% unrestricted units, the Underwriter will limit the Pro Forma Rents to the lesser of Market Rent or the Gross Program Rent at 60% AMI. As an alternative, if the Applicant submits market rents that are up to 30% higher than the 60% AMI gross rent and the Applicant submits an investor commissioned market study with the application, the Underwriter has the discretion to use the market rents supported by the investor commissioned market study in consideration of the independently determined rents. The Applicant must also provide a statement by the investor indicating that they have reviewed the market study and agree with its conclusions. (ii) Gross Program Rent. The Underwriter will use the Gross Program Rents for the year that is most current at the time the underwriting begins. When underwriting for a simultaneously funded competitive round, all Applications are underwritten with the Gross Program Rents for the same year. If Gross Program Rents are adjusted by the Department after the close of the Application Acceptance Period, but prior to publication of the Report, the Underwriter may adjust the Effective Gross Income ("EGI") to account for any increase or decrease in Gross Program Rents for the purposes of determining the reasonableness of the Applicant's EGI. (iii) Contract Rents. The Underwriter will review rental assistance contracts to determine the Contract Rents currently applicable to the Development. Documentation supporting the likelihood of continued rental assistance is also reviewed. The Underwriter will take into consideration the Applicant's intent to request a Contract Rent increase. At the discretion of the Underwriter, the Applicant's proposed rents may be used as the Pro Forma Rent, with the recommendations of the Report conditioned upon receipt of final approval of such an increase. (iv) Utility Allowances. The Utility Allowances used in underwriting must be in compliance with all applicable federal guidance, and of Subchapter F of this Chapter relating to Utility Allowances. Utility allowances must be calculated for individually metered tenant paid utilities. (v) Utility Allowance. Net Program Rents. Gross Program Rent less (vi) Actual Rents for existing Developments will be reviewed as supported by a current rent roll. For Unstabilized Developments, actual rents will be based on the most recent units leased with occupancy and leasing velocity considered. Actual rents may be adjusted by the Underwriter to reflect lease-up concessions and other market considerations. (vii) Collected Rent. Represents the monthly rent amount collected for each Unit Type. For rent-assisted units, the Contract Rent is used. In absence of a Contract Rent, the lesser of the Net Program Rent, Market Rent or actual rent is used. (B) Miscellaneous Income. All ancillary fees and miscellaneous secondary income, including, but not limited to late fees, storage fees, laundry income, interest on deposits, carport and garage rent, washer and dryer rent, telecommunications fees, and other miscellaneous income, are anticipated to be included in a $5 to $20 per Unit per month range. Exceptions may be made at the discretion of the Underwriter and must be supported by either the normalized operating history of the Development or other existing comparable properties within the same market area. (i) The Applicant must show that a tenant will not be required to pay the additional fee or charge as a condition of renting a Unit and must show that the tenant has a reasonable alternative. (ii) The Applicant's operating expense schedule should reflect an itemized offsetting line-item associated with miscellaneous income derived from pass-through utility payments, pass-through water, sewer and trash payments, and cable fees. (iii) Collection rates of exceptional fee items will generally be heavily discounted. (iv) If an additional fee is charged for the optional use of an amenity, any cost associated with the construction, acquisition, or development of the hard assets needed to produce the additional fee for such amenity must be excluded from Eligible Basis. (C) Vacancy and Collection Loss. The Underwriter generally uses a normalized vacancy rate of 7.5 percent (5 percent vacancy plus 2.5 percent for collection loss). The Underwriter may use other assumptions based on conditions in the immediate market area. 100 percent project-based rental subsidy developments and other well documented cases may be underwritten at a combined 5 percent at the discretion of the Underwriter if the immediate market area's historical performance reflected in the Market Analysis is consistently higher than a 95 percent occupancy rate. (D) Effective Gross Income ("EGI"). EGI is the total of Collected Rent for all units plus Miscellaneous Income less Vacancy and Collection Loss. If the Applicant's pro forma EGI is within 5 percent of the EGI independently calculated by the Underwriter, the Applicant's EGI is characterized as reasonable in the Report; however, for purposes of calculating the underwritten DCR the Underwriter's pro forma will be used unless the Applicant's pro forma meets the requirements of paragraph (3) of this subsection. (2) Expenses. In determining the first year stabilized operating expense pro forma, the Underwriter evaluates the reasonableness of the Applicant's expense estimate based upon the characteristics of each Development, including the location, utility structure, type, the size and number of Units, and the Applicant's management plan. Historical, stabilized and certified financial statements of an existing De- ADOPTED RULES January 5, TexReg 55

56 velopment or Third Party quotes specific to a Development will reflect the strongest data points to predict future performance The Underwriter may review actual operations on the Applicant's other properties monitored by the Department, if any, or review the proposed management company's comparable properties. The Department's Database of properties located in the same market area or region as the proposed Development also provides data points; expense data from the Department's Database is available on the Department's website. Data from the Institute of Real Estate Management's ("IREM") most recent Conventional Apartments-Income/Expense Analysis book for the proposed Development's property type and specific location or region may be referenced. In some cases local or project-specific data such as PHA Utility Allowances and property tax rates are also given significant weight in determining the appropriate line item expense estimate. Estimates of utility savings from green building components, including on-site renewable energy, must be documented by an unrelated contractor or component vendor. (A) General and Administrative Expense ("G&A")-- Accounting fees, legal fees, advertising and marketing expenses, office operation, supplies, and equipment expenses. G&A does not include partnership related expenses such as asset management, accounting or audit fees. Costs of tenant services are not included in G&A. (B) Management Fee. Fee paid to the property management company to oversee the operation of the Property and is most often based upon a percentage of EGI as documented in an existing property management agreement or proposal. Typically, 5 percent of EGI is used, though higher percentages for rural transactions may be used. Percentages as low as 3 percent may be used if well documented. (C) Payroll Expense. Compensation, insurance benefits, and payroll taxes for on-site office, leasing and maintenance staff. Payroll does not include Third-Party security or tenant services contracts. Staffing specific to tenant services, security or other staffing not related to customary property operations should be itemized and included in other expenses or tenant services expense. (D) Repairs and Maintenance Expense. Materials and supplies for the repairs and maintenance of the Development including Third-Party maintenance contracts. This line-item does not include costs that are customarily capitalized that would result from major replacements or renovations. (E) Utilities Expense. Gas and electric energy expenses paid by the Development. Estimates of utility savings from green building components, including on-site renewable energy, must be documented by an unrelated contractor or component vendor. (F) Water, Sewer, and Trash Expense ("WST"). Includes all water, sewer and trash expenses paid by the Development. (G) Insurance Expense. Cost of Insurance coverage for the buildings, contents, and general liability, but not health or workman's compensation insurance. (H) Property Tax. Includes real property and personal property taxes but not payroll taxes. (i) An assessed value will be calculated based on the capitalization rate published by the county taxing authority. If the county taxing authority does not publish a capitalization rate, a capitalization rate of 10 percent or a comparable assessed value may be used. (ii) Other assessed values or property tax estimates may be used based on development specific factors as determined by the Underwriter. (iii) If the Applicant proposes a property tax exemption or PILOT agreement the Applicant must provide documentation in accordance with (d). At the underwriter's discretion, such documentation may be required prior to Commitment if deemed necessary. (I) Replacement Reserves. Periodic deposits to a reserve account to pay for the future replacement or major repair of building systems and components (generally items considered capitalized costs).the Underwriter will use a minimum reserve of $250 per Unit for New Construction and Reconstruction Developments and $300 per Unit for all other Developments. The Underwriter may require an amount above $300 for the Development based on information provided in the Property Condition Assessment ("PCA") or, for existing USDA developments, an amount approved by USDA. The Applicant's assumption for reserves may be adjusted by the Underwriter if the amount provided by the Applicant is insufficient to fund capital needs as documented by the PCA during the first fifteen (15) years of the long term pro forma. Higher reserves may be used if documented by a primary lender or syndicator. (J) Other Operating Expenses. The Underwriter will include other reasonable, customary and documented property-level operating expenses such as audit fees, security expense, telecommunication expenses (tenant reimbursements must be reflected in EGI) and TDHCA's compliance fees. This category does not include depreciation, interest expense, lender or syndicator's asset management fees, or other ongoing partnership fees. (K) Tenant Services. Tenant services are not included as an operating expense or included in the DCR calculation unless: (i) There is a documented financial obligation on behalf of the Owner with a unit of state or local government to provide tenant supportive services at a specified dollar amount. The financial obligation must be identified by the permanent lender in their term sheet and the dollar amount of the financial obligation must be included in the DCR calculation on the permanent lender's 15-year pro forma at Application. At cost certification and as a minimum, the estimated expenses underwritten at Application will be included in the DCR calculation regardless if actually incurred; or, (ii) The Applicant demonstrates a history of providing comparable supportive services and expenses at existing affiliated properties within the local area. Except for Supportive Housing Developments, the estimated expense of supportive services must be identified by the permanent lender in their term sheet and included in the DCR calculation on the 15-year pro forma. At cost certification and as a minimum, the estimated expenses underwritten at Application will be included in the DCR calculation regardless if actually incurred; (iii) On-site staffing or pro ration of staffing for coordination of services only, not provision of services, can be included as a supportive services expense without permanent lender documentation. (L) Total Operating Expenses. The total of expense items described above. If the Applicant's total expense estimate is within 5 percent of the final total expense figure calculated by the Underwriter, the Applicant's figure is characterized as reasonable in the Report; however, for purposes of calculating DCR, the Underwriter's independent calculation will be used unless the Applicant's first year stabilized pro forma meets the requirements of paragraph (3) of this subsection. (3) Net Operating Income ("NOI"). The difference between the EGI and total operating expenses. If the Applicant's first year stabilized NOI figure is within 5 percent of the NOI calculated by the Underwriter, the Applicant's NOI is characterized as reasonable in the Report; however, for purposes of calculating the first year stabilized pro forma DCR, the Underwriter's calculation of NOI will be used un- 43 TexReg 56 January 5, 2018 Texas Register

57 less the Applicant's first year stabilized EGI, total operating expenses, and NOI are each within 5 percent of the Underwriter's estimates. For Housing Tax Credit Developments at cost certification, actual NOI will be used as adjusted for stabilization of rents and extraordinary lease-up expenses. Permanent lender and equity partner stabilization requirements documented in the loan and partnership agreements will be considered in determining the appropriate adjustments and the NOI used by the Underwriter. (4) Debt Coverage Ratio. DCR is calculated by dividing NOI by the sum of scheduled loan principal and interest payments for all permanent debt sources of funds. If executed loan documents do not exist, loan terms including principal and/or interest payments are calculated based on the terms indicated in the most current term sheet(s). Otherwise, actual terms indicated in the executed loan documents will be used. Term sheet(s) must indicate the DCR required by the lender for initial underwriting as well as for stabilization purposes. Unusual or non-traditional financing structures may also be considered. (A) Interest Rate. The rate documented in the term sheet(s) or loan document(s) will be used for debt service calculations. Term sheets indicating a variable interest rate must provide a breakdown of the rate index and any component rates comprising an all-in interest rate. The term sheet(s) must state the lender's underwriting interest rate assumption, or the Applicant must submit a separate statement from the lender with an estimate of the interest rate as of the date of such statement. At initial underwriting, the Underwriter may adjust the underwritten interest rate assumption based on market data collected on similarly structured transactions or rate index history. Private Mortgage Insurance premiums and similar fees are not included in the interest rate but calculated on outstanding principal balance and added to the total debt service payment. (B) Amortization Period. For purposes of calculating DCR, the permanent lender's amortization period will be used if not less than thirty (30) years and not more than forty (40) years. Up to fifty (50) years may be used for federally sourced or insured loans For permanent lender debt with amortization periods less than thirty (30) years, thirty (30) years will be used. For permanent lender debt with amortization periods greater than forty (40) years, forty (40) years will be used. For non-housing Tax Credit transactions a lesser amortization period may be used if the Department's funds are fully amortized over the same period as the primary senior debt. (C) Repayment Period. For purposes of projecting the DCR over a thirty (30) year period for developments with permanent financing structures with balloon payments in less than thirty (30) years, the Underwriter will carry forward debt service based on a full amortization at the interest rate stated in the term sheet(s). (D) Acceptable Debt Coverage Ratio Range. Except as set forth in clauses (i) or (ii) of this subparagraph, the acceptable first year stabilized pro forma DCR for all priority or foreclosable lien financing plus the Department's proposed financing must be between a minimum of 1.15 and a maximum of 1.35 (maximum of 1.50 for Housing Tax Credit Developments at cost certification). (i) If the DCR is less than the minimum, the recommendations of the Report may be based on a reduction to debt service and the Underwriter will make adjustments to the financing structure in the order presented in subclauses (I) - (III) of this clause subject to a Direct Loan NOFA and program rules: Loan; (I) a reduction to the principal amount of a Direct (II) in the case where the amount of the Direct Loan determined in (I) is insufficient to balance the sources and uses; (-a-) a reduction to the interest rate; (-b-) an increase in the amortization period; (III) an assumed reduction in the permanent loan amount for non-department funded loans based upon the rates and terms in the permanent loan term sheet(s) as long as they are within the ranges in subparagraphs (A) and (B) of this paragraph. (ii) If the DCR is greater than the maximum, the recommendations of the Report may be based on an increase to debt service and the Underwriter will make adjustments to the assumed financing structure in the order presented in subclauses (I) - (III) of this clause subject to a Direct Loan NOFA and program rules: (I) an increase to the interest rate up to the highest interest rate on any senior debt or if no senior debt a market rate determined by the Underwriter based on current market interest rates; (II) or a decrease in the amortization period but not less than thirty (30) years; (III) an assumed increase in the permanent loan amount for non-department funded loans based upon the rates and terms in the permanent loan term sheet as long as they are within the ranges in subparagraphs (A) and (B) of this paragraph. (iii) For Housing Tax Credit Developments, a reduction in the recommended Housing Credit Allocation Amount may be made based on the Gap Method described in subsection (c)(2) of this section as a result of an increased debt assumption, if any. (iv) For Developments financed with a Direct Loan subordinate to FHA financing, DCR on the Direct Loan will be calculated using 75% of the Surplus Cash (as defined by the applicable FHA program). (v) The Underwriter may limit total debt service that is senior to a Direct Loan to produce an acceptable DCR on the Direct Loan. (5) Long Term Pro forma. The Underwriter will create a 30-year operating pro forma using the following: (A) The Underwriter's or Applicant's first year stabilized pro forma as determined by paragraph (3) of this subsection. (B) A 2 percent annual growth factor is utilized for income and a 3 percent annual growth factor is utilized for operating expenses except for management fees that are calculated based on a percentage of each year's EGI. (C) Adjustments may be made to the long term pro forma if satisfactory support documentation is provided by the Applicant or as independently determined by the Underwriter. (e) Total Housing Development Costs. The Department's estimate of the Total Housing Development Cost will be based on the Applicant's development cost schedule to the extent that costs can be verified to a reasonable degree of certainty with documentation from the Applicant and tools available to the Underwriter. For New Construction Developments, the Underwriter's total cost estimate will be used unless the Applicant's Total Housing Development Cost is within 5 percent of the Underwriter's estimate. The Department's estimate of the Total Housing Development Cost for Rehabilitation Developments will be based in accordance with the estimated cost provided in the PCA for the scope of work as defined by the Applicant and (a)(5) of this chapter (relating to PCA Guidelines). If the Applicant's cost estimate is utilized and the Applicant's line item costs are inconsistent with documentation provided in the Application or program rules, the Underwriter may make adjustments to the Applicant's Total Housing Development Cost. ADOPTED RULES January 5, TexReg 57

58 (1) Acquisition Costs. The underwritten acquisition cost is verified with Site Control document(s) for the Property. At Cost Certification, the underwritten acquisition cost will be the amount verified by the settlement statement. For Identify of Interest acquisitions, the cost will be limited to the underwritten acquisition cost at initial Underwriting. (A) Excess Land Acquisition. In cases where more land is to be acquired (by the Applicant or a Related Party) than will be utilized as the Development Site and the remainder acreage is not accessible for use by tenants or dedicated as permanent and maintained green space, the value ascribed to the proposed Development Site will be prorated based on acreage from the total cost reflected in the Site Control document(s). An appraisal containing segregated values for the total acreage, the acreage for the Development Site and the remainder acreage, or tax assessment value may be used by the Underwriter in making a proration determination based on relative value; however, the Underwriter will not utilize a prorated value greater than the total amount in the Site Control document(s). (B) Identity of Interest Acquisitions. (i) An acquisition will be considered an identity of interest transaction when an Affiliate of the seller is an Affiliate of, a Related Party to, any owner at any level of the Development Team or a Related Party lender; and Property; or (I) is the current owner in whole or in part of the (II) has or had within the prior 36 months, legal or beneficial ownership of the property or any portion thereof or interest therein prior to the first day of the Application Acceptance Period. (ii) In all identity of interest transactions the Applicant is required to provide: (I) the original acquisition cost in the most recent non-identity of interest transaction evidenced by an executed settlement statement or, if a settlement statement is not available, the original asset value listed in the most current financial statement for the identity of interest owner; and (II) if the original acquisition cost evidenced by subclause (I) of this clause is less than the acquisition cost stated in the application: (-a-) an appraisal that meets the requirements of of this chapter (relating to Appraisal Rules and Guidelines); and (-b-) any other verifiable costs of owning, holding, or improving the Property, excluding seller financing, that when added to the value from subclause (I) of this clause justifies the Applicant's proposed acquisition amount. (-1-) For land-only transactions, documentation of owning, holding or improving costs since the original acquisition date may include property taxes, interest expense to unrelated Third Party lender(s), capitalized costs of any physical improvements, the cost of zoning, platting, and any off-site costs to provide utilities or improve access to the Property. All allowable holding and improvement costs must directly benefit the proposed Development by a reduction to hard or soft costs. Additionally, an annual return of 10 percent may be applied to the original capital investment and documented holding and improvement costs; this return will be applied from the date the applicable cost is incurred until the date of the Department's Board meeting at which the Grant, Direct Loan and/or Housing Credit Allocation will be considered. (-2-) For transactions which include existing residential or non-residential buildings that will be rehabilitated or otherwise retained as part of the Development, documentation of owning, holding, or improving costs since the original acquisition date may include capitalized costs of improvements to the Property, and in the case of USDA financed Developments the cost of exit taxes not to exceed an amount necessary to allow the sellers to be made whole in the original and subsequent investment in the Property and avoid foreclosure. Additionally, an annual return of 10 percent may be applied to the original capital investment and documented holding and improvement costs; this return will be applied from the date the applicable cost was incurred until the date of the Department's Board meeting at which the Grant, Direct Loan and/or Housing Credit Allocation will be considered. For any period of time during which the existing residential or non-residential buildings are occupied or otherwise producing revenue, holding and improvement costs will not include capitalized costs, operating expenses, property taxes, interest expense or any other cost associated with the operations of the buildings. (C) In no instance will the acquisition cost utilized by the Underwriter exceed the lesser of the original acquisition cost evidenced by clause (ii)(i) of this subparagraph plus costs identified in clause (ii)(ii)(-b-) of this subparagraph, or if applicable the "as-is" value conclusion evidenced by clause (ii)(ii)(-a-) of this subparagraph or the transfer value approved by USDA. Acquisition cost is limited to appraised land value for transactions which include existing buildings that will be demolished. The resulting acquisition cost will be referred to as the "Adjusted Acquisition Cost." (D) Eligible Basis on Acquisition of Buildings. Building acquisition cost will be included in the underwritten Eligible Basis if the Applicant provided an appraisal that meets the Department's Appraisal Rules and Guidelines as described in of this chapter. The underwritten eligible building cost will be the lowest of the values determined based on clauses (i) - (iii) of this subparagraph: the Applicant's stated eligible building acquisition cost; (i) (ii) the total acquisition cost reflected in the Site Control document(s), or the Adjusted Acquisition Cost (as defined in subparagraph (B)(iii) of this paragraph), prorated using the relative land and building values indicated by the applicable appraised value; (iii) total acquisition cost reflected in the Site Control document(s), or the Adjusted Acquisition Cost (as defined in subparagraph (B)(iii) of this paragraph), less the appraised "as-vacant" land value; or (iv) the Underwriter will use the value that best corresponds to the circumstances presently affecting the Development that will continue to affect the Development after transfer to the new owner in determining the building value. These circumstances include but are not limited to operating subsidies, rental assistance, transfer values approved by USDA and/or property tax exemptions. Any value of existing favorable financing will be attributed prorata to the land and buildings. (2) Off-Site Costs. The Underwriter will only consider costs of Off-Site Construction that are well documented and certified to by a Third Party engineer on the required Application forms with supporting documentation. (3) Site Work Costs. The Underwriter will only consider costs of Site Work that are well documented and certified to by a Third Party engineer on the required Application forms with supporting documentation. 43 TexReg 58 January 5, 2018 Texas Register

59 (4) Building Costs. (A) New Construction and Reconstruction. The Underwriter will use the Marshall and Swift Residential Cost Handbook, other comparable published Third-Party cost estimating data sources, historical final cost certifications of previous Housing Tax Credit developments and other acceptable cost data available to the Underwriter to estimate Building Cost. Generally, the "Average Quality" multiple, townhouse, or single family costs, as appropriate, from the Marshall and Swift Residential Cost Handbook or other comparable published Third-Party data source, will be used based upon details provided in the Application and particularly building plans and elevations. The Underwriter will consider amenities, specifications and development types not included in the Average Quality standard. The Underwriter may consider a sales tax exemption for nonprofit General Contractors. (B) Rehabilitation and Adaptive Reuse. (i) The Applicant must provide a scope of work and narrative description of the work to be completed. The narrative should speak to all off-site, site work, building components including finishes and equipment, and development amenities. The narrative should be in sufficient detail so that the reader can understand the work and it should generally be arranged consistent with the line-items on the PCA Cost Schedule Supplement and must also be consistent with the development cost schedule of the Application. (ii) The Underwriter will use cost data provided on the PCA Cost Schedule Supplement. (5) Contingency. Total contingency, including any soft cost contingency, will be limited to a maximum of 7 percent of Building Cost plus Site Work and off-sites for New Construction and Reconstruction Developments, and 10 percent of Building Cost plus Site Work and off-sites for Rehabilitation and Adaptive Reuse Developments. For Housing Tax Credit Developments, the percentage is applied to the sum of the eligible Building Cost, eligible Site Work costs and eligible off-site costs in calculating the eligible contingency cost. (6) General Contractor Fee. General Contractor fees include general requirements, contractor overhead, and contractor profit. General requirements include, but are not limited to, on-site supervision or construction management, off-site supervision and overhead, jobsite security, equipment rental, storage, temporary utilities, and other indirect costs. General Contractor fees are limited to a total of 14 percent on Developments with Hard Costs of $3 million or greater, the lesser of $420,000 or 16 percent on Developments with Hard Costs less than $3 million and greater than $2 million, and the lesser of $320,000 or 18 percent on Developments with Hard Costs at $2 million or less. Any contractor fees to Affiliates or Related Party subcontractors regardless of the percentage of the contract sum in the construction contract (s) will be treated collectively with the General Contractor Fee limitations. For Housing Tax Credit Developments, the percentages are applied to the sum of the Eligible Hard Costs in calculating the eligible contractor fees. For Developments also receiving financing from USDA, the combination of builder's general requirements, builder's overhead, and builder's profit should not exceed the lower of TDHCA or USDA requirements. Additional fees for ineligible costs will be limited to the same percentage of ineligible Hard Costs but will not be included in Eligible Basis. (7) Developer Fee. (A) For Housing Tax Credit Developments, the Developer Fee included in Eligible Basis cannot exceed 15 percent of the project's eligible costs, less Developer fees, for Developments proposing fifty (50) Units or more and 20 percent of the project's eligible costs, less Developer fees, for Developments proposing forty-nine (49) Units or less. For Public Housing Authority Developments for conversion under the HUD Rental Assistance Demonstration ("RAD") program that will be financed using tax-exempt mortgage revenue bonds, the Developer Fee cannot exceed 20 percent of the project's eligible cost less Developer Fee. (B) Any additional Developer fee claimed for ineligible costs will be limited to the same percentage but applied only to ineligible Hard Costs (15 percent for Developments with fifty (50) or more Units, or 20 percent for Developments with forty-nine (49) or fewer Units). Any Developer fee above this limit will be excluded from Total Housing Development Costs. All fees to Affiliates and/or Related Parties for work or guarantees determined by the Underwriter to be typically completed or provided by the Developer or Principal(s) of the Developer will be considered part of Developer fee. (C) In the case of a transaction requesting acquisition Housing Tax Credits: (i) the allocation of eligible Developer fee in calculating Rehabilitation/New Construction Housing Tax Credits will not exceed 15 percent of the Rehabilitation/New Construction eligible costs less Developer fees for Developments proposing fifty (50) Units or more and 20 percent of the Rehabilitation/New Construction eligible costs less Developer fees for Developments proposing forty-nine (49) Units or less; and (ii) no Developer fee attributable to an identity of interest acquisition of the Development will be included. (D) Eligible Developer fee is multiplied by the appropriate Applicable Percentage depending whether it is attributable to acquisition or rehabilitation basis. (E) For non-housing Tax Credit developments, the percentage can be up to 15 percent, but is based upon Total Housing Development Cost less the sum of the fee itself, land costs, the costs of permanent financing, excessive construction period financing described in paragraph (8) of this subsection, reserves, and any identity of interest acquisition cost. (8) Financing Costs. All fees required by the construction lender, permanent lender and equity partner must be indicated in the term sheets. Eligible construction period interest is limited to the lesser of actual eligible construction period interest, or the interest on one (1) year's fully drawn construction period loan funds at the construction period interest rate indicated in the term sheet(s). For tax-exempt bond transactions up to twenty four (24) months of interest may be included. Any excess over this amount will not be included in Eligible Basis. Construction period interest on Related Party construction loans is only included in Eligible Basis with documentation satisfactory to the Underwriter that the loan will be at a market interest rate, fees and loan terms and the Related Party lender can demonstrate that it is routinely engaged in construction financing to unrelated parties. (9) Reserves. Except for the underwriting of a Housing Tax Credit Development at cost certification, the Underwriter will utilize the amount described in the Applicant's project cost schedule if it is within the range of two (2) to six (6) months of stabilized operating expenses plus debt service. Alternatively, the Underwriter may consider a greater amount proposed by the first lien lender or syndicator if the detail for such greater amount is found by the Underwriter to be both reasonable and well documented. Reserves do not include capitalized asset management fees, guaranty reserves, tenant services reserves or other similar costs. Lease up reserves, exclusive of initial start-up costs, funding of other reserves and interim interest, may be considered with documentation showing sizing assumptions accept- ADOPTED RULES January 5, TexReg 59

60 able to the Underwriter. In no instance at initial underwriting will total reserves exceed twelve (12) months of stabilized operating expenses plus debt service (and only for USDA or HUD financed rehabilitation transactions the initial deposits to replacement reserves and transferred replacement reserves for USDA or HUD financed rehabilitation transactions). Pursuant to (c) and for the underwriting of a Housing Tax Credit Development at cost certification, operating reserves that will be maintained for a minimum period of five years and documented in the Owner's partnership agreement and/or the permanent lender's loan documents will be included as a development cost. (10) Soft Costs. Eligible soft costs are generally costs that can be capitalized in the basis of the Development for tax purposes. The Underwriter will evaluate and apply the allocation of these soft costs in accordance with the Department's prevailing interpretation of the Code. Generally the Applicant's costs are used however the Underwriter will use comparative data to determine the reasonableness of all soft costs. (11) Additional Tenant Amenities. For Housing Tax Credit Developments and after submission of the cost certification package, the Underwriter may consider costs of additional building and site amenities (suitable for the tenant population being served) proposed by the Owner in an amount not to exceed 1.5% of the originally underwritten Hard Costs. The additional amenities may be included in the LURA. (12) Special Reserve Account. For Housing Tax Credit Developments at cost certification, the Underwriter may include a deposit of up to $2,500 per Unit into a Special Reserve Account as a Development Cost. (f) Development Team Capacity and Development Plan. (1) The Underwriter will evaluate and report on the overall capacity of the Development Team by reviewing aspects, including but not limited to those identified in subparagraphs (A) - (D) of this paragraph: (A) personal credit reports for development sponsors, Developer fee recipients and those individuals anticipated to provide guarantee(s) in cases when warranted. The Underwriter may evaluate the credit report and identify any bankruptcy, state or federal tax liens or other relevant credit risks for compliance with eligibility and debarment requirements in this chapter; (B) quality of construction, Rehabilitation, and ongoing maintenance of previously awarded housing developments by review of construction inspection reports, compliance on-site visits, findings of UPCS violations and other information available to the Underwriter; (C) for Housing Tax Credit Developments, repeated or ongoing failure to timely submit cost certifications, requests for and clearance of final inspections, and timely response to deficiencies in the cost certification process; (D) adherence to obligations on existing or prior Department funded developments with respect to program rules and documentation. (2) While all components of the development plan may technically meet the other individual requirements of this section, a confluence of serious concerns and unmitigated risks identified during the underwriting process may result in an Application being referred to the Committee by the Director of Real Estate Analysis. The Committee will review any recommendation made under this subsection to deny an Application for a Grant, Direct Loan and/or Housing Credit Allocation prior to completion of the Report and posting to the Department's website. (g) Other Underwriting Considerations. The Underwriter will evaluate additional feasibility elements as described in paragraphs (1) - (3) of this subsection. (1) Floodplains. The Underwriter evaluates the site plan, floodplain map, survey and other information provided to determine if any of the buildings, drives, or parking areas reside within the 100-year floodplain. If such a determination is made by the Underwriter, the Report will include a condition that: (A) the Applicant must pursue and receive a Letter of Map Amendment ("LOMA") or Letter of Map Revision ("LOMR-F"); or (B) the Applicant must identify the cost of flood insurance for the buildings and for the tenant's contents for buildings within the 100-year floodplain and certify that the flood insurance will be obtained; and (C) the Development must be proposed to be designed to comply with the QAP, Program Rules and NOFA, and applicable Federal or state requirements. (2) Proximity to Other Developments. The Underwriter will identify in the Report any developments funded or known and anticipated to be eligible for funding within one linear mile of the subject. Distance is measured in a straight line from nearest boundary point to nearest boundary point. (3) Supportive Housing. The unique development and operating characteristics of Supportive Housing Developments may require special consideration in these areas: (A) Operating Income. The extremely-low-income tenant population typically targeted by a Supportive Housing Development may include deep-skewing of rents to well below the 50 percent AMGI level or other maximum rent limits established by the Department. The Underwriter should utilize the Applicant's proposed rents in the Report as long as such rents are at or below the maximum rent limit proposed for the units or equal to any project based rental subsidy rent to be utilized for the Development if higher than the maximum rent limits; (B) Operating Expenses. A Supportive Housing Development may have significantly higher expenses for payroll, management fee, security, resident support services, or other items than typical affordable housing developments. The Underwriter will rely heavily upon the historical operating expenses of other Supportive Housing Developments affiliated with the Applicant or otherwise available to the Underwriter. Expense estimates must be categorized as outlined in subsection (d)(2) of this section; (C) DCR and Long Term Feasibility. Supportive Housing Developments may be exempted from the DCR requirements of subsection (d)(4)(d) of this section if the Development is anticipated to operate without conventional or "must-pay" debt. Applicants must provide evidence of sufficient financial resources to offset any projected 15-year cumulative negative Cash Flow. Such evidence will be evaluated by the Underwriter on a case-by-case basis to satisfy the Department's long term feasibility requirements and may take the form of one or a combination of: executed subsidy commitment(s); set-aside of Applicant's financial resources to be substantiated by current financial statements evidencing sufficient resources; and/or proof of annual fundraising success sufficient to fill anticipated operating losses. If either a set aside of financial resources or annual fundraising are used to evidence the long term feasibility of a Supportive Housing Development, a resolution from the Applicant's governing board must be provided confirming their irrevocable commitment to the provision of these funds and activities; and/or 43 TexReg 60 January 5, 2018 Texas Register

61 (D) Total Housing Development Costs. For Supportive Housing Developments designed with only Efficiency Units, the Underwriter may use "Average Quality" dormitory costs, or costs of other appropriate design styles from the Marshall & Swift Valuation Service, with adjustments for amenities and/or quality as evidenced in the Application, as a base cost in evaluating the reasonableness of the Applicant's Building Cost estimate for New Construction Developments. (h) Work Out Development. Developments that are underwritten subsequent to Board approval in order to refinance or gain relief from restrictions may be considered infeasible based on the guidelines in this section, but may be characterized as "the best available option" or "acceptable available option" depending on the circumstances and subject to the discretion of the Underwriter as long as the option analyzed and recommended is more likely to achieve a better financial outcome for the property and the Department than the status quo. (i) Feasibility Conclusion. An infeasible Development will not be recommended for a Grant, Direct Loan or Housing Credit Allocation unless the Underwriter can determine an alternative structure and/or conditions the recommendations of the Report upon receipt of documentation supporting an alternative structure. A Development will be characterized as infeasible if paragraph (1) or (2) of this subsection applies. The Development will be characterized as infeasible if one or more of paragraphs (3) - (5) of this subsection applies unless paragraph (6)(B) of this subsection also applies. (1) Gross Capture Rate, AMGI Band Capture Rates, and Individual Unit Capture Rate. The method for determining capture rates for a Development is defined in of this chapter. The Underwriter will independently verify all components and conclusions of the capture rates and may, at their discretion, use independently acquired demographic data to calculate demand and may make a determination of the capture rates based upon an analysis of the Sub-market. The Development: (A) is characterized as an Elderly Development and the Gross Capture Rate or any AMGI bad capture rate exceeds 10 percent; or (B) is outside a Rural Area and targets the general population, and the Gross Capture Rate or any AMGI band capture rate exceeds 10 percent (or 15 percent for Tax-Exempt Bond Developments located in an MSA (as defined in the HTC Site Demographics Characteristics Report) with a population greater than 1 million if the average physical occupancy is 92.5% or greater for all stabilized affordable housing developments located within a 20 minute drive time, as supported by the Market Analyst, from the subject Development); or (C) is in a Rural Area and targets the general population, and the Gross Capture Rate or any AMGI band capture rate exceeds 30 percent; or (D) is Supportive Housing and the Gross Capture Rate or any AMGI band capture rate exceeds 30 percent; or, (E) has an Individual Unit Capture Rate for any Unit Type greater than 65 percent. (F) Developments meeting the requirements of subparagraph (A), (B), (C), (D) or (E) of this paragraph may avoid being characterized as infeasible if clause (i) or (ii) of this subparagraph apply. (i) Replacement Housing. The proposed Development is comprised of affordable housing which replaces previously existing affordable housing within the Primary Market Area as defined in of this chapter on a Unit for Unit basis, and gives the displaced tenants of the previously existing affordable housing a leasing preference. (ii) Existing Housing. The proposed Development is comprised of existing affordable housing, whether defined by an existing land use and rent restriction agreement or if the subject rents are at or below 50% AMI rents, which is at least 50 percent occupied and gives displaced existing tenants a leasing preference as stated in a relocation plan. (2) Deferred Developer Fee. Applicants requesting an allocation of tax credits where the estimated deferred Developer Fee, based on the underwritten capitalization structure, is not repayable from Cash Flow within the first fifteen (15) years of the long term pro forma as described in subsection (d)(5) of this section. (3) Pro Forma Rent. The Pro Forma Rent for Units with rents restricted at 60 percent of AMGI is less than the Net Program Rent for Units with rents restricted at or below 50 percent of AMGI unless the Applicant accepts the Underwriter's recommendation, if any, that all restricted units have rents and incomes restricted at or below the 50 percent of AMGI level. (4) Initial Feasibility. (A) Except when underwritten at cost certification, the first year stabilized pro forma operating expense divided by the first year stabilized pro forma Effective Gross Income is greater than 68 percent for Rural Developments 36 Units or less and 65 percent for all other Developments. (B) The first year DCR is below 1.15 (1.00 for USDA Developments). (5) Long Term Feasibility. The Long Term Pro forma at any time during years two through fifteen, as defined in subsection (d)(5) of this section, reflects: Loan). (A) a Debt Coverage Ratio below 1.15; or, (B) negative cash flow (throughout the term of a Direct (6) Exceptions. The infeasibility conclusions may be excepted when: (A) Waived by the Executive Director of the Department or by the Committee if documentation is submitted by the Applicant to support unique circumstances that would provide mitigation. (B) Developments not meeting the requirements of one or more of paragraphs (3), (4)(A) or (5) of this subsection will be re-characterized as feasible if one or more of clauses (i) - (v) of this subparagraph apply. A Development financed with a Direct Loan will not be re-characterized as feasible with respect to (5)(B). (i) The Development will receive Project-based Section 8 Rental Assistance or the HUD Rental Assistance Demonstration Program for at least 50 percent of the Units and a firm commitment, with terms including Contract Rent and number of Units, is submitted at Application. (ii) The Development will receive rental assistance for at least 50 percent of the Units in association with USDA financing. (iii) The Development will be characterized as public housing as defined by HUD for at least 50 percent of the Units. (iv) The Development will be characterized as Supportive Housing for at least 50 percent of the Units and evidence of adequate financial support for the long term viability of the Development is provided. ADOPTED RULES January 5, TexReg 61

62 (v) The Development has other long term project based restrictions on rents for at least 50 percent of the Units that allow rents to increase based upon expenses and the Applicant's proposed rents are at least 10 percent lower than both the Net Program Rent and Market Rent Market Analysis Rules and Guidelines. (a) General Provision. A Market Analysis prepared for the Department must evaluate the need for decent, safe, and sanitary housing at rental rates or sales prices that eligible tenants can afford. The analysis must determine the feasibility of the subject Property rental rates or sales price and state conclusions as to the impact of the Property with respect to the determined housing needs. The Market Analysis must include a statement that the report preparer has read and understood the requirements of this section. The Market Analysis must also include a statement that the person or company preparing the Market Analysis is a disinterested party and will not materially benefit from the Development in any other way than receiving a fee for performing the Market Analysis, and that the fee is in no way contingent upon the outcome of the Market Analysis. (b) Self-Contained. A Market Analysis prepared for the Department must allow the reader to understand the market data presented, the analysis of the data, and the conclusions derived from such data. All data presented should reflect the most current information available and the report must provide a parenthetical (in-text) citation or footnote describing the data source. The analysis must clearly lead the reader to the same or similar conclusions reached by the Market Analyst. All steps leading to a calculated figure must be presented in the body of the report. (c) Market Analyst Qualifications. A Market Analysis submitted to the Department must be prepared and certified by an approved Qualified Market Analyst. ( ) The Department will maintain an approved Market Analyst list based on the guidelines set forth in paragraphs (1) - (2) of this subsection. (1) The approved Qualified Market Analyst list will be updated and published annually on or about November 1st. If not listed as an approved Qualified Market Analyst by the Department, a Market Analyst may request approval by submitting items in subparagraphs (A) - (F) of this paragraph at least thirty (30) calendar days prior to the first day of the competitive tax credit Application Acceptance Period or thirty (30) calendar days prior to submission of any other application for funding for which the Market Analyst must be approved. (A) Franchise Tax Account Status from the Texas Comptroller of Public Accounts (not applicable for sole proprietorships). (B) A current organization chart or list reflecting all members of the firm who may author or sign the Market Analysis. A firm with multiple offices or locations must indicate all members expected to be providing Market Analysis. (C) Resumes for all members of the firm or subcontractors who may author or sign the Market Analysis. (D) General information regarding the firm's experience including references, the number of previous similar assignments and timeframes in which previous assignments were completed. (E) Certification from an authorized representative of the firm that the services to be provided will conform to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the Application Round in which each Market Analysis is submitted. (F) A sample Market Analysis that conforms to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the year in which the sample Market Analysis is submitted. An already approved Qualified Market Analyst will remain on the list so long as at least one (1) Market Analysis has been submitted to the Department in the previous 12 months or items (A),(B),(C) and (E) are submitted prior to October 1st. Otherwise, the Market Analyst will automatically be removed from the list. (2) During the underwriting process each Market Analysis will be reviewed and any discrepancies with the rules and guidelines set forth in this section may be identified and require timely correction. Subsequent to the completion of the Application Round and as time permits, staff or a review appraiser will re-review a sample set of submitted market analyses to ensure that the Department's Market Analysis Rules and Guidelines are met. If it is found that a Market Analyst has not conformed to the Department's Market Analysis Rules and Guidelines, as certified to, the Market Analyst will be notified of the discrepancies in the Market Analysis and will be removed from the approved Qualified Market Analyst list. (A) In and of itself, removal from the list of approved Market Analysts will not invalidate a Market Analysis commissioned prior to the removal date and at least ninety (90) days prior to the first day of the applicable Application Acceptance Period. (B) To be reinstated as an approved Qualified Market Analyst, the Market Analyst must amend the previous report to remove all discrepancies or submit a new sample Market Analysis that conforms to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the year in which the updated or new sample Market Analysis is submitted. (d) Market Analysis Contents. A Market Analysis for a rental Development prepared for the Department must be organized in a format that follows a logical progression and must include, at minimum, items addressed in paragraphs (1) - (13) of this subsection. (1) Title Page. Include Property address or location, effective date of analysis, date report completed, name and address of person authorizing report, and name and address of Market Analyst. (2) Letter of Transmittal. The date of the letter must be the date the report was completed. Include Property address or location, description of Property, statement as to purpose and scope of analysis, reference to accompanying Market Analysis report with effective date of analysis and summary of conclusions, date of Property inspection, name of persons inspecting subject Property, and signatures of all Market Analysts authorized to work on the assignment. Include a statement that the report preparer has read and understood the requirements of this section. (3) Table of Contents. Number the exhibits included with the report for easy reference. (4) Market Analysis Summary. Include the Department's Market Analysis Summary exhibit. (5) Assumptions and Limiting Conditions. Include a description of all assumptions, both general and specific, made by the Market Analyst concerning the Property. (6) Identification of the Property. Provide a statement to acquaint the reader with the Development. Such information includes street address, tax assessor's parcel number(s), and Development characteristics. (7) Statement of Ownership. Disclose the current owners of record and provide a three (3) year history of ownership for the subject Property. 43 TexReg 62 January 5, 2018 Texas Register

63 (8) Primary Market Area. A limited geographic area from which the Development is expected to draw most of its demand. The size and shape of the PMA should be reflective of proximity to employment centers, services and amenities and contain the most significant areas from which to draw demand. All of the Market Analyst's conclusions specific to the subject Development must be based on only one PMA definition. The Market Analyst must adhere to the methodology described in this paragraph when determining the market area. ( ) (A) The PMA will be defined by the Market Analyst as: (i) geographic size based on a base year population no larger than necessary to provide sufficient demand but no more than 100,000 people; (ii) boundaries based on U.S. census tracts; and (iii) the population of the PMA may exceed 100,000 if the amount over the limit is contained within a single census tract. include: a detailed narrative specific to the PMA explaining: (B) The Market Analyst's definition of the PMA must (i) (I) how the boundaries of the PMA were determined with respect to census tracts chosen and factors for including or excluding certain census tracts in proximity to the Development; (II) whether a more logical market area within the PMA exists but is not definable by census tracts and how this subsection of the PMA supports the rationale for the defined PMA; (III) what are the specific attributes of the Development's location within the PMA that would draw prospective tenants from other areas of the PMA to relocate to the Development; (IV) what are the specific attributes, if known, of the Development itself that would draw prospective tenants currently residing in other areas of the PMA to relocate to the Development; (V) if the PMA crosses county lines, discuss the different income and rent limits in each county and how these differing amounts would affect the demand for the Development; (VI) for rural Developments, discuss the relative draw (services, jobs, medical facilities, recreation, schools, etc.) of the Development's immediate local area (city or populous area if no city) in comparison to its neighboring local areas (cities, or populous areas if no cities), in and around the PMA. A rural PMA should not include significantly larger more populous areas unless the analyst can provide substantiation and rationale that the tenants would migrate to the Development's location from the larger cities; (VII) discuss and quantify current and planned single-family and non-residential construction (include permit data if available); and other housing issues in general, if pertinent; PMA; (VIII) (ii) a complete demographic report for the defined (iii) a scaled distance map indicating the PMA boundaries showing relevant U.S. census tracts with complete 11-digit identification numbers in numerical order with labels as well as the location of the subject Development and all comparable Developments. The map must indicate the total square miles of PMA; and, (iv) a proximity table indicating distance from the Development to employment centers, medical facilities, schools, entertainment and any other amenities relevant to the potential residents and include drive time estimates. (C) Comparable Units. Identify developments in the PMA with Comparable Units. In PMAs lacking sufficient rent comparables, it may be necessary for the Market Analyst to collect data from markets with similar characteristics and make quantifiable and qualitative location adjustments. Provide a data sheet for each comparable development consisting of: if applicable; (i) (ii) development name; address; (iii) year of construction and year of Rehabilitation, (iv) (v) property condition; Target Population; (vi) unit mix specifying number of Bedrooms, number of baths, Net Rentable Area; and date of sale; (I) (II) monthly rent and Utility Allowance; or sales price with terms, marketing period and (vii) description of concessions; (viii) list of unit amenities; (ix) (x) utility structure; list of common amenities; (xi) narrative comparison of its proximity to employment centers and services relative to targeted tenant population of the subject property; and, and turnover. (xii) for rental developments only, the occupancy (9) Market Information. (A) Identify the number of units for each of the categories in clauses (i) - (vi) of this subparagraph, if applicable: (i) total housing; (ii) all multi-family rental developments, including unrestricted and market-rate developments, whether existing, under construction or proposed; (iii) (iv) (v) Affordable housing; Comparable Units; Unstabilized Comparable Units; and (vi) proposed Comparable Units. (B) Occupancy. The occupancy rate indicated in the Market Analysis may be used to support both the overall demand conclusion for the proposed Development and the vacancy rate assumption used in underwriting the Development described in (d)(1)(C) of this chapter (relating to Underwriting Rules and Guidelines). State the overall physical occupancy rate for the proposed housing tenure (renter or owner) within the defined market areas by: (i) (ii) number of Bedrooms; quality of construction (class); (iii) Target Population; and ADOPTED RULES January 5, TexReg 63

64 (iv) Comparable Units. (C) Absorption. State the absorption trends by quality of construction (class) and absorption rates for Comparable Units. (D) Demographic Reports. (i) All demographic reports must include population and household data for a five (5) year period with the year of Application submission as the base year; (ii) All demographic reports must provide sufficient data to enable calculation of income-eligible, age-, size-, and tenureappropriate household populations; (iii) For Elderly Developments, all demographic reports must provide a detailed breakdown of households by age and by income; and (iv) A complete copy of all demographic reports relied upon for the demand analysis, including the reference index that indicates the census tracts on which the report is based. (E) Demand. Provide a comprehensive evaluation of the need for the proposed housing for the Development as a whole and each Unit type by number of Bedrooms proposed and rent restriction category within the defined market areas using the most current census and demographic data available. A complete demand and capture rate analysis is required in every Market Study, regardless of the current occupancy level of an existing Development. (i) Demographics. The Market Analyst should use demographic data specific to the characteristics of the households that will be living in the proposed Development. For example, the Market Analyst should use demographic data specific to the elderly populations (and any other qualifying residents for Elderly Developments) to be served by an Elderly Development, if available, and should avoid making adjustments from more general demographic data. If adjustment rates are used based on more general data for any of the criteria described in subclauses (I) - (V) of this clause, they should be clearly identified and documented as to their source in the report. (I) Population. Provide population and household figures, supported by actual demographics, for a five (5) year period with the year of Application submission as the base year. (II) Target. If applicable, adjust the household projections for the qualifying demographic characteristics such as the minimum age of the population to be served by the proposed Development. (III) Household Size-Appropriate. Adjust the household projections or target household projections, as applicable, for the appropriate household size for the proposed Unit type by number of Bedrooms proposed and rent restriction category based on 2 persons per Bedroom or one person for Efficiency Units. (IV) Income Eligible. Adjust the household size appropriate projections for income eligibility based on the income bands for the proposed Unit Type by number of Bedrooms proposed and rent restriction category with: (-a-) the lower end of each income band calculated based on the lowest gross rent proposed divided by 40 percent for the general population and 50 percent for elderly households; and (-b-) the upper end of each income band equal to the applicable gross median income limit for the largest appropriate household size based on 2 persons per Bedroom (round up) or one person for Efficiency Units. (V) Tenure-Appropriate. Adjust the income-eligible household projections for tenure (renter or owner). If tenure appropriate income eligible target household data is available, a tenure appropriate adjustment is not necessary. (ii) Gross Demand. Gross Demand is defined as the sum of Potential Demand from the PMA, Demand from Other Sources, and External Demand. (iii) Potential Demand. Potential Demand is defined as the number of income-eligible, age-, size-, and tenure-appropriate target households in the designated market area at the proposed placed in service date. (I) Maximum eligible income is equal to the applicable gross median income limit for the largest appropriate household size. (II) For Developments targeting the general population: (-a-) minimum eligible income is based on a 40 percent rent to income ratio; (-b-) appropriate household size is defined as 2 persons per Bedroom (rounded up); and (-c-) the tenure-appropriate population for a rental Development is limited to the population of renter households. (III) For Developments consisting solely of single family residences on separate lots with all Units having three (3) or more Bedrooms: (-a-) minimum eligible income is based on a 40 percent rent to income ratio; (-b-) appropriate household size is defined as 2 persons per Bedroom (rounded up); and (-c-) Gross Demand includes both renter and owner households. (IV) Elderly Developments: (-a-) minimum eligible income is based on a 50 percent rent to income ratio; and (-b-) Gross Demand includes all household sizes and both renter and owner households within the age range (and any other qualifying characteristics) to be served by the Elderly Development. (V) Supportive Housing: (-a-) minimum eligible income is $1; and (-b-) households meeting the occupancy qualifications of the Development (data to quantify this demand may be based on statistics beyond the defined PMA but not outside the historical service area of the Applicant). (VI) For Developments with rent assisted units (PBV's, PHU's): (-a-) minimum eligible income for the assisted units is $1; and (-b-) maximum eligible income for the assisted units is the minimum eligible income of the corresponding affordable unit. (iv) External Demand: Assume an additional 10% of Potential Demand from the PMA to represent demand coming from outside the PMA. (v) Demand from Other Sources: (I) the source of additional demand and the methodology used to calculate the additional demand must be clearly stated; (II) consideration of Demand from Other Sources is at the discretion of the Underwriter; 43 TexReg 64 January 5, 2018 Texas Register

65 (III) Demand from Other Sources must be limited to households that are not included in Potential Demand; and (IV) if households with Section 8 vouchers are identified as a source of demand, the Market Study must include: (-a-) documentation of the number of vouchers administered by the local Housing Authority; and (-b-) a complete demographic report for the area in which the vouchers are distributed. (F) Employment. Provide a comprehensive analysis of employment trends and forecasts in the Primary Market Area. Analysis must discuss existing or planned employment opportunities with qualifying income ranges. (10) Conclusions. Include a comprehensive evaluation of the subject Property, separately addressing each housing type and specific population to be served by the Development in terms of items in subparagraphs (A) - (I) of this paragraph. All conclusions must be consistent with the data and analysis presented throughout the Market Analysis. (A) Unit Mix. Provide a best possible unit mix conclusion based on the occupancy rates by Bedroom type within the PMA and target, income-eligible, size-appropriate and tenure-appropriate household demand by unit type and income type within the PMA. (B) Rents. Provide a separate Market Rent conclusion for each proposed Unit Type by number of Bedrooms and rent restriction category. Conclusions of Market Rent below the maximum Net Program Rent limit must be well documented as the conclusions may impact the feasibility of the Development under (i) of this chapter. In support of the Market Rent conclusions, provide a separate attribute adjustment matrix for each proposed Unit Type by number of Bedrooms and rental restriction category (i) The Department recommends use of HUD Form (ii) A minimum of three developments must be represented on each attribute adjustment matrix. if applicable. (iii) Adjustments for concessions must be included, (iv) Adjustments for proximity and drive times to employment centers and services narrated in the Comparable Unit description, and the rationale for the amount of the adjustments must be included. (v) Total adjustments in excess of 15 percent must be supported with additional narrative. (vi) Total adjustments in excess of 25 percent indicate the Units are not comparable for the purposes of determining Market Rent conclusions. (C) Effective Gross Income. Provide rental income, secondary income, and vacancy and collection loss projections for the subject derived independent of the Applicant's estimates. (D) Demand: (i) state the Gross Demand for each Unit Type by number of Bedrooms proposed and rent restriction category (e.g. one- Bedroom Units restricted at 50 percent of AMGI; two-bedroom Units restricted at 60 percent of AMGI); and (ii) state the Gross Demand for the proposed Development as a whole. If some households are eligible for more than one Unit Type due to overlapping eligible ranges for income or household size, Gross Demand should be adjusted to avoid including households more than once. (iii) state the Gross Demand generated from each AMGI band. If some household incomes are included in more than one AMGI band, Gross Demand should be adjusted to avoid including households more than once. (E) Relevant Supply. The Relevant Supply of proposed and unstabilized Comparable Units includes: (i) the proposed subject Units to be absorbed; (ii) Comparable Units in an Application with priority over the subject pursuant to (6) of this chapter; and (iii) Comparable Units in previously approved Developments in the PMA that have not achieved 90% occupancy for a minimum of 90 days. (F) Gross Capture Rate. The Gross Capture Rate is defined as the Relevant Supply divided by the Gross Demand. Refer to (i) of this chapter for feasibility criteria. (G) Individual Unit Capture Rate. For each Unit Type by number of Bedrooms and rent restriction categories, the individual unit capture rate is defined as the Relevant Supply of proposed and unstabilized Comparable Units divided by the eligible demand for that Unit. Some households are eligible for multiple Unit Types. In order to calculate individual unit capture rates, each household is included in the capture rate for only one Unit Type. (H) Capture Rate by AMGI Band. For each AMGI band (30%, 40%, 50%, 60%), the capture rate by AMGI band is defined as Relevant Supply of proposed and unstabilized Comparable Units divided by the eligible demand from that AMGI band. Some households are qualified for multiple income bands. In order to calculate AMGI band rates, each household is included in the capture rate for only one AMGI band. (I) Absorption. Project an absorption period for the subject Development to achieve Breakeven Occupancy. State the absorption rate. (J) Market Impact. Provide an assessment of the impact the subject Development, as completed, will have on existing Developments supported by Housing Tax Credits in the Primary Market. ( ) (12) Photographs. Provide labeled color photographs of the subject Property, the neighborhood, street scenes, and comparables. An aerial photograph is desirable but not mandatory. (13) Appendices. Any Third Party reports including demographics relied upon by the Market Analyst must be provided in appendix form. A list of works cited including personal communications also must be provided, and the Modern Language Association (MLA) format is suggested. (14) Qualifications. Current Franchise Tax Account Status from the Texas Comptroller of Public Accounts (not applicable for sole proprietorships) and any changes to items listed in (c)(1)(B) and (C) of this chapter. (e) The Department reserves the right to require the Market Analyst to address such other issues as may be relevant to the Department's evaluation of the need for the subject Development and the provisions of the particular program guidelines. (f) In the event that the PMA for a subject Development overlaps the PMA's of other proposed or unstabilized comparable Developments, the Underwriter may perform an extended Sub-Market analy- ADOPTED RULES January 5, TexReg 65

66 sis considering the combined PMA's and all proposed and unstabilized Units in the extended Sub-Market Area; the Gross Capture Rate from such an extended Sub-Market Area analysis may be used as the basis for a feasibility conclusion. (g) All Applicants shall acknowledge, by virtue of filing an Application, that the Department shall not be bound by any such opinion or Market Analysis, and may substitute its own analysis and underwriting conclusions for those submitted by the Market Analyst. 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 December 20, TRD Timothy K. Irvine Executive Director Texas Department of Housing and Community Affairs Effective date: January 9, 2018 Proposal publication date: October 27, 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 B. RATES, RATE-MAKING, AND RATES/TARIFF CHANGES 16 TAC The Public Utility Commission of Texas (commission) adopts an amendment to 24.21, relating to form and filing of tariffs, with changes to the proposed text as published in the September 15, 2017, issue of the Texas Register (42 TexReg 4739). The amendments implement House Bill 1083 (HB 1083), which amended Texas Water Code and (West 2008 & Supp. 2017) (TWC) to allow a utility to establish reduced water utility rates funded by donations for elderly customers. The amendments also revise the minor tariff change portion of the rule to correct an example in the pass-through provision formula and clarify what constitutes an acceptable amount of line loss in the pass-through portion of the rule. The amendment is adopted under Project Number The commission received comments on the proposed amendments from the City of Houston (Houston), the Office of Public Utility Counsel (OPUC), and joint comments from Aqua Texas, Inc.; Aqua Utilities, Inc.; Aqua Development, Inc. d/b/a Aqua Texas; SJWTX, Inc. d/b/a Canyon Lake Water Service Company; and SouthWest Water Company (collectively, the Water Companies). The commission also received reply comments from the Water Companies and Houston (b)(2)(B) The Water Companies opined that the proposed rule amendments add certain requirements not included in HB 1083 that may disincentivize utilities from adopting the new program. Specifically, the Water Companies argued that the proposed rule: (1) adds an income-driven limitation even though HB 1083 only contemplates age-based criteria, which could increase administration costs; (2) seems to limit the "cost of providing the reduced rates" that donations may cover to "lost revenues due to the difference in the utility's tariffed retail water rates and the reduced rates," which would prohibit use of donations to cover program administrative costs; and (3) does not appear to contemplate how this type of program would work for sewer or flat rate utilities. The Water Companies argued that the rule should specifically allow donations to be used to cover administrative costs of the new program in order to encourage utilities to adopt this type of assistance program. The Water Companies further argued that assistance programs should be encouraged for all types of service providers, and that the commission should consider how best to incentivize utilities to provide an assistance program of the type authorized by HB 1083 while providing maximum flexibility. The Water Companies argued that the proposed rule does not appear to accomplish those goals. As further discussed and summarized below, Houston supported and OPUC did not oppose the income limitation as a mechanism to ensure that those persons most in need of assistance receive the discount. Commission response The commission agrees with the Water Companies and makes a change to the rule language to reflect the Water Companies' recommendation relating to the use of donations to cover program costs. As discussed in more detail below, the commission finds that the "cost of providing the reduced rates" includes program administrative costs. However, contrary to the argument of the Water Companies, the commission declines to expand the rule to cover sewer rates; the preamble to HB 1083, section three of HB 1083, and the legislative history of HB 1083 all clearly specify that the assistance program established by HB 1083 applies only to water rates, not to sewer rates. The commission responds to the Water Companies' concern regarding adding an income-driven limitation below (b)(2)(B)(i) Houston commented that the rule does not indicate whether donations are to be collected in advance or prior to calculating and implementing the rates, nor does the rule indicate the proposed timeframe for this initial period. If, on the other hand, donations are not to be collected until after implementation of the rate, Houston was unsure how a utility would determine anticipated donations to be collected in order to create a reasonable rate. Houston indicated that most of the issues it identified could be addressed as part of a proceeding related to the filing of a utility's plan for implementing an assistance program; however, Houston recommended that the commission clarify when the rate would be implemented upon filing of a plan. The Water Companies replied that leaving the types of details discussed by Houston to consideration on a case-by-case basis for each specific plan would permit more flexibility and therefore be preferable to addressing all the details by rule. The Water Companies did request guidance as to how the commission anticipates the implementation of proposed plans and the approval process working in practice. 43 TexReg 66 January 5, 2018 Texas Register

67 Commission response The commission anticipates that a utility will propose its own plan with respect to when donations will be collected in relation to the implementation date of the rate and that this plan will address any other necessary implementation details (b)(2)(B)(i)(I) OPUC recommended changing the new 24.21(b)(2)(B)(i)(I) to reflect that the collection of donations is permissive, not mandatory. The Water Companies concurred with OPUC's recommendation. Commission response The commission agrees with OPUC that donations are permissive. The commission acknowledges that donations may be received from the utility, customers, or outside persons. There is no need to adopt any changes to the language contained in the proposed rule (b)(2)(B)(i)(II) Houston stated that the rule is unclear as to whether interest should be applied to the donations collected and held by the utility. Commission response The commission determines that any interest earned on donated funds will be considered a donation to the fund. The commission modifies 24.21(b)(2)(B)(i)(II) accordingly (b)(2)(B)(i)(III) OPUC recommended changing the new 24.21(b)(2)(B)(i)(III) to replace the word "clause" with "program" to clarify that the subsection is referring to the reduced water rate program and not a particular clause. The Water Companies replied that the commission's proposed "clause" language presumably referred to the proposed minor tariff change language an applicant may propose in a plan to implement a reduced rate program. The Water Companies stated that the proposed effective date in a plan under the rule would likely apply to both the tariff language, including the proposed reduced rate, and the contemplated program. The Water Companies also stated that there could potentially be two different dates to allow more time for program implementation. As a result, the Water Companies recommended that the issue be addressed by adding language covering both items instead of using OPUC's proposed language replacement. OPUC also suggested replacing the word "sample" with "example" to clarify that there may not be any donations at the time of the application. In addition, OPUC recommended inserting additional language to clarify that an accounting of lost revenues is only required if the utility is receiving donations. The Water Companies agreed with these proposed revisions, but argued that the clarification regarding the need for an accounting should be incorporated into the Water Companies' proposed modifications to the proposed rule language. Houston opposed the Water Companies' proposed modifications to the rule language, specifically the removal of language requiring that " utilities provide a calculation of all lost revenues and journal entries that transfer the funds from the account in this subparagraph of this clause to the utility's account." Houston argued that requiring the calculation of lost revenues is an important part of determining whether a utility has properly complied with 24.21, and stated that the Water Companies offered no explanation for the change. Commission response The commission agrees with OPUC's first two recommendations and changes the word "clause" to "program" and the word "sample" to "example." The commission disagrees with the assertion of OPUC and the Water Companies that an accounting for lost revenues is only necessary when funding is from donations received from other sources. The commission finds that an accounting for lost revenues is appropriate regardless of the source of the donations, and therefore, does not revise 24.21(b)(2)(B)(i)(III) based on those comments (b)(2)(B)(i)(IV) OPUC recommended replacing the word "requesting" with "receiving" to maintain consistency between proposed 24.21(b)(2)(B)(i)(IV) and the statutory language. The Water Companies did not oppose OPUC's proposed revision. Commission response The commission agrees with OPUC's recommendation and changes the language in the rule accordingly (b)(2)(B)(i)(V) Houston agreed that the rule should establish eligibility requirements for the elderly rate; however, Houston argued that the eligibility criteria should be consistent with other programs, citing the System Benefit Fund rules in 16 Texas Administrative Code et seq. as an example. Houston recommended that the eligibility criteria for the elderly rate should consist of (1) a limitation of household income of not more than 125% of the federal poverty guidelines, and (2) eligibility for the assistance programs identified in proposed 24.21(b)(2)(B)(i)(V). Likewise, OPUC recommended that proposed 24.21(b)(2)(B)(i)(V) be modified to use a limitation on household income of not more than 125% of the federal poverty guidelines. OPUC argued that this change would be consistent with other customer assistance programs, such as the commission's rate reduction program as proposed for amendment in Docket No OPUC also proposed that, in the event the commission retains the approach originally proposed, that proposed 24.21(b)(2)(B)(i)(V)(-e-) be modified to specify any comprehensive energy assistance program instead of just Travis County's program. The Water Companies replied that they were not opposed to Houston's and OPUC's recommendations regarding the use of income-based eligibility criteria that are consistent with criteria used in other programs outlined in the commission rules for electric utilities. However, the Water Companies recommended that the requirement be optional under this particular rule, while acknowledging that including low-income eligibility criteria language in the rule as a guide would be helpful. The Water Companies urged the commission to specifically permit low-income assistance programs by rule and extend the language from proposed 24.21(b)(2)(B)(iv) to other low-income assistance programs, rates, and tariff provisions. In its reply comments, Houston reiterated its position regarding eligibility criteria for the assistance program and stated its opposition to the Water Companies' proposed changes related to the eligibility requirements. Commission response The commission agrees with the Water Companies that the rule should not mandate an income-based eligibility requirement and removes the requirement from the rule. The commission de- ADOPTED RULES January 5, TexReg 67

68 clines to extend proposed 24.21(b)(2)(B)(iv) to other programs, as proposed 24.21(b)(2)(B)(iv) is designed to implement section two of HB Community Outreach Houston suggested plans submitted by utilities should include outreach programs to ensure that the people in need of the discount are aware of its existence and have the resources needed to apply for it. The Water Companies were not opposed to the idea of requesting applicants to address community outreach within their plans. The Water Companies stated that community outreach will likely be needed regardless of whether it is addressed in the plan, and argued that costs for community outreach and education efforts should be considered "costs of providing the reduced rates" eligible to be recovered from donated program funds along with other program related administrative costs. Commission response Due to the potential cost of the community outreach programs, the commission declines to adopt Houston's suggestion to require community outreach programs regarding the discount program. The commission agrees with Houston that cost for community outreach and education efforts should be considered administrative costs. The commission leaves the decision to the utility to determine outreach activities (b)(2)(B)(ii) Houston recommended that the costs of providing the reduced rates should not include administrative costs and other costs that might fall under the proposed rule language. Houston proposed that this concern be addressed by removing the term "lost revenue" from the rule language. Houston argued that, to the extent the commission intends to allow utilities to recover administrative and other costs, the rule should expressly address limitations on the type and amount of administrative and other costs to be recovered and that parties should have an opportunity to comment on any such limitations. The Water Companies opposed Houston's suggested revision related to the "cost of providing the reduced rates." The Water Companies argued that the rule should specifically permit administrative costs to be recovered by donated program funds as part of the "cost of providing the reduced rates." The Water Companies did not agree that the rule should expressly address limitations on the recovery of administrative costs, arguing that placing arbitrary limitations on these costs when they would likely vary on a case-by-case basis didn't appear to incentivize the adoption of rate assistance plans. Instead, the Water Companies recommended that the proposed plan required by the rule should address the anticipated types and amounts of these costs. In its reply comments, Houston reiterated its position that the rule should place express limitations on the type and amount of administrative costs eligible to be recovered as part of the assistance program. Houston further reiterated its position that parties should have the opportunity to comment on these limitations. Houston argued that under the Water Companies' approach, unlimited administrative costs could be eligible for recovery, which would be contrary to the spirit of the assistance program. Houston commented with respect to electric energy efficiency programs, which apply to many more customers and are more complex in terms of research and development requirements particularly, utilities are allowed to recover up to 20% of their total program cost (cumulative cost of administration and research and development). Commission response The commission agrees with the Water Companies that administrative costs may be recovered through donated program funds as part of the "cost of providing the reduced rates." The commission disagrees with Houston and declines to adopt a limit on what portion of donated funds may be used for administrative costs. HB 1083 did not provide for a disallowance of administrative costs for the program; therefore, the commission retains the proposed language. The commission disagrees with Houston that the term "lost revenues" is broad and should not be included. The commission determines that the donations to the program should cover the difference in rate revenue due to the reduced rate (lost revenue) and also administrative costs; therefore the commission retains the language. HB 1083 anticipates a reduced rate rather than a credit to customer bills and the calculation of lost revenues accounts for the difference in rates. The commission also adds language to clarify that all expenses (administrative and any other expense) related to the program must be identified in the annual accounting and excluded from the utility's cost of service in order to comply with HB 1083, which states that "A utility may not recover those costs through charges to the utility's other customer classes." 24.21(b)(2)(E) The Water Companies agreed with the commission's correction to the example pass-through formula included in 16 TAC 24.21(b)(2)(E). However, the Water Companies are opposed to the additional language proposed to that subsection of "Unless good cause is shown, L (line loss) shall be limited to the lesser of the actual line loss experienced or 15%." The Water Companies believe there is no basis for presuming that a reasonable amount of line loss should be capped at 15%. Commission response The commission agrees with the Water Companies. The commission retains the right to analyze water loss on a case-by-case issue and makes a change to the rule language to reflect the Water Companies' recommendation and the case-by-case analysis of line loss. All comments, including any not specifically referenced herein, were fully considered by the commission. In adopting this section, the commission makes other minor modifications for the purpose of clarifying its intent. The amendment is adopted under TWC , which provides the commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Additionally, the amendment is adopted under HB 1083, which amended TWC and to allow a utility to establish reduced water utility rates funded by donations for elderly customers and established a deadline of December 31, 2017 for the commission to adopt rules to implement HB 1083 Cross reference to statutes: TWC , , and Form and Filing of Tariffs. (a) Approved tariff. A utility may not directly or indirectly demand, charge, or collect any rate or charge, or impose any classifications, practices, rules, or regulations different from those prescribed in 43 TexReg 68 January 5, 2018 Texas Register

69 its approved tariff filed with the commission or with the municipality exercising original jurisdiction over the utility, except as follows: (1) A utility may charge the rates proposed under the Texas Water Code (TWC) or on or after the proposed effective date, unless the proposed effective date of the proposed rates is suspended or the regulatory authority sets interim rates. (2) The regulatory assessment fee required in TWC 5.701(n) does not have to be listed on the utility's approved tariff to be charged and collected but must be included in the tariff at the earliest opportunity. (3) A person who possesses facilities used to provide retail water utility service or a utility that holds a certificate of public convenience and necessity (CCN) to provide retail water service that enters into an agreement in accordance with TWC (b)(2), may collect charges for sewer services on behalf of another retail public utility on the same bill with its water charges and shall at the earliest opportunity include a notation on its tariff that it has entered into such an agreement. (4) A utility may enter into a contract with a county to collect solid waste disposal fees and include those fees on the same bill with its water charges and shall at the earliest opportunity include a notation on its tariff that it has entered into such an agreement. (b) Requirements as to size, form, identification, minor changes, and filing of tariffs. (1) Tariffs filed with applications for CCNs. (A) When applying to obtain or amend a CCN, or to add a new water or sewer system or subdivision to its certificated service area, every utility shall file its proposed tariff with the commission and any regulatory authority with original rate jurisdiction over the utility. (i) For a utility that is under the original rate jurisdiction of the commission, the tariff shall contain schedules of all the utility's rates, tolls, charges, rules, and regulations pertaining to all of its utility service(s) when it applies for a CCN to operate as a utility. The tariff must be on the form prescribed by the commission or another form acceptable to the commission. (ii) For a utility under the original rate jurisdiction of a municipality, the utility must file with the commission a copy of its tariff as approved by the municipality. (B) If a person applying for a CCN is not a retail public utility and would be under the original rate jurisdiction of the commission if the CCN application were approved, the person shall file a proposed tariff with the commission. The person filing the proposed tariff shall also: (i) provide a rate study supporting the proposed rates, which may include the costs of existing invested capital or estimates of future invested capital; rates; (ii) provide all calculations supporting the proposed (iii) provide all assumptions for any projections included in the rate study; (iv) provide an estimated completion date(s) for the physical plant(s); (v) provide an estimate of the date(s) service will begin for all phases of construction; and (vi) provide notice to the commission once billing for service begins. (C) A person who has obtained an approved tariff for the first time and is under the original rate jurisdiction of the commission shall file a rate change application within 18 months from the date service begins in order to revise its tariff to adjust the rates to a historic test year and to true up the new tariff rates to the historic test year. Any dollar amount collected under the rates charged during the test year in excess of the revenue requirement established by the commission during the rate change proceeding shall be reflected as customer contributed capital going forward as an offset to rate base for ratemaking purposes. An application for a price index rate adjustment under TWC does not satisfy the requirements of this subparagraph. (D) Every water supply or sewer service corporation shall file with the commission a complete tariff containing schedules of all its rates, tolls, charges, rules, and regulations pertaining to all of its utility services when it applies to operate as a retail public utility and to obtain or amend a CCN. (2) Minor tariff changes. Except for an affected county or a utility under the original rate jurisdiction of a municipality, a utility's approved tariff may not be changed or amended without commission approval. Minor tariff changes shall not be allowed for any fees charged by affiliates. The addition of a new extension policy to a tariff or modification of an existing extension policy is not a minor tariff change. An affected county may change rates for retail water or sewer service without commission approval, but shall file a copy of the revised tariff with the commission within 30 days after the effective date of the rate change. (A) The commission, or regulatory authority, as appropriate, may approve the following minor changes to utility tariffs: (i) service rules and policies; (ii) changes in fees for customer deposits, meter tests, return check charges, and late charges, provided they do not exceed the maximum allowed by commission rules; (iii) addition of the regulatory assessment fee payable to the TCEQ as a separate item or to be included in the currently authorized rate; (iv) addition of a provision allowing a utility to collect retail sewer service charges in accordance with TWC (b)(2) or (d); (v) rate adjustments to implement commission-authorized phased or multi-step rates or downward rate adjustments to reconcile rates with actual costs; (vi) implementation of an energy cost adjustment clause under subsection (n) of this section; (vii) implementation or modification of a pass-through provision calculation in a tariff, as provided in subparagraphs (B)-(E) of this paragraph, which is necessary for the correct recovery of the actual charges from pass-through entities, including line loss; (viii) some surcharges as provided in subparagraph (F) of this paragraph; (ix) modifications, updates, or corrections that do not affect a rate may be made to the following information contained in the tariff: (I) the list of the cities, counties, and subdivisions in which service is provided; (II) the public water system name(s) and corresponding identification number(s) issued by the TCEQ; and ADOPTED RULES January 5, TexReg 69

70 (III) the sewer system names and corresponding discharge permit number(s) issued by the TCEQ. (B) The commission, or other regulatory authority, as appropriate, may approve a minor tariff change for a utility to establish reduced rates for a minimal level of retail water service to be provided solely to a class of elderly customers 65 years of age or older to ensure that those customers receive that level of retail water service at more affordable rates. The regulatory authority shall allow a utility to establish a fund to receive donations to recover the costs of providing the reduced rates. A utility may not recover those costs through charges to its other customer classes. (i) To request a rate as defined in this subparagraph, the utility must file a proposed plan for review by the commission. The plan shall include: (I) A proposed plan for collection of donations to establish a fund to recover the costs of providing the reduced rates. (II) The National Association of Regulatory Utility Commissioners (NARUC) account or subaccount name and number in which the donations will be accounted for, and a clear definition of how the administrative costs of operation of the program are accounted for and removed from the cost of service for rate making purposes. Any interest earned on donated funds will be considered a donation to the fund. (III) An effective date of the program and an example of an annual accounting for donations received and a calculation of all lost revenues and the journal entries that transfer the funds from the account in this subparagraph of this clause to the utility's revenue account. The annual accounting shall be available to audit by the commission upon request. (IV) An example bill with the contribution line item, if receiving contributions from customers. (ii) For the purpose of clause (i) of this subparagraph, recovery of lost revenues from donations shall only include the lost revenues due to the difference in the utility's tariffed retail water rates and the reduced rates established by this subparagraph. (iii) The minimal level of retail water service requested by the utility shall be no more than 3,000 gallons per month per connection. Additional gallons used shall be billed at the utility's tariffed rates. (iv) For purposes of the provision in this subparagraph, a reduced rate authorized under this section does not: (I) Make or grant an unreasonable preference or advantage to any corporation or person; (II) Subject a corporation or person to an unreasonable prejudice or disadvantage; or (III) Constitute an unreasonable difference as to retail water rates between classes of service. (C) If a utility has provided proper notice as required in subparagraph (F) of this paragraph, the commission may approve a pass-through provision as a minor tariff change, even if the utility has never had an approved pass-through provision in its tariff. A pass-through provision may not be approved for a charge already included in the utility's cost of service used to calculate the rates approved by the commission in the utility's most recently approved rate change under TWC or TWC A pass-through provision may only include passing through of the actual costs charged to the utility. Only the commission staff or the utility may request a hearing on a proposed pass-through provision or a proposed revision or change to a pass-through provision. A pass-through provision may be approved in the following situation(s): (i) A utility that purchases water or sewage treatment and whose rates are under the original jurisdiction of the commission may include a provision in its tariff to pass through to its customers changes in such costs. The provision must specify how it is calculated. (ii) A utility may pass through a temporary water rate provision implemented in response to mandatory reductions in water use imposed by a court, government agency, or other authority. The provision must specify how the temporary water rate provision is calculated. (iii) A utility may include the addition of a production fee charged by a groundwater conservation district, including a production fee charged in accordance with a groundwater reduction plan entered in to by a utility in response to a groundwater conservation district production order or rule, as a separate line item in the tariff. (iv) A utility may pass through the costs of changing its source of water if the source change is required by a governmental entity. The pass-through provision may not be effective prior to the date the conversion begins. The pass-through provision must be calculated using an annual true-up provision. (v) A utility subject to more than one pass-through cost allowable in this section may request approval of an overall combined pass-through provision that includes all allowed pass-through costs to be recovered in one provision under subparagraph (D) of this paragraph. The twelve calendar months (true-up period) for inclusion in the true-up must remain constant, e.g., January through December. (vi) A utility that has a combined pass-through provision in its approved tariff may request to amend its tariff to replace the combined pass-through provision with individual pass-through provisions if all revenues and expenses have been properly trued up in a true-up report and all over-collections have been credited back to the customers. A utility that has replaced its previously approved combined pass-through provision with individual provisions may not request another combined pass-through until three years after the replacement has been approved unless good cause is shown. (D) A change in the combined pass-through provision may only be implemented once per year. The utility must file a true-up report within one month after the end of the true-up period. The report must reconcile both expenses and revenues related to the combined pass-through charge for the true-up period. If the true-up report reflects an over-collection from customers, the utility must change its combined pass-through rate using the confirmed rate changes to charges being passed through and the over-collection from customers reflected in the true-up report. If the true-up report does not reflect an over-collection from the customers, the implementation of a change to the pass-through rate is optional. The change may be effective in a billing cycle within three months after the end of the true-up period as long as the true-up clearly shows the reconciliation between charges by pass-through entities and collections from the customers, and charges from previous years are reconciled. Only expenses charged by the pass-through provider(s) shall be included in the provision. The true-up report shall include: (i) a list of all entities charging fees included in the combined pass-through provision, specifying any new entities added to the combined pass-through provision; (ii) a summary of each charge passed through in the report year, along with documentation verifying the charge assessed and showing the amount the utility paid; 43 TexReg 70 January 5, 2018 Texas Register

71 (iii) a comparison between annual amounts billed by all entities charging fees included in the pass-through provision with amounts billed for the usage by the utility to its customers in the passthrough period; (iv) all calculations and supporting documentation; (v) a summary report, by year, for the lesser of all years prior or five years prior to the pass-through period showing the same information as in clause (iii) of this subparagraph with a reconciliation to the utility's booked numbers, if there is a difference in any year; and (vi) any other documentation or information requested by the commission. (E) For any pass-through provision granted under this section, all charges approved for recovery of pass-through costs shall be stated separately from all charges by the utility to recover the revenue requirement. Except for a combined pass-through provision, the calculation for a pass-through gallonage rate for a utility with one source of water may be made using the following equation, which is provided as an example: R=G /(1-L), where R is the utility's new proposed pass-through rate, G equals the new gallonage charge by source supplier or conservation district, and L equals the actual line loss reflected as a percentage expressed in decimal format (for example, 8.5% would be expressed as 0.085). Line loss will be considered on a case-by-case basis. (F) A utility that wishes to revise or implement an approved pass-through provision shall take the following actions prior to the beginning of the billing period in which the revision takes effect: (i) file a written notice with the commission that must include: (I) the affected CCN number(s); (II) a list of the affected subdivision(s), public water system name(s) and corresponding number(s) issued by the TCEQ, and the water quality system name(s) and corresponding number(s) issued by the TCEQ, if applicable; (III) a copy of the notice to the customers; (IV) documentation supporting the stated amounts of any new or modified pass-through costs; (V) historical documentation of line loss for one year; (VI) all calculations and assumptions for any true-up of pass-through costs; (VII) the calculations and assumptions used to determine the new rates; and (VIII) a copy of the pages of the utility's tariff that contain the rates that will change if the utility's application is approved; and (ii) (if the customer has agreed to receive communications electronically), mail, or hand-deliver notice to the utility's customers. Notice may be in the form of a billing insert and must contain: (I) the effective date of the change; (II) the present calculation of customer billings; (III) the new calculation of customer billings; (IV) an explanation of any corrections to the pass-through formula, if applicable; (V) the change in charges to the utility for purchased water or sewer treatment or ground water reduction fee or subsidence, if applicable; and (VI) the following language: "This tariff change is being implemented in accordance with the minor tariff changes allowed by 16 Texas Administrative Code The cost to you as a result of this change will not exceed the costs charged to your utility." (G) The following provisions apply to surcharges: (i) A surcharge is an authorized rate to collect revenues over and above the usual cost of service. (ii) If authorized by the commission or the municipality exercising original jurisdiction over the utility, a surcharge to recover the actual increase in costs to the utility may be collected over a specifically authorized time period without being listed on the approved tariff for: (I) sampling fees not already recovered by rates; (II) inspection fees not already recovered by rates; (III) production fees or connection fees not already recovered by rates charged by a groundwater conservation district; or (IV) other governmental requirements beyond the control of the utility. (iii) A utility shall use the revenues collected through a surcharge approved by the commission only for the purposes noted in the order approving the surcharge. A utility shall handle the funds in the manner specified in the order approving the surcharge. The utility may redirect or use the revenues for other purposes only after first obtaining the approval of the commission. (iv) The commission may require a utility to file periodic and/or final accounting information to show the collection and disbursement of funds collected through an approved surcharge. (3) Tariff revisions and tariffs filed with rate changes. (A) If the commission is the regulatory authority, the utility shall file its revisions with the commission. If a proposed tariff revision constitutes an increase in existing rates of a particular customer class or classes, then the commission may require that notice be given. (B) Each revision must be accompanied by a copy of the original tariff and a red-lined copy of the proposed tariff revisions clearly showing the proposed changes. (4) Rate schedule. Each rate schedule must clearly state the public water system name(s) and the corresponding identification number(s) issued by the TCEQ or the sewer system name(s) and the corresponding identification number(s) issued by the TCEQ for each discharge permit, subdivision, city, and county in which the schedule is applicable. (5) Tariff pages. Tariff pages must be numbered consecutively. Each page must show section number, page number, name of the utility, and title of the section in a consistent manner. (c) Composition of tariffs. A utility's tariff, including those utilities operating within the corporate limits of a municipality, must contain sections setting forth: (1) a table of contents; (2) a list of the cities, counties, and subdivision(s) in which service is provided, along with the public water system name(s) and ADOPTED RULES January 5, TexReg 71

72 corresponding identification number(s) issued by the TCEQ and sewer system names and corresponding discharge permit number(s) issued by the TCEQ to which the tariff applies; (3) the CCN number(s) under which service is provided; (4) the rate schedules; (5) the service rules and regulations, including forms of the service agreements, if any, and customer service inspection forms to be completed as required by the TCEQ; (6) the extension policy; (7) an approved drought contingency plan as required by the TCEQ; and (8) the forms of payment to be accepted for utility services. (d) Tariff filings in response to commission orders. Tariff filings made in response to an order issued by the commission must include a transmittal letter stating that the tariff attached is in compliance with the order, giving the docket number, date of the order, a list of tariff pages filed, and any other necessary information. Any service rules proposed in addition to those listed on the commission's tariff form or any modifications of a rule in the tariff must be clearly noted. All tariff pages must comply with all other sections in this chapter and must include only changes ordered. The effective date and/or wording of the tariff must comply with the provisions of the order. (e) Availability of tariffs. Each utility shall make available to the public at each of its business offices and designated sales offices within Texas all of its tariffs currently on file with the commission or regulatory authority, and its employees shall lend assistance to persons requesting information and afford these persons an opportunity to examine any such tariffs upon request. The utility also shall provide copies of any portion of the tariffs at a reasonable cost to a requesting party. (f) Rejection. Any tariff filed with the commission and found not to be in compliance with this section shall be returned to the utility with a brief explanation of the reasons for rejection. (g) Change by other regulatory authorities. Each utility operating within the corporate limits of a municipality exercising original jurisdiction shall file with the commission its current tariff that has been authorized by the municipality. If changes are made to the utility's tariff for one or more service areas under the jurisdiction of the municipality, the utility shall file its tariff reflecting the changes along with the ordinance, resolution or order issued by the municipality to authorize the change. (h) Effective date. The effective date of a tariff change is the date of approval by the regulatory authority, unless otherwise specified by the regulatory authority, in a commission order, or by rule. The effective date of a proposed rate increase under TWC or is the proposed date on the notice to customers and the regulatory authority, unless suspended by the regulatory authority. (i) Tariffs filed by water supply or sewer service corporations. Every water supply or sewer service corporation shall file, for informational purposes only, its tariff showing all rates that are subject to the appellate jurisdiction of the commission and that are in force for any utility service, product, or commodity offered. The tariff must include all rates, rules, and regulations relating to utility service or extension of service, the CCN number(s), and all affected counties or cities. If changes are made to the water supply or sewer service corporation's tariff, the water supply or sewer service corporation shall file the tariff reflecting the changes, along with a cover letter with the effective date of the change. Tariffs filed under this subsection shall be filed in conformance with of this title (relating to Filing of Pleadings, Documents, and Other Materials) and of this title (relating to Formal Requisites of Pleadings and Documents to be Filed with the Commission). (j) Temporary water rate provision for mandatory water use reduction. (1) A utility's tariff may include a temporary water rate provision that will allow the utility to increase its retail customer rates during periods when a court, government agency, or other authority orders mandatory water use reduction measures that affect the utility customers' use of water service and the utility's water revenues. Implementation of the temporary water rate provision will allow the utility to recover revenues that the utility would otherwise have lost due to mandatory water use reductions. If a utility obtains an alternate water source to replace the required mandatory reduction during the time the temporary water rate provision is in effect, the temporary water rate provision must be adjusted to prevent over-recovery of revenues from customers. A temporary water rate provision may not be implemented if an alternative water supply is immediately available without additional cost. (2) The temporary water rate provision must be approved by the regulatory authority having original jurisdiction in a rate proceeding before it may be included in the utility's approved tariff or implemented as provided in this subsection. A proposed change in the temporary water rate provision must be approved in a rate proceeding. A utility that has filed a rate change within the last 12 months may file a request for the limited purpose of obtaining a temporary water rate provision. (3) A utility may request a temporary water rate provision for mandatory water use reduction using the formula in this paragraph to recover 50% or less of the revenues that would otherwise have been lost due to mandatory water use reductions. The formula for a temporary water rate provision for mandatory water use reduction under this paragraph is: Figure: 16 TAC 24.21(j)(3) (No change.) (A) The utility shall file a temporary water rate provision for mandatory water use reduction request and provide customer notice as required by the regulatory authority, but is not required to provide complete financial data to support its existing rates. Notice must include a statement of when the temporary water rate provision would be implemented, the customer class(es) affected, the rates affected, information on how to protest and/or intervene in the rate change, the address of the regulatory authority, the time frame for protests, and any other information that is required by the regulatory authority. The utility's existing rates are not subject to review in this proceeding and the utility is only required to support the need for the temporary rate. A request for a temporary water rate provision for mandatory water use reduction under this paragraph is not considered a statement of intent to increase rates subject to the 12-month limitation in of this title (relating to Time Between Filings). (B) The utility shall establish that the projected revenues that will be generated by the temporary water rate provision are required by the utility to pay reasonable and necessary expenses that will be incurred by the utility during the time mandatory water use reductions are in effect. (4) A utility may request a temporary water rate provision for mandatory water use reduction using the formula in paragraph (3) of this subsection or any other method acceptable to the regulatory authority to recover up to 100% of the revenues that would otherwise have been lost due to mandatory water use reductions. 43 TexReg 72 January 5, 2018 Texas Register

73 (A) If the utility requests authorization to recover more than 50% of lost revenues, it shall submit financial data to support its existing rates as well as the temporary water rate provision for mandatory water use reduction even if no other rates are proposed to be changed. The utility's existing rates are subject to review in addition to the temporary water rate provision for mandatory water use reduction. (B) The utility shall establish that the projected revenues that will be generated by the temporary water rate provision for mandatory water use reduction are required by the utility to pay reasonable and necessary expenses that will be incurred by the utility during the time mandatory water use reductions are in effect; that the rate of return granted by the regulatory authority in the utility's last rate case does not adequately compensate the utility for the foreseeable risk that mandatory water use reductions will be ordered; and that revenues generated by existing rates do not exceed reasonable cost of service. (5) The utility may place the temporary water rate provision into effect only after: (A) it has been approved by the regulatory authority and included in the utility's approved tariff in a prior rate proceeding; (B) there is an action by a court, government agency, or other authority requiring mandatory water use reduction measures that affect the utility's customers' use of utility services; and subsection. (C) issuing notice as required by paragraph (7) of this (6) The utility may readjust its temporary water rate provision to respond to modifications or changes to the original required water use reductions by reissuing notice as required by paragraph (7) of this subsection. If the commission is the regulatory authority, only the commission or the utility may request a hearing on the proposed implementation. (7) A utility implementing a temporary water rate for mandatory water use reduction shall take the following actions prior to the beginning of the billing period in which the temporary water rate provision takes effect: (A) submit a written notice, including a copy of the notice received from the court, government agency, or other authority requiring the reduction in water use, to the regulatory authority; and (B) , if the customer has agreed to receive communications electronically, or mail notice to the utility's customers. Notice may be in the form of a billing insert and must contain the effective date of the implementation and the new rate the customers will pay after the temporary water rate provision is implemented. If the commission is the regulatory authority, the notice must include the following language: "This rate change is being implemented in accordance with the temporary water rate provision approved by the Public Utility Commission of Texas to recognize the loss of revenues due to mandatory water use reduction ordered by (name of entity issuing order). The new rates will be effective on (date) and will remain in effect until the mandatory water use reductions are lifted or expired. The purpose of the rate is to ensure the financial integrity of the utility. The utility will recover through the rate (the percentage authorized by the temporary rate) % of the revenues the utility would otherwise have lost due to mandatory water use reduction by increasing the volume charge from ($ per 1,000 gallons to $ per 1,000 gallons)." (8) A utility shall stop charging a temporary water rate provision as soon as is practicable after the order that required mandatory water use reduction is ended, but in no case later than the end of the billing period that was in effect when the order was ended. The utility shall notify its customers of the date that the temporary water rate provision ends and that its rates will return to the level authorized before the temporary water rate provision was implemented. The notice provided to customers regarding the end of the temporary water rate provision shall be filed with the commission. (9) If the regulatory authority initiates an inquiry into the appropriateness or the continuation of a temporary water rate provision, it may establish the effective date of its decision on or after the date the inquiry is filed. (k) Multiple system consolidation. Except as otherwise provided in subsection (m) of this section, a utility may consolidate its tariff and rate design for more than one system if: (1) the systems included in the tariff are substantially similar in terms of facilities, quality of service, and cost of service; and (2) the tariff provides for rates that promote water conservation for single-family residences and landscape irrigation. (l) Regional rates. The regulatory authority, where practicable, shall consolidate the rates by region for applications submitted under TWC or with a consolidated tariff and rate design for more than one system. (m) Exemption. Subsection (k) of this section does not apply to a utility that provided service in only 24 counties on January 1, (n) Energy cost adjustment clause. (1) A utility that purchases energy (electricity or natural gas) that is necessary for the provision of retail water or sewer service may request the inclusion of an energy cost adjustment clause in its tariff to allow the utility to adjust its rates to reflect increases and decreases in documented energy costs. (2) A utility that requests the inclusion of an energy cost adjustment clause in its tariff shall file a request with the commission. The utility shall also give notice of the proposed energy cost adjustment clause by mail, either separately or accompanying customer billings, or by hand delivery to all affected utility customers at least 60 days prior to the proposed effective date. Proof of notice in the form of an affidavit stating that proper notice was delivered to affected customers and stating the date(s) of such delivery shall be filed with the commission by the utility as part of the request. Notice must be provided on the form prescribed by the commission for a rate application package filed under TWC or and must contain the following information: (A) the utility name and address, a description of how the increase or decrease in energy costs will be calculated, the effective date of the proposed change, and the class(es) of utility customers affected. The effective date of the proposed energy cost adjustment clause must be the first day of a billing period, which should correspond to the day of the month when meters are typically read, and the clause may not apply to service received before the effective date of the clause; (B) information on how to submit comments regarding the energy cost adjustment clause, the address of the commission, and the time frame for comments; and (C) any other information that is required by the commission. (3) The commission's review of the utility's request is an uncontested matter not subject to a contested case hearing. However, the commission shall hold an uncontested public meeting if requested by a member of the legislature who represents an area served by the ADOPTED RULES January 5, TexReg 73

74 utility or if the commission determines that there is substantial public interest in the matter. (4) Once an energy cost adjustment clause has been approved, documented changes in energy costs must be passed through to the utility's customers within a reasonable time. The pass-through, whether an increase or decrease, shall be implemented on at least an annual basis, unless the commission determines a special circumstance applies. Anytime changes are being made using this provision, notice shall be provided as required by paragraph (5) of this subsection. Copies of notices to customers shall be filed with the commission, (5) Before a utility implements a change in its energy cost adjustment clause as required by paragraph (4) of this subsection, the utility shall take the following actions prior to the beginning of the billing period in which the implementation takes effect: (A) submit written notice to the commission, which must include a copy of the notice sent to the customers, proof that the documented energy costs have changed by the stated amount; and (B) , if the customer has agreed to receive communications electronically, mail, either separately or accompanying customer billings, or hand deliver notice to the utility's affected customers. Notice must contain the effective date of change and the increase or decrease in charges to the utility for documented energy costs. The notice must include the following language: "This tariff change is being implemented in accordance with the utility's approved energy cost adjustment clause to recognize (increases) (decreases) in the documented energy costs. The cost of these charges to customers will not exceed the (increase) (decrease) in documented energy costs." (6) The commission may suspend the adoption or implementation of an energy cost adjustment clause if the utility has failed to properly file the request or has failed to comply with the notice requirements or proof of notice requirements. If the utility cannot clearly demonstrate how the clause is calculated, the increase or decrease in documented energy costs or how the increase or decrease in documented energy costs will affect rates, the commission may suspend the adoption or implementation of the clause until the utility provides additional documentation requested by the commission. If the commission suspends the adoption or implementation of the clause, the adoption or implementation will be effective on the date specified by the commission. (7) Energy cost adjustment clauses may not apply to contracts or transactions between affiliated interests. (8) A proceeding under this subsection is not a rate case under TWC , , or 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 December 18, TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Effective date: January 7, 2018 Proposal publication date: September 15, 2017 For further information, please call: (512) PART 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION CHAPTER 64. TEMPORARY COMMON WORKER EMPLOYERS 16 TAC 64.1, 64.10, 64.20, 64.70, 64.72, The Texas Commission of Licensing and Regulation (Commission) adopts the repeal of existing rules at 16 Texas Administrative Code (TAC), Chapter 64, 64.1, 64.10, 64.20, 64.70, 64.72, and 64.80, regarding the Temporary Common Worker Employers program, without changes to the proposed text as published in the October 6, 2017, issue of the Texas Register (42 TexReg 5305). The rules will not be republished. The adoption repeals the existing rules of the Commission, the governing body of the Texas Department of Licensing and Regulation (Department), regarding the licensing and regulation of temporary common worker employers by the Department. The existing rules under 16 TAC Chapter 64 implemented Texas Labor Code, Chapter 92. The repeal of the existing rules is necessary to implement Senate Bill (S.B.) 2065, 85th Legislature, Regular Session, This bill, in part, repealed the state licensing requirements for temporary common worker employers under Texas Labor Code, Chapter 92, Temporary Common Worker Employers. S.B preserved the provisions in Chapter 92 regarding the standards of conduct and practice for temporary common worker employers and the provision allowing municipalities over 1 million people to impose stricter standards of conduct and practice. As amended by S.B. 2065, unless prohibited by a governmental subdivision, a temporary common worker employer is authorized to operate in the state if it meets the requirements of Chapter 92. A governmental subdivision may enforce Chapter 92 within the boundaries of the governmental subdivision. These statutory changes were effective September 1, The adoption repeals the existing rules for the Temporary Common Worker Employers Program under 16 TAC Chapter 64, 64.1, 64.10, 64.20, 64.70, 64.72, and As of September 1, 2017, the Department no longer licenses or regulates temporary common worker employers. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 6, 2017, issue of the Texas Register (42 TexReg 5305). The deadline for public comments was November 6, The Department did not receive any comments during the 30-day public comment period. At its meeting on December 15, 2017, the Commission adopted the proposed repeal without changes. The repeal is adopted under Texas Occupations Code, Chapter 51, which authorizes the Commission, the Department's governing body, to adopt rules as necessary to implement this chapter and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Texas Labor Code, Chapter 92. No other statutes, articles, or codes are affected by the adoption. 43 TexReg 74 January 5, 2018 Texas Register

75 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) CHAPTER 65. BOILERS The Texas Commission of Licensing and Regulation (Commission) adopts amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 65, Subchapter A, 65.1 and 65.2; Subchapter C, ; Subchapter D 65.25; Subchapter E, 65.30; Subchapter G, 65.45; Subchapter J, 65.72; Subchapter N, ; Subchapter O, ; Subchapter R, , , ; the repeal of current Subchapter I, 65.63; and new Subchapter I, and 65.64, regarding the Boilers program, without changes to the proposed text as published in the October 6, 2017, issue of the Texas Register (42 TexReg 5307). The rules will not be republished. The Commission also adopts amendments to existing rules at 16 TAC, Chapter 65, Subchapter C, 65.12, with changes to the proposed text as published in the October 6, 2017, issue of the Texas Register (42 TexReg 5307). The rule will be republished. The Texas Legislature enacted House Bill 3257 (HB 3257), 85th Legislature, Regular Session (2017), which set the periodicity of portable boiler inspections. Editorial corrections and clarifications are also being adopted. The adopted amendments, repeal and new rules are necessary to implement HB The adopted amendments to 65.1 correct the statutory authority. The adopted amendments to 65.2 remove the definitions for "existing installations" and "new installations" since the terms are not used in this program. Editorial changes are also made to renumber the section accordingly. The adopted amendments to clarify that the current certificate of operation is to be displayed under glass in a conspicuous place on or near the boiler. The adopted amendments to clarify the process to testfire and operate a newly installed boiler and the Temporary Operating Permit. The adopted amendments to correct the name of the National Board Commission and require the applicant to demonstrate they meet eligibility requirements. The adopted amendments to change the title of the section to correctly name boiler certification requirements and clarify when inspection reports and written authorization are needed. The adopted amendments to change the title of the section to correctly name authorized inspector requirements. The adopted amendments to clarify the requirement for the applicant to demonstrate they meet eligibility requirements. The adopted amendments to remove "portable boiler" language in the title and section to be placed in a new section. The adopted repeal of current is to renumber it to adopted new The adopted new establishes the requirements of HB The adopted amendments to further identify which stamped tag designates the boiler as condemned and clarify the decal which shall be altered/defaced. The adopted amendments to add a reference and makes an editorial change. The adopted amendments to correct the title to reflect all fees and specify who is required to pay each fee. The adopted amendments to clarify existing language to reflect practice and make editorial changes. The adopted amendments to clarify where the record of calibration must be placed. The adopted amendments to correct the title of the section to reflect practice. The adopted amendments to make editorial changes. The adopted amendments to make editorial changes. The adopted amendments to make editorial changes. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 6, 2017, issue of the Texas Register (42 TexReg 5307). The deadline for public comments was November 6, The Department did not receive any comments on the proposed rules during the 30-day public comment period. The Board of Boiler Rules (Board) met on November 14, 2017, and recommended adopting the proposed rules with changes to 65.12(2) conforming that subsection to Health and Safety Code (c). At its meeting on December 15, 2017, the Commission adopted the proposed rules with changes as recommended by the Board. SUBCHAPTER A. GENERAL PROVISIONS 16 TAC 65.1, 65.2 The amendments are adopted under Texas Occupations Code, Chapter 51, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, ADOPTED RULES January 5, TexReg 75

76 TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER C. BOILER REGISTRATION AND CERTIFICATE OF OPERATION-- REQUIREMENTS 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption Boiler Registration and Certificate of Operation Required. Except as provided by this chapter, each boiler operated in this state must: (1) be registered with the department; and (2) have qualified for a current certificate of operation with the current certificate of operation posted under glass in a conspicuous place on or near the boiler for which it is issued. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER D. AUTHORIZED INSPECTOR 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER E. EXAMINATIONS AND WAIVER OF EXAMINATION 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER G. APPLICATION TO OPERATE PORTABLE AND STATIONARY NONSTANDARD BOILERS IN THE STATE 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 43 TexReg 76 January 5, 2018 Texas Register

77 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER I. INSPECTION OF BOILERS 16 TAC The repeal is adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and other law establishing a program regulated by the Department. The statutory provisions affected by the repeal are those set forth in the Texas Occupations code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) TAC 65.63, The new rules are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER J. TEXAS BOILER NUMBERS 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER N. RESPONSIBILITIES OF THE OWNER AND OPERATOR 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the proposal. 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 December 21, ADOPTED RULES January 5, TexReg 77

78 TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER O. FEES 16 TAC The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) SUBCHAPTER R. TECHNICAL REQUIREMENTS 16 TAC , , The amendments are adopted under Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and Health and Safety Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) CHAPTER 71. WARRANTORS OF VEHICLE PROTECTION PRODUCTS 16 TAC 71.1, 71.10, 71.20, 71.22, 71.70, 71.80, The Texas Commission of Licensing and Regulation (Commission) adopts the repeal of existing rules at 16 Texas Administrative Code (TAC), Chapter 71, 71.1, 71.10, 71.20, 71.22, 71.70, 71.80, and 71.90, regarding the Vehicle Protection Product Warrantors program, without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5199). The rules will not be republished. The adoption repeals the existing rules of the Commission, the governing body of the Texas Department of Licensing and Regulation (Department), regarding the licensing and regulation of vehicle protection product warrantors by the Department. The existing rules under 16 TAC Chapter 71 implemented the former Texas Occupations Code, Chapter The repeal of the existing rules is necessary to implement Senate Bill (S.B.) 2065, 85th Legislature, Regular Session, This bill, in part, repealed Texas Occupations Code, Chapter 2306, Vehicle Protection Product Warrantors, and relocated the regulation of vehicle protection products and warrantors to Texas Business and Commerce Code, Chapter 17, Subchapter E, the Deceptive Trade Practices-Consumer Protection Act. These statutory changes were effective September 1, The adoption repeals the existing rules for the Vehicle Protection Product Warrantors Program under 16 TAC Chapter 71, 71.1, 71.10, 71.20, 71.22, 71.70, 71.80, and As of September 1, 2017, the Department no longer regulates or licenses vehicle protection products or warrantors. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the September 29, 2017, issue of the Texas Register (42 TexReg 5199). The deadline for public comments was October 30, The Department did not receive any comments during the 30-day public comment period. At its meeting on December 15, 2017, the Commission adopted the proposed repeal without changes. The repeal is adopted under Texas Occupations Code, Chapter 51, which authorizes the Commission, the Department's governing body, to adopt rules as necessary to implement this chapter and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51 and former Chapter 2306, and Texas Business and Commerce Code, Chapter 17. No other statutes, articles, or codes are affected by the adoption. The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority. 43 TexReg 78 January 5, 2018 Texas Register

79 Filed with the Office of the Secretary of State on December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: September 29, 2017 For further information, please call: (512) CHAPTER 73. ELECTRICIANS 16 TAC The Texas Commission of Licensing and Regulation (Commission) adopts the amendment of an existing rule at 16 Texas Administrative Code (TAC), Chapter 73, 73.26, regarding the Electricians program, without changes to the proposed text as published in the August 18, 2017, issue of the Texas Register (42 TexReg 4081). The rules will not be republished. The adopted amendment of the existing rule is necessary to to simplify the language of the existing rule and add one substantive provision. Section 73.26(b) currently requires electrical licensees to "provide verifiable documentation of the on-the-job training hours of an applicant they have supervised upon the request of the department." However, the rule does not provide a date by which the licensee must provide the necessary verification. The adopted amendment to subsection (b) creates a deadline of 30 days for a licensee to verify an applicant's on-the-job experience. The adopted amendments are necessary to make more reader-friendly and to provide clearer guidance to applicants and licensees regarding verification of on-the-job experience. The adopted amendments to simplify the rule's language and impose a deadline of 30 days for a licensee to verify an applicant's on-the-job experience The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the August 18, 2017, issue of the Texas Register (42 TexReg 4081). The deadline for public comments was September 18, The Department received nine comments during the 30-day public comment period. The public comments received are summarized below. Comment--Three commenters agreed with the Department's rule proposal. Department Response--The Department appreciates these comments. The Department did not make any changes to the rules in response to these comments. Comment--One commenter inquired about a continuing education course for his license. Department Response--This comment was forwarded to the Education and Examination Division for a response. The Department did not make any changes to the rules in response to this comment. Comment--One commenter voiced concern regarding the lack of reciprocity for the master electrician license. Department Response--The Department appreciates the comment, but it is outside the scope of this rulemaking. The Department did not make any changes to the rules in response to this comment. Comment--One commenter inquired about the renewal process for an expired license. Department Response--This comment was forwarded to the Licensing Division for a response. The Department did not make any changes to the rules in response to this comment. Comment--One commenter asked whether, under the proposed rule, an applicant may verify his or her own on-the-job experience. Department Response--The proposed rule, like the current rule, requires a person authorized by Chapter 1305 of the Texas Occupations Code to verify on-the-job training. The Department did not make any changes to the rules in response to this comment. Comment--One commenter expressed disagreement with the proposed rule, claiming that the Department will not be able to enforce the rule. The commenter recommended the rule remain as is. Department Response--The Department understands the commenter's concerns, but disagrees with the commenter's conclusion regarding its ability to enforce the rule. The Department did not make any changes to the rules in response to this comment. Comment--One commenter referred to his test score. Department Response--This comment is outside the scope of this rulemaking. The Department did not make any changes to the rules in response to this comment. The Electrical Safety and Licensing Advisory Board met on November 2, 2017, to discuss the proposed amendments and the public comments received. The Board recommended adopting the proposed amendments without changes. At its meeting on December 15, 2017, the Commission adopted the proposed amendments with changes. The amendment is adopted under Texas Occupations Code, Chapter 51, which authorizes the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51 and No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: August 18, 2017 For further information, please call: (512) CHAPTER 82. BARBERS ADOPTED RULES January 5, TexReg 79

80 The Texas Commission of Licensing and Regulation (Commission) adopts the amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 82, 82.10, 82.20, 82.22, 82.23, 82.29, 82.40, 82.50, 82.52, 82.54, , 82.78, 82.80, , and ; and the repeal of current 82.53, regarding the Barbers program, without changes to the proposed text as published in the October 6, 2017, issue of the Texas Register (42 TexReg 5315). The rules will not be republished. The Texas Legislature enacted Senate Bill 1503, Senate Bill 2065, House Bill 2738, House Bill 2739, 85th Legislature, Regular Session (2017). The adopted amendments and repeal include removing the requirement for a shampoo apprentice permit or shampoo specialty certificate; eliminating risk-based inspections; clarifying the definition of barbering to exclude threading; authorizing licensed schools to account for hours on the basis of clock or credit; allowing standards to be established for equivalency and conversion of clock to credit hours and vice versa; removing square footage, chair, and sink requirements for barber schools; and distinguishing between larger and specialty school requirements. The adopted amendments and repeal are necessary to implement the legislative changes. The adopted amendments to corrects a reference. The adopted amendments to adds the word "specialty" to match current statutory language. The adopted amendments to adds a reference regarding specialty shop permits. The adopted amendments to removes specific requirements for barber schools. The adopted amendments to clarifies the current requirements for an establishment relocation or change of ownership. The adopted amendments to increases the amount per claim that a student may receive in the event of a school closure. The adopted amendments to removes the reference to risk-based inspections. The adopted amendments to removes risk-based inspections as part of periodic inspections. The adopted repeal of removes risk-based inspections and the classifications. The adopted amendments to allows individuals a full ten days to complete the necessary modification after an inspection. The adopted amendments to corrects language to make it consistent throughout the chapter. The adopted amendments to remove shampoo permit requirements, make language consistent, and correct a reference. The adopted amendments to remove shampoo requirements and outdated language and establish equivalency and conversion standards between credit and clock hours. The adopted amendments to clarifies language and updates a reference. The adopted amendments to removes fees relating to risk-based inspections and renumbers the section accordingly. The adopted amendments to streamlines language for clarity and quick reference. The adopted amendments to makes an editorial change. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 6, 2017, issue of the Texas Register (42 TexReg 5315). The deadline for public comments was November 6, The Department received sixteen comments during the 30-day public comment period. The public comments received are summarized below. Comment--Twelve commenters would like to see the restriction removed from rule that prevents a cosmetology school from operating on the same premises as a barber school. Department Response--This comment does not address any current proposed rule. The purpose of the proposed rules is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. These comments have been forwarded to the appropriate division for review. The Department did not make any changes to the rules in response to this comment. Comment--One commenter would like to know how to obtain a license in Texas. Department Response--This comment does not address any current proposed rule. The purpose of the proposed rules is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. This comment has been forwarded to the appropriate division for review. The Department did not make any changes to the rules in response to this comment. Comment--One commenter raised several issues regarding the Barber Program. First, the commenter states that the Department lacks follow-up with barber school students. The commenter believes that there should always be a mandate over the number of sinks within an establishment and consumer protection should be the sole purpose of governance. The commenter raises general concerns about the need for better sanitary regulations and Department follow-up. The commenter believes that there needs to be mandates on braiding and does not agree with the Commission choosing to deregulate or lift regulations due to lack of enforcement. The commenter believes that proposed amendments in 82.23, 82.52, , 82.72, and need to be reconsidered because the removal of these rules will result in more lawsuits. Department Response--The purpose of the proposed rules is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. The commenter's remarks regarding Department processes and "follow up" with students may be addressed with the Department through our current complaint process. These comments have been forwarded to the correct division for review. The Department is the primary state agency responsible for the oversight of businesses, industries, general trades, and occupations that are regulated by the state and assigned to the department by the legislature. During the 85th Texas Legislative Session, the legislature passed Senate Bill 2065 and House Bill 2739, removing the Commission's ability to establish building and facility standards that are not related to health and safety and removes square footage, chair, and sink requirements. The legislature also chose to deregulate hair braiding during the 84th Texas Legislative Session (House Bill 2717). Furthermore, the proposed rule changes to 82.23, 82.52, 82.71, 82.72, and are a result of legislative measure passed during the 85th Legislative Session. The proposed change to provides more flexibility to the owner and department to ensure corrective modifications are made following 43 TexReg 80 January 5, 2018 Texas Register

81 an inspection. The Department did not make any changes to the rules in response to this comment. Comment--One commenter asks if any changes were made relating to enforcement provisions for obtaining a barber license if the applicant has a felony charge. Department Response--This comment does not address any current proposed rule. No changes have been made relating to enforcement provisions. However, existing Chapter 51, Section and Chapter 53, Subchapter D, of the Texas Occupations Code, allow a person to request a criminal history evaluation letter from the Department, prior to actually applying for a license. The Department did not make any changes to the rules in response to this comment. Comment--One commenter would like to know what the new square footage requirements will be for opening a school. Department Response--Senate Bill 2065 and House Bill 2739 passed during the 85th Legislative Session removing the Commission's ability to establish building and facility standards that are not related to health and safety and removes square footage, chair, and sink requirements. The Department is in the process of developing procedures to implement all changes as a result of Senate Bill 2065 and HB2739. This comment has been forwarded to the appropriate division for review. The Department did not make any changes to the rules in response to this comment. The Advisory Board on Barbering (Board) met on November 13, 2017, to discuss the proposed rules and the public comments received. The Board recommended adopting the rules without changes. At its meeting on December 15, 2017, the Commission adopted the rules without changes. 16 TAC 82.10, 82.20, 82.22, 82.23, 82.29, 82.40, 82.50, 82.52, 82.54, , 82.78, 82.80, , The amendments are adopted under Texas Occupations Code, Chapter 51, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51, 1601, and No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) TAC The repeal is adopted under Texas Occupations Code, Chapters 51, 1601, and 1603, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, 1601, and No other statutes, articles, or codes are affected by the proposal. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) CHAPTER 83. COSMETOLOGISTS The Texas Commission of Licensing and Regulation (Commission) adopts amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 83, 83.10, , 83.29, 83.31, 83.40, , 83.54, , 83.78, 83.80, and ; and the repeal of current 83.53, regarding the Cosmetologists program, without changes to the proposed text as published in the October 6, 2017, issue of the Texas Register (42 TexReg 5319). The rules will not be republished. The Texas Legislature enacted Senate Bill 1503, Senate Bill 2065, House Bill 2552, House Bill 2738, and House Bill 2739, 85th Legislature, Regular Session (2017). The adopted amendments and repeal include removing the requirement for a shampoo apprentice permit or shampoo specialty certificate; eliminating risk-based inspections; clarifying the definition of cosmetology to exclude threading; authorizing licensed schools to account for hours on the basis of clock or credit; allowing standards to be established for equivalency and conversion of clock to credit hours and vice versa; requiring continuing education hours to include information on human trafficking; removing square footage, chair, and sink requirements for cosmetology schools; and distinguishing between larger and specialty school requirements. The adopted amendments and repeal are necessary to implement the legislative changes. The adopted amendments to correct references, remove outdated language, and add "specialty shop" to be consistent with statutory language. The adopted amendments to remove redundant language for clarity. The adopted amendments to remove specific requirements for beauty culture schools. The adopted amendments to remove language regarding inactive license status to reflect current practice. The adopted amendments to correct a reference and add human trafficking to continuing education requirements. ADOPTED RULES January 5, TexReg 81

82 The adopted amendments to clarify the current requirements for establishment relocation and change of ownership. The adopted amendments to remove shampoo specialty certificates. The adopted amendments to reduce the maximum amount per claim per student to assist more students in the event of a school closure. The adopted amendments to remove a reference to riskbased inspections. The adopted amendments to update language to be consistent with statutory language. The adopted amendments to remove risk-based inspections from periodic inspections. The adopted repeal of removes risk-based inspections and classifications. The adopted amendments to allow individuals a full 10 days to complete the necessary modification after an inspection. The adopted amendments to update language to be consistent throughout chapter. The adopted amendments to remove shampoo permit requirements, add facility license posting requirements, and update language for consistency. The adopted amendments to require human trafficking information to be posted, remove outdated language, and establish equivalency and conversion standards between credit and clock hours. The adopted amendments to remove the shampoo apprentice permits and shampoo specialty certificates. The adopted amendments to update language for clarity. The adopted amendments to remove fees relating to shampoo certificates and risk-based inspections and renumber the section accordingly. The adopted amendments to streamline language for clarity and quick reference. The adopted amendments to remove threading language for clarity. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 6, 2017, issue of the Texas Register (42 TexReg 5319). The deadline for public comments was November 6, The Department received comments from 16 interested parties during the 30-day public comment period. The public comments received are summarized below. Comment--One commenter raised several issues with the Cosmetology Program. First, the commenter would like to see an optional "refresher course" offered for licensed cosmetologists and those on inactive status. The commenter would like the board to issue a professional designation to all Texas cosmetologists who are licensed. The commenter states that a cosmetology operator should be allowed to instruct others using DVDs, tapes, or other mechanical means. The commenter believes that the fee for cosmetologists over the age of 60 should be lowered. Finally, the commenter states that cosmetologists should be given blanket authority to practice their profession wherever the need arises and/or exists. Department Response--These comments do not address any current proposed rule change. The purpose of the proposed rules is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. Cosmetologists are required to complete at least four hours of continuing education. Three of the hours must cover any topic under (Technical Requirements--Curriculum). To be a Department-approved education provider, a course must be dedicated to instruction in one or more of the topics: (1) Sanitation required under the Act and this chapter; (2) the Act and this chapter, addressing topics other than Sanitation; and (3) the curriculum subjects listed in At this time, education course providers have the ability to create "refresher courses" as the commenter suggests. A person may not perform or attempt to perform a practice of cosmetology unless the person holds a license or certification to perform that practice. There is no current prohibition on a licensed cosmetologist stating or designating that they are a "licensed cosmetologist." Section of Chapter 1602, Texas Occupations Code states that only licensed cosmetology instructors are allowed to instruct. Additionally, portions of cosmetology instruction can already be done through different types of mediums, including DVDs and tapes. Texas Occupations Code, Chapter 51, requires the Texas Commission of Licensing and Regulation to set fees in amounts reasonable and necessary to cover the costs of administering the program. Finally, where a licensed cosmetologist is able to provide services is established in law by Texas Occupations Code Chapter 1602, (c) and would require a statutory change. The Department did not make any changes to the rules in response to these comments. Comment--Two commenters would like to see the period for renewing an expired license extended from three years to five or eight years. The commenters would like to make the process of reapplying more convenient and states that it is too difficult to take the exam, both written and practical, again for licensing. Department Response--This comment does not address any current proposed rule change. The law states that a person who has a license that has been expired for more than three years may not renew the license. Texas Occupations Code, Chapter 51, requires a person whose license that has been expired for more than three years must obtain a new license and the requirements and procedures, including the examination requirements, for which obtaining an original license must be complied. The Department did not make any changes to the proposed rules in response to these comments. Comment--The commenter believes that the clock to credit, credit to clock, hour conversion chosen was not designed to be used to measure learning and that the calculation may violate other parts of the rules. The commenter is concerned that the number chosen represents an outdated method that is no longer fully supported by its creators. Department Response--The purpose of the proposed rule changes is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. During the 85th Texas Legislative Session, the legislature passed Senate Bill 2065 and House Bill 2738 instructing the commission to establish standards for determining the equivalency and conversion of clock hours to credit hours and credit hours to clock and authorizing a school to account for any hours of instruction completed under Chapters 1601 or 1602 based on clock or credit. The Department established a clock to credit and credit to clock conversion formula with the help and advice of the Cosmetology Advisory Board Education Workgroup. 43 TexReg 82 January 5, 2018 Texas Register

83 Furthermore, the formula of 37.5 clock hours to 1 credit ensure schools comply with the federal student aid requirements. The Department did not make any changes to the rules in response to this comment. Comment--Seven commenters do not agree with human trafficking information being included in their continuing education requirements. Department Response--The purpose of the proposed rule changes is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. House Bill 2552 requires the commission to adopt rules to require all cosmetology continuing education programs to include information on human trafficking. The proposed rule change implements the statutory requirements. The Department did not make any changes to the proposed rules in response to this comment. Comment--One commenter raised concerns about the safety of their workplace. Department Response--This comment does not address any current proposed rule. The comment has been referred to the appropriate division for review. The Department did not make any changes to the proposed rules in response to this comment. Comment--One commenter raised several issues with the proposed rules. First, the commenter believes that the reference for 83.10(21) is incorrect. The commenter believes that the wording of 83.25(l) is confusing because it is drafted as two separate lines. Finally, the commenter raises concerns with the inspections process. Department Response--The purpose of the proposed rules is to implement changes as a result of legislation passed during the 85th Texas Legislative Session. Senate Bill 1503 removed shampooing and conditioning from the definition of cosmetology and renumbered the section accordingly. The rule change reflects the statutory change and corrects the reference. The comments on the wording of and concerning inspections were not about a currently proposed rule change and have been referred to the appropriate divisions for review. The Department did not make any changes to the rules in response to this comment. Comment--One commenter would like to know how to pay for their renewal. Department Response--This comment does not address any current proposed rule change. However, it has been referred to the appropriate division for review and response. The Department did not make any changes to the rules in response to this comment. Comment--One commenter raises concern with salons employing unlicensed individuals using borrowed or rented licenses. Department Response--This comment does not address any current proposed rule change. However, it has been referred to the appropriate division for review. The Department did not make any changes to the rules in response to this comment. Comment--One commenter was unable to view the rule proposal because the link did not work. Department Response--This comment does not address any current proposed rule change. The link to the proposed rules was resent to the commenter. The Department did not make any changes to the rules in response to this comment. The Advisory Board on Cosmetology met on November 13, 2017, but lacked a quorum to recommend adopting the proposed rules. However, the Board members present agreed with the Department to send the rules to the Commission. At its meeting on December 15, 2017, the Commission adopted the proposed rules without changes. 16 TAC 83.10, , 83.29, 83.31, 83.40, , 83.54, , 83.78, 83.80, , The amendments are adopted under Texas Occupations Code, Chapter 51, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51, 1602, and No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) TAC The repeal is adopted under Texas Occupations Code, Chapters 51, 1602, and 1603, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51, 1602, and No other statutes, articles, or codes are affected by the adoption. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 6, 2017 For further information, please call: (512) ADOPTED RULES January 5, TexReg 83

84 CHAPTER 85. FACILITIES VEHICLE STORAGE The Texas Commission of Licensing and Regulation (Commission) adopts the repeal of current rules at rules at 16 Texas Administrative Code (TAC), and , regarding the Vehicle Storage Facilities Program without changes to proposed text as published in the October 13, 2017, issue of the Texas Register (42 TexReg 5617). The rules will not be republished. The Commission also adopts amendments to existing rules at 16 Texas Administrative Code (TAC), , , , , , , , , , and , regarding the Vehicle Storage Facilities Program with changes to proposed text as published in the October 13, 2017 issue of the Texas Register (42 TexReg 5617). The rules will be republished. The adopted amendments and repeals are necessary to implement Senate Bill 1501, Senate Bill 2065, House Bill 1247 and House Bill 2615, 85th Legislature, Regular Session (2017). Collectively these bills remove fencing requirements during the initial licensure application process; eliminate dual licensure and associated fees; eliminate periodic and risk-based inspections and associated fees; relax certain signage requirements; as well as clarify required notices and databases; and update the advisory board composition. The adopted amendments to removes fencing requirements during the initial licensure application process. The adopted amendments to eliminate dual licensure and allow a person to work at a Vehicle Storage Facility if they hold a license under Chapter 85 or Chapter 86. The adopted repeal of eliminates dual licensure requirements. The adopted amendments to removes references to dual licensure. The adopted amendments to removes risk based inspections from general inspection rules. The adopted amendments to removes periodic inspections. The adopted repeal of removes language relating to risk based inspections. The adopted amendments to changes the composition of the advisory board. The adopted amendments to relates to notice requirements and databases that must be used to find vehicle owners and lien holders. The adopted amendments to relates to the second notice requirements. The adopted amendments to cleans up the language to bring it in line with other rules. The adopted amendments to eliminates fees related to dual licensure and risk-based inspections. The adopted amendments to relaxes some signage requirements. The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 13, 2017 issue of the Texas Register (42 TexReg 5617). The Department received a total of 11 comments from the public regarding this program and the proposed amendments. All comments are summarized below. Comment: The Department received one general comment related to signage. The commenter asked if the rules could reflect an exemption on signage requirements for repo companies who hold a VSF license, but only use it occasionally to obtain storage liens. There was no reference to a specific rule. Department Response--The Department maintains that anyone seeking and obtaining a VSF license must adhere to all licensing requirements, including those relating to signage. The Department did not make any changes to the proposed rules based on this public comment. Comment: The Department received one comment related to which alleges a conflict between the proposed rule and the Texas Department of Motor Vehicle (DMV) notice requirements for disposition of an abandoned vehicle. Department Response--The Department maintains that there is no conflict between this proposed rule and the Texas DMV notice requirements. The rule relating to disposition of an abandoned nuisance vehicle is found in , not proposed General Counsel staff forwarded the comment to Compliance staff and requested contact with the commenter to clarify the confusion. The Department did not make any changes to the proposed rules based on this public comment. Comment: The Department received two comments relating to (e)(2). Both assert that the proposed rule would cause undue financial burden on VSF's because they would be unable to charge storage for the first 24 hours that a vehicle is on a storage lot. Department Response--The Department believes that the commenters are misinterpreting the proposed rule. The rule reflects a change in statute stating that if a VSF does not timely send its first notice, it cannot charge a fee until 24 hours after it has sent the required notice. If a VSF timely sends its notice as required by statute and the proposed rule, a VSF may charge the daily storage fee permissible under Tex. Occ. Code (b)(3) beginning when the vehicle enters its lot. The change in statute and in the proposed rule only penalizes VSF's that do not timely send notice as required by (b)(1) and (b)(2). The Department did not make any changes to the proposed rules based on this public comment. Comment: The Department received one comment related to (c). The commenter disagrees with the proposed removal of this rule section. The section contains language relating to an affirmative defense for license holders who are cited and prosecuted for failing to timely send first notice to vehicle owners or lien holders. Department Response--The availability of the affirmative defense still exists in statute. It is unnecessary, and quite unusual, to state an affirmative defense in a companion rule. The proposed removal of this section does not affect licensees or any defenses to prosecution which are available to them in statute. The Department did not make any changes to the proposed rules based on this public comment. 43 TexReg 84 January 5, 2018 Texas Register

85 Comment: The Department received one comment related to (f). The commenter states that the language relating to a return receipt requested for certified and electronic certified mail is incorrect. Department Response--The commenter is correct and the Department acknowledges a drafting error. The Department corrected the drafting error so that the proposed rule now mirrors the statutory language. Comment: The Department received one general comment relating to The comment asserts that there is an inconsistency in notice requirements between vehicle and lien holder information obtained directly from the state and information obtained from a third-party provider. The commenter states that if there is a change in owner between the time that a first notice is issued and the time that a title application is submitted by a VSF, the VSF cannot obtain the title without starting the notice process over if it originally utilized a third-party provider to obtain locating information for the first notice. Department Response--There is nothing in statute or in the proposed Department rule that requires a VSF owner to start the notice process over if it uses a third-party provider to obtain locating information for the vehicle or lien holder and there is a subsequent sale of the vehicle after that information is obtained, but before the VSF secures title. If the DMV or local governments require a VSF to start the notice process over under this circumstance, that is an issue for those agencies to address. The Department's proposed rule does not contain such a provision. The Department did not make any changes to the proposed rule based on this public comment. It will, however, address the issue in an FAQ. Comment: The Department received one comment related to (b). However, the comment was actually a question relating to service workers that a VSF might periodically hire to perform landscaping work for their business. Department Response--This question does not pertain to the proposed rule. General Counsel staff forwarded the question to Compliance staff for further handling. The Department did not make any changes to the proposed rule based on this public comment. Comment: The Department received one comment related to (a). The commenter suggested adding language to the first sentence of the rule so that it reads: "A towing company shall be inspected periodically to warn a towing company of a violation if found or as a result of a complaint." (italicized words represent the suggested addition). Department Response--The rule at (a) relates to inspections. The Department conducts inspections at towing companies to provide notification of any violations. Accordingly, the Department determined that the suggested language is redundant and does not substantively add to, or clarify, any portion of the rule. The Department did not make any changes to the proposed rules based on this public comment. Comment: The Department received one comment related to (a)(7) with regards to the change in reference to a board member as a "representative" instead of an "owner". The commenter suggests that the board members be referred to as "representative or owner". Department Response--The Department's proposed amendment updates the rule to mirror language used in the statutory change to Tex. Occ. Code (a). The updated language in rule is not discretionary and must replicate the language in statute. In statute, certain board members are now referred to as "representative" in lieu of "owner". Comment: The Department received one comment related to The comment was a question about the amount of the fee authorized for this section. Department Response--This question does not pertain to the proposed rule. General Counsel staff forwarded the question to Compliance staff for further handling. The Department did not make any changes to the proposed rule based on this public comment. 16 TAC , , , , , , , , , , The amendments are adopted under Texas Occupations Code, Chapters 51 and 2303, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51 and No other statutes, articles, or codes are affected by the adoption License Requirements--Vehicle Storage Facility License. To be eligible for a VSF license, an applicant must: (1) submit a completed application on a department approved form; (2) pay the fee required under ; (3) provide proof of insurance required under ; (4) successfully pass a criminal background check; (5) provide the name, and address of each partner if the applicant is a partnership; (6) provide the name, and address of each corporate officer, including the president, secretary, and treasurer, if the applicant is a corporation; (7) provide the name, and address of each owner of the VSF and the percentage of ownership interest each holds in the facility; (8) provide the name, and address of the operator or manager of the VSF if it is not operated or managed by one of the owners; (9) provide the facility's physical address, mailing address, and telephone number; (10) state the VSF's storage capacity; and (11) include a statement indicating whether the facility has an all weather surface, signs posted in the proper locations, and lighting, as required by these rules; and (12) adopt the model drug testing policy provided in these rules or file an alternate drug testing policy for approval under these rules. ADOPTED RULES January 5, TexReg 85

86 License Requirements-Vehicle Storage Facility Employee License. (a) To be eligible for a VSF employee license, an applicant must: (1) submit a completed application on a department-approved form; (2) pay the fee required under ; (3) successfully pass a criminal background check; and (4) if the applicant for renewal has within the preceding 12-month period tested positive for drugs under , the applicant must submit a negative drug test to the department. (b) A person may not work at a VSF unless the individual holds: (1) a license issued under this chapter; (2) an incident management towing operator's license under Section ; (3) a private property towing operator's license under Section ; or (4) a consent towing operator's license under Section (c) A VSF may not employ a person to work at the VSF unless the person holds a license issued under this chapter or under Chapter 86. (d) For purposes of this chapter, persons operating or managing a VSF as a sole proprietor or other unincorporated business organization are employees of the VSF and required to obtain a VSF employee license or otherwise be licensed under this chapter or under Chapter License Requirements--Vehicle Storage Facility Employee License Renewal. (a) To renew a VSF employee license an applicant must: (1) submit a completed application on a department-approved form; (2) pay the applicable fee required under ; (3) successfully pass a criminal background check; and (4) if the applicant for renewal has within the preceding 12-month period tested positive for drugs under , the applicant must submit a negative drug test to the department. (b) To renew and maintain continuous licensure, the renewal requirements under this section must be completed prior to the expiration of the license. A late renewal means the licensee will have an unlicensed period from the expiration date of the expired license to the issuance date of the renewed license. During the unlicensed period, a person may not perform any duties of a VSF employee that requires a license under this chapter. (c) Non-receipt of a license renewal notice from the department does not exempt a person from any requirements of this chapter Inspections--General. (a) All VSFs shall be inspected periodically or as a result of a complaint. These inspections will be performed to determine compliance with the requirements of the Act and these rules. In addition, the department may make information available to VSF owners and managers on best practices for risk-reduction techniques. (b) Inspections shall be performed during the normal operating hours of the VSF. The department may conduct inspections under the Act and these rules with or without advance notice. (c) The department inspector will contact the VSF owner, manager, or representative upon arrival at the VSF, and before proceeding with the inspection. (d) The VSF owner, manager, or representative shall cooperate with the inspector in the performance of the inspection Periodic Inspections. (a) Each VSF shall be inspected at least once every two years. (b) The VSF owner, manager, or representative must, upon request, make available to the inspector all records, notices and other documents required by these rules. (c) On completion of the inspection, the VSF shall be advised in writing of the inspection results. (d) The inspection report will identify violations that must be corrected by the licensee. The report will also indicate the corrective actions required to address the violations, in accordance with Additionally, the department may assess administrative penalties and/or administrative sanctions for violations Towing and Storage Advisory Board. (a) The advisory board consists of the nine members appointed by the chairman of the commission with the approval of the commission. The nine members include: (1) one representative of a towing company operating in a county with a population of less than one-million; (2) one representative of a towing company operating in a county with a population of one-million or more; (3) one representative of a vehicle storage facility located in a county with a population of less than one-million; (4) one representative of a vehicle storage facility located in a county with a population of one-million or more; (5) one peace officer from a county with a population of less than one-million; (6) one peace officer from a county with a population of one-million or more; (7) one parking facility representative; (8) one representative of a member insurer, as defined by Section , Insurance Code, of the Texas Property and Casualty Insurance Guaranty Association who automobile insurance in this state; and (9) one person who operates both a towing company and a vehicle storage facility. (b) The advisory board shall include representation for each classification of towing. (c) Advisory board members serve terms of six years, with the terms of two or three members, expiring on February 1 of each oddnumbered year. (1) A member may not serve more than two full consecutive terms. (2) If a vacancy occurs during a term, the chairman of the commission will appoint a replacement who meets the qualifications of the open position to serve for the balance of the term. 43 TexReg 86 January 5, 2018 Texas Register

87 (d) The chairman of the commission appoints one of the advisory board members to serve as the presiding officer of the advisory board for one year. The presiding officer of the advisory board may vote on any matter before the advisory board. (e) Advisory board members do not receive compensation. They are, subject to the General Appropriations Act, reimbursed for actual and necessary expenses incurred in performing the duties of the advisory board. (f) The advisory board meets twice yearly and may meet at other times at the call of the chairman of the commission or the executive director. (g) The advisory board provides advice and recommendations to the department on technical matters relevant to the administration and enforcement of this chapter, including examination content, licensing standards, continuing education requirements, and maximum amounts that may be charged for fees related to private property tows Responsibilities of Licensee--Notice to Vehicle Owner or Lienholder. (a) If a vehicle is removed by the vehicle owner or authorized representative within 24 hours after the VSF receives the vehicle, notification as described in subsections (b) - (j) does not apply. (b) The registered owners and lien holders of a vehicle accepted at a VSF shall be notified in the following manner. (1) If a vehicle is registered in Texas, the VSF shall notify the vehicle's registered owner and primary lien holder by certified mail, return receipt requested, registered, or electronic certified mail, within five days, but no sooner than within 24 hours of receipt of the vehicle. (2) If a vehicle is not registered in Texas, the VSF shall notify the vehicle's registered owner and all recorded lien holders within 14 days, but no sooner than within 24 hours of receipt of the vehicle. (c) The operator of a VSF shall send the notice required by subsections (b)(1) and (b)(2) to an address obtained by mail or electronically from: (1) The governmental entity responsible for maintaining the motor vehicle title and registration database for the state in which the vehicle is registered; or (2) A private entity authorized by the governmental entity to obtain title, registration, and lienholder information using a single vehicle identification number search obtained through a secure access portal to the government entity's motor vehicle records. (d) Notification has occurred when the United States Postal Service places its postmark and is timely if: (1) the postmark indicates that the notice was mailed within the period described by subsection (b); or (2) the notice was published as provided by subsection (f). (e) If a VSF sends a notice required under this section after the time mandated by subsections (b)(1) or (b)(2): (1) The deadline for sending any subsequent notice is based on the date that notice was actually sent to the vehicle owner and any lien holders; (2) A VSF may not charge the daily storage fee permissible under Tex. Occ. Code (b)(3) until 24 hours after it has sent the notice required under this section. (f) Notice required under this section may be completed by publication in a newspaper of general circulation in the county in which the vehicle is stored if: (1) the vehicle is registered in another state; (2) the VSF submits to the governmental entity that is responsible for maintaining the motor vehicle title and registration database for the state in which the vehicle is registered, or to a private entity that is authorized by the governmental entity to access title, registration, or lienholder information, a written or electronic request for information relating to the identity of the registered owner and any lienholder of record. (3) If mailed, such requests shall be correctly addressed, with sufficient postage, and sent by certified mail, return receipt requested or electronic certified mail, to the governmental entity with which the vehicle is registered requesting information relating to the identity of the last known registered owner and any lienholder of record. (4) the identity of the registered owner cannot be determined; (5) the registration does not contain an address for the registered owner; or (6) the operator of the storage facility cannot reasonably determine the identity and address of each lienholder. (g) Notice by publication is not required if each notice sent in accordance with this Section is returned because: (1) the notice was unclaimed or refused; or (2) the person to whom the notice was sent moved without leaving a forwarding address. (h) Only one notice is required to be published for an abandoned nuisance vehicle. (i) All mailed notifications must be correctly addressed; mailed with sufficient postage; and sent by certified mail, return receipt requested, registered, or electronic certified mail. (1) All mailed notifications shall state: (A) the full licensed name of the VSF where the motor vehicle is located, its street address and telephone number, and the hours the vehicle can be released to the vehicle owner; (B) the daily storage rate, the type and amount of all other charges assessed, and the statement, "Total storage charges cannot be computed until vehicle is claimed. The storage charge will accrue daily until vehicle is released"; (C) the first date for which a storage fee is assessed; (D) the date the vehicle will be transferred from the VSF and the address to which the vehicle will be transferred if the operator will be transferring a vehicle to a second lot because the vehicle has not been claimed within a certain time; (E) the date the vehicle was accepted for storage and from where, when, and by whom the vehicle was towed; (F) the VSF license number preceded by the words "Texas Department of Licensing and Regulation Vehicle Storage Facility License Number" or "TDLR VSF Lic. No."; (G) a notice of the towed vehicle owner's right under the Texas Occupations Code, Chapter 2308, to challenge the legality of the tow involved; and (H) the name, mailing address, and toll-free telephone number of the department for purposes of directing questions or complaints. ADOPTED RULES January 5, TexReg 87

88 (2) All published notifications shall state: (A) the full name, street address, telephone number, and VSF license number, and the Department's internet address; (C) the total amount of charges assessed against the vehicle. (B) a description of the vehicle; and (3) Notices published in a newspaper may contain information for more than one towed vehicle. (j) If authorized, a notification fee may not be charged unless actual notice has been given as required under this section Responsibilities of licensee--second Notice; Consent to Sale. (a) If a vehicle is not claimed by a person permitted to claim the vehicle before the 10th day after the date notice is mailed or published under , the operator of the VSF shall consider the vehicle to be abandoned and, if required by the law enforcement agency with jurisdiction where the vehicle is located, must report the abandonment to the law enforcement agency. If the law enforcement agency notifies the VSF that the agency will send notices and dispose of the abandoned vehicle under Subchapter B, Chapter 683, Transportation Code, the VSF shall pay the fee required under Section , Transportation Code. (b) If the vehicle is not claimed, the second notice shall be sent no earlier than the 15th day, and no later than the 21st day, after the date the first notice is mailed or published under The operator of a VSF shall send a second notice to the registered owner and each recorded lienholder of the vehicle if the facility: or (1) was not required to make a report under Subsection (a); (2) has made a required report under Subsection (a) and the law enforcement agency: (A) has notified the facility that the law enforcement agency will take custody of the vehicle; (B) has not taken custody of the vehicle; or (C) has not responded to the report. (c) If the VSF sends a second notice after the 21st day on which the first notice was mailed or published, it may not charge a daily storage fee authorized under (d) until 24 hours after the second notice is mailed or published. (d) Notice under this section must include: (1) the information listed in (h)(1)(A) - (H); (2) a statement of the right of the facility to dispose of the vehicle under subsections (a) and (b); (3) a statement that the failure of the owner or lienholder to claim the vehicle and personal property before the 30th day after the date the notice if provided is: (A) a waiver by that person of all right, title, or interest in the vehicle and personal property; and (B) a consent to the sale of the vehicle at a public sale. (e) Notwithstanding subsection (a), if publication is required for notice under this section, the notice must include: (1) the information listed in (i)(2); and (2) a statement that the failure of the owner or lienholder to claim the vehicle before the date of the sale is: sale. (A) a waiver of all right, title, and interest in the vehicle; (B) and a consent to the sale of the vehicle at a public (f) The operator shall pay any excess proceeds to the person entitled to those proceeds Responsibilities of Licensee--Storage Fees and Other Charges. (a) For the purposes of this section, "VSF" includes a garage, parking lot, or other facility that is: (1) owned by a governmental entity; and (2) used to store or park at least 10 vehicles each year. (b) The fees outlined in this section have precedence over any conflicting municipal ordinance or charter provision. (c) Notification fee. (1) A VSF may not charge a vehicle owner or authorized representative more than $50 for notification under these rules. If a notification must be published, and the actual cost of publication exceeds 50% of the notification fee, the VSF may recover the additional amount of the cost of publication. The publication fee is in addition to the notification fee. (2) If a vehicle is removed by the vehicle owner or authorized representative within 24 hours after the date the VSF receives the vehicle, notification is not required by these rules. (3) If a vehicle is removed by the vehicle owner or authorized representative before notification is sent or within 24 hours from the time VSF receives the vehicle, the VSF may not charge a notification fee to the vehicle owner. (d) Daily storage fee. A VSF may not charge less than $5.00 or more than $20 for each day or part of a day for storage of a vehicle that is 25 feet or less in length. A VSF shall charge a fee of $35 for each day or part of a day for storage of a vehicle that exceeds 25 feet in length. (1) A daily storage fee may be charged for any part of the day, except that a daily storage fee may not be charged for more than one day if the vehicle remains at the VSF less than 12 hours. In this paragraph a day is considered to begin and end at midnight. (2) A VSF that has accepted into storage a vehicle registered in this state shall not charge for more than five days of storage fees until a notice, as prescribed in of these rules, is mailed or published. (3) A VSF that has accepted into storage a vehicle not registered in Texas shall not charge for more than five days of storage before the date the request for owner information is sent to the appropriate governmental entity or to the private entity authorized by that governmental entity to obtain title, registration, and lienholder information using a single vehicle identification number inquiry. (4) A VSF shall charge a daily storage fee after notice, as prescribed in , is mailed or published for each day or portion of a day the vehicle is in storage until the vehicle is removed and all accrued charges are paid. (e) Impoundment fee. A VSF may charge a vehicle owner or authorized representative an impoundment fee not to exceed $20. If the VSF charges a fee for impoundment, the written bill for services must 43 TexReg 88 January 5, 2018 Texas Register

89 specify the exact services performed for that fee and the dates those services were performed. (f) Governmental or law enforcement fees. A VSF may collect from a vehicle owner or authorized representative any fee that must be paid to a law enforcement agency, the agency's authorized agent, or a governmental entity. (g) Environmental hazard fee. A VSF may collect from a vehicle owner or authorized representative a fee in an amount set by the commission for the remediation, recovery, or capture of an environmental or biological hazard. (h) Additional fees. A VSF may not charge additional fees related to the storage of a vehicle other than fees authorized by these rules or a nonconsent-towing fee authorized by Texas Occupations Code, Fees. (a) Application fees. (1) Vehicle Storage Facility License (A) Original Application--$250 (B) Renewal--$250 (2) Vehicle Storage Facility Employee License (A) Original Application--$75 (B) Renewal--$75 (b) Revised/Duplicate License/Certificate/Permit/Registration--$25 (c) Late renewals fees for licenses under this chapter are provided under of this title (relating to Late Renewal Fees). (d) All fees are nonrefundable Technical Requirements--Storage Lot Signs. (a) Facility information. All VSFs shall have a clearly visible and readable sign located at the main entrance. The sign shall have letters at least 2 inches in height, with a contrasting background, be readable at 10 feet, and contain the following information: (1) the registered name of the storage lot, as it appears on the VSF license; (2) street address; (3) the telephone number for the owner to contact in order to obtain release of the vehicle; (4) the facility's hours, within one hour of which vehicles will be released to vehicle owners; and (5) the storage lot's state license number preceded by the phrase "VSF License Number." (b) All VSFs shall have a sign in view of the person who claims the vehicle setting out the charge for storage and all other fees, which may be charged by the storage lot, including notification and impoundment fees. The sign may be affixed to the payment window and shall include all forms of payments the VSF accepts for any charge associated with delivery or storage of a vehicle. If the sign is affixed to the payment window, it must be located so it is clearly visible to a vehicle owner at the place of payment and meet the following font sizes and fonts to produce text not smaller than 24 points Helvetica or Arial Black for headers and 14 points Helvetica or Arial Condensed for all body text. (c) Nonconsent towing fees schedule. All VSFs shall place a clearly visible and readable sign where payment to the VSF is made which states: (1) "Nonconsent tow fees schedules available on request." The VSF shall provide a copy of a nonconsent towing fees schedule on request; and (2) The nonconsent towing fees provided for viewing and to the vehicle owner or representative must match the nonconsent towing fees authorized by this chapter or Texas Occupations Code (d) Instruments accepted for release of vehicle. VSFs shall have a sign describing the documents that may be presented by the vehicle owner or his/her authorized representative to obtain possession of the vehicle. This sign shall list all instruments as described in (a)(3)(A) - (I), and shall also state: "Affidavit of Right of Possession Furnished Upon Request." The sign may be affixed to the payment window. (e) A VSF must conspicuously post a sign that states: "This vehicle storage facility must accept payment by cash, debit cards and credit cards for any fee or charge associated with delivery or storage of a vehicle." (f) Combination signs. A VSF may combine the signs described in subsections (b), (c), (d), and (e), if the combination sign meets the requirements of each of the separate signs. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 13, 2017 For further information, please call: (512) TAC , The repeals are adopted under Texas Occupations Code, Chapters 51 and 2308, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51 and No other statutes, articles, or codes are affected by the proposal. 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 December 21, TRD ADOPTED RULES January 5, TexReg 89

90 Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 13, 2017 For further information, please call: (512) CHAPTER 86. BOOTING VEHICLE TOWING AND The Texas Commission of Licensing and Regulation (Commission) adopts the repeal of current rules at rules at 16 Texas Administrative Code (TAC), Chapter 86, and , regarding the Vehicle Towing and Booting program without changes to proposed text as published in the October 13, 2017, issue of the Texas Register (42 TexReg 5622). The rules will not be republished. The Commission also adopts amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 86, 86.10, , , , and , with changes to the proposed text as published October 13, 2017, issue of the Texas Register (42 TexReg 5622). The rules will be republished. The repeal of existing rules is necessary to implement Senate Bill 1501, Senate Bill 2065, and House Bill 2615 during the 85th Legislature, Regular Session (2017). These bills eliminated dual licensure, the towing operator training licenses as well as the associated fees, and risk-based inspections. The repeals are necessary to implement the legislative changes mandated by these statutes. The amendments to existing rules are necessary is necessary to implement Senate Bill 1501, Senate Bill 2065, and House Bill 2615 during the 85th Legislature, Regular Session (2017). These bills establish guidelines for nonconsent tows in an apartment complex and to update the advisory board composition. The amendments are necessary to implement the legislative changes mandated by these statutes. The adopted amendments to updates the name of the advisory board, removes the definition of Property Owner's Association and renumbers the section accordingly. The adopted repeal of eliminates dual licensure and its associated requirements. The adopted amendments to removes references to the risk-based inspection schedule. The adopted amendments to removes reference to riskbased inspections. The adopted repeal of eliminates risk-based inspections. The adopted amendments to updates the composition of the advisory board. The adopted amendments to removes dual licensure. The Department also withdraws and The Department drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the October 13, 2017, issue of the Texas Register (42 TexReg 5622). The Department received a total of 16 comments from the public regarding this program and the proposed amendments. All comments are summarized below. Comment--The Department received two comments from the same individual inquiring about his license. Department Response--These comments do not pertain to the proposed rules. General Counsel staff forwarded the inquiries to Licensing for handling. The Department did not make any changes to the proposed rules based on these public comments. Comment--The Department received one comment from a consumer complaining about an alleged wrongful tow. Department Response--The comment does not pertain to the proposed rules. General Counsel staff forwarded the complaint to Enforcement for handling. The Department did not make any changes to the proposed rules based on this public comment. Comment--The Department received one comment expressing agreement with all proposed changes. Department Response--The Department did not make any changes to the proposed rules based on this public comment. Comment--The Department received one comment related to (a). The commenter suggested adding language to the first sentence of the rule so that it reads: "A towing company shall be inspected periodically to warn a towing company of a violation if found or as a result of a complaint. (italicized words represent the suggested addition). Department Response--The rule at (a) relates to inspections. TDLR conducts inspections at towing companies to provide notification of any violations. Accordingly, the Department determined that the suggested language is redundant and does not substantively add to, or clarify, any portion of the rule. The Department did not make any changes to the proposed rules based on this public comment. Comment--The Department received one comment related to (a) with three parts. Two parts of the comment concern (a)(1)-(4) and (9) with regards to the change in reference to certain board members as a "representative" instead of an "owner". The commenter suggested that the board members referenced in (a)(1)-(4) and (9) be referred to as "representative or owner". The third part of the comment asks why the Department added a member of the insurance industry to the Advisory Board. Department Response--The Department's proposed amendment updates the rule to mirror language used in the statutory change to Tex. Occ. Code (a). The updated language in rule is not discretionary and must replicate the language in statute. In statute, certain board members are now referred to as "representative" in lieu of "owner". The addition of an insurance industry professional to the Advisory Board was made by the State Legislature in SB 1501 and not by the Department. This addition is also not discretionary. The Department did not make any changes to the proposed rules based on this public comment. Comment--The Department received nine comments related to Section responds to a statutory change to add 43 TexReg 90 January 5, 2018 Texas Register

91 Tex. Occ. Code (a)(1) - (2)(A) - (B) and (a-1)(1) - (3) that mandates the Commission to adopt rules authorizing a tow company that makes a nonconsent tow from a parking facility to tow the vehicle to another location on the same parking facility under the direction of a parking facility owner, authorized agent, or peace officer. The Texas Apartment Association commented specifically on (o). The comments are as follows: i) One comment relating to (n) with three subparts asking: a) whether a tow truck driver is obligated to comply with a consumer request to move a vehicle to a location different than the one to which a driver might otherwise be required to take it to; b) how charges for towing a vehicle upon customer request to a location different than the one to which the driver might otherwise be required to take it to would be assessed; and c) how tow tickets would need to be written. ii) Two comments related to (o)(1) - (2) and its proposed rule restriction on non-consent tows contemplated by the statute to apartment complexes that are moving vehicles from one location on their parking facility to another in furtherance of repairs or renovation. The comments collectively expressed that the statute does not contain such restrictions and should not be limited to solely those circumstances. iii) Two comments related to (o)(3) and its proposed obligation on an apartment complex to provide 10 days notice of its intent to move vehicles in its parking facility. The commenters stated that a 10-day notice is too long and unreasonable. iv) One comment related to (o)(3) stating that there should be a clarification that initial notice is sufficient even if the event that necessitated the notification is delayed. v) one comment related to (o)(2) expressing that a clarification should be added to state that "written notice" includes electronic notice if such a notice provision is present in a lease. vi) one comment that should allow parking facilities to post signs like those allowed for the relocation of vehicles at universities. vii) One comment related to (o)(3)(E) to allow a parking facility that does not know the exact location to which vehicles will be moved to tell residents how they will be informed of the exact location at a later date. Department Response--The Department reviewed the new statutory provision of 2308(a)(1)-(2) and (a-1)(1) - (3) and determined that there is merit to the comments relating to the restrictive nature of the proposed rules. The Department acknowledges that the applicable statute is broad in nature and does not limit its application to apartment complexes moving cars from one location on its parking facility to another in furtherance of repairs or renovations. The Department also finds merit to the comments relating to notice and believes that further discussion regarding the timing of notice, the form of notice, the ability to use freestanding signs to provide notice, and the need for flexibility regarding notification of specific re-locations is warranted. Accordingly, the Department recommended to the Advisory Board during its November 16, 2017, meeting that it withdraw the entire proposed rule additions of (o)(1) - (8) and form a workgroup in order to facilitate a re-drafting of the rule and its subparts. The Department believes that withdrawal is warranted and required in order to draft rule provisions that more closely reflect the broad nature of the statutory change and to accommodate industry input. Comment--The Department received one comment related to (4) asking how to get a refund on dual-license fees. Department Response--This question does not pertain to the proposed rule. The Department did not make any changes to the proposed rule based on this public comment. The Towing and Storage Advisory Board (Board) met on November 16, 2017, to discuss proposed amendments and the public comments received. The board recommended adopting the proposed repeal and amendments with changes. At its meeting on December 15, 2017, the Commission adopted the proposed repeal without changes and adopted the proposed amendments with changes as recommended by the Board. 16 TAC 86.10, , , , The amendments are adopted under Texas Occupations Code, Chapters 51 and 2308, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51 and No other statutes articles or codes are affected by the proposal Definitions. The following words and terms, when used in this chapter will have the following meanings, unless the context clearly shows otherwise: (1) Advisory board--the Towing and Storage Advisory Board. (2) Applicant--The person or entity submitting an application for a permit or license issued by the department. (3) Certificate of insurance--a certificate prescribed by and filed with the department in which an insurance carrier or surety company, approved in this state, warrants that a towing company for whom the certificate is filed has the minimum coverage as required by (4) Commission--The Texas Commission of Licensing and Regulation. (5) Consent tow--any tow of a motor vehicle in which the tow truck is summoned by the owner or operator of the vehicle or by a person who has possession, custody, or control of the vehicle. The term does not include an incident management tow or a private property tow. (6) Conspicuous--Written in a size, color, and contrast so as to be readily noticed and understood. (7) Contested case--a proceeding, including a licensing proceeding, in which the legal rights, duties, or privileges of a party are to be determined by a state agency after an opportunity for adjudicative hearing. (8) Department--The Texas Department of Licensing and Regulation. (9) Driver's License--Has the meaning assigned by , Transportation Code. ADOPTED RULES January 5, TexReg 91

92 (10) Incident--an unplanned randomly occurring traffic event that adversely affects normal traffic operations. (11) Incident management tow--any tow of a vehicle in which the tow truck is summoned to the scene of a traffic accident or to an incident, including the removal of a vehicle, commercial cargo, and commercial debris from an accident or incident scene. (12) License holder or Licensee--The person to which the department issued a license. (13) Nonconsent tow--any tow of a motor vehicle that is not a consent tow, including: (A) (B) an incident management tow; and a private property tow. (14) Parking facility--public or private property used, wholly or partly, for restricted or paid vehicle parking. The term includes: (A) a restricted space on a portion of an otherwise unrestricted parking facility; and (B) a commercial parking lot, a parking garage, and a parking area serving or adjacent to a business, church, school, home, apartment complex, property governed by a property owners' association, or government-owned property leased to a private person, including: (i) a portion of the right-of-way of a public roadway that is leased by a governmental entity to the parking facility owner; and (ii) the area between the facility's property line abutting a county or municipal public roadway and the center line of the roadway's drainage way or the curb of the roadway, whichever is farther from the facility's property line. (15) Parking facility authorized agent--an employee or agent of a parking facility owner with the authority to: (A) authorize the removal of a vehicle from the parking facility on behalf of the parking facility owner; and (B) accept service on behalf of the parking facility owner of a notice of hearing requested under this chapter. (16) Parking facility owner-- (A) an individual, corporation, partnership, limited partnership, limited liability company, association, trust, or other legal entity owning or operating a parking facility; (B) a property owners' association having control under a dedicatory instrument, as that term is defined in , Property Code, over assigned or unassigned parking areas; or (C) a property owner having an exclusive right under a dedicatory instrument, as that term is defined in , Property Code, to use a parking space. (17) Permit holder--the person to which the department issued a permit. (18) Private property tow--any tow of a vehicle authorized by a parking facility owner without the consent of the owner or operator of the vehicle. (19) Public roadway--a public street, alley, road, right-ofway, or other public way, including paved and unpaved portions of the right-of-way. (20) Tow truck--a motor vehicle, including a wrecker, equipped with a mechanical device used to tow, winch, or otherwise move another motor vehicle. The term does not include: (A) a motor vehicle owned and operated by a governmental entity, including a public school district; (B) (C) (i) (ii) (iii) a motor vehicle towing: a race car; a motor vehicle for exhibition; or an antique motor vehicle; a recreational vehicle towing another vehicle; (D) a motor vehicle used in combination with a tow bar, tow dolly, or other mechanical device if the vehicle is not operated in the furtherance of a commercial enterprise; (E) a motor vehicle that is controlled or operated by a farmer or rancher and used for towing a farm vehicle; or (F) a motor vehicle that: (i) is owned or operated by an entity the primary business of which is the rental of motor vehicles; and (ii) only tows vehicles rented by the entity. (21) Towing company--an individual, association, corporation, or other legal entity that controls, operates, or directs the operation of one or more tow trucks over a public roadway in this state but does not include a political subdivision of the state. (22) Towing operator--the person to which the department issued a towing operator license. (23) Unauthorized vehicle--a vehicle parked, stored, or located on a parking facility without the consent of the parking facility owner. (24) Vehicle--A device in, on, or by which a person or property may be transported on a public roadway. The term includes an operable or inoperable automobile, truck, motorcycle, recreational vehicle, or trailer but does not include a device moved by human power or used exclusively on a stationary rail or track. (25) Vehicle owner--a person: (A) named as the purchaser or transferee in the certificate of title issued for the vehicle under Chapter 501, Transportation Code; (B) in whose name the vehicle is registered under Chapter 502, Transportation Code, or a member of the person's immediate family; (C) who holds the vehicle through a lease agreement; (D) who is an unrecorded lienholder entitled to possess the vehicle under the terms of a chattel mortgage; or (E) who is a lienholder holding an affidavit of repossession and entitled to repossess the vehicle. (26) Vehicle storage facility--a vehicle storage facility, as defined by Texas Occupations Code, that is operated by a person who holds a license issued under Texas Occupations Code, Chapter 2303 to operate the facility Inspections--General. (a) A towing company shall be inspected periodically or as a result of a complaint. These inspections are performed to determine compliance with the requirements of the Act and these rules. In addi- 43 TexReg 92 January 5, 2018 Texas Register

93 tion, the department may make information available to licensees and managers on best practices for risk-reduction techniques. (b) The towing company owner, manager, or their representative must, upon request, make available to the inspector all records, notices and other documents required by these rules. (c) Upon completion of the inspection, the owner manager, or representative shall be advised in writing of the results of the inspection. The inspection report will indicate whether the inspection was approved or not approved, and will describe any violations identified during the inspection. (d) For inspections that are not approved, the inspection report will identify violations that must be corrected by the owner. The report will also indicate the corrective actions required to address the violations, in accordance with Additionally, the department may assess administrative penalties and/or administrative sanctions for violations Periodic Inspections. (a) Each towing company shall be inspected at least once every two years. (b) The towing company owner, manager, or their representative must, upon request, make available to the inspector all records, notices and other documents required by these rules. (c) Upon completion of the inspection, the owner manager, or representative shall be advised in writing of the results of the inspection. The inspection report will indicate whether the inspection was approved or not approved, and will describe any violations identified during the inspection. (d) For inspections that are not approved, the inspection report will identify violations that must be corrected by the owner. The report will also indicate the corrective actions required to address the violations, in accordance with Additionally, the department may assess administrative penalties and/or administrative sanctions for violations Towing and Storage Advisory Board. (a) The advisory board consists of the nine members appointed by the chairman of the commission with the approval of the commission. The nine members include: (1) one representative of a towing company operating in a county with a population of less than one-million; (2) one representative of a towing company operating in a county with a population of one-million or more; (3) one representative of a vehicle storage facility located in a county with a population of less than one-million; (4) one representative of a vehicle storage facility located in a county with a population of one-million or more; (5) one peace officer from a county with a population of less than one-million; (6) one peace officer from a county with a population of one-million or more; (7) one parking facility representative; (8) one representative of a member insurer, as defined by Section , Insurance Code, of the Texas Property and Casualty Insurance Guaranty Association who writes automobile insurance in this state; and (9) one person who operates both a towing company and a vehicle storage facility. (b) The advisory board shall include representation for each classification of towing. (c) Advisory board members serve terms of six years, with the terms of two or three members, expiring on February 1 of each odd-numbered year. (1) A member may not serve more than two full consecutive terms. (2) If a vacancy occurs during a term, the chairman of the commission will appoint a replacement who meets the qualifications of the open position to serve for the balance of the term. (d) The chairman of the commission appoints one of the advisory board members to serve as the presiding officer of the advisory board for one year. The presiding officer of the advisory board may vote on any matter before the advisory board. (e) Advisory board members do not receive compensation. They are, subject to the General Appropriations Act, reimbursed for actual and necessary expenses incurred in performing the duties of the advisory board. (f) The advisory board meets twice yearly and may meet at other times at the call of the chairman of the commission or the executive director. (g) The advisory board provides advice and recommendations to the department on technical matters relevant to the administration and enforcement of this chapter, including examination content, licensing standards, continuing education requirements, and maximum amounts that may be charged for fees related to private property tows Fees. (a) Application Fees (1) Permit Tow Truck (A) Original Application--$75 (B) Renewal--$75 (C) Duplicate Permit--No charge (D) Permit Amendment--$25 (2) Tow Company License (A) Original Application--$350 (B) Renewal--$350 (C) Duplicate License--$25 (D) Permit Amendment--$25 (3) Operator License (A) Original Application--$100 (B) Renewal--$100 (C) Duplicate License--$25 (D) Operator License Amendment--$25 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 December 21, TRD ADOPTED RULES January 5, TexReg 93

94 Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 13, 2017 For further information, please call: (512) TAC , The repeals are adopted under Texas Occupations Code, Chapters 51 and 2308, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department. The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapters 51 and No other statutes, articles, or codes are affected by the proposal. 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 December 21, TRD Brian E. Francis Executive Director Texas Department of Licensing and Regulation Effective date: January 15, 2018 Proposal publication date: October 13, 2017 For further information, please call: (512) TITLE 19. EDUCATION PART 2. TEXAS EDUCATION AGENCY CHAPTER 103. HEALTH AND SAFETY SUBCHAPTER CC. COMMISSIONER'S RULES CONCERNING SAFE SCHOOLS 19 TAC The Texas Education Agency (TEA) adopts new , concerning school safety and discipline. The new section is adopted without changes to the proposed text as published in the October 20, 2017 issue of the Texas Register (42 TexReg 5834) and will not be republished. The adopted new rule establishes criteria for participation in a pilot program for alternative disciplinary placement in accordance with House Bill (HB) 156, 85th Texas Legislature, Regular Session, REASONED JUSTIFICATION. The Texas Education Code (TEC), , as added by HB 156, 85th Texas Legislature, Regular Session, 2017, establishes a pilot program for placement of high school students in Junior Reserve Officers Training Corps (JROTC) programs as an alternative to placement in disciplinary alternative education programs (DAEPs) or juvenile justice alternative education programs (JJAEPs). The statute requires the TEA to designate not more than two high schools that meet certain criteria, as specified in the TEC, (b), to participate in the pilot program. The statute also requires the commissioner to adopt by rule additional criteria that promote positive student educational outcomes for the agency to use in making designations for participation in the pilot program. Adopted new implements the TEC, , by adopting in rule additional criteria that the TEA will use in making designations for the JROTC pilot program. The rule also specifies that schools participating in the pilot program must follow the minimum standards and best practices for truancy prevention measures as outlined in the TEC, , and comply with the data reporting required under the TEC, (d). SUMMARY OF COMMENTS AND AGENCY RESPONSES. The public comment period on the proposal began October 20, 2017, and ended November 20, No public comments were received. STATUTORY AUTHORITY. The new rule is adopted under the Texas Education Code (TEC), (c), as added by House Bill (HB) 156, 85th Texas Legislature, Regular Session, 2017, which requires the commissioner to adopt additional criteria that promote positive student educational outcomes for use in making designations of not more than two high schools for the Junior Reserve Officers Training Corps (JROTC) pilot program; TEC, (d), as amended by HB 156, 85th Texas Legislature, Regular Session, 2017, which requires districts who place students in a JROTC program to report information on each placement; and TEC, , which establishes truancy prevention measures for districts to implement to address student conduct related to truancy. CROSS REFERENCE TO STATUTE. The new rule implements the Texas Education Code, (c), as added by House Bill (HB) 156, 85th Texas Legislature, Regular Session, 2017; (d), as amended by HB 156, 85th Texas Legislature, Regular Session, 2017; 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 December 19, TRD Cristina De La Fuente-Valadez Director, Rulemaking Texas Education Agency Effective date: January 8, 2018 Proposal publication date: October 20, 2017 For further information, please call: (512) TITLE 34. PUBLIC FINANCE PART 5. TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM CHAPTER 105. CREDITABLE SERVICE 34 TAC The Board of Trustees for the Texas County and District Retirement System ("TCDRS") adopts new rule, 105.9, concerning notice by a participating subdivision of certain felony convictions of elected or appointed officers. The new rule is adopted without 43 TexReg 94 January 5, 2018 Texas Register

95 changes to the proposed text as published in the October 20, 2017, issue of the Texas Register (42 TexReg 5838). The text of the new rule will not be republished. The new rule implements Senate Bill 500, 85th Legislature, The new rule prescribes the content of the written notice, which is required to be filed by the participating subdivision, concerning certain felony convictions of certain participating members and which will ensure compliance with the pension forfeiture provisions required under Government Code, enacted by the 85th Legislature, The Board received no comments, written or otherwise, regarding the proposed new rule. The new rule is adopted under the Government Code, , which authorizes the TCDRS Board of Trustees to adopt rules for the efficient administration of the system and under Government Code, (j), which requires a public retirement system to adopt rules to implement No other statutes, articles, or codes are affected by the adopted new rule. 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 December 21, TRD Ann McGeehan General Counsel Texas County and District Retirement System Effective date: January 10, 2018 Proposal publication date: October 20, 2017 For further information, please call: (512) TITLE 37. PUBLIC SAFETY AND CORREC- TIONS PART 1. TEXAS DEPARTMENT OF PUBLIC SAFETY CHAPTER 4. COMMERCIAL VEHICLE REGULATIONS AND ENFORCEMENT PROCEDURES SUBCHAPTER A. REGULATIONS GOVERNING HAZARDOUS MATERIALS 37 TAC 4.1 The Texas Department of Public Safety (the department) adopts amendments to 4.1, concerning Transportation of Hazardous Materials. This section is adopted without changes to the proposed text as published in the November 17, 2017, issue of the Texas Register (42 TexReg 6483) and will not be republished. These amendments are necessary to harmonize updates to Title 49, Code of Federal Regulations with those laws adopted by Texas. No comments were received regarding the adoption of these amendments. The amendments are adopted pursuant to Texas Transportation Code, , which authorizes the director to adopt rules regulating the safe transportation of hazardous materials and the safe operation of commercial motor vehicles; and authorizes the director to adopt all or part of the federal safety regulations, by reference. 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Effective date: January 9, 2018 Proposal publication date: November 17, 2017 For further information, please call: (512) SUBCHAPTER B. REGULATIONS GOVERNING TRANSPORTATION SAFETY 37 TAC 4.11 The Texas Department of Public Safety (the department) adopts amendments to 4.11, concerning General Applicability and Definitions. This section is adopted without changes to the proposed text as published in the November 17, 2017, issue of the Texas Register (42 TexReg 6484) and will not be republished. These amendments are necessary to harmonize updates to Title 49, Code of Federal Regulations with those laws adopted by Texas. No comments were received regarding the adoption of these amendments. The amendments are adopted pursuant to Texas Transportation Code, , which authorizes the director to adopt rules regulating the safe transportation of hazardous materials and the safe operation of commercial motor vehicles; and authorizes the director to adopt all or part of the federal safety regulations, by reference. 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Effective date: January 9, 2018 Proposal publication date: November 17, 2017 For further information, please call: (512) ADOPTED RULES January 5, TexReg 95

96 37 TAC 4.13 The Texas Department of Public Safety (the department) adopts amendments to 4.13, concerning authority to Enforce, Training and Certificate Requirements. This section is adopted without changes to the proposed text as published in the November 17, 2017, issue of the Texas Register (42 TexReg 6485) and will not be republished. The proposed amendments are necessary to ensure this section is consistent with the Texas Transportation Code, , which establishes which peace officers are eligible to enforce Chapter 644 of the Texas Transportation Code. No comments were received regarding the adoption of these amendments. The amendments are adopted pursuant to Texas Transportation Code, , which authorizes the director to adopt rules regulating the safe transportation of hazardous materials and the safe operation of commercial motor vehicles; and authorizes the director to adopt all or part of the federal safety regulations, by reference. 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 December 20, TRD D. Phillip Adkins General Counsel Texas Department of Public Safety Effective date: January 9, 2018 Proposal publication date: November 17, 2017 For further information, please call: (512) TexReg 96 January 5, 2018 Texas Register

97 Proposed Rule Reviews Texas Racing Commission Title 16, Part 8 The Texas Racing Commission files this notice of intent to review Chapter 309, Racetrack Licenses and Operations, and Chapter 311, Other Licenses. This review is conducted pursuant to the Texas Government Code, , which requires state agencies to review and consider for readoption their administrative rules every four years. The review shall assess whether the reasons for initially adopting the rules within each chapter continue to exist and whether any changes to the rules should be made. All comments or questions in response to this notice of rule reviews may be submitted in writing to Jean Cook, Assistant to the Executive Director of the Texas Racing Commission, at P.O. Box 12080, Austin, Texas , telephone (512) , or fax (512) The Commission will accept public comments regarding the chapter and the rules within it for 30 days following publication of this notice in the Texas Register. Any proposed changes to the rules within Chapters 309 and 311 as a result of the review will be published in the Proposed Rules section of the Texas Register and will be open for an additional 30-day public comment period prior to final adoption or repeal by the Commission. TRD Devon Bijansky General Counsel Texas Racing Commission Filed: December 21, 2017 State Board for Educator Certification Title 19, Part 7 The State Board for Educator Certification (SBEC) proposes the review of Title 19, Texas Administrative Code (TAC), Chapter 229, Accountability System for Educator Preparation Programs, pursuant to the Texas Government Code, As required by the Texas Government Code, , the SBEC will accept comments as to whether the reasons for adopting 19 TAC Chapter 229 continue to exist. The comment period on the review of 19 TAC Chapter 229 begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the review of 19 TAC Chapter 229 at the March 2, 2018, meeting in accordance with the SBEC board operating policies and procedures. Comments regarding this rule review 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 sbecrules@tea.texas.gov. Comments should be identified as "SBEC Rule Review." TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Filed: December 21, 2017 The State Board for Educator Certification (SBEC) proposes the review of Title 19, Texas Administrative Code (TAC), Chapter 247, Educators Code of Ethics, pursuant to the Texas Government Code, As required by the Texas Government Code, , the SBEC will accept comments as to whether the reasons for adopting 19 TAC Chapter 247 continue to exist. The comment period on the review of 19 TAC Chapter 247 begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the review of 19 TAC Chapter 247 at the March 2, 2018 meeting in accordance with the SBEC board operating policies and procedures. Comments regarding this rule review 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 sbecrules@tea.texas.gov. Comments should be identified as "SBEC Rule Review." TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Filed: December 21, 2017 The State Board for Educator Certification (SBEC) proposes the review of Title 19, Texas Administrative Code (TAC), Chapter 250, Administration, pursuant to the Texas Government Code, The rules being reviewed by the SBEC in 19 TAC Chapter 250 are organized under the following subchapters: Subchapter A, Purchasing; and Subchapter B, Rulemaking Procedures. As required by the Texas Government Code, , the SBEC will accept comments as to whether the reasons for adopting 19 TAC Chapter 250 continue to exist. RULE REVIEW January 5, TexReg 97

98 The comment period on the review of 19 TAC Chapter 250 begins January 5, 2018, and ends February 5, The SBEC will take registered oral and written comments on the review of 19 TAC Chapter 250 at the March 2, 2018, meeting in accordance with the SBEC board operating policies and procedures. Comments regarding this rule review 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 Comments should be identified as "SBEC Rule Review." TRD Cristina De La Fuente-Valadez Director, Rulemaking State Board for Educator Certification Filed: December 21, 2017 Adopted Rule Reviews Texas Racing Commission Title 16, Part 8 Pursuant to Government Code , the Texas Racing Commission adopts the review of Texas Administrative Code, Title 16, Part 8, Chapter 301, Definitions; Chapter 303, General Provisions; Chapter 319, Veterinary Practices and Drug Testing; and Chapter 321, Pari- Mutuel Wagering. The review assessed whether the reason for adopting the chapter continues to exist. The Commission received no comments on the proposed review, which was published in the March 31, 2017, issue of the Texas Register (42 TexReg 1801). Relating to the review of Chapter 301, the Commission finds that the reasons for adopting the chapter continue to exist and readopts the sections at this time without changes in accordance with the requirements of Government Code Relating to the review of Chapter 303, the Commission finds that the reasons for adopting the chapter continue to exist and readopts the sections at this time without changes in accordance with the requirements of Government Code Relating to the review of Chapter 319, the Commission finds that the reasons for adopting the chapter continue to exist and readopts the sections at this time without changes in accordance with the requirements of Government Code Relating to the review of Chapter 321, the Commission finds that the reasons for adopting the chapter continue to exist and readopts the sections at this time without changes in accordance with the requirements of Government Code, This concludes the review of Texas Administrative Code, Title 16, Part 8, Chapters 301, 303, 319, and 321. TRD Devon Bijansky General Counsel Texas Racing Commission Filed: December 21, TexReg 98 January 5, 2018 Texas Register

99 TABLES AND GRAPHICS January 5, TexReg 99

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103 TABLES AND GRAPHICS January 5, TexReg 103

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105 TABLES AND GRAPHICS January 5, TexReg 105

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107 TABLES AND GRAPHICS January 5, TexReg 107

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109 Comptroller of Public Accounts Notice to Persons Interested in Energy Efficiency Building Codes for Non-Single Family Residential, Commercial, and Industrial Construction Pursuant to 34 TAC 19.52, this notice is provided to interested persons that the State Energy Conservation Office (SECO) is accepting written comments on the 2018 International Energy Conservation Code, promulgated by the International Code Council and published August 2017, for all commercial and industrial construction and in residential construction other than single-family residential construction. To achieve energy conservation in all commercial and industrial construction and in residential construction other than single-family residential construction, Texas Health and Safety Code, (b), adopted the International Energy Conservation Code (IECC) as it existed on May 1, 2001, as the energy code for use in this state for all such construction. Effective November 1, 2016, SECO adopted the IECC as it existed on May 1, 2015, as the energy code for all commercial and industrial construction and in residential construction other than single-family residential construction, pursuant to authority previously set forth under Texas Health and Safety Code, (b-1) (repealed by Acts 2015, 84th Legislature, Chapter 541, Section 2(1), effective June 16, 2015), which allowed SECO to adopt the latest published edition of the IECC if SECO determined, based on written recommendations submitted by the Energy Systems Laboratory at the Texas Engineering Experiment Station of The Texas A&M University System ("Laboratory"), that doing so would result in residential or commercial energy efficiency or air quality equivalent to or better than that achievable under the 2001 IECC. Texas Health and Safety Code, (b), currently authorizes SECO to adopt the latest published edition of the IECC based on written findings from the Laboratory regarding the stringency of that edition. In accordance with current law, SECO expects to receive written findings from the Laboratory regarding the stringency of the 2018 IECC (i.e., the latest published edition of the code), and may consider adopting the latest edition by rule and substituting it for the 2015 edition on the basis of those findings at a future date. Texas Health and Safety Code, (b-3), requires the Laboratory, in developing its findings, to consider written comments of interested parties that have been submitted to SECO within 30 days of the publication of this notice. Comments on the 2018 IECC are encouraged from any persons interested in energy efficiency building codes for non-single family residential, commercial, and industrial construction, including without limitation: commercial and residential builders; architects and engineers; municipal, county, and other local government authorities; environmental groups; and manufacturers of building materials and products. Copies of the 2015 IECC as well as the 2018 IECC are available for purchase through International Code Council website Also, copies of these codes are available for viewing during regular business hours at the SECO office located at the Lyndon Baines Johnson (LBJ) State Office Building, 111 E. 17th Street, Suite 314, Austin, Texas Written comments may be submitted in person at the SECO office, electronically through the SECO's electronic mail address, 2018CodeComments@cpa.texas.gov, or through the United States Postal Service at the State Energy Conservation Office, Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas All written comments submitted no later than 30 days following the publication date of this notice will be forwarded to the Laboratory by SECO. TRD Lita Gonzalez General Counsel Comptroller of Public Accounts Filed: December 20, 2017 Texas Council for Developmental Disabilities Request for Proposals: Leadership and Advocacy Training by Local Self-Advocacy Organizations The Texas Council for Developmental Disabilities (TCDD) announces the availability of funds for one local self-advocacy organization to provide leadership and advocacy training to individuals with disabilities, students with development disabilities, individuals living in institutions, family members of people with disabilities, and other interested community members who do not fall into any of these categories. This Request for Proposals (RFP) applicants are limited to local selfadvocacy groups and organizations. The self-advocates will take the lead and conduct the training. TCDD has approved funding up to $75,000 per year, for one project, for up to five years. Additional funding may be made available to provide reasonable accommodations to key project leadership staff who have a developmental disability. Additional funding must be based on level of need and justifications should be provided in the submitted proposal. Funds available for these projects are provided to TCDD by the U.S. Department of Health and Human Services, Administration on Intellectual and Developmental Disabilities, pursuant to the Developmental Disabilities Assistance and Bill of Rights Act. Funding for the project is dependent on the results of a review process established by TCDD and on the availability of funds. Non-federal matching funds of at least 10% of the total project costs are required for projects in federally designated poverty areas. Non-federal matching funds of at least 25% of total project costs are required for projects in other areas. Additional information concerning this RFP may be obtained at More information about TCDD may be obtained through TCDD's website at All questions pertaining to this RFP should be directed in writing to Danny Fikac, Planning Specialist, via at Danny.Fikac@tcdd.texas.gov. Mr. Fikac may also be reached by telephone at (512) Deadline: Proposals must be submitted through by March 16, Proposals will not be accepted after the due date. TRD IN ADDITION January 5, TexReg 109

110 Beth Stalvey Executive Director Texas Council for Developmental Disabilities Filed: December 21, 2017 Request for Proposals: TCDD Public Policy Fellows The Texas Council for Developmental Disabilities (TCDD) announces the availability of funds for one organization to hire a TCDD Policy Fellow and support the Fellow to develop a deep understanding of policy affecting people with developmental disabilities. The purpose of offering funding for the project described in this Request for Proposals (RFP) is to increase the number of policy professionals in Texas who have the requisite skills, knowledge and experience to engage in policy activities so that people with developmental disabilities have greater control over their own lives. TCDD has approved funding up to $67,500 for one organization, per year, for up to two years. Funds available for these projects are provided to TCDD by the U.S. Department of Health and Human Services, Administration on Intellectual and Developmental Disabilities, pursuant to the Developmental Disabilities Assistance and Bill of Rights Act. Funding for the project is dependent on the results of a review process established by TCDD and on the availability of funds. Non-federal matching funds of at least 10% of the total project costs are required for projects in federally designated poverty areas. Non-federal matching funds of at least 25% of total project costs are required for projects in other areas. Additional information concerning this RFP may be obtained at More information about TCDD may be obtained through TCDD's website at All questions pertaining to this RFP should be directed in writing to Danny Fikac, Planning Specialist, via at Danny.Fikac@tcdd.texas.gov. Mr. Fikac may also be reached by telephone at (512) Deadline: Proposals must be submitted through by March 16, Proposals will not be accepted after the due date. TRD Beth Stalvey Executive Director Texas Council for Developmental Disabilities Filed: December 21, 2017 Commission on State Emergency Communications Public Notice of Workshop Next Generation Staff of the Commission on State Emergency Communications ("CSEC") will conduct a workshop regarding Next Generation ("NG9-1-1"). The focus of the workshop will be to provide information to CSEC Commissioners regarding implementation of NG The workshop will not be a "meeting" as defined in the Texas Open Meetings Act, Texas Government Code (4). The public, including Texas Entities, associations, service providers, vendors, and interested persons are invited to attend, and may offer comments or statements. The workshop will be held on Wednesday, January 31, 2018, from 10:00 a.m. to 12:00 p.m., at the Hilton Austin Airport, 9515 Hotel Drive, Room Bergstrom A, Austin, Texas The workshop will not be livestreamed or broadcast, but will be recorded and posted to CSEC's website. For additional information, including an agenda (which will be posted at least five days before the workshop), please go to CSEC's What's New at CSEC webpage Additional information on NG9-1-1 can be found at Staff requests that written comments be submitted to Robert Gonzalez at robert.gonzalez@csec.texas.gov, or by mail to CSEC at 333 Guadalupe Street, Suite 2-212, Austin, Texas , or by fax to (512) Please reference "CSEC NG9-1-1 Workshop" in the subject line. Questions concerning the workshop or this notice should be directed to Sally Jo Hahn at sallyjo.hahn@csec.texas.gov or (512) TRD Patrick Tyler General Counsel Commission on State Emergency Communications Filed: December 20, 2017 Texas Commission on Environmental Quality Agreed Orders The Texas Commission on Environmental Quality (TCEQ 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 February 5, 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 February 5, 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: Aga traders Incorporated dba Pic Kwik Food Mart; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Universal City, Bexar County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (b)(1)(A) and TWC, (c)(1), 43 TexReg 110 January 5, 2018 Texas Register

111 by failing to monitor the underground storage tanks for releases at a frequency of at least once every month; PENALTY: $3,375; EN- FORCEMENT COORDINATOR: Melissa Castro, (512) ; REGIONAL OFFICE: Judson Road, San Antonio, Texas , (210) (2) COMPANY: CARNES INTERESTS, INCORPORATED; DOCKET NUMBER: WQ-E; IDENTIFIER: RN ; LOCATION: College Station, Brazos County; TYPE OF FACILITY: residential construction site; 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 under Texas Pollutant Discharge Elimination System General Permit Number TXR150000; PENALTY: $2,500; ENFORCEMENT COORDINATOR: Caleb Olson, (512) ; REGIONAL OFFICE: 6801 Sanger Avenue, Suite 2500, Waco, Texas , (254) (3) COMPANY: City of Alvord; DOCKET NUMBER: MWD-E; IDENTIFIER: RN ; LOCATION: Alvord, Wise County; TYPE OF FACILITY: wastewater treatment 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, by failing to comply with permitted effluent limitations; PENALTY: $11,500; Supplemental Environmental Project offset amount of $11,500; ENFORCEMENT COORDINATOR: Caleb Olson, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (4) COMPANY: City of Anahuac and Trinity Bay Conservation District; DOCKET NUMBER: MWD-E; IDENTIFIER: RN ; LOCATION: Anahuac, Chambers County; TYPE OF FACILITY: wastewater treatment facility; RULES VIOLATED: TWC, (a)(1), 30 TAC (1), and Texas Pollutant Discharge Elimination System Permit Number WQ , Effluent Limitations and Monitoring Requirements Numbers 1, 2, and 6, by failing to comply with permitted effluent limitations; PENALTY: $7,500; Supplemental Environmental Project offset amount of $6,000; ENFORCEMENT COORDINATOR: Caleb Olson, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (5) COMPANY: City of Beeville; DOCKET NUMBER: MWD-E; IDENTIFIER: RN ; LOCATION: Beeville, Bee County; TYPE OF FACILITY: wastewater treatment; RULES VIOLATED: TWC, (a)(1), 30 TAC (1), and Texas Pollutant Discharge Elimination System (TPDES) Permit Number WQ , Permit Conditions Number 2.g., by failing to prevent an unauthorized discharge of wastewater resulting in a documented serious impact to the environment; 30 TAC (1) and (9)(A) and (b), and TPDES Permit Number WQ , Monitoring and Reporting Requirements Numbers 7.a. and 7.b.i., by failing to notify the TCEQ of any noncompliance which may endanger human health or safety, or the environment, within 24 hours of becoming aware of any noncompliance, orally or by facsimile transmission; and submit written notification within five working days of becoming aware of any noncompliance; 30 TAC (1) and (5) and TPDES Permit Number WQ , Operational Requirements Number 1, by failing to ensure that the facility and all of its systems of collection, treatment, and disposal are properly operated and maintained; and TWC, (a)(1), 30 TAC (1), and TPDES Permit Number WQ , Interim Effluent Limitations and Monitoring Requirements Number 1, by failing to comply with permitted effluent limitations; PENALTY: $24,250; ENFORCEMENT COOR- DINATOR: Alejandro Laje, (512) ; REGIONAL OFFICE: 6300 Ocean Drive, Suite 1200, Corpus Christi, Texas , (361) (6) COMPANY: City of Sabinal; DOCKET NUMBER: MLM-E; IDENTIFIER: RN ; LOCATION: Sabinal, Uvalde County; TYPE OF FACILITY: type IV landfill; RULES VIOLATED: 30 TAC (a) and (a) and (b), and Municipal Solid Waste (MSW) Permit Number 630, Part IV, Site Operating Plan (SOP) Section 1, by failing to maintain a copy of the permit which includes an approved site development plan, final closure plan, the post-closure maintenance plan, the landfill gas management plan, and any other documents that are part of the site Operating Record and make them available for review at the facility; 30 TAC (a), by failing to cause, suffer, allow, or permit the unauthorized disposal of MSW; 30 TAC (a)(4) and 40 Code of Federal Regulations (a)(1)(ii), by failing to obtain authorization to discharge stormwater associated with industrial activities under the Texas Pollutant Discharge Elimination System General Permit Number TXR050000; 30 TAC and MSW Permit Number 630, Part IV, SOP Section 12, by failing to display all required information on a site sign at the facility entrance; 30 TAC (a) and MSW Permit Number 630, Part IV, SOP Section 15, by failing to maintain the visibility of all required landfill markers and the benchmark; 30 TAC and MSW Permit Number 630, Part IV, Landfill Gas Management Plan (LGMP), Section 4.0 Landfill Gas Monitoring and SOP Section 23, by failing to monitor landfill gases on a quarterly basis, as required by the LGMP; and 30 TAC (a), by failing to employ at least one licensed individual who supervises or manages the operations of a MSW facility; PENALTY: $10,975; ENFORCEMENT COORDINATOR: Huan Nguyen, (512) ; REGIONAL OFFICE: Judson Road, San Antonio, Texas , (210) (7) COMPANY: Derichebourg Recycling USA, Incorporated; DOCKET NUMBER: AIR-E; IDENTIFIER: RN ; LOCATION: Houston, Harris County; TYPE OF FACILITY: metal recycling plant; RULES VIOLATED: 30 TAC 106.4(c) and (a)(5), Permit By Rules Registration Number 82937, and Texas Health and Safety Code (THSC), (b), by failing to prevent an excess opacity event; 30 TAC (e) and THSC, (b), by failing to submit an initial notification for Incident Number within 24 hours after discovery of the excess opacity event; and 30 TAC and and TWC, 5.702, by failing to pay the General Permits Stormwater Fee and/or associated late fees for TCEQ Financial Administration Account Numbers and , and the Air Inspection Fee and/or associated late fees for TCEQ Financial Administration Account Number for Fiscal Years 2016 and 2017; PENALTY: $1,500; ENFORCEMENT COORDINATOR: Raime Hayes-Falero, (713) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (8) COMPANY: ERICKSDAHL WATER SUPPLY CORPORA- TION; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LOCATION: Stamford, Jones County; TYPE OF FACILITY: public water supply; RULES VIOLATED: 30 TAC (f)(1) and Texas Health and Safety Code, (c), by failing to comply with the maximum contaminant level of milligrams per liter for total trihalomethanes, based on the locational running annual average; and 30 TAC (c)(2)(A) and (f), by failing to provide public notification and submit a copy of the public notification to the executive director regarding the failure to conduct repeat coliform monitoring; PENALTY: $490; ENFORCEMENT COORDINATOR: Ross Luedtke, (512) ; REGIONAL OF- FICE: 1977 Industrial Boulevard, Abilene, Texas , (325) IN ADDITION January 5, TexReg 111

112 (9) COMPANY: ExxonMobil Oil Corporation; DOCKET NUMBER: AIR-E; IDENTIFIER: RN ; LOCATION: Beaumont, Jefferson County; TYPE OF FACILITY: petrochemical manufacturing; RULES VIOLATED: 30 TAC (3), (b)(2)(F) and (c), and (4), Texas Health and Safety Code, (b), New Source Review Permit Numbers 83702, PSDTX843M1, PSDTX860M1, and PAL15, Special Conditions Number 1, and Federal Operation Permit Number O2292, Special Terms and Conditions Number 25, by failing to prevent unauthorized emissions; PENALTY: $6,525; Supplemental Environmental Project offset amount of $2,610; ENFORCEMENT COORDINATOR: Shelby Orme, (512) ; REGIONAL OFFICE: 3870 Eastex Freeway, Beaumont, Texas , (409) (10) COMPANY: GIRL SCOUTS OF TEXAS OKLAHOMA PLAINS, INCORPORATED; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LOCATION: near Amarillo, Potter County; TYPE OF FACILITY: public water supply; RULES VIOLATED: 30 TAC (f)(4) and (e), by failing to report the results of nitrate sampling to the executive director (ED); 30 TAC (f)(4) and (e), by failing to report the results of secondary constituent sampling to the ED; 30 TAC (c)(2)(A) and (f), by failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to collect a routine distribution water sample for coliform analysis; and 30 TAC (a)(6) and TWC, 5.702, by failing to pay annual Public Health Service fees and/or any associated late fees for TCEQ Financial Administration Account Number ; PENALTY: $385; ENFORCEMENT COORDINATOR: Jason Fraley, (512) ; REGIONAL OFFICE: 3918 Canyon Drive, Amarillo, Texas , (806) (11) COMPANY: GULF STATES TOYOTA, INCORPORATED; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LOCATION: San Felipe, Austin County; TYPE OF FACILITY: public water supply; RULES VIOLATED: 30 TAC (f)(4), (e), and (c)(2)(A) and (f), by failing to provide the results of the Stage 2 Disinfection Byproducts (DBP2) sampling to the executive director (ED) for the January 1, December 31, 2016, monitoring period, and failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to provide results of the DBP2 sampling for the January 1, December 31, 2016, monitoring period; 30 TAC (d)(4)(B) (formerly 30 TAC (c)(4)(B)) and (c)(2)(A) and (f), by failing to collect one raw groundwater source Escherichia coli (E coli) sample from the facility's three active sources within 24 hours of notification of a distribution total coliform-positive result during the month of September 2014, and failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to collect a raw groundwater source E coli sample during the month of September 2014; 30 TAC (c)(2)(C), (h), and (i)(1) and (c)(2)(A) and (f), by failing to collect lead and copper tap samples at the required five sample sites, have the samples analyzed, and report the results to the ED for the January 1, December 31, 2015, monitoring period, and failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to collect lead and copper tap samples for the January 1, December 31, 2015, monitoring period; 30 TAC (c)(2)(B), (h), and (i)(1) and (c)(2)(A) and (f), by failing to collect lead and copper tap samples at the required five sample sites, have the samples analyzed, and report the results to the ED for the January 1, December 31, 2016, monitoring period, and failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to collect lead and copper tap samples for the January 1, December 31, 2016, monitoring period; and 30 TAC (c)(2)(A) and (f), by failing to issue public notification and submit a copy of the public notification to the ED regarding the failure to conduct increased coliform monitoring during the month of October 2014; PENALTY: $1,003; ENFORCEMENT COORDINATOR: Sarah Kim, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (12) COMPANY: Lonestar Operating, LLC; DOCKET NUMBER: AIR-E; IDENTIFIER: RN ; LOCATION: Fowlerton, La Salle County; TYPE OF FACILITY: oil and gas production plant; RULES VIOLATED: 30 TAC (4) and (2), Texas Health and Safety Code, (b), and Federal Operating Permit Number O3864, General Terms and Conditions, by failing to submit a permit compliance certification within 30 days after the end of the certification period; PENALTY: $2,438; Supplemental Environmental Project offset amount of $975; ENFORCEMENT COORDINATOR: Robyn Babyak, (512) ; REGIONAL OF- FICE: 707 East Calton Road, Suite 304, Laredo, Texas , (956) (13) COMPANY: MA FOOD MART, INCORPORATED dba Matlock Corner Store; DOCKET NUMBER: PST-E; IDENTI- FIER: RN ; LOCATION: Arlington, Tarrant County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (a) and (b), by failing to demonstrate acceptable financial assurance for taking corrective action and for compensating third parties for bodily injury and property damage caused by accidental releases arising from the operation of petroleum underground storage tanks (USTs); 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; 30 TAC 334.8(c)(4)(A)(vii) and (5)(B)(ii), by failing to renew a previously issued UST delivery certificate by submitting a properly completed UST registration and self-certification form at least 30 days before the expiration date; 30 TAC (c)(4)(C) and TWC, (d), by failing to have the cathodic protection system inspected and tested for operability and adequacy of protection at least once every three years by a qualified corrosion specialist or technician; 30 TAC , Texas Health and Safety Code, (b), by failing to conduct the Stage I vapor recovery annual test for all affected gasoline dispensing facilities; 30 TAC (a)(4), by failing to have at least one certified operator (Class A, B, or C) present at the UST facility during all hours of operation; 30 TAC , by failing to empty any and all tanks to less than 2.5 centimeters no later than the 90th day after the financial assurance coverage was terminated; 30 TAC (b)(2) and TWC, (a), by failing to provide release detection for the pressurized piping associated with the UST system; 30 TAC (d)(1)(B)(ii) and TWC, (c)(1), by failing to conduct reconciliation of detailed inventory control records at least once each month, in a manner sufficiently accurate to detect a release which equals or exceeds the sum of 1.0% of the total substance flow-through for the month plus 130 gallons; 30 TAC (d)(1)(B)(iii)(I) and TWC, (c)(1), by failing to record inventory volume measurements for regulated substance inputs, withdrawals, and the amount still remaining in the tank each operating day; 30 TAC 334.8(c)(5)(A)(i) and TWC, (a), by failing to make available to a common carrier a valid, current TCEQ delivery certificate before accepting delivery of a regulated substance into the USTs; PENALTY: $22,336; ENFORCEMENT COORDINATOR: Abigail Lindsey, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (14) COMPANY: Peter Henry Schouten and Nova Darlene Schouten dba P and L Dairy; DOCKET NUMBER: AGR-E; IDEN- TIFIER: RN ; LOCATION: Hico, Erath County; TYPE 43 TexReg 112 January 5, 2018 Texas Register

113 OF FACILITY: concentrated animal feeding operation (CAFO); RULES VIOLATED: TWC, (a)(1), 30 TAC (1) and (a), and Texas Pollutant Discharge Elimination System (TPDES) Permit Number WQ , Part VI.A., by failing to prevent the unauthorized discharge of wastewater from a CAFO into or adjacent to any water in the state; 30 TAC (1) and (a) and TPDES Permit Number WQ , Part VIII.B.3, by failing to notify the TCEQ Dallas/Fort Worth Regional Office orally no later than 24 hours of becoming aware of the discharge and in writing within 14 business days of the discharge; and 30 TAC (1) and (b)(1) and TPDES Permit Number WQ , Part VII.A.2.(b), by failing to collect and analyze samples of the unauthorized discharge that occurred on January 22, 2016; PENALTY: $3,975; ENFORCEMENT COORDINATOR: Alejandro Laje, (817) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (15) COMPANY: RAKAH INCORPORATED dba Quick Stop FFP 3341; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Gainesville, Cooke County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (a)(1) and TWC, (d), by failing to provide corrosion protection for the underground storage tank system; PENALTY: $4,500; ENFORCEMENT COORDINATOR: Abigail Lindsey, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (16) COMPANY: SAHIL VENTURES, INCORPORATED dba Paradise Food Mart; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LOCATION: Conroe, Montgomery County; TYPE OF FACILITY: public water supply; RULES VIO- LATED: 30 TAC (a) and (b) and TCEQ Agreed Order Docket Number PWS-E, Ordering Provision Number 2.a.iv, by failing to develop, maintain, and make available for executive director (ED) review upon request an accurate and up-to-date chemical and microbiological monitoring plan that identifies all sampling locations, describes the sampling frequency, and specifies the analytical procedures and laboratories that the facility will use to comply with the monitoring requirements; 30 TAC (c)(1)(A)(ii), Texas Health and Safety Code (THSC), (c), and TCEQ Agreed Order Docket Number PWS-E, Ordering Provision Number 2.g, by failing to provide a minimum pressure tank capacity of 220 gallons; 30 TAC (d)(3) and TCEQ Agreed Order Docket Number PWS-E, Ordering Provision Number 2.a.i, by failing to equip the air compressor injection lines with filters or other devices to prevent compressor lubricants or other contaminants from entering the facility's pressure tank; 30 TAC (l), by failing to compile and maintain a thorough and up-to-date plant operations manual for operator review and reference; 30 TAC (s)(1), by failing to calibrate the facility's well meter at least once every three years; 30 TAC (m)(1)(B), by failing to inspect the facility's pressure tank annually; 30 TAC (m), by failing to initiate maintenance and housekeeping practices to ensure the good working condition and general appearance of the system's facilities and equipment; 30 TAC (e)(1) and (h)(1), THSC, (c), and TCEQ Agreed Order Docket Number PWS-E, Ordering Provision Number 2.e, by failing to submit plans and specifications to the ED for review and approval prior to the construction of a new public water supply; and 30 TAC (a)(6) and TWC, 5.702, by failing to pay Public Health Service Fees and associated late fees for TCEQ Financial Administration Account Number for Fiscal Year 2017; PENALTY: $7,725; ENFORCEMENT COORDINATOR: Jason Fraley, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (17) COMPANY: SELECT SPECIALTY HOSPITAL - DALLAS, IN- CORPORATED; DOCKET NUMBER: PST-E; IDENTI- FIER: RN ; LOCATION: Carrollton, Denton County; TYPE OF FACILITY: hospital with an emergency generator; RULES VIO- LATED: 30 TAC (b)(1)(A) and (2)(B), and TWC, (b) and (c)(1), by failing to monitor the underground storage tank (UST) for releases at a frequency of at least once every month, and by failing to provide release detection for the suction piping associated with the UST system; 30 TAC (a), by failing to designate, train, and certify at least one named individual for each class of operator - Class A, B, and C for the facility; and 30 TAC 334.8(c)(4)(A)(vii) and (5)(B)(ii), by failing to renew a previously issued UST delivery certificate by submitting a properly completed UST registration and self-certification form at least 30 days before the expiration date; PENALTY: $8,042; EN- FORCEMENT COORDINATOR: Jonathan Nguyen, (512) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (817) (18) COMPANY: SHAHZAB and SARA, INCORPORATED dba Hopcus Mini Mart; DOCKET NUMBER: PST-E; IDEN- TIFIER: RN ; LOCATION: Houston, Harris County; TYPE OF FACILITY: convenience store with retail sales of gasoline; RULES VIOLATED: 30 TAC (a)(1) and TWC, (d), by failing to provide corrosion protection for the underground storage tank system; PENALTY: $3,750; ENFORCEMENT COORDINATOR: Sandra Douglas, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (19) COMPANY: Southwestern Electric Power Company; DOCKET NUMBER: IWD-E; IDENTIFIER: RN ; LO- CATION: Hallsville, Harrison County; TYPE OF FACILITY: electric power plant; 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 Number 004, by failing to comply with permitted effluent limitations; PENALTY: $17,250; ENFORCEMENT COORDINATOR: James Boyle, (512) ; REGIONAL OFFICE: 2916 Teague Drive, Tyler, Texas , (903) (20) COMPANY: Sunoco Pipeline L.P.; DOCKET NUMBER: AIR-E; IDENTIFIER: RN ; LOCATION: Hermleigh, Scurry County; TYPE OF FACILITY: crude oil storage facility; RULES VIOLATED: 30 TAC (4) and (2)(C), Federal Operating Permit Number O2691, General Terms and Conditions, and Texas Health and Safety Code, (b), by failing to submit a deviation report no later than 30 days after the end of the reporting period; PENALTY: $2,813; ENFORCEMENT COORDINATOR: Sandra Douglas, (512) ; REGIONAL OFFICE: 1977 Industrial Boulevard, Abilene, Texas , (325) (21) COMPANY: THB Construction L.L.C.; DOCKET NUMBER: AIR-E; IDENTIFIER: RN ; LOCATION: Sanger, Denton County; TYPE OF FACILITY: concrete batch plant; RULES VIOLATED: 30 TAC (a) and Texas Health and Safety Code, (a) and (b), by failing to obtain authorization to construct and operate a source of air emissions; PENALTY: $1,063; ENFORCEMENT COORDINATOR: Claudia Corrales, (432) ; REGIONAL OFFICE: 2309 Gravel Drive, Fort Worth, Texas , (713) (22) COMPANY: Timber Lane Utility District; DOCKET NUMBER: MWD-E; IDENTIFIER: RN ; LOCATION: Houston, Harris County; TYPE OF FACILITY: wastewater treatment facility; RULES VIOLATED: TWC, (a)(1), 30 TAC (1), and Texas Pollutant Discharge Elimination System IN ADDITION January 5, TexReg 113

114 Permit Number WQ , Interim Effluent Limitations and Monitoring Requirements Number 1, by failing to comply with permitted effluent limitations; PENALTY: $17,250; Supplemental Environmental Project offset amount of $13,800; ENFORCEMENT COORDINATOR: Caleb Olson, (512) ; REGIONAL OF- FICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (23) COMPANY: United States National Park Service; DOCKET NUMBER: PWS-E; IDENTIFIER: RN ; LO- CATION: Del Rio, Val Verde County; TYPE OF FACILITY: public water supply; RULES VIOLATED: 30 TAC (f)(2) and Texas Health and Safety Code, (a), by failing to comply with the acute maximum contaminant level of ten milligrams per liter for nitrate; and 30 TAC (c)(2)(A) and (f), by failing to timely issue public notification and submit a copy of the public notification to the executive director regarding the failure to conduct increased coliform monitoring; PENALTY: $650; ENFORCEMENT COORDINATOR: James Baldwin, (512) ; REGIONAL OFFICE: 707 East Calton Road, Suite 304, Laredo, Texas , (956) (24) COMPANY: VSS HOLDINGS, L.L.C. dba DeerPark Exxon; DOCKET NUMBER: PST-E; IDENTIFIER: RN ; LOCATION: Deer Park, Harris 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 (USTs) for releases at a frequency of at least once every month; and 30 TAC (b)(2), by failing to assure that all UST recordkeeping requirements are met; PENALTY: $3,600; ENFORCEMENT COORDINATOR: Ken Moller, (512) ; REGIONAL OFFICE: 5425 Polk Street, Suite H, Houston, Texas , (713) (25) COMPANY: White River Municipal Water District; DOCKET NUMBER: MWD-E; IDENTIFIER: RN ; LO- CATION: Crosbyton, Crosby County; TYPE OF FACILITY: wastewater treatment facility; RULES VIOLATED: 30 TAC (1) and 317.4(c) and Texas Pollutant Discharge Elimination System Permit Number WQ , Operational Requirements Number 5, by failing to provide a means for measuring effluent flow at the facility; PENALTY: $787; ENFORCEMENT COORDINATOR: Claudia Corrales, (432) ; REGIONAL OFFICE: th Street, Suite 100, Lubbock, Texas , (806) TRD Charmaine Backens Director, Litigation Division Texas Commission on Environmental Quality Filed: December 22, 2017 Correction of Error - Notice of Rate Change to the Low-Level Radioactive Waste Maximum Disposal Rates and Opportunity for a Contested Case Hearing The Texas Commission on Environmental Quality (TCEQ) published a notice titled "Notice of Rate Change to the Low-Level Radioactive Waste Maximum Disposal Rates and Opportunity for a Contested Case Hearing" in the December 29, 2017, issue of the Texas Register (42 TexReg 7787). Due to errors submitted by TCEQ in the graphic, the following notice and graphic has been corrected. The text should have read as follows: In a letter dated September 22, 2017, Waste Control Specialists LLC (WCS) submitted a request to the Texas Commission on Environmental Quality (TCEQ or commission) to conduct an annual volume adjustment for the disposal rates found in 30 Texas Administrative Code for commercial low-level radioactive waste (LLRW) at the Compact Waste Disposal Facility (CWF) in Andrews County, Texas. The CWF is owned by the State of Texas and operated by WCS. The land disposal facility for LLRW disposal is located at 9998 State Highway 176 West in Andrews County, Texas. The following link to an electronic map of the facility's general location is provided as a public courtesy: WCS' volume adjustment proposes to reduce the number and price of surcharges with the expectation that this would increase the volume of waste received for disposal. Other changes in the rate schedule being requested are: clarifying the source line is only for Class A sources; removing the biological line item, C14 line item, and Special Nuclear Material line item, and cask handling; and reducing the surcharge amounts for curies, weight, and dose rate. The requested changes to the Disposal Rates are reflected in Figure 1 (See the Graphics and Tables section in this issue of the Texas Register). Note that in the figure language underlined designates new language and language struck through designates language to be removed. 43 TexReg 114 January 5, 2018 Texas Register

115 IN ADDITION January 5, TexReg 115

116 OPPORTUNITY FOR A CONTESTED CASE HEARING (CCH). A CCH is a legal proceeding similar to a civil trial in a state district court. The TCEQ may grant a CCH on this request if a written hearing request is timely submitted by the licensee or a party state compact generator. If the commission receives a timely hearing request from the licensee or a party state compact generator, a public hearing will be scheduled to determine if the rate adjustments requested by WCS are fair, just, and reasonable. TO REQUEST A CONTESTED CASE HEARING, YOU MUST INCLUDE THE FOLLOWING ITEMS IN YOUR REQUEST: your name, mailing address, phone number, a clear and concise statement that you are requesting a CCH, and if you are a compact generator, provide the generator's licensing numbers indicating the location or locations where the compact waste is generated. Written comments may be submitted to Derek Baxter, MC 205, Office of Legal Services, Texas Commission on Environmental Quality, P.O. Box 13087, Austin, Texas , or faxed to (512) Electronic comments may be submitted at: File size restrictions may apply to comments being submitted via the ecomments system. All requests should reference Non-Rule Project Number OTH-NR. Requests must be received by January 29, Generators must initiate a request for a CCH by filing individual requests rather than joint requests. Following the close of all applicable request periods, if the executive director (ED) receives a hearing request, the ED will directly refer the application to the State Office of Administrative Hearings (SOAH) for a CCH. EXECUTIVE DIRECTOR ACTION. Unless a hearing request is received from the licensee or an eligible generator, no hearing will be held and the ED will issue final approval of the ED's recommended rates. Upon the commissioners' approval for rulemaking, the final approved rates will be established by rule as the maximum disposal rates for disposal of compact LLRW. If a timely hearing request is filed, the ED will not adopt the revised rates and will forward the matter to SOAH for a hearing. AGENCY CONTACTS AND INFORMATION. Please be aware that any contact information you provide, including your name, phone number, address and physical address will become part of the agency's public record. Further information may also be obtained from TCEQ's Radioactive Materials Division, MC-233, P.O. Box 13087, Austin, Texas or by calling Mr. Bobby Janecka, Radioactive Materials Section Manager, at (512) TRD Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: December 21, 2017 Notice of Intent to Perform Removal Action at the Cass County Treating Company State Superfund Site, Linden, Cass County, Texas The executive director of the Texas Commission on Environmental Quality (TCEQ, agency, or commission) hereby issues public notice of intent to perform a removal action, as provided by Texas Health and Safety Code , for the Cass County Treating Company state Superfund site (the site). The site, including all land, structures, appurtenances, and other improvements, is comprised of approximately 17 acres located at 304 Hall Road in Linden, Cass County, Texas. The site also includes any areas where hazardous substances have come to be located as a result, either directly or indirectly, of releases of hazardous substances from the site. The site was proposed for listing on the state Superfund registry on February 3, 2006 (31 TexReg 740). Wood treating operations were conducted at the site from the 1960s to The contaminants of concern at the site include arsenic, dioxins, and pentachlorophenol. One or more of these contaminants have been found in soil, sediments, and groundwater at the site. The removal action will consist of excavation of contaminated soils and waste materials and, as necessary and appropriate, measures to prevent recontamination. The removal action is appropriate to protect human health and the environment, can be completed without extensive investigation and planning, and will achieve a significant cost reduction for the site. A portion of the records for this site is available for review during regular business hours at the Atlanta Public Library, located at 101 West Hiram, Atlanta, Texas 75551, (903) Copies of the complete public record file may be obtained during business hours at the commission's Central File Room, Building E, First Floor, Room 103, Records Customer Service, Park 35 Circle, MC 213, Austin, Texas 78753, (512) , or cfrreq@tceq.texas.gov. Photocopying of file information is subject to payment of a fee. Parking for persons with disabilities is available on the east side of Building D, convenient to access ramps that are between Buildings D and E. Information is also available about the state Superfund program at For further information, please contact Catherine McMullen, TCEQ Project Manager, Remediation Division, at (512) , or Crystal Taylor, TCEQ Community Relations Liaison, at (800) or (512) TRD TexReg 116 January 5, 2018 Texas Register

117 Charmaine Backens Director, Litigation Division Texas Commission on Environmental Quality Filed: December 21, 2017 Notice of Public Comment Period and Public Meetings Concerning Proposed Revisions to the Texas Emissions Reduction Plan Guidelines for Emissions Reduction Incentive Grants, RG-388 and the TERP Guidelines for the Drayage Truck Incentive Program, RG-524 The executive director of the Texas Commission on Environmental Quality (TCEQ, agency, or commission) is issuing this public notice of proposed revisions to the ERIG guidelines and DTIP guidelines to obtain public input. The TERP was established by the Texas Legislature in The primary purpose of the TERP is to provide financial incentives (grants) for projects intended to reduce the nitrogen oxides emissions and other pollutants from on-road vehicles and non-road equipment. Certain areas of the state have ground-level ozone levels that exceed the National Ambient Air Quality Standards (NAAQS) established under the Federal Clean Air Act. The TERP was established to help these areas come into compliance with the federal requirements and to help other areas in the state that are facing air quality challenges. The ERIG guidelines were originally adopted in 2001 to implement the TERP Diesel Emissions Reduction Incentive Program (DERI program) established under Texas Health and Safety Code (THSC), Chapter 386, Subchapter C. The DERI program was established to provide grants to owners and operators of heavy-duty on-road vehicles, non-road equipment, marine vessels, locomotives, and stationary equipment to replace or upgrade their older vehicles, equipment, and/or engines with newer, cleaner models. The proposed revisions to the ERIG guidelines incorporate changes made to the DERI program by Senate Bill (SB) 1731, enacted by the 85th Texas Legislature, The DTIP guidelines were originally adopted in 2014 to implement the TERP Drayage Truck Incentive Program under THSC, Chapter 386, Subchapter D-1. The DTIP was established to provide grants for owners and operators to replace drayage trucks operating at and through the seaports and rail yards located in the areas of the state designated by the United States Environmental Protection Agency as nonattainment for ground-level ozone under the NAAQS. The revisions to the DTIP guidelines would change the name of the DTIP to the Seaport and Rail Yard Areas Emissions Reduction (SPRY) Program, expand the list of eligible vehicles and equipment, and make other changes to the program as required under SB Public meetings are scheduled for: January 23, 2018, at 2:00 p.m., at the North Central Texas Council of Governments, Metroplex Room, 616 Six Flags Drive, Suite 200, Arlington, Texas; January 25, 2018, at 2:00 p.m., at the Texas Department of Transportation, Houston District Office, Room 109, 7600 Washington Ave, Houston, Texas; and January 26, 2018, at 2:00 p.m., at the Texas Commission on Environmental Quality, Building E, Room 201S, Park 35 Circle, Austin, Texas. The guidelines are not a rulemaking under Texas Government Code, Chapter 2001, but the meetings will be conducted like a public hearing for rulemaking. Staff will be available for a limited time after public comments are received to answer questions regarding the guidelines. Comments may be submitted in writing or may be provided at one of the public meetings. Written comments submitted separate from a public meeting may be sent in writing to Mr. Stephen Dayton, Texas Commission on Environmental Quality, Air Quality Division, Implementation Grants Section, MC 204, P.O. Box 13087, Austin, Texas , or faxed to Mr. Stephen Dayton at (512) Electronic comments may be submitted at: File size restrictions may apply to comments being submitted via the ecomments system. All comments should reference Non-Rule Project Number OTH-NR and should identify whether the comment pertains to the ERIG guidelines or the DTIP (SPRY) guidelines. The public comment period closes February 6, Electronic copies of the proposed revisions to the ERIG guidelines and DTIP (SPRY) guidelines may be viewed and downloaded at Written copies of the documents may be requested by calling the TERP toll-free number at (800) 919-TERP (8377). Persons who have special communication or other accommodation needs who are planning to attend a public meeting should contact the TCEQ at (800) Requests should be made as far in advance as possible. For further information about these documents or the public meetings, please call the TERP toll-free number at (800) TRD Robert Martinez Director, Environmental Law Division Texas Commission on Environmental Quality Filed: December 21, 2017 Notice of Water Quality Application The following notices were issued on December 20, The following does not require publication in a newspaper. Written comments or requests for a public meeting may be submitted to the Office of the Chief Clerk, Mail Code 105, P.O. Box 13087, Austin, Texas WITHIN (30) DAYS OF THE ISSUED DATE OF THE NOTICE. INFORMATION SECTION OPTIMUM CALVES LLC AND ROGER GUADALUPE GOMEZ for a minor amendment of Texas Pollutant Discharge Elimination System (TPDES) Permit No. WQ , for a Concentrated Animal Feeding Operation (CAFO), to reconfigure the land management units that were previously approved; and update the recharge feature certification to reflect other protective measures for Well #2. The currently authorized 5,000 head, none of which are milking cows, and 96 acres of total land application area remain unchanged. The facility is located at 250 Farm-to-Market Road 3125, Muleshoe, Bailey County, Texas. If you need more information about these permit applications or the permitting process, please call the TCEQ Public Education Program, Toll Free, at (800) General information about the TCEQ can be found at our web site at Si desea información en español, puede llamar al (800) TRD Bridget C. Bohac Chief Clerk Texas Commission on Environmental Quality Filed: December 21, 2017 Notice of Water Rights Application Notice issued December 15, 2017 IN ADDITION January 5, TexReg 117

118 APPLICATION NO. 5802A; The City of Albany, P.O. Box 3248, Albany, Texas 76430, Applicant, seeks an amendment to Water Use Permit No to authorize the use of the bed and banks of an unnamed tributary of North Fork Creek to convey 565 acre-feet per year of contract water through the reservoir for subsequent diversion, use and reuse of not to exceed 465 acre-feet per year for agricultural and industrial purposes within the city limits of Albany in Shackelford County. The application and fees were received on January 24, Additional information and fees were received on May 30 and June 17, 2013; July 23, August 17 and 19, The application was declared administratively complete and accepted for filing with the Office of the Chief Clerk on February 16, The Executive Director has completed the technical review of the application and prepared a draft amendment. The draft amendment, if granted, would contain special conditions including, but not limited to, maintaining an alternate source of water and monitoring with a measuring device. The application, technical memoranda, and Executive Director's draft amendment are available for viewing and copying at the Office of the Chief Clerk, Park 35 Circle, Bldg. 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 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: December 21, 2017 Texas Facilities Commission Request for Proposals # The Texas Facilities Commission (TFC), on behalf of the Health and Human Services Commission (HHSC), the Department of Family and Protective Services (DFPS) and the Department of State Health Services (DSHS), announces the issuance of Request for Proposals (RFP) # TFC seeks a five (5) or ten (10) year lease of approximately 10,515 square feet of office space in Beeville, Texas. The deadline for questions is January 17, 2018, and the deadline for proposals is January 24, 2018, at 3:00 p.m. The award date is February 22, TFC reserves the right to accept or reject any or all proposals submitted. TFC is under no legal or other obligation to execute a lease on the basis of this notice or the distribution of an RFP. Neither this notice nor the RFP commits TFC to pay for any costs incurred prior to the award of a grant. Parties interested in submitting a proposal may obtain information by contacting the Program Specialist, Evelyn Esquivel, at (512) A copy of the RFP may be downloaded from the Electronic State Business Daily at TRD Kay Molina General Counsel Texas Facilities Commission Filed: December 21, 2017 Texas Health and Human Services Commission Notice of Public Hearing on Proposed Medicaid Payment Rates for the 2018 Annual Healthcare Common Procedure Code System for Diagnostic and Radiology Services. Hearing. The Texas Health and Human Services Commission (HHSC) will conduct a public hearing on January 11, 2018, at 3:00 p.m., to receive comment on proposed Medicaid payment rates for the 2018 Annual Healthcare Common Procedure Coding System (HCPCS) for Diagnostic and Radiology Services. The public hearing will be held in HHSC's Public Hearing Room at the Brown-Heatly Building, located at 4900 North Lamar Boulevard, Austin, Texas. Entry is through security at the main entrance of the building, which faces Lamar Boulevard. HHSC will also broadcast the public hearing; the broadcast can be accessed at The broadcast will be archived and can be accessed on demand at the same website. The hearing will be held in compliance with Texas Human Resources Code , which requires public notice of and hearings on proposed Medicaid reimbursements. Proposal. The payment rates for the 2018 Annual HCPCS Diagnostic and Radiology Services Updates are proposed to be effective January 1, 2018, for the following services: Radiology Services - TOS 4 (Radiology), I (Interpretation Component), and T (Technical Component) Methodology and Justification. The proposed payment rates were calculated in accordance with Title 1 of the Texas Administrative Code: , relating to Reimbursement Methodology for Physicians and Other Practitioners; and , relating to Outpatient Hospital Reimbursement. 43 TexReg 118 January 5, 2018 Texas Register

119 Briefing Package. A briefing package describing the proposed payment rates will be available at on or after December 28, Interested parties may obtain a copy of the briefing package prior to the hearing by contacting the Rate Analysis Department by telephone at (512) ; by fax at (512) ; or by at RADAcuteCare@hhsc.state.tx.us. The briefing package will also be available at the public hearing. Persons with disabilities who wish to attend the hearing and require auxiliary aids or services should contact Rate Analysis at (512) at least 72 hours in advance, so appropriate arrangements can be made. Written Comments. Written comments regarding the proposed payment rates may be submitted in lieu of, or in addition to, oral testimony until 5:00 p.m. the day of the hearing. Written comments may be sent by U.S. mail, overnight mail, special delivery mail, hand delivery, fax, or U.S. Mail Texas Health and Human Services Commission Attention: Rate Analysis Mail Code H400 P.O. Box Austin, Texas Overnight mail, special delivery mail, or hand delivery Texas Health and Human Services Commission Attention: Rate Analysis Brown-Heatly Building 4900 North Lamar Blvd. Austin, Texas Phone number for package delivery: (512) Fax Attention: (Contact, Department) at (512) RADAcuteCare@hhsc.state.tx.us TRD Karen Ray Chief Counsel Texas Health and Human Services Commission Filed: December 22, 2017 Texas Higher Education Coordinating Board Request for Qualifications - Bond and Student Loan Program Counsel RFQ Number The Texas Higher Education Coordinating Board (THECB) is issuing a Request for Qualifications (RFQ) to employ Bond and Program Counsel to assist the Board in the issuance of bonds and to provide general program assistance when needed. In accordance with guidance promulgated by the Attorney General of the State of Texas pursuant to Sections and of the Texas Government Code, and 1 TAC Chapter 57. The THECB is a state agency with Board members appointed by the Governor. Bonds are issued to fund the THECB's Hinson Hazelwood student loan program. The enabling acts, Chapter 52 and Chapter 56, Texas Education Code, as amended, provide for the administration of the programs by the THECB. Historically, the student loan program has provided funding through the repayment of student loans and earnings in amounts sufficient to meet debt service and reserve requirements and to pay administrative costs of the student loan program without drawing on the State's General Revenue Fund. The THECB uses bond proceeds to fund the loan program. The program provides low interest loans to eligible students seeking an undergraduate education and/or graduate or professional education through public and independent institutions of higher education in Texas. Scope of Work: Outside Counsel shall perform all usual and necessary legal services as Bond Counsel in connection with the authorization, issuance and delivery of each installment or series of Securities, including related tax law services. Outside Counsel shall prepare and direct the legal proceedings and perform the other necessary legal services with reference to the authorization, issuance and delivery of each installment or series of Securities. RFQ documentation may be obtained by contacting: Texas Higher Education Coordinating Board P.O. Box Austin, TX (512) Theresa.lopez@thecb.state.tx.us RFQ documentation is also located on the THECB's website at: And The Electronic state Business Daily Proposers should check both websites often to ensure they have the most current information. Deadline for proposal submission is 3:00 p.m. CT on January 31, TRD Bill Franz General Counsel Texas Higher Education Coordinating Board Filed: December 21, 2017 Texas Department of Insurance Notice of Public Hearing Texas workers' compensation revised classification relativities Location: William P. Hobby Jr. State Office Building, Room Guadalupe Street Austin, Texas January 25, :30 a.m., Central time Docket No: 2804 The Commissioner of Insurance will conduct a public hearing to consider a recommendation by staff of the Texas Department of Insurance IN ADDITION January 5, TexReg 119

120 (TDI) to revise Texas workers' compensation classification relativities adopted under Commissioner's Order No in Read the TDI staff recommendation: /documents/wcstaffrecnoh.docx Jurisdiction: Under Insurance Code , TDI must determine hazards by class and establish classification relativities for the payroll in each workers' compensation insurance classification. TDI must revise the classification system at least once every five years. How to submit comments: Please provide two copies of written comments and exhibits, with the docket number on each submission. Send a copy by or regular mail to each of these addresses: Office of the Chief Clerk, Mail Code 113-2A Texas Department of Insurance P.O. Box Austin, Texas chiefclerk@tdi.texas.gov J'ne Byckovski, Director and Chief Actuary, Mail Code 105-5F Texas Department of Insurance P.O. Box Austin, Texas jne.byckovski@tdi.texas.gov The Commissioner requests that comments in response to the staff recommendation be submitted by January 16, 2018, for consideration before the hearing. The agency will continue to accept comments until 5:00 p.m., Central time, February 1, TRD Norma Garcia General Counsel Texas Department of Insurance Filed: December 21, 2017 Texas Lottery Commission Scratch Ticket Game Number 2024 "Wild 9's" 1.0 Name and Style of Scratch Ticket Game. A. The name of Scratch Ticket Game No is "WILD 9's". The play style is "row/column/diagonal". 1.1 Price of Scratch Ticket Game. A. The price for Scratch Ticket Game No shall be $1.00 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 Prize Symbols are: $1.00, $2.00, $4.00, $5.00, $10.00, $20.00, $30.00, $100, $900, 1, 2, 3, 4, 5, 6, 7, 8, 9 SYMBOL, PINEAPPLE SYMBOL, GOLD BAR SYMBOL, BELL SYMBOL, KEY SYMBOL, DIAMOND SYMBOL, PIGGY- BANK SYMBOL, MELON SYMBOL, GRAPE SYMBOL, CROWN SYMBOL and HORSESHOE SYMBOL. 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: 43 TexReg 120 January 5, 2018 Texas Register

121 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 (2024), a seven (7) digit Pack number, and a three (3) digit Scratch Ticket number. Scratch Ticket numbers start with 001 and end with 150 within each Pack. The format will be: H. Pack - A Pack of the "WILD 9's" Scratch Ticket Game contains 150 Tickets, packed in plastic shrink-wrapping and fanfolded in pages of two (2). Ticket 150 will be shown on the front of the Pack; the back of Ticket 150 will be revealed on the back of the Pack. All Packs will be tightly shrink-wrapped. There will be no breaks between the Tickets in a Pack. Every other Pack will reverse i.e., reverse order will be: the IN ADDITION January 5, TexReg 121

122 back of Ticket 001 will be shown on the front of the Pack and the front of Ticket 150 will be shown on the back of the Pack. 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 "WILD 9's" 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 "WILD 9's" Scratch Ticket Game is determined once the latex on the Scratch Ticket is scratched off to expose 12 (twelve) Play Symbols. If a player reveals three "9" Play Symbols in any row, column or diagonal line, the player wins the prize in the PRIZE BOX. If a player reveals two matching symbols in the BONUS BOX, the player wins $10 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 12 (twelve) 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; 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 12 (twelve) 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 12 (twelve) Play Symbols must be exactly one of those described in Section 1.2.C of these Game Procedures; 17. Each of the 12 (twelve) 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. Consecutive Non-Winning Tickets in a Pack will not have matching play data, spot for spot. B. There will be only one occurrence of three (3) matching "9" Play Symbols appearing in a row, column or diagonal on winning Tickets as dictated by the prize structure. C. There will be no occurrence of three (3) matching Play Symbols other than the "9" Play Symbol appearing in a row, column or diagonal. D. No matching non-winning Play Symbols on a Ticket. E. A Non-Winning Ticket will have a minimum of three (3) "9" Play Symbols and a maximum of five (5) "9" Play Symbols, unless restricted by other parameters, play action or prize structure. 2.3 Procedure for Claiming Prizes. A. To claim a "WILD 9's" Scratch Ticket Game prize of $1.00, $2.00, $4.00, $5.00, $10.00, $20.00, $30.00 or $100, 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; 43 TexReg 122 January 5, 2018 Texas Register

123 provided that the Texas Lottery Retailer may, but is not required, to pay a $30.00 or $100 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 "WILD 9's" Scratch Ticket Game prize of $900, 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 "WILD 9's" Scratch Ticket Game prize, the claimant must sign the winning Scratch 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 "WILD 9's" 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 "WILD 9's" 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 9,120,000 Scratch Tickets in Scratch Ticket Game No The approximate number and value of prizes in the game are as follows: IN ADDITION January 5, TexReg 123

124 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. 2024, 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: December 21, 2017 Scratch Ticket Game Number 2067 "Stacks of Cash" 1.0 Name and Style of Scratch Ticket Game. A. The name of Scratch Ticket Game No is "STACKS OF CASH". The play style is "multiple games". 1.1 Price of Scratch Ticket Game. A. The price for Scratch Ticket Game No shall be $20.00 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: GOLD BAR SYMBOL, BANANA SYMBOL, DICE SYMBOL, CROWN SYMBOL, DIAMOND SYMBOL, SPADE SYMBOL, PINEAPPLE SYMBOL, SUN SYMBOL, ANCHOR SYMBOL, APPLE SYMBOL, STACK OF BILLS SYMBOL, HORSESHOE SYMBOL, PEAR SYMBOL, LEMON SYMBOL, BOLT SYMBOL, STRAWBERRY SYMBOL, SAFE SYMBOL, STAR SYMBOL, COIN SYMBOL, CLUB SYMBOL, POT OF GOLD SYMBOL, 4 LEAF CLOVER SYMBOL, WISHBONE SYMBOL, 01, 02, 03, 04, 06, 07, 08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, MONEY BAG SYMBOL, 5X SYMBOL, $20.00, $25.00, $50.00, $75.00, $100, $200, $500, $1,000, $10,000, $100,000 and $1,000,000. 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: 43 TexReg 124 January 5, 2018 Texas Register

125 IN ADDITION January 5, TexReg 125

126 43 TexReg 126 January 5, 2018 Texas Register

127 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-Scratch Ticket Number - A 14 (fourteen) digit number consisting of the four (4) digit game number (2067), a seven (7) digit Pack number, and a three (3) digit Scratch Ticket number. Scratch Ticket numbers start with 001 and end with 025 within each Pack. The format will be: H. Pack - A Pack of the "STACKS OF CASH" Scratch Ticket Game contains 025 Tickets, packed in plastic shrink-wrapping and fanfolded in pages of one (1). The front of Ticket 001 will be shown on the front of the Pack; the back of Ticket 025 will be revealed on the back of the Pack. All Packs will be tightly shrink-wrapped. There will be no breaks between the Tickets in a Pack. Every other Pack will reverse i.e., reverse order will be: the back of Ticket 001 will be shown on the front of the Pack and the front of Ticket 025 will be shown on the back of the Pack. 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 "STACKS OF CASH" 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 "STACKS OF CASH" Scratch Ticket Game is determined once the latex on the Scratch Ticket is scratched off to expose 65 (sixty-five) Play Symbols. GAMES 1-3: If a player reveals 3 matching Play Symbols in the same GAME, the player wins the prize above that GAME. GAME 4: A player must scratch the entire play area to reveal 6 LUCKY NUMBERS Play Symbols and 25 YOUR NUMBERS Play Symbols. If a player matches any of YOUR NUM- BERS Play Symbols to any of the LUCKY NUMBERS Play Symbols, the player wins the prize for that number. If a player reveals a "MONEY BAG" Play Symbol, the player wins DOUBLE the prize for that symbol. If a player reveals a "5X" Play Symbol, the player wins 5 TIMES the prize for that symbol. 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 65 (sixty-five) 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; 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 65 (sixty-five) 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 IN ADDITION January 5, TexReg 127

128 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 65 (sixty-five) Play Symbols must be exactly one of those described in Section 1.2.C of these Game Procedures; 17. Each of the 65 (sixty-five) 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. GENERAL: Consecutive Non-Winning Tickets within a Pack will not have matching patterns of either Play Symbols or Prize Symbols. B. GENERAL: A Ticket will win as indicated by the prize structure. C. GENERAL: A Ticket can win up to twenty-eight (28) times. D. GENERAL: On winning and Non-Winning Tickets, the top cash prizes of $100,000 and $1,000,000 will each appear at least once, except on Tickets winning twenty-five (25) times or more. E. GENERAL: Non-winning Prize Symbols will not match a winning Prize Symbol on a Ticket. F. GAMES 1-3: A Ticket can win up to three (3) times: once in each GAME. G. GAMES 1-3: Winning Tickets will contain three (3) matching Play Symbols in a GAME. H. GAMES 1-3: Consecutive Non-Winning Tickets within a Pack will not have matching GAMES. For instance if the first Ticket contains a Lemon Play Symbol, Banana Play Symbol and Dice Play Symbol in any GAME, then the next Ticket may not contain a Lemon Play Symbol, Banana Play Symbol and Dice Play Symbol in any GAME in any order. I. GAMES 1-3: Non-Winning Tickets will not have matching GAMES. For example if GAME 1 is the Lemon Play Symbol, Banana Play Symbol and Dice Play Symbol, then GAME 2 and GAME 3 will not contain the Lemon Play Symbol, Banana Play Symbol and Dice Play Symbol in any order. J. GAMES 1-3: Wins will be distributed in GAMES 1-3 in accordance with the prize structure. K. GAMES 1-3: No Play Symbol will appear more than three (3) times across GAMES 1-3. L. GAME 4: A Ticket can win up to twenty-five (25) times in GAME 4. M. GAME 4: No matching non-winning YOUR NUMBERS Play Symbols will appear on a Ticket. N. GAME 4: Tickets winning more than one (1) time will use as many LUCKY NUMBERS Play Symbols as possible to create matches, unless restricted by other parameters, play action or prize structure. O. GAME 4: No matching LUCKY NUMBERS Play Symbols will appear on a Ticket. P. GAME 4: YOUR NUMBERS Play Symbols will never equal the corresponding Prize Symbol (i.e., 20 and $20, 25 and $25, 50 and $50). Q. GAME 4: On all Tickets, a Prize Symbol will not appear more than four (4) times, except as required by the prize structure to create multiple wins. R. GAME 4: On Non-Winning Tickets, a LUCKY NUMBERS Play Symbol will never match a YOUR NUMBERS Play Symbol. S. GAME 4: The "MONEY BAG" (DBL) Play Symbol will never appear as a LUCKY NUMBERS Play Symbol. T. GAME 4: The "MONEY BAG" (DBL) Play Symbol will win DOU- BLE the prize for that Play Symbol and will win as per the prize structure. U. GAME 4: The "MONEY BAG" (DBL) Play Symbol will never appear more than once on a Ticket. V. GAME 4: The "MONEY BAG" (DBL) Play Symbol will never appear on a Non-Winning Ticket. W. GAME 4: The "5X" (WINX5) Play Symbol will never appear as a LUCKY NUMBERS Play Symbol. X. GAME 4: The "5X" (WINX5) Play Symbol will win 5 TIMES the prize for that Play Symbol and will win as per the prize structure. Y. GAME 4: The "5X" (WINX5) Play Symbol will never appear more than once on a Ticket. Z. GAME 4: The "5X" (WINX5) Play Symbol will never appear on a Non-Winning Ticket. 2.3 Procedure for Claiming Prizes. A. To claim a "STACKS OF CASH" Scratch Ticket Game prize of $20.00, $25.00, $50.00, $75.00, $100, $200 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, $75.00, $100, $200 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 43 TexReg 128 January 5, 2018 Texas Register

129 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 "STACKS OF CASH" Scratch Ticket Game prize of $1,000, $10,000, $100,000 or $1,000,000, 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 "STACKS OF CASH" Scratch Ticket Game prize, the claimant must sign the winning Scratch 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 "STACKS OF CASH" 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 "STACKS OF CASH" 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 7,080,000 Scratch Tickets in Scratch Ticket Game No The approximate number and value of prizes in the game are as follows: IN ADDITION January 5, TexReg 129

130 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. 2067, 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: December 21, 2018 Scratch Ticket Game Number 2078 "Weekly Grand" 1.0 Name and Style of Scratch Ticket Game. A. The name of Scratch Ticket Game No is "WEEKLY GRAND". The play style is "multiple games". 1.1 Price of Scratch Ticket Game. A. The price for Scratch Ticket Game No shall be $2.00 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: $2.00, $4.00, $5.00, $10.00, $20.00, $40.00, $100, $300, GRAND SYMBOL, CLOVER SYMBOL, DIAMOND SYMBOL, GOLD BAR SYMBOL, POT OF GOLD SYMBOL, MONEYBAG SYMBOL, TOP HAT SYMBOL, 01, 02, 03, 04, 05, 06, 07 and 08. 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: 43 TexReg 130 January 5, 2018 Texas Register

131 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 (2078), a seven (7) digit Pack number, and a three (3) digit Scratch Ticket number. Scratch Ticket numbers start with 001 and end with 125 within each Pack. The format will be: H. Pack - A Pack of the "WEEKLY GRAND" Scratch Ticket Game contains 125 Scratch Tickets, packed in plastic shrink-wrapping and fanfolded in pages of two (2). One Ticket will be folded over to expose a front and back of one Ticket on each Pack. Please note the books will be in an A, B, C and D configuration. 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 "WEEKLY GRAND" 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 "WEEKLY GRAND" Scratch Ticket Game is determined once the latex on the Scratch Ticket is scratched off to expose fifteen (15) Play Symbols. GAME 1: If a player reveals IN ADDITION January 5, TexReg 131

132 3 matching prize amounts, the player wins that amount. If a player reveals 3 "GRAND" Play Symbols, the player wins $1,000 per week for 20 years! GAME 2: If the player reveals 2 matching symbols, the player wins $20 instantly! GAME 3: If a player's YOUR NUM- BER Play Symbol beats THEIR NUMBER Play Symbol in any ROW across, the player wins the PRIZE for that ROW. If the PRIZE won is a "GRAND" Play Symbol, the player wins $1,000 per week for 20 years! 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 fifteen (15) 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; 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 fifteen (15) 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 fifteen (15) Play Symbols must be exactly one of those described in Section 1.2.C of these Game Procedures; 17. Each of the fifteen (15) 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. GENERAL: A Ticket can win up to four (4) times in accordance with the approved prize structure. B. GENERAL: 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 matching spots. C. GENERAL: The top Prize Symbol will appear on every Ticket, unless restricted by other parameters, play action or prize structure. D. GAME 1: Winning games can have only one (1) set of three (3) matching Prize Symbols. E. GAME 1: Winning games cannot have more than three (3) matching Prize Symbols. F. GAME 1: No game will contain two (2) sets of three (3) matching Prize Symbols. G. GAME 2: There will never be more than two (2) matching Play Symbols in a game. H. GAME 3: The YOUR NUMBER Play Symbol will never be the same as the THEIR NUMBER Play Symbol. I. GAME 3: The YOUR NUMBER Play Symbol will never be a "01" Play Symbol. J. GAME 3: The THEIR NUMBER Play Symbol will never be a "08" Play Symbol. K. GAME 3: Non-winning ROWS on a Ticket will not have the same Play Symbols regardless of order. 2.3 Procedure for Claiming Prizes. A. To claim a "WEEKLY GRAND" Scratch Ticket Game prize of $2.00, $4.00, $5.00, $10.00, $20.00, $40.00, $100 or $300, 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 43 TexReg 132 January 5, 2018 Texas Register

133 Scratch Ticket; provided that the Texas Lottery Retailer may, but is not required, to pay a $40.00, $100 or $300 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 "WEEKLY GRAND" Scratch Ticket Game top level prize of $1,000 per week for 20 years, the claimant must sign the winning Scratch Ticket and present it at Texas Lottery Commission headquarters in Austin, Texas. 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. When claiming a "WEEKLY GRAND" Scratch Ticket Game prize of $1,000 per week for 20 years, the claimant must choose one (1) of five (5) payment options for receiving his prize: 1. Cash Value Option via direct deposit transfer to the claimant/winner's account. For the top prize, a cash value option may be selected at the time of claiming the prize. The value of the prize will be determined at the time of claim and based on the cost of purchasing the annuity. 2. Weekly via direct deposit transfer to the claimant/winner's account. With this plan, a payment of $1, less Federal withholding will be made once a week for 20 years. After the initial payment, installment payments will be made every Wednesday. 3. Monthly via direct deposit transfer to the claimant/winner's account. If the claim is made during the month, the claimant/winner will still receive the entire month's payment. This will allow the flow of payments throughout the 20 years to remain the same. With this plan, an initial payment of $4, less Federal withholding will be made the month of the claim. Each additional month, a payment of $4, less Federal withholding will be made once a month for 20 years. After the initial payment, installment payments will be made on the first business day of each month. 4. Quarterly via direct deposit transfer to the claimant/winner's account. If the claim is made during the quarter, the claimant/winner will still receive the entire quarter's payment. This will allow the flow of payments throughout the 20 years to remain the same. With this plan, a payment of $13, less Federal withholding will be made each quarter (four times a year) for 20 years. After the initial payment, installment payments will be made on the first business day of the first month of every quarter (January, April, July, October). 5. Annually via direct deposit transfer to the claimant/winner's account. These payments will be made in a manner similar to how jackpot payments are currently handled. With this plan, a payment of $52, less Federal withholding will be made once a year during the anniversary month of the claim for 20 years. After the initial payment, installment payments will be made on the first business day of the anniversary month. D. As an alternative method of claiming a "WEEKLY GRAND" Scratch Ticket Game prize of $2.00, $4.00, $5.00, $10.00, $20.00, $40.00, $100 or $300, the claimant must sign the winning Scratch Ticket, thoroughly complete a claim form, and mail both to: Texas Lottery Commission, Post Office 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. E. 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. F. 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 "WEEKLY GRAND" 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 "WEEKLY GRAND" 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. IN ADDITION January 5, TexReg 133

134 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 35,280,000 Scratch Tickets in Scratch Ticket Game No The approximate number and value of prizes in the game are as follows: 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. 2078, 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: December 21, 2017 Public Utility Commission of Texas Notice of Application for a Service Provider Certificate of Operating Authority Notice is given to the public of an application filed with the Public Utility Commission of Texas (commission) on December 20, 2017, for a service provider certificate of operating authority in accordance with Public Utility Regulatory Act Docket Title and Number: Application of 24 Fiber LLC dba 24 Fiber for a Service Provider Certificate of Operating Authority, Docket Number Applicant intends to provide facilities-based, data and resale telecommunications services throughout the Dallas LATA TexReg 134 January 5, 2018 Texas Register

135 Persons wishing to 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) no later than January 12, 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: December 21, 2017 Texas Water Development Board 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 December 20, 2017, in accordance with the Texas Water Code. Docket Style and Number: Application of Deer Creek Ranch Water Co., and SJWTX, Inc. dba Canyon Lake Water Service Company for the Sale, Transfer, or Merger of Facilities and Certificate Rights, Docket Number The Application: Deer Creek Ranch Water Co., and SJWTX, Inc. dba Canyon Lake Water Service Company filed an application for the sale, transfer, or merger of facilities and certificate rights in Travis and Hays Counties. Specifically, Deer Creek Ranch Water Co. seeks approval to transfer all of its water service area under certificate of convenience and necessity number to Canyon Lake Water Service Company. The total area being requested includes approximately 1,222 acres and serves 756 current customers. Persons who wish to intervene in the proceeding or comment upon 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 Public Utility Commission of Texas, P.O. Box 13326, Austin, Texas Further information may also be obtained by calling the commission's Office of Customer Protection at (512) or (888) Hearing and speech-impaired individuals with text telephones (TTY) may contact the commission through Relay Texas by dialing All correspondence should refer to Docket Number TRD Adriana Gonzales Rules Coordinator Public Utility Commission of Texas Filed: December 21, 2017 Request for Application for Flood Protection Grants The Texas Water Development Board (TWDB) requests applications for the possible award of grants for flood early warning systems, the implementation of local strategies for alerting and responding to floods, or flood protection planning. The TWDB will accept applications that include political subdivisions in Texas that have the authority to plan for and implement projects related to flood protection. Applicants or the beneficiaries of the application must be participants in the National Flood Insurance Program or have applied to participate in the National Flood Insurance Program. For more information, including instructions on how to apply, please visit the TWDB website at: TRD Todd Chenoweth General Counsel Texas Water Development Board Filed: December 21, 2017 IN ADDITION January 5, TexReg 135

136 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:

137 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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