texashistory.unt.edu/67531/metapth97369/m2/1/high_res_d/1103is.pdfSchool children's artwork is used to decorate the front cover and blank filler pages of the Texas Register. Teachers

Volume 31 Number 44 November 3, 2006 Pages 8923- 9088

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 0362-4781, USPS 120-090), is published weekly (52 times per year) for $211.00 ($311.00 for first class mail delivery) by LexisNexis Matthew Bender & Co., Inc., 1275 Broadway, Albany, N.Y. 12204-2694. 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 2002. 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. 13748-1531.

a section of the Office of the Secretary of State P.O. Box 13824 Austin, TX 78711-3824 (800) 226-7199 (512) 463-5561 FAX (512) 463-5569 http://www.sos.state.tx.us [email protected]

Secretary of State – Roger Williams Director - Dan Procter Staff Ada Aulet Leti Benavides Dana Blanton Belinda Bostick Kris Hogan Roberta Knight Jill S. Ledbetter Juanita Ledesma Tamara Wah

GOVERNORAppointments.................................................................................8927

Proclamation 41-3059....................................................................8927

PROPOSED RULESOFFICE OF THE SECRETARY OF STATE

ELECTIONS

1 TAC §81.174...............................................................................8929

FINANCE COMMISSION OF TEXAS

CONSUMER CREDIT REGULATION

7 TAC §§1.101 - 1.107 ..................................................................8929

7 TAC §1.201.................................................................................8930

7 TAC §§1.301 - 1.310 ..................................................................8931

7 TAC §§1.401 - 1.407 ..................................................................8931

TEXAS DEPARTMENT OF BANKING

PERPETUAL CARE CEMETERIES

7 TAC §26.2, §26.4........................................................................8932

PRIVATE CHILD SUPPORT ENFORCEMENTAGENCIES

7 TAC §31.11, §31.14 ....................................................................8934

7 TAC §31.31.................................................................................8935

7 TAC §31.35.................................................................................8935

7 TAC §31.54.................................................................................8935

OFFICE OF CONSUMER CREDIT COMMISSIONER

ADMINISTRATION

7 TAC §82.1, §82.2........................................................................8936

CONSUMER LOANS

7 TAC §83.101, §83.102................................................................8937

7 TAC §§83.201 - 83.205 ..............................................................8940

7 TAC §§83.301 - 83.311...............................................................8941

7 TAC §§83.401 - 83.408 ..............................................................8948

CREDIT UNION DEPARTMENT

SHARE AND DEPOSITOR INSURANCEPROTECTION

7 TAC §95.100...............................................................................8951

7 TAC §§95.100 - 95.109 ..............................................................8951

TEXAS RACING COMMISSION

GENERAL PROVISIONS

16 TAC §303.4...............................................................................8954

16 TAC §303.31, §303.42..............................................................8955

16 TAC §303.94.............................................................................8955

16 TAC §303.202...........................................................................8955

TEXAS BOARD OF VETERINARY MEDICALEXAMINERS

RULES OF PROFESSIONAL CONDUCT

22 TAC §573.10.............................................................................8956

PRACTICE AND PROCEDURE

22 TAC §575.27.............................................................................8957

TEXAS BOARD OF PROFESSIONAL LANDSURVEYING

GENERAL RULES OF PROCEDURES ANDPRACTICES

22 TAC §661.46.............................................................................8958

STANDARDS OF RESPONSIBILITY AND RULESOF CONDUCT

22 TAC §663.10.............................................................................8958

22 TAC §663.17.............................................................................8959

EXAMINATION ADVISORY COMMITTEE

22 TAC §665.2...............................................................................8959

22 TAC §665.4...............................................................................8960

22 TAC §665.7...............................................................................8961

GENERAL LAND OFFICE

COASTAL AREA PLANNING

31 TAC §15.6.................................................................................8962

31 TAC §15.32...............................................................................8963

TEXAS WATER DEVELOPMENT BOARD

RESEARCH AND PLANNING FUND

31 TAC §§355.70 - 355.73, 355.75 ...............................................8967

FINANCIAL ASSISTANCE PROGRAMS

31 TAC §§363.502 - 363.505 ........................................................8972

31 TAC §363.504, §363.505..........................................................8975

EMPLOYEES RETIREMENT SYSTEM OF TEXAS

INSURANCE

34 TAC §81.11 ...............................................................................8975

TEXAS YOUTH COMMISSION

PROGRAM SERVICES

37 TAC §91.87, §91.88..................................................................8976

SECURITY AND CONTROL

37 TAC §97.45...............................................................................8978

TEXAS WORKFORCE COMMISSION

COMMUNITY DEVELOPMENT INITIATIVES

40 TAC §§833.11 - 833.15.............................................................8979

TABLE OF CONTENTS 31 TexReg 8923

IN THIS ISSUE

WITHDRAWN RULESJOINT FINANCIAL REGULATORY AGENCIES

HOME EQUITY LENDING

7 TAC §153.22...............................................................................8981

7 TAC §153.22...............................................................................8981



22 TAC §573.52.............................................................................8981

ADOPTED RULESTEXAS DEPARTMENT OF AGRICULTURE

SEED CERTIFICATION STANDARDS

4 TAC §§10.40 - 10.50 ..................................................................8983

FINANCE COMMISSION OF TEXAS

CONSUMER CREDIT REGULATION

7 TAC §§1.501 - 1.505 ..................................................................8983

7 TAC §§1.601, 1.603 - 1.606 .......................................................8984

7 TAC §§1.701 - 1.708 ..................................................................8984

7 TAC §§1.751, 1.752, 1.754, 1.755, 1.758 - 1.761 ......................8984

7 TAC §§1.801 - 1.811, 1.814........................................................8985

7 TAC §§1.826, 1.828, 1.830 - 1.832, 1.834 - 1.839, 1.848 ..........8985

7 TAC §§1.851 - 1.858, 1.860 - 1.863 ...........................................8985

7 TAC §1.901, §1.902....................................................................8986

CURRENCY EXCHANGE

7 TAC §4.2, §4.5............................................................................8986

TEXAS DEPARTMENT OF BANKING

SALE OF CHECKS ACT

7 TAC §29.1, §29.5........................................................................8986

MONEY SERVICES BUSINESSES

7 TAC §33.23.................................................................................8987

OFFICE OF CONSUMER CREDIT COMMISSIONER

CONSUMER LOANS

7 TAC §§83.501 - 83.505 ..............................................................8989

7 TAC §§83.601 - 83.605 ..............................................................8992

7 TAC §§83.701 - 83.708 ..............................................................8994

7 TAC §§83.751 - 83.758 ..............................................................8999

7 TAC §§83.801 - 83.812 ..............................................................9001

7 TAC §§83.826 - 83.837 ..............................................................9006

7 TAC §§83.851 - 83.862 ..............................................................9014

RETAIL CREDITORS

7 TAC §86.101, §86.102................................................................9017

CREDIT UNION DEPARTMENT

CHARTERING, OPERATIONS, MERGERS,LIQUIDATIONS

7 TAC §91.701...............................................................................9017

7 TAC §91.704...............................................................................9018

7 TAC §91.708...............................................................................9018

7 TAC §91.710...............................................................................9019

7 TAC §91.711 ...............................................................................9019

7 TAC §91.712...............................................................................9020

7 TAC §91.713...............................................................................9020

7 TAC §91.714...............................................................................9021

7 TAC §91.715...............................................................................9021

7 TAC §91.718...............................................................................9021

7 TAC §91.719...............................................................................9022

JOINT FINANCIAL REGULATORY AGENCIES

HOME EQUITY LENDING

7 TAC §153.13...............................................................................9022

PUBLIC UTILITY COMMISSION OF TEXAS

SUBSTANTIVE RULES APPLICABLE TOTELECOMMUNICATIONS SERVICE PROVIDERS

16 TAC §26.127.............................................................................9023

TEXAS EDUCATION AGENCY

SCHOOL DISTRICTS

19 TAC §§61.1091 - 61.1101.........................................................9025

CHARTERS

19 TAC §100.1207.........................................................................9031

EDUCATIONAL PROGRAMS

19 TAC §102.1031.........................................................................9031



22 TAC §573.71.............................................................................9033

GENERAL ADMINISTRATIVE DUTIES

22 TAC §577.15.............................................................................9033

TEXAS BOARD OF PROFESSIONAL LANDSURVEYING

GENERAL RULES OF PROCEDURES ANDPRACTICES

22 TAC §661.99.............................................................................9033


TEXAS COMMISSION ON ENVIRONMENTALQUALITY

UNDERGROUND AND ABOVEGROUND STORAGETANKS

30 TAC §§334.2, 334.5, 334.8.......................................................9036

30 TAC §334.71, 334.84................................................................9036

30 TAC §§334.301 - 334.303, 334.306, 334.310, 334.313 ...........9037

DEPARTMENT OF FAMILY AND PROTECTIVESERVICES

GENERAL ADMINISTRATION

40 TAC §§702.601, 702.605, 702.617, 702.618, 702.621.............9037

PREVENTION AND EARLY INTERVENTIONSERVICES

40 TAC §704.1, §704.3..................................................................9038

40 TAC §§704.205, 704.207, 704.209...........................................9038

40 TAC §704.701, §704.703..........................................................9039

ADULT PROTECTIVE SERVICES

40 TAC §§705.7101, 705.7103, 705.7105, 705.7107, 705.7109,705.7111, 705.7113, 705.7115, 705.7117, 705.7119, 705.7121,705.7123.........................................................................................9039

EXEMPT FILINGSTexas Department of Insurance

Proposed Action on Rules..............................................................9041

RULE REVIEWProposed Rule Review

Texas Racing Commission.............................................................9043

Adopted Rule Reviews

Texas Department of Banking .......................................................9043

Credit Union Department...............................................................9044

Finance Commission of Texas .......................................................9044

TABLES AND GRAPHICS........................................................................................................9047

IN ADDITIONTexas Department of Agriculture

Notice of Acceptance of Applications for the Aquaculture AssistanceGrant Program................................................................................9053

Coastal Coordination Council

Notice and Opportunity to Comment on Requests for ConsistencyAgreement/Concurrence Under the Texas Coastal Management Pro-gram ..............................................................................................9053

Comptroller of Public Accounts

Notice of Contract Amendment .....................................................9054

Of�ce of Consumer Credit Commissioner

Notice of Rate Ceilings..................................................................9054

Court Reporters Certi�cation Board

Certi�cation of Court Reporters.....................................................9054

Texas Commission on Environmental Quality

Agreed Orders................................................................................9054

Notice of Opportunity to Comment on Default Orders of Administra-tive Enforcement Actions ..............................................................9057

Notice of Opportunity to Comment on Settlement Agreements of Ad-ministrative Enforcement Actions .................................................9058

Notice of Opportunity to Comment on Shut Down/Default Orders ofAdministrative Enforcement Actions ............................................9060

Notice of Request for Public Comment and Notice of a Public Meetingfor Two Total Maximum Daily Loads ..........................................9061

Notice of Water Quality Applications............................................9061

Notice of Water Rights Application...............................................9063

General Land Of�ce

Public Notice of Proposed Settlement Agreement (Natural Resourceand Damage Assessment Program) ...............................................9063

Department of State Health Services

Licensing Actions for Radioactive Materials ................................9064

Texas Department of Insurance

Company Licensing .......................................................................9071

Third Party Administrator Applications ........................................9071

Texas Lottery Commission

Instant Game Number 766 "Bonus Cashword" .............................9071

Instant Game Number 767 "Lone Star Riches" .............................9076

Instant Game Number 780 "Panda-Money-UM" ..........................9081

Public Utility Commission of Texas

Announcement of Application for State-Issued Certi�cate of FranchiseAuthority .......................................................................................9086

Notice of Application for Amendment to Certi�cated Service AreaBoundary........................................................................................9086

Notice of Application for Amendment to Service Provider Certi�cateof Operating Authority...................................................................9086

Notice of Application for Amendment to Service Provider Certi�cateof Operating Authority ..................................................................9086

Notice of Application for Sale, Transfer, or Merger......................9087

Notice of Application for Service Provider Certi�cate of Operating Au-thority.............................................................................................9087

Public Notice of Workshop - TXU Electric Delivery Advanced Meter-ing Deployment Plan......................................................................9087

Texas Residential Construction Commission

Notice of Application for Designation as a "Texas Star Builder"..9087


Texas Workforce Commission Resolution of the TexasWorkforce Commission Establishing the Un-employment Obligation Assessment for Calendar Year 2007 .......9088


Appointments

Appointments for October 16, 2006

Appointed to the Commission on State Emergency Communicationsfor a term to expire September 1, 2007, Gerardo M. Garcia of CorpusChristi (replacing James O’Neal of Lancaster who no longer quali�es).

Appointed to the Real Estate Research Advisory Committee for a termto expire January 31, 2009, Ronald Charles Wake�eld of San Antonio(replacing Jerry L. Schaffner of Lubbock whose term expired).


Appointed to the Board of Pilot Commissioners for Galveston Countyfor a term to expire February 1, 2007, Edward A. Janek of Galveston(replacing Edward Wilkinson of League City whose term expired).

Appointed to the Board of Pilot Commissioners for Galveston Countyfor a term to expire February 1, 2007, Edgar A. Bircher of Galveston(Reappointment).

Appointed to the Board of Pilot Commissioners for Galveston Countyfor a term to expire February 1, 2008, Vandy Anderson of Galveston(replacing Harry Brown of Galveston whose term expired).

Appointed to the Board of Pilot Commissioners for Galveston Countyfor a term to expire February 1, 2008, Elizabeth A. Iles of Texas City(Reappointment).

Appointed to the Board of Pilot Commissioners for Galveston Countyfor a term to expire February 1, 2010, Diane Hemmig Kerkhove ofLeague City (replacing Billie Pennings of Galveston whose term ex-pired).


Appointed as Justice of the 8th Court of Appeals, Place 3, for a termuntil the next General Election and until his successor shall be dulyelected and quali�ed, Kenneth R. Carr of El Paso. Mr. Carr is replacingJustice David W. Chew who has been appointed as Chief Justice.

Appointed to the Crime Victims’ Institute Advisory Council for a termto expire January 31, 2008, Ben M. Crouch of College Station (Reap-pointment).

Appointed to the Crime Victims’ Institute Advisory Council for a termto expire January 31, 2008, Nancy Holmes Ghigna of The Woodlands(Reappointment).

Appointed to the Crime Victims’ Institute Advisory Council for aterm to expire January 31, 2008, Rodman Frazier Goode of Cedar Hill(Reappointment).

Appointed to the Crime Victims’ Institute Advisory Council for a termto expire January 31, 2008, Sonia Lea Higgins of Amarillo (Reappoint-ment).

Appointed to the Crime Victims’ Institute Advisory Council for a termto expire January 31, 2008, Darlene Warrick McLaughlin, M.D. of El-gin (Reappointment).

Appointed to the Crime Victims’ Institute Advisory Council for a termto expire January 31, 2008, Mary Ann Wiley of Austin (Reappoint-ment).

Rick Perry, Governor

TRD-200605862

Proclamation 41-3059

TO ALL TO WHOM THESE PRESENTS SHALL COME:

I, RICK PERRY, Governor of Texas, do hereby certify that severestorms and �ooding that began on October 15, 2006 and is continuing,has caused a disaster in Hardin, Jasper, Jefferson, Liberty, Newton, Or-ange, Polk, San Jacinto, and Tyler Counties, in the State of Texas.

THEREFORE, in accordance with the authority vested in me by Sec-tion 418.014 of the Texas Government Code, I do hereby proclaim theexistence of such threat and direct that all necessary measures both pub-lic and private as authorized under Section 418.015 of the code be im-plemented to meet that threat.

As provided in section 418.016, all rules and regulations that may in-hibit or prevent prompt response to this threat are suspended for theduration of the incident.

In accordance with the statutory requirements, copies of this proclama-tion shall be �led with the applicable authorities.

IN TESTIMONY WHEREOF, I have hereunto signed my name andhave of�cially caused the Seal of State to be af�xed at my Of�ce in theCity of Austin, Texas, this the 23rd day of October, 2006

Rick Perry, Governor

Attested by: Roger Williams, Secretary of State

TRD-200605858

GOVERNOR November 3, 2006 31 TexReg 8927

TITLE 1. ADMINISTRATION

PART 4. OFFICE OF THE SECRETARYOF STATE

CHAPTER 81. ELECTIONSSUBCHAPTER I. IMPLEMENTATION OF THEHELP AMERICA VOTE ACT OF 20021 TAC §81.174

The Of�ce of the Secretary of State, Elections Division, proposesan amendment to §81.174, concerning provisional voting proce-dures for punch card and optical scan voting system ballots tabu-lated at a central counting station. Because of the Help AmericaVote Act of 2002 (H.R. 3295), the use of punch cards is nowprohibited and, therefore, must be deleted from the rule’s sec-tion heading.

Ann McGeehan, Director of Elections, has determined that, forthe �rst �ve-year period the rule is in effect, there will be no �scalimplications for state or local government as a result of enforcingor administering the rule.

Ms. McGeehan has determined also that, for each year of the�rst �ve years that the rule is in effect, the public bene�t antic-ipated as a result of enforcing the rule will be an update of thecurrent rule to re�ect federal changes relating to acceptable vot-ing systems. There will be no effect on small businesses.

Comments on the proposal may be submitted to Ann McGeehan,Director of Elections, Of�ce of the Secretary of State, P.O. Box12060, Austin, Texas 78711-2060. The Of�ce of the Secretaryof State will consider all comments received by 5:00 p.m. Friday,December 1, 2006.

The rule is proposed pursuant to §31.003 of the Texas ElectionCode, which provides the Of�ce of the Secretary of State withthe authority to obtain and maintain uniformity in the application,interpretation, and operation of provisions under the Texas Elec-tion Code and other election laws. No other code is affected bythe rule as proposed.

§81.174. Provisional Voting Procedures for [Punch Card and] Opti-cal Scan Voting System Ballots Tabulated at a Central Counting Sta-tion.

(a) - (k) (No change.)

This agency hereby certi�es that the proposal has been reviewedby legal counsel and found to be within the agency’s legal author-ity to adopt.

Filed with the Of�ce of the Secretary of State on October 23,

2006.

TRD-200605760Ann McGeehanDirector of ElectionsOf¿ce of the Secretary of StateEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 463-5650

TITLE 7. BANKING AND SECURITIES

PART 1. FINANCE COMMISSION OFTEXAS

CHAPTER 1. CONSUMER CREDITREGULATIONSUBCHAPTER A. GENERAL PROVISIONS7 TAC §§1.101 - 1.107

(Editor’s note: The text of the following sections proposed for repealwill not be published. The sections may be examined in the of�ces ofthe Finance Commission of Texas or in the Texas Register of�ce, Room245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Finance Commission of Texas (the commission) proposesthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter A, §§1.101- 1.107, concerning General Provisions. The commission hasdetermined as part of a rule review that this subchapter more ef-fectively belongs in Part 5, in new Chapter 83, concerning Con-sumer Loans. Therefore, these rules are being proposed for re-peal and new rules are proposed elsewhere in this issue of theTexas Register.

Leslie L. Pettijohn, Consumer Credit Commissioner, has deter-mined that for the �rst �ve-year period the repeal as proposedwill be in effect, there will be no �scal implications for state orlocal government as a result of administering or enforcing therepeal.

Commissioner Pettijohn also has determined that for each yearof the �rst �ve years the repeal as proposed will be in effect, thepublic bene�t anticipated as a result of the repeal will be morelogically organized and readily available rules for lenders andconsumers. There is no anticipated cost to persons who arerequired to comply with the repeal as proposed. There will be noadverse economic effect on small or micro businesses. Therewill be no effect on individuals required to comply with the repealas proposed.

Comments on the proposed repeal may be submitted inwriting to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North Lamar

PROPOSED RULES November 3, 2006 31 TexReg 8929

Boulevard, Austin, Texas 78705-4207, or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed repeal is published in the Texas Register.At the conclusion of the 31st day after the proposed repeal ispublished in the Texas Register, no further written commentswill be considered or accepted by the commission.

The repeal is proposed under Texas Finance Code, §11.304,which authorizes the commission to adopt rules to enforce Title4 of the Texas Finance Code. Additionally, Texas Finance Code,§342.551 authorizes the commission to adopt rules for the en-forcement of the consumer loan chapter.

The statutory provisions (as currently in effect) affected by theproposed repeal are contained in Texas Finance Code, Chapter342.

§1.101. Purpose and Scope.

§1.102. De�nitions.

§1.103. Responsibility for Acts of Agents.

§1.104. Knowledge of Laws and Regulations Required.

§1.105. Attempted Evasion of Applicability of Chapter.

§1.106. Multiple Licenses.

§1.107. Loans by Mail.



2006.

TRD-200605733Leslie L. PettijohnCommissionerFinance Commission of TexasEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 936-7640

SUBCHAPTER B. INTERPRETATIONS ANDADVISORY LETTERS7 TAC §1.201

The Finance Commission of Texas (the commission) proposesamendments to §1.201, concerning Interpretations and AdvisoryLetters.

The purpose of the amendments to §1.201 is to make changesresulting from a rule review, which are technical in nature, andinclude revisions in grammar and format. There is also one re-vision to remove a reference to prior law.

Leslie L. Pettijohn, Consumer Credit Commissioner, has de-termined that for the �rst �ve-year period the amendments to§1.201 are in effect, there will be no �scal implications for stateor local government as a result of administering the rule.

For each year of the �rst �ve years the amendments to §1.201are in effect, Commissioner Pettijohn has also determined thatthe public bene�t anticipated as a result of the proposed amend-ments will be that the commission’s rule will be more easily un-derstood. There is no anticipated cost to persons who are re-quired to comply with the amendments as proposed. There will

be no adverse economic effect on small or micro businesses.There will be no effect on individuals required to comply with thesection as proposed.

Comments on the proposed amendments may be submittedin writing to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North LamarBoulevard, Austin, Texas 78705-4207 or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed amendments are published in the TexasRegister. At the conclusion of the 31st day after the proposedamendments are published in the Texas Register, no furtherwritten comments will be considered or accepted by the com-mission.

The amendments are proposed under Texas Finance Code,§11.304, which authorizes the commission to propose rules toenforce Chapter 14 and Title 4 of the Texas Finance Code.

The statutory provisions (as currently in effect) affected by theproposed amendments are contained in Texas Finance Code,Chapter 14 and Title 4.

§1.201. Interpretations and Advisory Letters.(a) De�nitions. The following words and terms, when used

in this section, shall have the following meanings, unless the contextclearly indicates otherwise.

(1) Advisory letter--A letter by the commissioner or amember of the staff of the Of�ce of Consumer Credit Commissionerproviding an informal advisory response to an inquiry concerningprovisions of the Texas Finance Code, Title 4, Subtitles A or B, and isnot an interpretation as de�ned in paragraph (3) of this subsection.

(2) Commissioner--The commissioner of the Of�ce ofConsumer Credit Commissioner of the State of Texas.

(3) Interpretation--A letter issued by the consumer creditcommissioner and approved by the Finance Commission of Texas pur-suant to [Texas Civil Statutes,] Texas Finance Code, §14.108 interpret-ing a provision of Texas Finance Code, Title 4, Subtitle A or B in lightof certain relevant facts by the requestor.

(b) Procedures for Finance Commission of Texas interpreta-tions. Any person may submit a request for an interpretation. All re-quests must be directed to the commissioner and contain the followingitems:

(1) Statement requesting interpretation. An explicit [ex-plicitly] statement that an interpretation approved by the Finance Com-mission of Texas is desired.

(2) Description of transaction, facts, and legal issues. Aconcise description of the contemplated transaction or activity contem-plated, the legal issue raised, and all facts necessary to reach a conclu-sion in the matter.

(3) Pending litigation. A statement whether or not, to thebest of the requester’s knowledge, the issue to be considered is an is-sue in pending litigation. Matters in litigation will not ordinarily beanswered.

(4) Fee. A fee of $300 will be charged for an interpretationto compensate the agency for the expense involved in researching andanswering the request. The [A] payment of $300 should be submittedwith the request. The commission may determine and remit a partialrefund if deemed applicable. The commission may waive the fee.

(5) Additional information. A requestor should also iden-tify each provision of law involved, and indicate the writer’s opinion

31 TexReg 8930 November 3, 2006 Texas Register

of how the legal issues should be resolved, and the basis for that opin-ion, including an analysis of any relevant court decisions, as well as,all prior interpretations to which the request relates.

(6) Processing time. Within 10 [ten] business days of re-ceipt of a valid request pursuant to this subsection, the request willbe �led with the Texas Register for publication. Upon publication inthe Texas Register, any party may within 31 [30] calendar days sub-mit briefs or proposals pertaining to the request. The agency will draftan interpretation or a response and present it to the Finance Commis-sion of Texas for [their] consideration. Within 10 [ten] business daysof an action of the Finance Commission of Texas, a summary of theinterpretation or the response will be �led with the Texas Register forpublication. Copies of interpretations or responses shall contain a no-tation of approval and the date of action by the Finance Commissionof Texas.

(c) Of�ce of Consumer Credit Commissioner advisory letters.Each advisory letter shall contain the following notation: "THIS AD-VISORY LETTER IS NOT AN INTERPRETATION APPROVEDBY THE FINANCE COMMISSION OF TEXAS PURSUANT TOTEXAS FINANCE CODE, §14.108. If an interpretation approved bythe Finance Commission of Texas is desired, then an interpretationshould be requested pursuant to the procedures set forth in 7 TexasAdministrative Code §1.201(b)."



2006.


SUBCHAPTER C. APPLICATIONPROCEDURES7 TAC §§1.301 - 1.310


The Finance Commission of Texas (the commission) proposesthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter C, §§1.301 -1.310, concerning Application Procedures. The commission hasdetermined as part of a rule review that this subchapter more ef-fectively belongs in Part 5, in new Chapter 83, concerning Con-sumer Loans. Therefore, these rules are being proposed for re-peal and new rules are proposed elsewhere in this issue of theTexas Register.



Comments on the proposed repeal may be submitted inwriting to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North LamarBoulevard, Austin, Texas 78705-4207, or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed repeal is published in the Texas Register.At the conclusion of the 31st day after the proposed repeal ispublished in the Texas Register, no further written commentswill be considered or accepted by the commission.



§1.301. De�nitions.§1.302. Filing of New Application.§1.303. Transfer of License.§1.304. Processing of Application.§1.305. Change in Form or Proportionate Ownership.§1.306. Amendments to Pending Application.§1.307. Relocation of Licensed Of�ces.§1.308. Designation of Active/Inactive Status.§1.309. Fees.§1.310. Applications and Notices as Public Records.This agency hereby certi�es that the proposal has been reviewedby legal counsel and found to be within the agency’s legal author-ity to adopt.


2006.


SUBCHAPTER D. LICENSE7 TAC §§1.401 - 1.407



The Finance Commission of Texas (the commission) proposesthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter D, §§1.401- 1.407, concerning License. The commission has determinedas part of a rule review that this subchapter more effectively be-longs in Part 5, in new Chapter 83, concerning Consumer Loans.Therefore, these rules are being proposed for repeal and newrules are proposed elsewhere in this issue of the Texas Regis-ter.



Comments on the proposed repeal may be submitted inwriting to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North LamarBoulevard, Austin, Texas 78705-4207, or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed repeal is published in the Texas Register.At the conclusion of the 31st day after the proposed repeal ispublished in the Texas Register, no further written commentswill be considered or accepted by the commission.



§1.401. Branch Networks.§1.402. License Display.§1.403. Notice of Delinquency in Payment of Annual Fee.§1.404. Effect of Revocation, Suspension, or Surrender of License.§1.405. Application Process after Suspension or Revocation.§1.406. Surrender of License.§1.407. License Reissuance.This agency hereby certi�es that the proposal has been reviewedby legal counsel and found to be within the agency’s legal author-ity to adopt.


2006.


PART 2. TEXAS DEPARTMENT OFBANKING

CHAPTER 26. PERPETUAL CARECEMETERIES7 TAC §26.2, §26.4

The Finance Commission of Texas (commission), on behalfof the Texas Department of Banking (department), proposesto amend §26.2, concerning perpetual care cemetery records,and §26.4, concerning ordering and setting burial markers andmonuments.

The commission completed its rule review of Chapter 26 as re-quired by Government Code, §2001.039, which is adopted in thisissue of the Texas Register. In connection with the review, thecommission determined that certain revisions to Chapter 26 arenecessary and appropriate. As explained in this preamble, therevisions are primarily intended to re�ect and clarify the depart-ment’s present interpretation and application of the requirementsof Chapter 26.

Section 26.2 speci�es the records that a perpetual care cemeterymust maintain. As a general matter, the proposed amendmentsto §26.2 re�ect the department’s existing practice, facilitate theexamination process, and ensure the availability of informationrequired for timely and correct account reconciliation. Theproposed amendment to §26.2(b)(1) requires that informationbe maintained in a �le that is readily accessible to the depart-ment. The proposed amendment to §26.2(b)(1)(H) requiresthat a perpetual care cemetery receive trustee or depositorystatements related to the cemetery’s perpetual care trust at leastquarterly. The proposed amendment to §26.2(b)(3) requiresthat purchasers’ separate �les be organized alphabetically ornumerically. Finally, the proposed amendment to §26.2(c)(1)clari�es where records may be maintained and the bankingcommissioner’s authority to approve alternate locations.

Section 26.4 establishes the time periods within which a perpet-ual care cemetery must order and set burial markers and mon-uments. The proposed amendment to §26.4(a)(4) revises thede�nition of "you" or "I" to provide that a purchaser’s paymentto a perpetual care cemetery’s sales representative or agent isconsidered payment to the perpetual care cemetery for purposesof §26.4(b)(1). If a perpetual care cemetery authorizes its salesrepresentative or agent to receive a purchaser’s payment on be-half of the cemetery and the representative or agent in fact re-ceives payment, the payment constitutes payment to the ceme-tery within the meaning of the §26.4(b)(1) triggering event.

The proposed amendment to §26.4(b) clari�es that a perpetualcare cemetery must pay the amount, if any, required by a vendoror manufacturer of a marker to initiate an order. Payment mustbe made only if and to the extent the vendor or manufacturerrequires payment at the time the order is placed. The proposedamendment to §26.4(b) also extends from 10 days to 21 days thetime within which an order must be placed after all the applicableevents listed in the subsection have occurred. The proposedamendment allows suf�cient time for an order to be processedby a perpetual care cemetery that has extensive operations andrequires that all orders be centrally processed through corporateheadquarters.


The department provided a draft of the proposed amendmentsto and solicited informal comments from perpetual care ceme-tery corporations that previously requested notice of any con-templated legislative or administrative rule actions that would af-fect their operations. The department received substantive com-ments from one perpetual care cemetery and the amendmentsas proposed address the issues raised by the commenter.

Stephanie Newberg, Deputy Commissioner, Texas Departmentof Banking, has determined that, for each year of the �rst �veyears that the proposed amendments are in effect, there will beno �scal implication for state or local government as a result ofenforcing or administering the proposed amendments.

Ms. Newberg has also determined that, for each of the �rst �veyears the proposed amendments are in effect, the public willbene�t as a result of the adoption because the amendments willimprove consistency and facilitate the department’s ability to ef-fectively and ef�ciently examine perpetual care cemeteries asrequired by law. The proposed amendments will also further en-sure that markers and monuments are timely ordered. There isno anticipated cost to persons who are required to comply withthe amendments as proposed. Further, there will be no adverseeconomic effect on small businesses.

Comments concerning the proposed amendments should besubmitted within 31 days of publication to Sarah Shirley, Gen-eral Counsel, Texas Department of Banking, 2601 North LamarBoulevard, Suite 300, Austin, Texas 78705-4924, or email [email protected].

The amendments are proposed under the authority of Govern-ment Code, §2001.039, which requires a state agency to re-view each of its rules every four years and readopt, readopt withamendments, or repeal rules based upon its rule review. Theamendments are also proposed under Health and Safety Code,§712.008, which authorizes the commission to adopt rules to ad-minister and enforce Health and Safety Code, Chapter 712, re-lating to Perpetual Care Cemeteries, and Health & Safety Code,§712.008(b), which authorizes the commission to adopt rulesestablishing reasonable standards for the timely placement ofburial markers and monuments in a perpetual care cemetery.

Health and Safety Code, Chapter 712, is affected by the pro-posed amendments.

§26.2. What Records am I Required to Maintain?(a) (No change.)

(b) What records must I maintain?

(1) You must maintain the following records in a general�le that is readily accessible to the department:

(A) - (G) (No change.)

(H) all trustee/depository statements covering the per-petual care fund, provided at least quarterly, and all written correspon-dence from the trustee that you received since the last examination;

(I) - (O) (No change.)

(2) (No change.)

(3) You must maintain either:

(A) separate �les for each property purchaser, �led al-phabetically or numerically, that contains all executed property pur-chase agreements, conveyance documents, and all related information;or

(B) (No change.)

(4) - (5) (No change.)

(c) Where do I need to keep the records required under thissection?

(1) You must keep all required records at the perpetual carecemetery’s physical location, [or] corporate of�ce located in this state,or another location approved in writing by the commissioner.

(2) (No change.)

(d) (No change.)

§26.4. When Must I Order and Set a Burial Marker or Monument inmy Perpetual Care Cemetery?

(a) De�nitions.

(1) - (3) (No change.)

(4) "You" or "I" means a cemetery corporation that owns oroperates a perpetual care cemetery. For purposes of subsection (b)(1)the term also includes a representative or agent that receives paymentfor the marker or monument on your behalf, whether or not the agentor representative signs the purchase order.

(b) When must I order the purchaser’s burial marker or mon-ument? You must order the marker or monument and pay the amount,if any, required by the vendor or manufacturer to initiate the order onor before the 21st [10th] day after the date as of which both of the fol-lowing events have occurred:

(1) - (2) (No change.)

(c) - (i) (No change.)



2006.

TRD-200605700Everette D. JobeCertifying Of¿cialTexas Department of BankingProposed date of adoption: December 15, 2006For further information, please call: (512) 475-1300

CHAPTER 31. PRIVATE CHILD SUPPORTENFORCEMENT AGENCIESThe Finance Commission of Texas (the commission), on behalfof the Texas Department of Banking (department), proposesamendments to §31.11, concerning the requirements to legallyengage in the business of private child support enforcement inTexas; §31.14, concerning the requirements for the contractswith clients; §31.31, concerning displaying certi�cates of reg-istration; and §31.54, concerning requirements for closing aregistered of�ce. The commission also proposes the repealof §31.35, concerning issuance of temporary certi�cates ofregistration.

The commission has completed the rule review of Chapter 31,required by Government Code, §2001.039 which is adopted inthis issue of the Texas Register. As a result of the review, thecommission has determined that §§31.11, 31.14, 31.31, and31.54 need to be amended and §31.35 needs to be repealed.


Section 31.11(b)(8) refers to §31.14(c), but should refer to§31.14(d). Proposed §31.11(b)(8) amends the section to referto §31.14(d).

Proposed §31.14(c) makes it clear that while the department willprovide sample clear language provisions, it will not provide amodel clear language contract.

Proposed §31.14(d) corrects an improper verb tense.

Proposed §31.14(d)(2)(R) is added because clear languagerules recommend that the only words that should be capitalizedin contracts are those that are capitalized when writing in Eng-lish. It is more dif�cult to read sentences containing capitalizedwords that are not typically capitalized when writing in English.

Proposed §31.31(b)(1) is amended to re�ect that instead of con-taining a link to each registered agency’s certi�cate of registra-tion, the department’s website lists the registered private childsupport enforcement agencies (agencies).

The repeal of §31.35 is proposed because the need to issuetemporary certi�cates of registration existed only during the initialregistration of agencies by the department.

Section 31.54(a)(4) requires that when an agency plans to closeone of its registered of�ces, it must �rst send a noti�cation to itsclients that the of�ce is closing 45 days prior to closing the of�ceand provide the department with a copy of the letter used to notifythe clients. Agencies have had dif�culty getting notice out to itsclients 45 days prior to closing an of�ce. Proposed §31.54(a)(4)shortens the time to 30 days prior to closing a registered of�ce.Further, the department concludes that submitting a copy of theletter sent to clients to the department is not necessary. Instead,written certi�cation from an agency that the noti�cation was sentto an agency’s clients served by the of�ce being closed is suf-�cient proof. Accordingly, proposed §31.54(a)(4) requires sub-mission of a written certi�cation to the department stating that theagency’s current clients, served by the of�ce being closed, weresent the noti�cation. Proposed §31.54(a)(4) also requires thatthe noti�cation sent to clients contain the address of the regis-tered of�ce that will now serve the client. Proposed §31.54(b) re-�ects that the department will receive a written certi�cation ratherthan a copy of the letter sent to the clients.

Stephanie Newberg, Deputy Commissioner, Texas Departmentof Banking, has determined that, for each year of the �rst �veyears that the proposed amendments and repeal are in effect,there will be no �scal implications for state or local governmentsas a result of enforcing or administering the amendments andrepeal.

Ms. Newberg has also determined that, for each of the �rst �veyears the amendments and repeal as proposed will be in effect,the public bene�t anticipated as a result of the amendments andrepeal will be consumer protection through the creation of reli-able standards and guidelines. There is no anticipated cost topersons who are required to comply with the amendments andrepeal as proposed. There will be no adverse economic effecton small businesses.

Comments concerning the proposed amendments and repealshould be submitted within 31 days of publication to ShannonPhillips, Assistant General Counsel, Texas Department ofBanking, 2601 North Lamar Boulevard, Suite 300, Austin, Texas78705-4294, or e-mail to [email protected].

SUBCHAPTER B. HOW DO I REGISTER MYAGENCY TO ENGAGE IN THE BUSINESS OFCHILD SUPPORT ENFORCEMENT?7 TAC §31.11, §31.14

The amendments are proposed under the authority of The Fi-nance Commission of Texas under Texas Finance Code, Section396.051(b), which provides that the Finance Commission shalladopt rules as necessary for the administration of Texas FinanceCode, Chapter 396, entitled Private Child Support EnforcementAgencies.

The amendments affect Finance Code, Chapter 396.

§31.11. What must I do to legally engage in the business of child sup-port enforcement in Texas?

(a) (No change.)

(b) Second, you must submit the following documents withyour application:

(1) - (7) (No change.)

(8) a paper and electronic (Word or WordPerfect) copy ofthe form contract your agency will use for an obligee to engage itsservices to enforce a child support obligation and the scores you cal-culated under §31.14(d) [§31.14(c)] and the readability statistics yougenerated; and

(9) (No change.)

(c) - (d) (No change.)

§31.14. What are the requirements for the contract for services withmy agency’s clients?

(a) - (b) (No change.)

(c) Will the department provide sample clear language provi-sions [a model contract]? The department will prepare and providesample [a] clear language provisions [contract] that your agency, or aforeign agency authorized to engage in business under Subchapter Fof this chapter, may use in preparing its contract for services with itsclients.

(d) How will I know if my agency’s contract [contracts] withclients is in "clear language"?

(1) (No change.)

(2) The department considers "clear language" to be syn-onymous with the more commonly known concept of "plain language."In evaluating your proposed contract, the department will consider theextent to which you have incorporated clear language principles intoits organization, language, and design. At a minimum, your proposedcontract should substantially comply with each of the clear languagewriting principles identi�ed in this paragraph.

(A) - (Q) (No change.)

(R) You should avoid capitalizing words that are nottypically capitalized in the English language. De�ned words, that arenot typically capitalized in the English language, should only be capi-talized when the same word is also used in the contract with a differentmeaning. To the extent possible, de�ned words should only be used fortheir de�ned meanings.

(3) (No change.)

(e) - (f) (No change.)




2006.


SUBCHAPTER C. WHAT ARE MY AGENCY’SRESPONSIBILITIES AFTER REGISTRATION?7 TAC §31.31



§31.31. Is my agency required to display its certi�cate of registra-tion?

(a) (No change.)

(b) If your agency, or a foreign agency authorized to engage inbusiness under Subchapter F of this chapter, offers obligees the oppor-tunity to contract for the agency’s child support enforcement serviceselectronically on its web site, the web site must contain either:

(1) a link, in no less than 8 point font, to the page of thedepartment’s web site that lists the registered agencies [which links toagency certi�cates of registration]; or

(2) (No change.)

(c) (No change.)



2006.


7 TAC §31.35

(Editor’s note: The text of the following section proposed for repealwill not be published. The section may be examined in the of�ces ofthe Texas Department of Banking or in the Texas Register of�ce, Room245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal is proposed under Finance Code, §396.051(b), whichprovides that the Finance Commission shall adopt rules as nec-essary for the administration of Texas Finance Code, Chapter396, entitled Private Child Support Enforcement Agencies.

The repeal affects Finance Code, Chapter 396.

§31.35. Under what circumstances will the department issue a tem-porary certi�cate of registration to my agency?



2006.


SUBCHAPTER D. WHAT ARE THEDEPARTMENT REQUIREMENTS FORADDING AN OFFICE, CLOSING AN OFFICE,RELOCATING AN OFFICE, TRANSFERRINGCONTROL OF MY AGENCY, CEASING TO DOBUSINESS, OR CHANGING MY EMAIL ORWEB SITE ADDRESSES?7 TAC §31.54



§31.54. What are the requirements for closing a registered of�ce?

(a) For each registered of�ce you propose to close, you must�le a written notice with the banking commissioner, at least 30 daysprior to the date you propose to close the registered of�ce, disclosing:

(1) - (3) (No change.)

(4) written certi�cation that [a copy of a letter notifying]all of your agency’s clients currently served by that registered of�cewere mailed a notice, at least 30 days prior to closing the registeredof�ce, stating that the of�ce is closing and providing the address of theregistered of�ce that will now serve them [evidence that you distributedit to those clients at least 45 days prior to closing the registered of�ce];and

(5) (No change.)

(b) Within 30 days of the submission of a completed writtencerti�cation [notice] under subsection (a)(4) of this section, the depart-ment will notify you in writing that:

(1) your written certi�cation [notice] was complete; and


(2) that you must surrender the certi�cate of registration forthe closed registered of�ce within 15 days of receiving the noti�cationfrom the department.



2006.


PART 5. OFFICE OF CONSUMERCREDIT COMMISSIONER

CHAPTER 82. ADMINISTRATION7 TAC §82.1, §82.2

The Finance Commission of Texas (the commission) proposesamendments to §82.1, concerning Custody of Criminal HistoryRecord Information, and §82.2, concerning Public InformationRequests; Charges.

The purpose of the amendments to §82.1 is to update incor-rect citation references, add a reference to other law, and toadd clari�cation. In subsection (a), references to the Texas Fi-nance Code have been added to replace the prior codi�cation inTexas Civil Statutes. The addition of a citation to the Texas Gov-ernment Code has been made to reference the de�nition usedfor "criminal history record information." Clarifying language hasalso been amended in subsection (a) concerning the use of crim-inal history record information with current license holders.

The purpose of the amendments to §82.2 is to conform the ruleto the commission’s current practice and to add clari�cation.In subsection (b), the last sentence has been updated to re-�ect the charging of no fee for �fty (50) or less standard-sizecopies. In subsections (c)(2), (c)(3), and (d)(3), amendmentshave been made to re�ect optional as opposed to mandatorycharging of certain items, with the remaining items re�ectingthe agency’s current mandatory charges for public informationrequests. In addition, in subsection (d)(6), a reference hasbeen added to Texas Government Code, §552.263, in order toclarify the agency’s authority to request a deposit or bond whencharges exceed $100. The remaining changes are technicaland nonsubstantive in nature.

Leslie L. Pettijohn, Consumer Credit Commissioner, has deter-mined that for the �rst �ve-year period the amendments to §82.1and §82.2 are in effect, there will be no �scal implications forstate or local government as a result of administering the rules.

For each year of the �rst �ve years the amendments to §82.1 and§82.2 are in effect, Commissioner Pettijohn has also determinedthat the public bene�t anticipated as a result of the proposedamendments will be that the commission’s rules will conform tocurrent practice, will be more easily understood by licensees re-quired to comply with the rules, and will be more easily enforced.

There is no anticipated cost to persons who are required to com-ply with the amendments as proposed. There will be no adverseeconomic effect on small or micro businesses. There will be noeffect on individuals required to comply with the sections as pro-posed.

Comments on the proposed amendments may be submittedin writing to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North LamarBoulevard, Austin, Texas 78705-4207 or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed amendments are published in the TexasRegister. At the conclusion of the 31st day after the proposedamendments are published in the Texas Register, no furtherwritten comments will be considered or accepted by the com-mission.

The amendments are proposed under Texas Finance Code,§11.304, which authorizes the commission to adopt rules toenforce Chapter 14 and Title 4 of the Texas Finance Code.Additionally, Texas Finance Code, §14.157 authorizes the com-mission to adopt rules governing the custody and use of criminalhistory record information obtained under Texas Finance Code,Chapter 14, Subchapter D. Texas Government Code, §552.230authorizes governmental bodies to adopt reasonable rules ofprocedure under which public information may be inspectedand copied.

The statutory provisions (as currently in effect) affected by theproposed amendments are contained in Texas Finance Code,Chapter 14 and Title 4.

§82.1. Custody of Criminal History Record Information.

(a) The use of "criminal history record information," as de-�ned by Texas Government Code, §411.082, obtained or maintainedby the Of�ce of Consumer Credit Commissioner pursuant to Texas Fi-nance Code, Chapter 14, Subchapter D [Civil Statutes, Article 5069-2.02A(11)], shall be limited to assisting the commissioner in determin-ing the character and �tness of an applicant for a license issued by theconsumer credit commissioner or in determining the character and �t-ness of a current license holder [a person licensed under the authority]of the consumer credit commissioner. All criminal history record in-formation received by the Of�ce of Consumer Credit Commissioner iscon�dential information and is for the exclusive use of the Of�ce ofConsumer Credit Commissioner. Except on court order or as other-wise provided by Texas Finance Code, §14.155 [Civil Statutes, Article2.02A(11)], such information may not be disclosed to any person oragency.

(b) Access to criminal history information maintained by theOf�ce of Consumer Credit Commissioner shall be limited to the fol-lowing persons:

(1) consumer credit commissioner;

(2) assistant commissioner;

(3) any attorney employed by the Of�ce of ConsumerCredit Commissioner or an assistant attorney general representing theinterest of the Of�ce of Consumer Credit Commissioner;

(4) employees of the licensing section; and

(5) any person appointed to act on behalf of or in the steadof any of the above.

§82.2. Public Information Requests; Charges.


(a) De�nitions. The following words and terms, when usedin this section, shall have the following meanings, unless the contextclearly indicates otherwise.

(1) Commissioner--The Consumer Credit Commissioner.

(2) Department--The Of�ce of Consumer Credit Commis-sioner.

(3) Readily available information--Public information thatalready exists in printed form, or information that is stored electroni-cally, and is ready to be printed or copied without requiring any pro-gramming, but not information that requires more than 30 minutes toprepare for release as a result of required redaction for the purpose ofdeleting information that is con�dential by law.

(4) Standard-size copy--A printed impression on one sideof a piece of paper that measures up to 8 1/2 inches by 14 inches. Apiece of paper that is printed on both sides shall be counted as twocopies.

(b) The request. Upon receipt of a written request from a re-questing party, including another state or federal agency, which clearlyidenti�es the public records requested to be copied or examined pur-suant to Texas Government Code, Chapter 552 [of the GovernmentCode] (the Texas Public Information Act), the agency shall make everyreasonable effort to provide the information in the manner requested asquickly as possible without disruption of normal business activities,provided that information that is con�dential by law will not be pro-vided except under court order, Attorney General directive, or otherlegal process. All inquiries will be treated equally. Fees imposed bythis section may be waived or reduced at [in] the discretion of the Con-sumer Credit Commissioner, provided that no fee will be charged forrequests for �fty (50) or less [than ten] standard-size copies of readilyavailable information.

(c) Copy and service charges.

(1) A charge of $.10 per page will be made for standard-size copies of readily available information.

(2) For standard-size copies of more than 50 pages of read-ily available information, a charge of $15 per hour of personnel timespent locating, copying, and preparing the information for delivery orinspection[, plus $3.00 per hour for overhead,] shall be added to thecopy charges speci�ed by paragraph (1) of this subsection. A chargeof $3.00 per hour for overhead may also be added to the charges.

(3) For standard-size copies of information that is not read-ily available, a charge of $15 per hour of personnel time spent locating,copying, redacting con�dential information, and preparing the infor-mation for delivery or inspection[, plus $3.00 per hour for overhead,plus $.50 per minute of computer time (if applicable)] shall be addedto the copy charges speci�ed by paragraph (1) of this subsection. Acharge of $3.00 per hour for overhead may also be added to the charges.If applicable, a charge of $.50 per minute of computer time may alsobe added to the charges.

(4) If certi�cation of copies is requested, an additionalcharge of $5.00 per certi�cation [document] will be added to thecomputed fee.

(5) The cost for non-standard-size copies shall be deter-mined by reference to any recommended standards promulgated by theOf�ce of the Attorney General, Title 1, Part 3, §§70.1 - 70.11, or as suchrules may be amended [Texas Building and Procurement Commission,Title 1, §§111.61 - 111.71].

(6) If the anticipated charges under this subsection plus an-ticipated charges under subsection (d) of this section exceed $100, the

agency may require cash prepayment or bond equal to the total antici-pated charges prior to release of the requested information, as per TexasGovernment Code, §552.263.

(d) Delivery charges.

(1) U.S. mail. When copies are required to be mailed, thecost of postage will be added to the computed fee.

(2) Expedited delivery. When copies are required to be sentby overnight delivery service or other expedited delivery, the cost of theservice will be added to the computed fee unless the requestor arrangesto pay the delivery charges directly.

(3) Faxing. The charge for faxing copies is $.10 per page.[for local telephone delivery,] The agency may charge $.50 per pagefor telephone delivery within the same area code, and $1.00 per pagefor telephone delivery to a different area code. The agency may refuseto fax more than 20 pages of information and may require another formof delivery.

(e) Inspection of records. Records access for purposes of in-spection will be by appointment only and will only be available duringregular business hours of the agency. If the safety of any public recordor the protection of con�dential information is at issue, or when a re-quest for inspection would be unduly disruptive to the ongoing businessof the of�ce, physical access may be denied and the option of receivingcopies at the usual fees shall be provided.

(f) Department of�cer for public information. The Commis-sioner or the Commissioner’s designee is the department’s of�cer forpublic information.



2006.

TRD-200605719Leslie L. PettijohnCommissionerOf¿ce of Consumer Credit CommissionerEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 936-7640

CHAPTER 83. CONSUMER LOANSSUBCHAPTER A. GENERAL PROVISIONS7 TAC §83.101, §83.102

The Finance Commission of Texas (commission) proposes new7 TAC, Chapter 83, §83.101 and §83.102, concerning ConsumerLoans. The new rules contained in 7 TAC §83.101 and §83.102outline Subchapter A, concerning General Provisions.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules pending repeal, as found in 7 TAC, Subchapter A, §1.101and §1.102, concerning General Provisions. The commission’sproposed repeal of Subchapter A is published elsewhere in thisissue of the Texas Register.


The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional expla-nation is provided under sections where recent changes in lan-guage have been incorporated into the proposed new rules as aresult of the agency’s rule review of current Subchapter A underTitle 7, Part 1, Chapter 1 of the Texas Administrative Code. Theremaining changes throughout all sections consist of revisions toformatting, grammar, punctuation, spelling, and other technicalcorrections. If no additional explanation is provided other thanthe main purpose of the rule, then the only changes made fromthe prior version of a rule pending repeal to the new rule beingproposed are technical and nonsubstantive in nature.

Section 83.101 (current §1.101) outlines the purpose and scopeof the chapter.

Section 83.101(b)(1)(C) has been revised and split into clausesin order to clarify the ways that consumer loans under TexasFinance Code, Chapter 342 may be secured. These securitymethods have not changed, as the language has merely beenclari�ed.

Section 83.102 (current §1.102) provides general de�nitions tobe used throughout the chapter.

A reference to Texas Finance Code, §342.259 has been addedto paragraphs (1) and (11) of §83.102 to re�ect the authorizedcharges allowed under this new statutory provision. In addition,the terms "regulated" and "consumer" have switched positionsin paragraph (15), in order to re�ect the chapter’s primary use ofthe term "regulated," with the alternate term being "consumer,"i.e., in reference to a "regulated loan license."

Leslie L. Pettijohn, Consumer Credit Commissioner, has deter-mined that for the �rst �ve-year period the rules are in effect therewill be no �scal implications for state or local government as aresult of administering the rules.

Commissioner Pettijohn also has determined that for each yearof the �rst �ve years the rules are in effect, the public bene�tanticipated as a result of the changes from the previously en-acted version of these rules will be that the commission’s ruleswill conform to current practice, will be more easily understoodby licensees required to comply with the rules, and will be moreeasily enforced. The general substance of these rules has al-ready been in effect, as the rules are simply being relocated andreorganized with some changes. Thus, aside from the continu-ance of currently existing costs, there is no anticipated cost topersons who are required to comply with the new rules as pro-posed. There is no anticipated adverse economic effect on smallor micro businesses. There will be no effect on individuals re-quired to comply with the sections as proposed.

Comments on the proposed new rules may be submittedin writing to Laurie Hobbs, Assistant General Counsel, Of-�ce of Consumer Credit Commissioner, 2601 North LamarBoulevard, Austin, Texas 78705-4207 or by email to [email protected]. To be considered, a writtencomment must be received on or before the 31st day after thedate the proposed rules are published in the Texas Register.At the conclusion of the 31st day after the proposed rules arepublished in the Texas Register, no further written commentswill be considered or accepted by the commission.

These new sections are proposed under Texas Finance Code,§11.304, which authorizes the Finance Commission to adoptrules to enforce Title 4 of the Texas Finance Code. Additionally,

Texas Finance Code, §342.551 grants the Finance Commissionthe authority to adopt rules to enforce the consumer loan chap-ter.

The statutory provisions (as currently in effect) affected by theproposal are contained in Texas Finance Code, Chapter 342.

§83.101. Purpose and Scope.

(a) Purpose. The purpose of this chapter is to assist in the ad-ministration and enforcement of Texas Finance Code, Chapter 342.

(b) Scope.

(1) This chapter applies to all persons engaged in the busi-ness of making, transacting, or negotiating loans subject to Texas Fi-nance Code, Chapter 342. As such, this chapter only applies to lendersand brokers in the business of making, transacting or negotiating loansthat:

(A) contract for, charge, or receive interest in excess of10% per year;

(B) are loans extended primarily for personal, family,or household use; and

(C) are either:

(i) unsecured or secured by a lien on real estate;

(ii) secured under a secondary mortgage loan; or

(iii) secured by personal property.

(2) This includes term loans extended primarily for per-sonal, family, or household purposes.

(3) This also includes a loan broker who arranges, negoti-ates, or brokers loans for a lender that funds the loan. This chapter doesnot apply to any loans made under Texas Finance Code, Chapters 301- 308 or Chapter 339, including for example, commercial and agricul-tural loans.


Words and terms used in this chapter that are de�ned in Texas FinanceCode, Chapter 342 have the same meanings as de�ned in Chapter 342.The following words and terms, when used in this chapter, shall havethe following meanings, unless the context clearly indicates otherwise.

(1) Acquisition charge--An interest charge authorized formaking the cash advance under the authority of Texas Finance Code,§342.252 and §342.259.

(2) Add-on interest--A method for calculating precom-puted interest in which the borrower agrees to pay the total ofpayments, which includes both interest and principal, as opposed toagreeing to pay the principal plus interest as it accrues at a certain rate.Add-on interest is calculated at the outset of a loan on the cash advancefor the full term, as if the principal did not decline over the course ofthe loan. For example, a $1,000 loan with 12 monthly installmentsand an add-on interest amount of $8.00 per hundred per annum wouldhave a total charge of interest of $80 and monthly payments of $90,yielding an annual percentage rate ("APR") of 14.45%.

(3) Amount Financed--The amount of money which isused, forborne, or detained and upon which interest is charged. Thecash advance plus any other amounts that are �nanced by the creditorare included. Any points or other prepaid �nance charges, excludingthe administrative loan fee, that are not paid at closing and that are�nanced as part of the transaction are included in the amount �nanced.This de�nition is only applicable for the purposes of this subchapter forcomputing earnings, deferments, maximum charges, and determining


refunds of unearned interest. It is not intended to be analogous withthe similar term that is used in the Truth in Lending Act (15 U.S.C.§1601, et seq.).

(4) Authorized charge--Any charge authorized by applica-ble Texas law to be included in the credit transaction.

(5) Authorized lender--A person who has obtained alicense from the commissioner, or a bank, savings bank, savings andloan association, or credit union doing business under the laws of thisstate or the United States. Banks chartered in other states insuredby the Federal Deposit Insurance Corporation are included in thisterm. Separate entities that are subsidiaries or af�liates of licenseesor authorized banks, savings banks, savings and loan associations, orcredit unions are not authorized lenders unless they meet the requiredelements of the de�nition of an authorized lender in their own right.

(6) Commissioner--The Consumer Credit Commissionerof the State of Texas.

(7) Date of consummation--The date of closing or execu-tion of a loan contract.

(8) Default charge or late charge--The additional interestcharge for late payment on a loan.

(9) Deferment charge--The payment of an additional inter-est charge to defer the payment date of a scheduled payment on a con-tract.

(10) Dual-interest coverage--Insurance that provides ben-e�ts to both the holder of a loan and the borrower in the event of aloss of the security covered by the policy. The policy contains a losspayable clause or endorsement that provides bene�ts that are payableat the discretion of the holder.

(11) Installment account handling charge (IAHC)--An in-terest charge authorized for making a loan under Texas Finance Code,§342.252 and §342.259.

(12) Installment loan--Any type of closed-end loan withmultiple scheduled payments.

(13) Interest-bearing loan--A loan in which the borroweragrees to pay the principal and interest that accrues at a certain periodicrate.

(14) Interpretation letter--A formal interpretation of TexasFinance Code, Title 4 made by the commissioner and approved by the�nance commission under Texas Finance Code, §14.108.

(15) Licensee--Any person who has been issued a regu-lated loan license pursuant to Texas Finance Code, Chapter 342. An-other name for a "regulated loan license" is "consumer loan license."

(16) Making a loan--The act of making a loan is either thedetermination of the credit decision to provide the loan, or the act offunding the loan or transferring money from the lender to the borrower.A person whose name appears on the loan documents as the payee ofthe note is considered to have "made" the loan.

(17) Negotiating a loan--The process of submitting andconsidering offers between a borrower and a lender with the objectiveof reaching agreement on the terms of a loan. The act of passinginformation between the parties can, by itself, be considered "negotia-tion" if it was part of the process of reaching agreement on the termsof a loan. "Negotiation" involves acts which take place before anagreement to lend or funding of a loan actually occurs.

(18) OCCC--The Of�ce of Consumer Credit Commis-sioner of the State of Texas.

(19) Precomputed loan--A loan in which the borroweragrees to pay the total of payments that includes both principal andall anticipated interest through the full term of the loan. If a borrowerprepays a precomputed loan, the borrower is entitled to a rebate of allunearned interest and unearned charges.

(20) Prepaid interest--Interest paid separately in cash or bycheck before or at consummation in a transaction, or withheld from theproceeds of the credit at any time. Some common terms such as points,discounts, and origination fees have been used to identify this charge.

(21) Principal--The capital sum of the debt including anyinterest capitalized and added to the cash advance at the inception of theloan. This is the amount of money which is used, forborne, or detainedand upon which interest is charged. The principal amount does notinclude any interest accrued after the inception of the loan, such asdefault charges.

(22) Pro rata method--A formula for determining theamount of unearned interest or other charges, such as insurance, tobe refunded following prepayment or acceleration by applying theamounts to equal unit periods. This formula assumes that interest orother charges are earned in direct proportion to the time that a loan hasbeen outstanding.

(23) Rebate--A refund of all or part of a precomputedcharge or interest.

(24) Regulated loan--A loan made under the authority ofTexas Finance Code, Chapter 342.

(25) Renewal or re�nance--A new loan contract that in-cludes, in whole or in part, the net balance of one or more existingloan contracts.

(26) Simple annual rate--The interest rate under the loanagreement expressed as a percentage rate per year employing the U.S.rule method.

(27) Sum of the monthly balances or sum of the periodicbalances method--Another formula for determining the amount of un-earned interest or other charges to be refunded. This is a variant ofthe rule of 78s. It provides that the fraction of the contract interest tobe rebated at any given time in the loan term is the sum of the monthlyloan balances for the months remaining in the originally scheduled loanterm divided by the sum of the monthly balances for all of the monthsin the scheduled loan term. For example, for a 6-month loan of $600which is scheduled to be repaid in $100 monthly installments, the re-bate fraction after two months would be: 400 + 300 + 200 + 100 di-vided by 600 + 500 + 400 + 300 + 200 + 100 = 1000/2100 = 10/21 =0.476 (rounded). For any loan which is paid off in equal installments,the sum of the balances method and the rule of 78s will provide iden-tical rebates. If, however, a loan schedule contains unequal paymentsand especially where the debt is retired by a �nal balloon payment, therebates under the two formulas will be different.

(28) Term loan--A loan made repayable in a single pay-ment.

(29) Transacting a loan--Any of the signi�cant events asso-ciated with the lending process through funding, including the prepa-ration, negotiation and execution of loan documents and the transferof money by the lender to the borrower or to a third party on the bor-rower’s behalf. This also includes the act of arranging a loan.

(30) United States rule--Ruling of United States SupremeCourt in Story v. Livingston, 38 U.S. (13 Pet.) 359, 371 (1839) that,in partial payments on a debt, each payment is applied �rst to interestand any remainder reduces the principal. Under this rule, accrued but


unpaid interest cannot be added to the principal and interest cannot becompounded.



2006.


SUBCHAPTER B. AUTHORIZED ACTIVITIES7 TAC §§83.201 - 83.205

The Finance Commission of Texas (commission) proposes new7 TAC, Chapter 83, §§83.201 - 83.205, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.201 - 83.205outline Subchapter B, concerning Authorized Activities.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules pending repeal, as found in 7 TAC, Subchapter A, §§1.103- 1.107, concerning General Provisions. The commission’sproposed repeal of Subchapter A is published elsewhere in thisissue of the Texas Register.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional expla-nation is provided under sections where recent changes in lan-guage have been incorporated into the proposed new rules as aresult of the agency’s rule review of current Subchapter A underTitle 7, Part 1, Chapter 1 of the Texas Administrative Code. Theremaining changes throughout all sections consist of revisions toformatting, grammar, punctuation, spelling, and other technicalcorrections. If no additional explanation is provided other thanthe main purpose of the rule, then the only changes made fromthe prior version of a rule pending repeal to the new rule beingproposed are technical and nonsubstantive in nature.

Section 83.201 (current §1.103) provides for the responsibility oflicensees for the acts of their agents.

Section 83.202 (current §1.104) requires that each of�cer, direc-tor, employee, and agent of a licensee have a working knowl-edge of the laws and regulations applicable to the licensee’sbusiness.

Section 83.203 (current §1.105) outlines transactions that areconsidered to constitute a "device, subterfuge, or pretense" un-der Texas Finance Code, §342.051, and attempted evasion ofthe applicability of 7 TAC, Chapter 83.

Section 83.204 (current §1.106) de�nes particular terms appli-cable to licensees with multiple licenses, and also outlines situ-ations in which multiple licenses are required.

Section 83.205 (current §1.107) outlines situations where li-censes are required to conduct loans by mail, when a license isnot required, and the fact that loans conducted via the Internetare considered to be loans by mail.

Section 83.205 has been revised to refer the reader to§83.204(a) for applicable de�nitions.




These new sections are proposed under Texas Finance Code,§11.304, which authorizes the Finance Commission to adoptrules to enforce Title 4 of the Texas Finance Code. Additionally,Texas Finance Code, §342.551 grants the Finance Commissionthe authority to adopt rules to enforce the consumer loan chap-ter.


§83.201. Responsibility for Acts of Agents.A licensee is responsible for the acts and omissions of its of�cers, di-rectors, employees, and agents in the conduct of the licensee’s business.

§83.202. Knowledge of Laws and Regulations Required.Each of�cer, director, employee, and agent of a licensee shall have aworking knowledge of Texas Finance Code, Chapter 342, its imple-menting regulations, and other pertinent state and federal statutes andregulations that apply to the licensee’s business.

§83.203. Attempted Evasion of Applicability of Chapter.A "device, subterfuge, or pretense to evade the application" of thischapter, as used in Texas Finance Code, §342.051(b) refers to any trans-action:

(1) that in form may appear on its face to be somethingother than a loan, but in substance meets the de�nition of a loan asde�ned in Texas Finance Code, §301.002(a)(10); and

(2) in which more than 10% annual interest, in substance,is being contracted for, charged or received.


§83.204. Multiple Licenses.(a) De�nitions. The words "made," "negotiated," and "col-

lected" as used in Texas Finance Code, §342.052(b) are to be construedas follows.

(1) Made or Make--Loans are "made" by the of�ce or of-�ces where either the credit decision is made or the cash advance isdisbursed.

(2) Negotiated or Arranged; Negotiate or Arrange--Loansare "negotiated" or "arranged" in the of�ce or of�ces that received anyinformation preliminary to a credit decision on a prospective borroweror received the executed application, agreement, or other necessaryloan documentation.

(3) Collected or Collect--Loans are "collected" in the of�ceor of�ces from which attempts are made to collect past-due paymentsfrom the borrowers under a loan. The mere receipt and accounting ofpayments does not constitute "collection."

(b) Application. Any of�ce making, negotiating, arranging, orcollecting loans must be licensed. For example, if a lender receives andreviews loan applications at one of�ce, makes the loan decision at an-other of�ce, funds the loan at a third, and collects past-due paymentsfrom another, all of these of�ces must be licensed. On the other hand,an of�ce that merely receives, records, accounts for, and processes pay-ments need not be licensed.

§83.205. Loans by Mail.(a) De�nitions. The words "make," "negotiate," "arrange,"

and "collect" as used in Texas Finance Code, §342.053(b) are to beconstrued according to the de�nitions contained in §83.204(a) of thistitle (relating to Multiple Licenses).

(b) Application. Any of�ce, wherever located, making, nego-tiating, arranging, or collecting loans by mail must be licensed. For ex-ample, if a lender receives and reviews loan applications at one of�ce,makes the loan decision at another of�ce, funds the loan at a third, andcollects past-due payments from another, all of these of�ces involvedin lending by mail must be licensed. On the other hand, an of�ce thatmerely receives, records, accounts for, and processes payments neednot be licensed.

(c) License not required. National banks and federally-char-tered thrifts and credit unions, wherever located, and federally-insuredstate banks, state thrifts and state credit unions with of�ces located out-side of Texas may make loans by mail to Texas residents without ob-taining any license under Texas Finance Code, §342.051 et seq. , fromthe OCCC and are considered to be an authorized lender.

(d) Internet loans. For purposes of Texas Finance Code,§342.053(b), a loan made, negotiated, arranged, or collected by orthrough the Internet is considered a "loan by mail."



2006.


SUBCHAPTER C. APPLICATIONPROCEDURES7 TAC §§83.301 - 83.311

The Finance Commission of Texas (commission) proposes new7 TAC, Chapter 83, §§83.301 - 83.311, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.301 - 83.311outline Subchapter C, concerning Application Procedures.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules pending repeal, as found in 7 TAC, Subchapter C, §§1.301- 1.310, concerning Application Procedures. The commission’sproposed repeal of Subchapter C is published elsewhere in thisissue of the Texas Register.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional expla-nation is provided under sections where recent changes in lan-guage have been incorporated into the proposed new rules as aresult of the agency’s rule review of current Subchapter C underTitle 7, Part 1, Chapter 1 of the Texas Administrative Code. Theremaining changes throughout all sections consist of revisions toformatting, grammar, punctuation, spelling, and other technicalcorrections. If no additional explanation is provided other thanthe main purpose of the rule, then the only changes made fromthe prior version of a rule pending repeal to the new rule beingproposed are technical and nonsubstantive in nature.

New 7 TAC §§83.301 - 83.311 set out detailed procedures re-lated to applications for licenses under Texas Finance Code,Chapter 342. The revisions outlined below clarify and stream-line some of the �ling procedures. In addition, the acceptanceof approved alternative formats or electronic submissions hasbeen added throughout the rules to modernize the applicationprocess and provide licensees with more options when complet-ing the application.

Section 83.301 (current §1.301) de�nes particular terms.

In §83.301(2), the de�nition of "principal party" has been signif-icantly revised. Subparagraph (A) under §83.301(2) has beenclari�ed regarding the inclusion of spouses with community prop-erty interest, while more detailed descriptions related to the otherentity types have been added in order to streamline the licensingprocess.

Section 83.302 (current §1.302) describes the procedure for �l-ing a new application for a regulated loan license, including in-structions regarding what information is necessary on the appli-cation and what information must be �led with the application.

Section 83.302 has been revised to conform to the agency’s cur-rent practice and also to streamline the application process. Therequirements for disclosure of owners and principal parties aswell as the �ngerprinting requirements have experienced con-siderable revisions. Clause (v) has been added to §83.302(1)(H)and speci�cally states that �ngerprints must be submitted to theagency, regardless of whether an individual has previously sub-mitted �ngerprints to a different state agency, as statutory provi-sions require direct submission and prevent disclosure to others.Revisions have been made to the provisions requiring entity doc-uments under §83.302(2)(D) in order to clarify when complete


copies are required and when relevant portions of documentsare acceptable.

Section 83.303 (current §1.303) describes the procedure for �l-ing an application for transfer of a regulated loan license, includ-ing the �ling requirements.

Section 83.303 has been revised, with appreciable additions toclarify the circumstances for each entity type and situation asto when a transfer will be required. Subsections (d) and (e) ofcurrent §1.303 have been combined and revised into §83.303(d)in order to provide a more cohesive explanation of the require-ments when one party is seeking permission to operate underanother party’s license.

Section 83.304 (current §1.305) describes what action a licenseemust take when it changes the proportion of ownership in or theform of the licensed entity and lists the time frame within whichthe licensee must notify the commissioner.

Section 83.304(c) has been revised to clarify the circumstancesas to when a change in proportionate ownership occurs, not re-quiring a transfer of license.

Section 83.305 (current §1.306(a)) requires each applicant tosupplement its application upon request by the agency.

Note that current §1.306 has been separated into two distinctrules, in order to distinguish between situations where theagency requests information to supplement an application andwhere the applicant has a duty to supplement its application asa result of changed circumstances. (See §83.306 below.)

Section 83.306 (current §1.306(b)) requires each applicant,upon discovery of new or changed information, to supplementits application within 10 days of discovery of the new or changedinformation.

Section 83.307 (current §1.304) describes how an applicationfor a regulated loan license is processed, including a descriptionof when an application is complete, as well as an explanation ofwhat may occur if an applicant fails to complete an application. Inaddition, this section describes the hearings process that occursif the applicant contests the denial of its application.

Section 83.308 (current §1.307) describes the procedures forrelocating a licensed of�ce, including deadlines for noti�cation.

Section 83.309 (current §1.308) describes how a licensee maychange its license status, including changing a license from ac-tive to inactive status and activating an inactive license.

Subsections (c) and (d) have been added to §83.309 in orderto clarify the procedures for a licensee to voluntarily surrenderits license, resulting in cancellation, as well as when a licensewill expire. Note that the language currently contained in §1.406regarding submission of the license certi�cate upon surrender isbeing combined into proposed §83.309(c).

Section 83.310 (current §1.309) sets out the fees for new li-censes, license transfers, �ngerprint processing, license amend-ments, license duplication, and costs of hearings.

Section 83.310(a)(2) has been revised re�ecting the collectionof assessment fees upfront with the application so that licensesmay be issued more quickly upon approval. Should a license notbe approved, this assessment fee will be refunded.

Section 83.311 (current §1.310) states that, upon �ling with theOf�ce of Consumer Credit Commissioner, an application for aregulated loan license or a notice submitted by an applicant or

licensee becomes a state record and public information subjectto the Texas Public Information Act.


Commissioner Pettijohn also has determined that for each yearof the �rst �ve years the rules are in effect, the public bene�tanticipated as a result of the changes from the previously en-acted version of these rules will be that the commission’s ruleswill conform to current practice, will be more easily understoodby licensees required to comply with the rules, and will be moreeasily enforced. The general substance of these rules has al-ready been in effect, as the rules are simply being relocated andreorganized with some changes. Thus, aside from the continu-ance of currently existing costs and the changing of the collectiontime for assessment fees under §83.310(a)(2), there is no antic-ipated cost to persons who are required to comply with the newrules as proposed. There is no anticipated adverse economiceffect on small or micro businesses. There will be no effect onindividuals required to comply with the sections as proposed.




§83.301. De�nitions.Words and terms used in this chapter that are de�ned in Texas FinanceCode, Chapter 342, have the same meanings as de�ned in Chapter 342.The following words and terms, when used in this chapter, shall havethe following meanings, unless the context clearly indicates otherwise.

(1) Net assets--The total value of acceptable assets usedor designated as readily available for use in the business, less liabil-ities, other than those liabilities secured by unacceptable assets. Unac-ceptable assets include, but are not limited to, goodwill, unpaid stocksubscriptions, lines of credit, notes receivable from an owner, propertysubject to the claim of homestead or other property exemption, and en-cumbered real or personal property to the extent of the encumbrance.Generally, assets are available for use if they are readily convertible tocash within 10 business days.

(2) Principal party--An adult individual with a substantialrelationship to the proposed lending business of the applicant. Thefollowing individuals are considered to be principal parties:

(A) proprietors, including spouses with communityproperty interest;

(B) general partners;


(C) of�cers of privately-held corporations, to includethe chief executive of�cer or president, the chief operating of�cer orvice president of operations, the chief �nancial of�cer or treasurer, andthose with substantial responsibility for lending operations or compli-ance with Texas Finance Code, Chapter 342;

(D) directors of privately-held corporations;

(E) individuals associated with publicly-held corpora-tions designated by the applicant as follows:

(i) of�cers as provided by subparagraph (D) of thissection (as if the corporation was privately-held); or

(ii) three of�cers or similar employees with signif-icant involvement in the corporation’s activities governed by TexasFinance Code, Chapter 342. One of the persons designated shall beresponsible for assembling and providing the information required onbehalf of the applicant and shall sign the application for the applicant;

(F) voting members of a limited liability corporation;and

(G) trustees and executors;

(H) individuals designated as a principal party wherenecessary to fairly assess the applicant’s �nancial responsibility, ex-perience, character, general �tness, and suf�ciency to command thecon�dence of the public and warrant the belief that the business willbe operated lawfully and fairly as required by the commissioner.

§83.302. Filing of New Application.

An application for issuance of a new regulated loan license must be sub-mitted in a format prescribed by the commissioner at the date of �lingand in accordance with the commissioner’s instructions. The commis-sioner may accept the use of prescribed alternative formats to facilitatemultistate uniformity of applications or in order to accept approvedelectronic submissions. The application must include the appropriatefees and the following:

(1) Required information. All questions must be answered.

(A) Application for License.

(i) Location. A physical street address must be listedfor the applicant’s proposed lending address. A post of�ce box or a mailbox location at a private mail-receiving service generally may not beused. If the address has not yet been determined or if the application isfor an inactive license, then the application must so indicate.

(ii) Responsible person. The person responsiblefor the day-to-day operations of applicant’s proposed of�ces must benamed.

(iii) Signature(s). Electronic signatures will be ac-cepted in a manner approved by the commissioner.

(I) If the applicant is a proprietor, each ownermust sign.

(II) If the applicant is a partnership, each generalpartner must sign.

(III) If the applicant is a corporation, an autho-rized of�cer must sign.

(IV) If the applicant is a limited liability com-pany, an authorized member or manager must sign.

(V) If the applicant is a trust or estate, the trusteeor executor, as appropriate, must sign.

(B) Disclosure of Owners and Principal Parties.

(i) Proprietorship. The applicant must disclose whoowns and who is responsible for operating the business. All commu-nity property interest must also be disclosed. If the business interestis owned by a married individual as separate property, documentationestablishing or con�rming separate property status must be provided.

(ii) General partnership. Each partner must be listedand the percentage of ownership stated. If a general partner is whollyor partially owned by a legal entity and not a natural person, a narrativeor diagram must be included that includes the names and titles of allmeeting the de�nition of "managerial of�cial," as contained in TexasBusiness Organization Code, §1.002, and a description of the owner-ship of each legal entity must be provided. General partnerships thatregister as limited liability partnerships should provide the same infor-mation as that required for general partnerships.

(iii) Limited partnership. Each partner, general andlimited, must be listed and the percentage of ownership stated.

(I) General partners. The applicant should pro-vide the complete ownership, regardless of percentage owned, for allgeneral partners. If a general partner is wholly or partially owned bya legal entity and not a natural person, a narrative or diagram must beincluded that includes the names and titles of all meeting the de�nitionof "managerial of�cial," as contained in Texas Business OrganizationCode, §1.002, and a description of the ownership of each legal entitymust be provided.

(II) Limited partners. The applicant should pro-vide a complete list of all limited partners owning 5% or more of thepartnership.

(III) Limited partnerships that register as limitedliability partnerships. The applicant should provide the same informa-tion as that required for limited partnerships.

(iv) Corporation. Each of�cer and director must benamed. Each shareholder holding 5% or more of the voting stock mustbe named if the corporation is privately-held. If a parent corporationis the sole or part owner of the proposed business, a narrative or dia-gram must be included that describes each level of ownership of 5% orgreater.

(v) Limited liability company. Each "manager," "of-�cer," and "member" owning 5% or more of the company, as thoseterms are de�ned in Texas Business Organization Code, §1.002, andeach agent owning 5% or more of the company must be listed. If amember is a legal entity and not a natural person, a narrative or dia-gram must be included that describes each level of ownership of 5% orgreater.

(vi) Trust or Estate. Each trustee or executor, as ap-propriate, must be listed.

(C) Application Questionnaire. All applicable ques-tions must be answered. Questions requiring a "yes" answer mustbe accompanied by an explanatory statement and any appropriatedocumentation requested.

(D) Appointment of Statutory Agent and Consent toService. The appointment of statutory agent and consent to servicemust be provided by each applicant. The statutory agent is the personor entity to whom any legal notice may be delivered. The agent mustbe a Texas resident and list an address for legal service. If the statutoryagent is a natural person, the address must be a physical residentialaddress. If the applicant is a corporation or a limited liability company,the statutory agent should be the registered agent on �le with theTexas Secretary of State. If the statutory agent is not the same as


the registered agent �led with the Texas Secretary of State, then theapplicant must submit certi�ed minutes appointing the new agent.

(E) Personal Af�davit. Each individual meeting thede�nition of "principal party" as de�ned in §83.301 of this title(relating to De�nitions) or who is a person responsible for day-to-dayoperations must provide a personal af�davit. All requested informa-tion must be provided.

(F) Personal Questionnaire. Each individual meetingthe de�nition of "principal party" as de�ned in §83.301 of this title orwho is a person responsible for day-to-day operations must provide apersonal questionnaire Each question must be answered. If any ques-tion, except question 1, is answered "yes," an explanation must be pro-vided.

(G) Employment History. Each individual meeting thede�nition of "principal party" as de�ned in §83.301 of this title or whois a person responsible for day-to-day operations must provide an em-ployment history. Each principal party should provide a continuous10-year history, with no gaps, accounting for time spent as a student,unemployed, or retired. The employment history must also include theindividual’s association with the entity applying for the license.

(H) Fingerprints.

(i) For all persons meeting the de�nition of "princi-pal party" as de�ned in §83.301 of this title, a complete set of legible�ngerprints must be provided. All �ngerprints should be submitted ina format prescribed by the agency and approved by the Texas Depart-ment of Public Safety and the Federal Bureau of Investigation.

(ii) For limited partnerships, if the Disclosure ofOwners and Principal Parties under subparagraph (B)(iii)(I) of thisparagraph does not produce a natural person, the applicant mustprovide a complete set of legible �ngerprints for individuals who areassociated with the general partner as principal parties.

(iii) For entities with complex ownership structuresthat result in the identi�cation of individuals to be �ngerprinted whodo not have a substantial relationship to the proposed applicant, theapplicant may submit a request to �ngerprint three of�cers or similaremployees with signi�cant involvement in the proposed business. Therequest should describe the relationship and signi�cant involvement ofthe individuals in the proposed business. The agency may approve therequest, seek alternative appropriate individuals, or deny the request.

(iv) For individuals who have previously been li-censed by the Of�ce of Consumer Credit Commissioner and principalparties of entities currently licensed, �ngerprints are not required.

(v) For individuals who have previously submitted�ngerprints to another state agency (e.g. Texas Department of Savingsand Mortgage Lending), �ngerprints are still required to be submittedto the Of�ce of Consumer Credit Commissioner, as per Texas FinanceCode, §14.152. Fingerprints cannot be disclosed to others, except asauthorized by Texas Government Code, §560.002, as amended.

(I) Financial Statement and Supporting Financial Infor-mation.

(i) General information. The �nancial statementmust be dated no earlier than 60 days prior to the date of applica-tion. Applicants may also submit audited �nancial statements datedwithin one year prior to the application date in lieu of completing theSupporting Financial Information All �nancial statements must becerti�ed as true, correct, and complete.

(ii) Sole proprietorships. Sole proprietors mustcomplete all sections of the Personal Financial Statement and the

Supporting Financial Information, or provide a personal �nancialstatement that contains all of the same information requested by thePersonal Financial Statement and the Supporting Financial Informa-tion. The Personal Financial Statement and Supporting FinancialInformation must be as of the same date.

(iii) Partnerships. A balance sheet for the partner-ship itself as well as each general partner must be submitted. In addi-tion, the information requested in the Supporting Financial Informationmust be submitted for the partnership itself and each general partner.All of the balance sheets and Supporting Financial Information doc-uments for the partnership and all general partners must be as of thesame date.

(iv) Corporations and limited liability companies.Corporations and limited liability companies must �le a balance sheetthat complies with generally accepted accounting principles (GAAP).The information requested in the Supporting Financial Informationmust be submitted. The balance sheet and Supporting FinancialInformation must be as of the same date. Financial statements aregenerally not required of related parties, but may be required by thecommissioner if the commissioner believes they are relevant. The�nancial information for the corporation or limited liability companyapplicant should contain no personal �nancial information.

(v) Trusts and estates. Trusts and estates must �le abalance sheet that complies with generally accepted accounting prin-ciples (GAAP). The information requested in the Supporting FinancialInformation must be submitted. The balance sheet and Supporting Fi-nancial Information must be as of the same date. Financial statementsare generally not required of related parties, but may be required bythe commissioner if the commissioner believes they are relevant. The�nancial information for the trust or estate applicant should contain nopersonal �nancial information.

(J) Assumed Name Certi�cates. For any applicant thatdoes business under an "assumed name" as that term is de�ned in TexasBusiness & Commerce Code, §36.02(7), an Assumed Name Certi�catemust be �led as provided in this subsection.

(i) Unincorporated applicants. Unincorporated ap-plicants using or planning to use an assumed name must �le an assumedname certi�cate with the county clerk of the county where the proposedbusiness is located in compliance with Texas Business & CommerceCode, §36.10, as amended. An applicant must provide a copy of theassumed name certi�cate that shows the �ling stamp of the county clerkor, alternatively, a certi�ed copy.

(ii) Incorporated applicants. Incorporated appli-cants using or planning to use an assumed name must �le an assumedname certi�cate in compliance with Texas Business & CommerceCode, §36.11, as amended. Evidence of the �ling bearing the �lingstamp of the Texas Secretary of State must be submitted or, alterna-tively, a certi�ed copy.

(2) Other required �lings.

(A) Loan forms. The applicant must provide informa-tion regarding all loan forms it intends to use.

(i) Custom forms. If a custom loan form is to beprepared, a preliminary draft or proof that is complete as to format andcontent and which indicates the number and distribution of copies tobe prepared for each transaction must be submitted.

(ii) Stock forms. If an applicant purchases or plansto purchase stock forms from a supplier, the applicant must includea statement that includes the supplier’s name and address and a list


identifying the forms to be used, including the revision date of the form,if any.

(B) Statement of Experience. Each applicant shouldprovide a statement setting forth the details of the applicant’s prior ex-perience in the lending or credit granting business. If the applicant orits principal parties do not have signi�cant experience in the same typeof credit business as planned for the prospective licensee, the applicantmust provide a written statement explaining the applicant’s relevantbusiness experience or education, why the commissioner should �ndthat the applicant has the requisite experience, and how the applicantplans to obtain the necessary knowledge to operate lawfully and fairly.

(C) Business Operation Plan. Each applicant must pro-vide a brief narrative to the application explaining the type of lendingoperation that is planned. This narrative should discuss each of the fol-lowing topics:

(i) the source of customers;

(ii) the purpose(s) of loans;

(iii) the size of loans;

(iv) the source of working capital for planned oper-ations;

(v) whether the applicant will only be arranging ornegotiating loans for another lender or �nancing entity;

(vi) if the applicant will only be arranging or nego-tiating loans for another lender or �nancing entity, the lender must alsoprovide:

(I) a list of the lenders for whom the applicantwill be arranging or negotiating loans;

(II) whether the loans will be collected at the lo-cation where the loans are made; or

(III) if the loans will not be collected at the loca-tion where the loans are made, the identi�cation of the person or �rmthat will be servicing the loans, including the location at which the loanswill be serviced, and a detailed description of the process to be utilizedin collections.

(D) Entity documents.

(i) Partnerships. A partnership applicant must sub-mit a complete and executed copy of the partnership agreement. Thiscopy must be signed and dated by all partners. If the applicant is a lim-ited partnership or a limited liability partnership, provide evidence of�ling with the Texas Secretary of State.

(ii) Corporations. A corporate applicant, domesticor foreign, must provide the following documents:

(I) a complete copy of the articles of incorpora-tion and any amendments;

(II) a copy of the relevant portions of the bylawsaddressing the required number of directors and the required of�cerpositions for the corporation;

(III) a copy of the minutes of corporate meetingsthat record the election of all current of�cers and directors as listedon the Disclosure of Owners and Principal Parties, or a certi�cationfrom the secretary of the corporation identifying the current of�cers anddirectors as listed on the Disclosure of Owners and Principal Parties;

(IV) if the statutory agent is not the same as theregistered agent �led with the Texas Secretary of State:

(-a-) a copy of the minutes of corporate meet-ings that record the election of the statutory agent; or

(-b-) a certi�cation from the secretary of thecorporation identifying the statutory agent; and

(V) a certi�cate of good standing from the TexasComptroller of Public Accounts.

(iii) Publicly-held corporations. In addition to theitems required for corporations, a publicly-held corporation must �lethe most recent 10K or 10Q for the applicant or for the parent company.

(iv) Limited liability companies. A limited liabilitycompany applicant, domestic or foreign, must provide the followingdocuments:

(I) a complete copy of the articles of organiza-tion;

(II) a copy of the relevant portions of the operat-ing agreement or regulations addressing responsibility for operations;

(III) a copy of the minutes of corporate meetingsthat record the election of all current of�cers and directors as listedon the Disclosure of Owners and Principal Parties, or a certi�cationfrom the secretary of the corporation identifying the current of�cers anddirectors as listed on the Disclosure of Owners and Principal Parties;

(IV) if the statutory agent is not the same as theregistered agent �led with the Texas Secretary of State:

(-a-) a copy of the minutes of corporate meet-ings that record the election of the statutory agent; or

(-b-) a certi�cation from the secretary of thecorporation identifying the statutory agent; and

(V) a certi�cate of good standing from the TexasComptroller of Public Accounts.

(v) Trusts. A copy of the relevant portions of theinstrument that created the trust addressing management of the trustand operations of the applicant must be �led with the application.

(vi) Estates. A copy of the instrument establishingthe estate must be �led with the application.

(vii) Foreign entities. In addition to the items re-quired by this chapter, a foreign entity must provide:

(I) a certi�cate of authority to do business inTexas, if applicable; and

(II) a statement of where records of Texas loantransactions will be kept. If these records will be maintained at a lo-cation outside of Texas, the applicant must acknowledge responsibilityfor the travel costs associated with examinations in addition to the usualassessment fee or agree to make all the records available for examina-tion in Texas.

(E) Bond. The commissioner may require a bond underTexas Finance Code, §342.102, when the commissioner �nds that thiswould serve the public interest. When a bond is required, the commis-sioner shall give written notice to the applicant. Should a bond not besubmitted within 40 calendar days of the date of the commissioner’snotice, any pending application may be denied.

(3) Subsequent applications (branch of�ces). If the appli-cant is currently licensed and �ling an application for a new of�ce, theapplicant must provide the information that is unique to the new loca-tion including the Application for License, Application Questionnaire,and Disclosure of Owners and Principal Parties, and a new FinancialStatement as provided in paragraph (1)(I) of this section. The respon-sible person at the new location must �le a Personal Af�davit, Personal


Questionnaire, and Employment History, if not previously �led. Otherinformation required by this section need not be �led if the informationon �le with the agency is current and valid.

§83.303. Transfer of License.

(a) De�nition. As used in this chapter, a "transfer of owner-ship" does not include a change in proportionate ownership as de�nedin §83.304 of this title (relating to Change in Form or ProportionateOwnership). Transfer of ownership includes the following:

(1) an existing owner of a sole proprietorship relinquishesthat owner’s entire interest in a license or an entirely new entity hasobtained an ownership interest in a sole proprietorship license;

(2) any purchase or acquisition of control of a licensed gen-eral partnership, in which a partner relinquishes that owner’s entire in-terest or a new general partner obtains an ownership interest;

(3) any change in ownership of a licensed limited partner-ship interest:

(A) in which a limited partner owning 10% or more re-linquishes that owner’s entire interest;

(B) in which a new limited partner obtains an ownershipinterest of 10% or more;

(C) in which a general partner relinquishes that owner’sentire interest; or

(D) in which a new general partner obtains an owner-ship interest (transfer of ownership occurs regardless of the percentageof ownership exchanged of the general partner);

(4) any change in ownership of a licensed corporation:

(A) in which a new stockholder obtains 10% or more ofthe outstanding voting stock in a privately-held corporation;

(B) in which an existing stockholder owning 10% ormore relinquishes that owner’s entire interest in a privately-held cor-poration;

(C) any purchase or acquisition of control of 51% ormore of a company which is the parent or controlling stockholder of alicensed privately-held corporation; or

(D) any stock ownership changes that result in a changeof control (i.e. 51% or more) for a licensed publicly-held corporation;

(5) any change in the membership interest of a licensedlimited liability company:

(A) in which a new member obtains an ownership in-terest of 10% or more;

(B) in which an existing member owning 10% or morerelinquishes that member’s entire interest; or

(C) in which a purchase or acquisition of control of 51%or more of any company which is the parent or controlling member ofa licensed limited liability company occurs;

(6) any acquisition of a license by gift, devise, or descent;and

(7) any purchase or acquisition of control of a licensed en-tity whereby a substantial change in management or control of the busi-ness occurs, despite not ful�lling the requirements of subsection (a)(1)- (5) of this section, and the commissioner has reason to believe thatproper regulation of the licensee dictates that a transfer must be pro-cessed.

(b) Approval of transfer. No regulated loan license may besold, transferred or assigned without written approval of the commis-sioner.

(c) Filing requirements. An application for transfer of a reg-ulated loan license must be submitted in a format prescribed by thecommissioner at the date of �ling and in accordance with the rules andinstructions. The commissioner may accept the use of prescribed alter-native formats to facilitate multistate uniformity of applications or inorder to accept approved electronic submissions. The application fortransfer shall include the appropriate fees and the following:

(1) Required information. The information contained inthe following must be submitted: Application for License, ApplicationQuestionnaire, Disclosure of Owners and Principal Parties, Appoint-ment of Statutory Agent and Consent to Service, Personal Af�davit,Personal Questionnaire, Employment History, Fingerprints, and Finan-cial Statement and Supporting Financial Information. The instructionsin §83.302 of this title (relating to Filing of New Application) are ap-plicable to these �lings.

(2) Evidence of the transfer of ownership. Documentationevidencing the transfer of ownership must be �led with the applicationand should include one of the following:

(A) a copy of the asset purchase agreement when onlythe assets have been purchased;

(B) a copy of the stock purchase agreement or other ev-idence of acquisition if voting stock of a corporate licensee has beenpurchased or otherwise acquired;

(C) any document that transferred ownership by gift,devise, or descent, such as a probated will or a court order; or

(D) any other documentation evidencing the transferevent.

(3) Other required �lings. All other required �lings of newlicense applicants pursuant to §83.302 of this title must be �led andcompleted by any applicant for transfer of a license. If the applicantis currently licensed and acquiring another location, the applicant mustprovide the information that is unique to the new location including theApplication for License, Application Questionnaire, and Disclosure ofOwners and Principal Parties, evidence of the transfer of ownership,and a new Financial Statement as provided in §83.302(1)(I) of this ti-tle. The responsible person at the new location must �le a PersonalAf�davit, Personal Questionnaire, and Employment History, if not pre-viously �led. Other information required by this section need not be�led if the information on �le with the agency is current and valid.

(d) Permission to operate. No business under the license shallbe conducted by any transferee until the application has been received,all applicable fees have been paid, and a request for permission to op-erate has been approved. In order to be considered, a permission tooperate must be in writing. Additionally, the transferor must grant thetransferee the authority to operate under the transferor’s license pend-ing approval of the transferee’s new license application. The transferormust accept full responsibility to any customer and to the agency forthe licensed business for any acts of the transferee in connection withthe operation of the lending business. The permission to operate mustbe submitted before the seller takes control of the licensed operation.The agreement shall set a de�nite period of time for the transferee tooperate under the transferor’s license. A request for permission to op-erate may be denied even if it contains all of the required information.Two companies may not simultaneously operate under a single license.If the agency grants a permission to operate, the transferor must ceaseoperating under the authority of the license.


(e) Application �ling deadline. Applications �led in connec-tion with transfers of ownership may be �led in advance but must be�led no later than 10 calendar days following the actual transfer.

§83.304. Change in Form or Proportionate Ownership.(a) Organizational form. When any licensee or parent of a li-

censee desires to change the organizational form of its business (e.g.,from corporation to limited partnership), the licensee must advise thecommissioner in writing of the change within 10 calendar days by �lingthe appropriate transfer application documents as provided in §83.303of this title (relating to Transfer of License). In addition, the licenseeshall submit a copy of the relevant portions of the organizational doc-ument for the new entity (e.g., articles of conversion and partnershipagreement) addressing the ownership and management of the new en-tity.

(b) Merger. A merger of a licensee is a change of ownershipthat results in a new or different surviving entity and requires the �lingof a transfer application pursuant to §83.303 of this title. A mergerof the parent entity of a licensee that leads to the creation of a newentity or results in a different surviving parent entity requires a transferapplication pursuant to §83.303 of this title. Mergers or transfers ofother entities with a bene�cial interest beyond the parent entity levelonly require noti�cation within 10 calendar days.

(c) Proportionate ownership.

(1) A change in proportionate ownership that results in theexact same owners still owning the business, and does not meet therequirements described in paragraph (2) of this subsection, does notrequire a transfer. Such a proportionate change in ownership does notrequire the �ling of a transfer application, but does require noti�cationwhen the cumulative ownership change to a single entity or individualamounts to 5% or greater. No later than 10 calendar days followingthe actual change, the licensee is required to notify the commissionerin writing of the change in proportionate ownership. This section doesnot apply to a publicly-held corporation that has �led with the agencythe most recent 10K or 10Q �ling of the licensee or the publicly-heldparent corporation, although a transfer application may be required un-der §83.303 of this title (relating to Transfer of License).

(2) A proportionate change in which an owner that previ-ously held under 10% obtains an ownership interest of 10% or more,requires a transfer under §83.303 of this title.

§83.305. Amendments to Pending Application.Upon request, each applicant shall provide information supplementalto that contained in the applicant’s original application documents.

§83.306. Reportable Actions After Application.Any action, fact, or information that would require a materially dif-ferent answer than that given in the original license application andwhich relates to the quali�cations for license must be reported within10 calendar days after the person has knowledge of the action, fact orinformation.

§83.307. Processing of Application.(a) Initial review. A response to an application will ordinarily

be made within 14 calendar days of receipt stating that the applicationis complete and accepted for �ling or stating that the application isincomplete and specifying the information required for acceptance.

(b) Complete application. An application is complete when:

(1) it conforms to the rules and published instructions;

(2) all fees have been paid; and

(3) all requests for additional information have been satis-�ed.

(c) Failure to complete application. If a complete applicationhas not been �led within 30 calendar days after notice of de�ciency hasbeen sent to the applicant, the application may be denied.

(d) Hearing. Whenever an application is denied, the affectedapplicant has 30 calendar days from the date the application was de-nied to request in writing a hearing to contest the denial. This hearingshall be conducted pursuant to the Administrative Procedure Act, TexasGovernment Code, Chapter 2001, and §9.1 et seq. of this title (relatingto Rules of Procedure for Contested Case Hearings, Appeals, and Rule-makings), before an administrative law judge who will recommend adecision to the commissioner. The commissioner will then issue a �naldecision after review of the recommended decision.

(e) Denial. If an application has been denied, the assessmentfee shall be refunded to the applicant. The investigation fee and the�ngerprint processing fee in §83.310 of this title (relating to Fees) shallbe forfeited.

(f) Processing time.

(1) A license application will ordinarily be approved or de-nied within a maximum of 60 calendar days after the date of �ling ofa completed application.

(2) When a hearing is requested following an initial licenseapplication denial, the hearing shall be held within 60 calendar daysafter a request for a hearing is made unless the parties agree to an ex-tension of time. A �nal decision approving or denying the license ap-plication shall be made after receipt of the proposal for decision fromthe administrative law judge.

(3) Exceptions. More time may be taken where good causeexists, as de�ned by Texas Government Code, §2005.004, for exceed-ing the established time periods in paragraphs (1) and (2) of this sub-section.

§83.308. Relocation of Licensed Of�ces.(a) A licensee may move the licensed of�ce from the licensed

location to any other location by paying the appropriate fees and giv-ing notice of intended relocation to the commissioner not less than 30calendar days prior to the anticipated moving date. Noti�cation mustbe �led on the Amendment to Regulated Loan License or an approvedelectronic submission as prescribed by the commissioner. The noticemust include the contemplated new address of the licensed of�ce, theapproximate date of relocation, a copy of the notice to debtors, and theapplicable fee as outlined in §83.310 of this title (relating to Fees).

(b) Written notice of a relocation of an of�ce must be mailedto all debtors of record at least �ve calendar days prior to the date of re-location. Any licensee failing to give the required notice shall waive alldefault charges on payments coming due from the date of relocation to15 calendar days subsequent to the mailing of notices to debtors. No-tices shall identify the licensee, provide both old and new addresses,provide both old and new telephone numbers, and state the date relo-cation is effective. The notice to debtors can be waived or modi�edby the commissioner when it is in the public interest. A request forwaiver or modi�cation must be submitted in writing for approval. Thecommissioner may approve noti�cation to debtors by signs in lieu ofnoti�cation by mail, if in the commissioner’s opinion, no debtors willbe adversely affected.

§83.309. License Status.(a) Inactivation of active license. A licensee may cease operat-

ing under a regulated loan license and choose to inactivate the license.A license may be inactivated by giving notice of the cessation of oper-ations not less than 30 calendar days prior to the anticipated inactiva-tion date. Noti�cation must be �led on the Amendment to RegulatedLoan License or an approved electronic submission as prescribed by


the commissioner. The notice must include the new mailing addressfor this license, the effective date of the inactivation, and the fee foramending the license. A licensee must continue to pay the yearly re-newal fees for an inactive license as outlined in §83.310 of this title(relating to Fees), or the license will expire.

(b) Activation of inactive license. A licensee may activate aninactive license by giving notice of the intended activation not less than30 calendar days prior to the anticipated activation date. Noti�cationmust be �led on the Amendment to Regulated Loan License or an ap-proved electronic submission as prescribed by the commissioner. Thenotice must include the contemplated new address of the licensed of-�ce, the approximate date of activation, and the fee for amending thelicense as outlined in §83.310 of this title.

(c) Voluntary surrender of license. Subject to §83.406(b) ofthis title (relating to Effect of Revocation, Suspension, or Surrender ofLicense), a licensee may voluntarily surrender a license by providingwritten notice of the cessation of operations, a request to surrender thelicense, and by submitting the license certi�cate. A voluntary surrenderwill result in cancellation of the license.

(d) Expiration. A license will expire on December 31 unlessa fee is paid by the due date for license renewal. A licensee that paysthe annual assessment fee will automatically be renewed even thougha new license may not be issued.

§83.310. Fees.

(a) New licenses.

(1) Investigation fees. A $200 non-refundable investiga-tion fee is assessed each time an application for a new license is �led.

(2) Assessment fees. An assessment fee of $430 per activelicense and $125 per inactive license is assessed each time an applica-tion for a new license is �led. This assessment fee will be refunded ifthe application is not approved.

(b) License transfers. An applicant must pay a $200 non-re-fundable investigation fee for the �rst license transfer and a $50 non-re-fundable investigation fee on each additional license transfer �led si-multaneously

(c) Fingerprint processing. The non-refundable fee to investi-gate each principal party’s �ngerprint record is $40 per individual.

(d) License amendments. A fee of $25 must be paid each timea licensee amends a license by rendering a license inactive, activatingan inactive license, changing the assumed name of the licensee, or re-locating an of�ce.

(e) License duplicates. The fee for a license duplicate is $10.

(f) Costs of hearings. The commissioner may assess the costsof an administrative appeal pursuant to Texas Finance Code, §14.207for a hearing afforded under §83.307(d) of this title (relating to Pro-cessing of Application), including the cost of the administrative lawjudge, the court reporter, and agency staff representing the agency at ahearing.

(g) Annual assessment fee.

(1) An annual assessment fee is required for each licenseconsisting of:

(A) a �xed fee of $430; and

(B) a volume fee based upon the type of lending activityconducted and the volume of business of that consists of an amount thatis the greater of:

(i) $0.03 per each $1,000 transacted for licenseholders whose regulated operations consist of negotiating or brokeringtransactions on behalf of others in accordance with the most recentannual report �ling (Schedule E, Brokered Loans) required by TexasFinance Code, §342.559;

(ii) $0.03 per each $1,000 advanced for licenseholders whose regulated operations occur within Texas Finance Code,Chapter 342, Subchapter F, in accordance with the most recent annualreport �ling (Schedule D, Lines 2 and 3) required by Texas FinanceCode, §342.559; or

(iii) $0.05 per each $1,000 made or acquired underTexas Finance Code, Chapter 342, except amounts made or acquiredby license holders covered by clauses (i) or (ii) of this subparagraph, orTexas Finance Code, Chapter 346, in accordance with the most recentannual report �ling (Schedule D, Lines 1, 4, 6 and 8) required by TexasFinance Code, §342.559.

(2) The annual assessment fee for an inactive license is$125.

(3) The maximum annual assessment fee for each licensedentity shall not average more than $1,000 per active licensed location.

§83.311. Applications and Notices as Public Records.Once a license application or notice is �led with the OCCC, it be-comes a "state record" under Texas Government Code, §441.180(11),and "public information" under Texas Government Code, §552.002.Under Texas Government Code, §441.190, §441.191 and §552.004, theoriginal applications and notices must be preserved as "state records"and "public information" unless destroyed with the approval of thedirector and librarian of the State Archives and Library Commissionunder Texas Government Code, §441.187. Under Texas GovernmentCode, §441.191, the OCCC may not return any original documents as-sociated with a regulated loan license application or notice to the ap-plicant or licensee. An individual may request copies of a state recordunder the authority of the Texas Public Information Act, Texas Gov-ernment Code, Chapter 552.



2006.


SUBCHAPTER D. LICENSE7 TAC §§83.401 - 83.408

The Finance Commission of Texas (commission) proposes new7 TAC, Chapter 83, §§83.401 - 83.408, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.401 - 83.408outline Subchapter D, concerning License.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to the


rules pending repeal, as found in 7 TAC, Subchapter D, §§1.401- 1.407, concerning License. The commission’s proposedrepeal of Subchapter D is published elsewhere in this issue ofthe Texas Register. The agency is also proposing new §83.404,concerning Effect of Criminal History Information on Applicantsand Licensees; and new §83.405, concerning Crimes DirectlyRelated to Fitness for License; Mitigating Factors.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional expla-nation is provided under sections where recent changes in lan-guage have been incorporated into the proposed new rules as aresult of the agency’s rule review of current Subchapter D underTitle 7, Part 1, Chapter 1 of the Texas Administrative Code. Theremaining changes throughout all sections consist of revisions toformatting, grammar, punctuation, spelling, and other technicalcorrections. If no additional explanation is provided other thanthe main purpose of the rule, then the only changes made fromthe prior version of a rule pending repeal to the new rule beingproposed are technical and nonsubstantive in nature.

Section 83.401 (current §1.401) discusses the authorized activ-ities of licensed lenders operating multiple branches.

Section 83.402 (current §1.402) explains the requirement for dis-playing licenses.

Section 83.403 (current §1.403) describes the agency’s pro-cedure for providing delinquent notices to licensees who havefailed to pay an annual assessment fee.

Section 83.404 (new rule) describes the effect of criminal historyinformation on applicants and licensees. Subsection (a) explainsthe collection and consideration of criminal history information.Subsection (b) outlines the information that must be providedon arrests, charges, indictments, and convictions. As per TexasOccupations Code, §53.022, subsection (c) of the rule outlinesthe factors the agency will consider in determining whether aconviction relates to the occupation of being a regulated lender.Subsection (d) provides the effects of criminal convictions on ap-plicants and licensees, including a list of crimes involving moralcharacter.

Section 83.405 (new rule) is a companion rule to §83.404. Sec-tion 83.405 describes the crimes directly related to the �tness forholding a license, as well as mitigating factors that will be con-sidered, as per Texas Occupations Code, §53.023.

Section 83.406 (current §1.404) details the effect of a license re-vocation, suspension, or surrender upon the authority to collectexisting contracts.

Subsection (b) has been added to §83.406 and states that a li-censee may not surrender a license after the initiation of an ad-ministrative action without the written agreement of the agency.

Section 83.407 (current §1.405) prescribes the process for a newapplication after a former licensee has surrendered its license orhad a license revoked.

Section 83.407 has been revised by deleting language referenc-ing suspension of a license, as such suspended licensees notcomplying with suspension requirements will subsequently berevoked and fall into the revocation category. Language outlin-ing the situation of application after surrender has been added.Additionally, §83.407 has been revised to re�ect that former li-censees in these situations must follow the procedures for �linga new application, as opposed to the current language in §1.405

which refers to only transfer application procedures being nec-essary.

Section 83.408 (current §1.407) provides the procedure for re-turning license certi�cates upon the reissuance of a license.

Section 83.408 has been revised, adding the requirement of awritten statement if a licensee is unable to return its former cer-ti�cate upon reissuance of a license.






§83.401. Branch Networks.

For purposes of Texas Finance Code, §342.151(b), an authorized lenderwith multiple licensed of�ces is authorized to make, negotiate, arrange,and collect loans from any of its licensed locations. Any action relatingto a single account may occur at different licensed locations as longas every action is made by a licensed branch operated by the sameauthorized lender.

§83.402. License Display.

Licenses must be prominently displayed in a licensee’s of�ce in a con-spicuous location visible to the general public.

§83.403. Notice of Delinquency in Payment of Annual AssessmentFee.

For purposes of Texas Finance Code, §342.155, notice of delinquencyin the payment of an annual assessment fee is given upon the mailingof the delinquency notice, enclosed in a postpaid, properly addressed


envelope, in a post of�ce or of�cial depository under the care and cus-tody of the United States Postal Service.

§83.404. Effect of Criminal History Information on Applicants andLicensees.

(a) Criminal history information. Upon submission of an ap-plication for a license, a principal party to an applicant for a licenseis investigated by the commissioner. In submitting an application fora license, a principal party to an applicant for a license is required toprovide �ngerprint information to the commissioner. Fingerprint in-formation is forwarded to the Texas Department of Public Safety andto the Federal Bureau of Investigation to obtain criminal history recordinformation. The commissioner will continue to receive informationon new criminal activity reported after the �ngerprints have been pro-cessed. In the case of a new application or if the commissioner �nds afact or condition that existed or, had it existed the license would havebeen refused, the commissioner may use the criminal history recordinformation obtained from law enforcement agencies or other criminalhistory information provided by the applicant or other sources to issuea denial or initiate an enforcement action. Criminal history informa-tion relates to the agency’s assessment of good moral character and theinformation gathered is relevant to the licensing or enforcement actiondecision as described below.

(b) Information on arrests, charges, indictments, and convic-tions. In responding to the information requests in the application, allarrests, charges, indictments, and convictions shall be disclosed. Theapplicant must, to the extent possible, secure and provide to the com-missioner reliable documents or testimony evidencing the informationrequired to make a determination under subsection (d) of this section,including the recommendations of the prosecution, law enforcement,and correctional authorities. The applicant must also furnish proof insuch form as may be required by the commissioner that the principalparty of the applicant or licensee has maintained a record of steadyemployment, has supported the principal party’s dependents, and hasotherwise maintained a record of good conduct. At a minimum, theprincipal party must furnish proof that all outstanding court costs, su-pervision fees, �nes, and restitution as may have been ordered havebeen paid. Failure to disclose arrests, charges, indictments, and convic-tions re�ects negatively on an applicant’s honesty and moral character.

(c) Factors in determining whether conviction relates to occu-pation of regulated lender. In determining whether a criminal offensedirectly relates to the duties and responsibilities of holding a license,the commissioner shall consider the following factors, as speci�ed inTexas Occupations Code, §53.022:

(1) the nature and seriousness of the crime;

(2) the relationship of the crime to the purposes for requir-ing a license to engage in the occupation;

(3) the extent to which a license might offer an opportunityto engage in further criminal activity of the same type as that in whichthe principal party previously had been involved; and

(4) the relationship of the crime to the ability, capacity, or�tness required to perform the duties and discharge the responsibilitiesof a license holder.

(d) Effect of criminal conviction on applicant for or holder oflicense.

(1) Effect of criminal convictions involving moral charac-ter. The commissioner may deny an application for a license, or sus-pend or revoke a license, if the applicant or licensee has a principalparty who has been convicted of any felony or of a crime involvingmoral character that is reasonably related to the applicant’s or licensee’s�tness to hold a license or to operate lawfully and fairly within Texas

Finance Code, Chapter 342. For purposes of this section, the crimeslisted below are considered to be crimes involving moral character:

(A) Fraud, misrepresentation, deception, or forgery;

(B) Breach of trust or other �duciary duty;

(C) Dishonesty or theft;

(D) Assault;

(E) Violation of a statute governing lending of this oranother state;

(F) Failure to �le a required report with a governmentalbody, or �ling a false report;

(G) Attempt, preparation, or conspiracy to commit oneof the preceding crimes; or

(H) Attempt, preparation, or conspiracy to evade TexasFinance Code, Chapter 342 and its provisions.

(2) Effect of other criminal convictions. The commissionermay deny an application for a license, or revoke an existing license ifa principal party of the license applicant or holder has been convictedof a crime that directly relates to the duties and responsibilities of aregulated lender who originates or obtains loans written under TexasFinance Code, Chapter 342. Adverse action by the commissioner inresponse to a crime speci�ed in this section is subject to mitigatingfactors and rights of the applicant or licensee, as found in §83.405 ofthis title (relating to Crimes Directly Related to Fitness for License;Mitigating Factors).

§83.405. Crimes Directly Related to Fitness for License; MitigatingFactors.

(a) Crimes directly related to �tness for license. Originatingor obtaining loans made under Texas Finance Code, Chapter 342 in-volves or may involve making representations to borrowers regardingthe terms of the loan, maintaining loan accounts, repossessing propertywithout a breach of the peace, maintaining goods that have been repos-sessed, collecting due amounts in a legal manner, and foreclosing onreal property in compliance with state and federal law. Consequently, acrime involving the misrepresentation of costs or bene�ts of a productor service, the improper handling of money or property entrusted to theindividual, a crime involving failure to �le a governmental report or �l-ing a false report, or a crime involving the use or threat of force againstanother person, is a crime directly related to the duties and responsibil-ities of a license holder and may be grounds for denial, suspension, orrevocation.

(b) Mitigating factors. In determining whether a convictionfor a crime renders an applicant or a licensee un�t to be a licenseholder, the commissioner shall consider, in addition to the factors listedin §83.404 of this title (relating to Effect of Criminal History Informa-tion on Applicants and Licensees), the following factors, as speci�edin Texas Occupations Code, §53.023:

(1) the extent and nature of the principal party’s past crim-inal activity;

(2) the age of the principal party at the time of the commis-sion of the crime;

(3) the time elapsed since the principal party’s last criminalactivity;

(4) the conduct and work activity of the principal partyprior to and following the criminal activity;


(5) the principal party’s rehabilitation or rehabilitative ef-fort while incarcerated or after release, or following the criminal activ-ity if no time served; and

(6) the principal party’s current circumstances relating tothe present �tness of the applicant or licensee holding a license, ev-idence of which may include letters of recommendation from prose-cution, law enforcement, and correctional of�cers who prosecuted, ar-rested, or had custodial responsibility for the principal party, the sheriffor chief of police in the community where the principal party resides,and other persons in contact with the convicted principal party.

§83.406. Effect of Revocation, Suspension, or Surrender of License.

(a) Effect on existing contracts. Revocation, suspension, orsurrender of a license does not affect a preexisting contract between alender and a borrower, except that no more than 10% interest may becharged or received by the lender following the revocation, suspension,or surrender of its license. Alternatively, a lender whose license is re-voked or suspended may transfer or sell its accounts to an authorizedlender who may continue to charge or receive the contracted rate of in-terest within the authority of Texas Finance Code, §342.001, et seq.

(b) Surrendering to avoid administrative action. A licenseemay not surrender a license after an administrative action has been ini-tiated without the written agreement of the agency.

§83.407. Application Process after Surrender or Revocation.

To obtain a license after surrender or revocation, the former licensee isrequired to �le an application for a new license pursuant to the proce-dures set forth in §83.302 of this title (relating to Filing of New Appli-cation).

§83.408. License Reissuance.

In the event of reissuance of a license for any reason, the licensee shallreturn to the agency the license certi�cate that was held prior to the reis-suance. Should the licensee be unable to return the license certi�cate tothe agency, the licensee must provide a written statement to that effect,including the reason for inability to return it (e.g. lost, destroyed).



2006.


PART 6. CREDIT UNIONDEPARTMENT

CHAPTER 95. SHARE AND DEPOSITORINSURANCE PROTECTIONSUBCHAPTER A. INSURANCEREQUIREMENTS7 TAC §95.100

(Editor’s note: The text of the following section proposed for repealwill not be published. The section may be examined in the of�ces of theCredit Union Department or in the Texas Register of�ce, Room 245,James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Credit Union Commission proposes the repeal of §95.100,concerning account insurance. The rule is being replaced bynew §95.100 and §95.101 which provides de�nitions for the rele-vant terms and speci�es the requirement that credit unions mustobtain share and deposit insurance protection for the protectionof its members.

The repeal of the rule is proposed as a result of the Department’sgeneral rule review and as a result of its replacement by newrules for approving a new insurance source for credit unions.The requirement that a credit union maintain account insurancehas been moved to new §95.101.

Betsy Loar, General Counsel, has determined that for the �rst�ve year period the rule is repealed there will be no �scal impli-cations for state or local government as a result of repealing therule.

Ms. Loar has also determined that for each year of the �rst �veyears the rule is repealed, the public bene�ts anticipated as aresult of repealing the rule will be ease of use by credit unionsand the public with the new rules replacing the repealed rule.There is no anticipated effect on small businesses as a resultof repealing the rule. There is no economic cost anticipated tocredit unions or individuals as a result of repealing the rule.

Written comments on the proposal must be submitted within 30days after its publication in the Texas Register to Betsy Loar,General Counsel, Credit Union Department, 914 East Ander-son Lane, Austin, Texas 78752-1699. Oral comments on theproposal can be made at the Commission’s Legislative AdvisoryCommittee meeting on Friday, January 19, 2007 at 9:00 a.m. at914 East Anderson Lane, Austin, Texas 78752.

The repeal is proposed under the provision of the Texas FinanceCode, §15.402, which authorizes the Commission to adopt rea-sonable rules for administering Title 2, Chapter 15 and Title 3,Subchapter D of the Texas Finance Code and under Texas Fi-nance Code §15.410, which requires credit unions to maintainshare and deposit insurance protection for its members and de-positors.

The speci�c section affected by the proposed repeal is TexasFinance Code, §15.410.

§95.100. Account Insurance.



2006.

TRD-200605765Harold E. FeeneyCommissionerCredit Union DepartmentEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 837-9236

7 TAC §§95.100 - 95.109


The Credit Union Commission proposes new §§95.100 - 95.109,concerning insurance requirements under Subchapter A. TheDepartment is authorized to approve providers of primary shareand deposit insurance protection. In order to promote consis-tency, the Commission seeks to establish standards which aninsuring organization must meet to qualify as primary share anddeposit insurance provider. The new rules update and replacethe existing §95.100 concerning account insurance.

New §95.100 provides de�nitions for the relevant terms foundin the various sections of this subchapter. Currently, §95.100addresses the requirement that a credit union have insurance.This requirement has been moved to new §95.101.

New §95.101, concerning share and depositor insurance pro-tection, incorporates and expands on the requirements of old§95.100, that a credit union maintain share and deposit insur-ance. The new rule speci�es the requirement that credit unionsmust obtain share and deposit insurance for the protection of itsmembers and indicates that the insurance protection may be ob-tained from NCUA or from an insuring organization approved bythe Department.

New §95.102 concerns the quali�cations for an insuring organ-ization. The new rule prescribes requirements that an organi-zation must meet to provide share and deposit insurance pro-tection for state-chartered credit unions. The rule provides thatthe insuring organization must be in good standing in its stateof domicile, that it receive regular examinations from its stateof domicile, and that it have adequate capital for its prospectivebusiness. The rule also sets out departmental requirements andfees.

New §95.103 describes the powers and duties granted to an ap-proved insuring organization in carrying out its general purposesas a provider of share and deposit insurance protection.

New §95.104, stipulates that an insuring organization must notifythe Department when it receives an application for participationby a credit union and when a credit union terminates participationin the insuring organization’s program.

New §95.105 concerns reports �led by an insuring organization.The rule speci�es that an insuring organization �le with the Com-missioner annually audited �nancial statements, as well as peri-odic reports on the capital adequacy of the insuring organization.

New §95.106 concerns the amount of insurance protection acredit union must maintain. The new rule provides that a par-ticipating credit union must maintain insurance for its share anddeposit accounts in an amount that is not less than the insurancecoverage it would have under NCUSIF or its successor. The rulealso sets out the conditions for a credit union to issue member-ship shares that are not guaranteed and are subordinate to allother claims.

New §95.107, concerning the sharing of con�dential informa-tion, allows the Department, with the consent of the participatingcredit union, to share examinations and other records with an in-suring organization to allow the insuring organization to assessthe �nancial condition of the participating credit union.

New §95.108, concerning examinations, provides that the De-partment may conduct examinations and investigations of an in-suring organization, either within or outside the state. The rulealso provides that the Department shall perform a regular exam-ination of each insuring organization.

New §95.109 concerns fees and charges. The new rule providesthat the insuring organization pay the costs of an examinationand permits the Department to engage professionals to performexaminations or investigations at the expense of the insuring or-ganization.

The new rules are proposed as a result of the Department’s gen-eral rule review.

Betsy Loar, General Counsel, has determined that for the �rst�ve year period the new rules are in effect there will be no �scalimplications for state or local government as a result of enforcingor administering the proposed rules.

Ms. Loar has also determined that for each year of the �rst �veyears the proposed new rules are in effect, the public bene�tsanticipated as a result of enforcing the rules will be greater clarityand ease of use of the rules. There is no anticipated effect onsmall businesses as a result of adopting the new rules. There isno economic cost anticipated to credit unions or individuals forcomplying with the new rules if adopted.

Written comments on the proposal must be submitted within 30days after its publication in the Texas Register to Betsy Loar,General Counsel, Credit Union Department, 914 East AndersonLane, Austin, Texas 78752-1699. Oral comments on the pro-posal can be made at the Commission’s Legislative AdvisoryCommittee meeting on Friday, January 19, 2007, at 9:00 a.m.at 914 East Anderson Lane, Austin, Texas 78752.

The new rules are proposed under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §15.410, which requires credit unions toprovide share and deposit insurance protection for credit unionmembers and depositors.

The speci�c section affected by the proposed new rules is TexasFinance Code, §15.410.


The following words and terms, when used in this chapter, shall havethe following meanings, unless the context clearly indicates otherwise.

(1) ”Act” means the Texas Credit Union Act (Texas Fi-nance Code, Subtitle D).

(2) ”Deposit” means a balance held by a credit union andestablished by a credit union member, another credit union, a govern-mental unit, or an authorized nonmember in accordance with standardsspeci�ed by the credit union, including balances designated as deposits,deposit certi�cates, checking accounts or accounts by other names. A”deposit” is a debt which earns interest and is owed by the credit unionto the account holder.

(3) ”Federally-insured” means insured by the NationalCredit Union Administration (NCUA) through the National CreditUnion Share Insurance Fund (NCUSIF) under Title II of the FederalCredit Union Act (12 USC Section 1781 et. seq.), or its successor.

(4) ”Insuring organization” means a cooperative share in-surance fund or a guaranty corporation or credit union that provides aidand �nancial assistance to credit unions that are in the process of liq-uidation or are incurring �nancial dif�culty in order that the share anddeposit accounts in the credit unions will be protected or guaranteedagainst loss up to a speci�ed level for each account.

(5) ”Membership share” means a share of the credit unionwhich shall be the balance held by a credit union and established by


a member in accordance with standards speci�ed by the credit union.Each member may own only one membership share. In the case ofa joint account, the account may serve to represent the membershipof each of the joint owners who have applied for and were acceptedas members, as long as a full membership share for each joint ownerseeking membership is maintained in the account.

(6) ”Participating credit union” means a credit union thathas applied for and been admitted to participate in an insuring organi-zation’s program and whose participation has not been terminated.

(7) ”Shares” means a balance held by a credit union andestablished in accordance with standards speci�ed by the credit unionincluding, but not limited to shares, share accounts, share certi�cates,share draft accounts or other such accounts. ”Shares” may includemembership shares. In addition, ”shares” earn dividends.

§95.101. Share and Depositor Insurance Protection.

(a) Each credit union incorporated under the Act or otherwiseauthorized to do business in this state shall obtain share and depositinsurance for the protection of its members’ accounts. Such share anddeposit guarantee insurance may be obtained from the NCUA throughthe NCUSIF or from an insuring organization approved by the com-missioner, with the advice and consent of the commission.

(b) Any credit union that fails to maintain in full force and ef-fect share and deposit insurance protections as provided in this sectionshall cease accepting deposits and making loans immediately and shallterminate its corporate existence in this state under such terms and con-ditions as the commissioner deems appropriate.

§95.102. Quali�cations for an Insuring Organization.

(a) An insuring organization must demonstrate the followingprerequisites:

(1) The insuring organization is authorized to provide shareand deposit insurance protection in its state of domicile or in the Stateof Texas;

(2) The insuring organization is in good standing with theregulatory authorities in its state of domicile;

(3) The insuring organization receives regular examina-tions from its state of domicile;

(4) The insuring organization has capital which is adequatefor its prospective business; and

(5) The insuring organization has loss reserves that are ac-tuarially sound.

(b) In addition to the prerequisites delineated above, the de-partment may scrutinize other data and information as the commis-sioner deems appropriate, including, but not limited to, demonstratedexpertise in insuring credit union shares and deposits.

(c) The department shall have the right to examine the booksand records of the insuring organization as part of the approval process.The insuring organization shall be assessed the supplemental exami-nation fee as prescribed in §97.113 of this title (relating to Fees andCharges). The insuring organization shall pay the fee to the depart-ment within thirty days of the assessment.

(d) The department may, in approving an insuring organiza-tion, impose such written conditions as the commissioner deems rea-sonable, necessary, or advisable in the public interest.

§95.103. General Powers and Duties of an Insuring Organization.

In carrying out its general purposes, an insuring organization may:

(1) guarantee to participating credit unions the payment ofany de�ciency in an individual member’s share or deposit account(s)caused by credit union’s insolvency or any other reason;

(2) issue share and deposit insurance contracts or otherwiseeffect credit union share guaranty, and enter into other contracts neces-sary or advisable in the conduct of its business;

(3) advance funds in accordance with agreed upon lendingterms and conditions to aid participating credit unions to operate andto meet liquidity needs;

(4) upon the written order of the commissioner, and at suchcompensation as shall be agreed upon, the insuring organization mayassume control of the property and business of any participating creditunion and operate it at the direction of the commissioner until its �nan-cial stability has been reestablished to the satisfaction of the commis-sioner, or the credit union has been liquidated or merged into anothercredit union;

(5) assist in the merger, consolidation, or liquidation of par-ticipating credit unions;

(6) receive money or other property from participatingcredit unions;

(7) conduct investigation and audits of any applicant orparticipating credit union in order to determine the �nancial andoperating condition of the applicant or participating credit union; and

(8) establish conditions for participation by credit unions,including the establishment of risk eligibility standards.

§95.104. Notices.(a) An insuring organization shall provide written notice to the

department of receipt of any application for participation by a creditunion. Within 30 days of receipt of the notice, the department will ad-vise the applicant and the insuring organization if it will interpose anobjection to the proposal based on safety and soundness concerns. Anysuch objection must be addressed to the satisfaction of the departmentbefore the applicant will be eligible to participate in the insuring organ-ization’s program. The insuring organization shall also be responsiblefor notifying the department of its underwriting decision on any appli-cation and advising the department when an applicant has become aparticipating credit union.

(b) At least 30-days prior to the effective date of any termi-nation, an insuring organization shall notify the department in writingof any termination, voluntary or involuntary, of a participating creditunion.

§95.105. Reporting.(a) Within one hundred days after the close of a �scal year, an

insuring organization shall �le with the commissioner annually audited�nancial statements, prepared in accordance with generally acceptedaccounting principles covering that �scal year. The audited �nancialstatements shall be accompanied by an opinion of an independent cer-ti�ed public accountant. In addition, at least once every three years,the audit shall include an actuarial study of the capital adequacy of theinsuring organization.

(b) The provisions of this section are in addition to those pre-scribed in §91.209 of this title (relating to Reports and Charges for LateFiling).

§95.106. Amount of Insurance Protection.(a) The primary insured or guaranteed amount for share and

deposit accounts of individual members of participating credit unionsshall never be less than the corresponding share insurance coverageprovided by the NCUSIF or its successor.


(b) With the approval of the commissioner and if authorizedby the insuring organization, a participating credit union may, fromtime to time as determined by its board of directors, issue membershipshares that are not guaranteed and are subordinate to all other claims,including creditors, shareholders and the insuring organization.

§95.107. Sharing Con�dential Information.

In order to permit the insuring organization to assess the �nancial con-dition and performance of a participating credit union, the departmentshall, with the consent of such participating credit union, provide to theinsuring organization any and all reports of examination conducted by,and orders and determinations issued by, the commissioner regardingthat institution.

§95.108. Examinations.

(a) The department may conduct examinations and investiga-tions within or outside this state to determine whether an insuring or-ganization has engaged, is engaging or is about to engage in any act,practice or transaction which constitutes an unsafe or unsound practiceor a violation of any law or rule applicable to the insuring organization.

(b) In lieu of an examination under this section, the commis-sioner may accept the examination report of another regulator autho-rized to examine the insuring organization.

§95.109. Fees and Charges.

(a) An insuring organization shall pay the cost associated withan examination as prescribed in §97.113(k) of this title (relating to For-eign Credit Union Examination Fees).

(b) At the sole discretion of the commissioner, the departmentmay engage professionals to perform and complete any aspect of anexamination or investigation. The reasonable expenses and compensa-tion of such professionals shall be paid by the insuring organization.



2006.

TRD-200605764Harold E. FeeneyCommissionerCredit Union DepartmentEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 837-9236

TITLE 16. ECONOMIC REGULATION

PART 8. TEXAS RACINGCOMMISSION

CHAPTER 303. GENERAL PROVISIONSThe Texas Racing Commission proposes amendments to§§303.4, 303.31, 303.42, 303.94, and the chart following§303.202(c). These amendments are proposed in conjunctionwith the Commission’s review of Chapter 303, conducted in ac-cordance with Government Code, §2001.039. The Commissionhas preliminarily determined that the reasons for adopting theabove-referenced sections continue to exist, with the proposedamendments.

The sections proposed for amendment relate to the conduct ofCommission meetings, the extent of the Commission’s regula-tory authority, the rules for Arabian breeds under the Texas BredIncentive Program, the types of charities that an association maydesignate as the bene�ciary of a required charity race day, thetypes of occupational licenses that the Commission issues, andthe types of criminal offenses that directly relate to speci�c oc-cupational licenses.

Charla Ann King, Executive Secretary for the Commission, hasdetermined that for each of the �rst �ve years that the amendedrules will be in effect, the following statements regarding the an-ticipated public bene�t will apply:

The change to §303.4 will clarify that the public is invited to com-ment at Commission meetings on any agenda item or issue thatis under the jurisdiction of the Commission.

The change to §303.31 will clarify that the Commission’s au-thority to regulate race meetings extends to both live and simul-cast race meetings. This change will be consistent with currentagency practice.

The change to §303.42 will expand the types of equine charitiesthat a racing association may designate as the bene�ciary ofa required charity race day to include those focused on equinewelfare.

The change to §303.94 is made to re�ect the date of the currentrules of the Texas Arabian Breeders Association.

The changes to the chart following §303.202(c) delete thecolumns for the obsolete occupational licenses for "ChartWriter" and "Cool-Out." Chart Writers are now licensed as As-sociation Staff. Cool-Outs are now licensed as Grooms at horseracetracks and as Kennel Helpers at greyhound racetracks.In addition, the changes now designate the offense of "Theft"as directly relating to the occupational licenses for AdoptionProgram Personnel, Announcers, Association Chaplains, andMedical Staff. The changes now also designate the offenseof "Felony Driving While Intoxicated" as directly relating to theoccupational licenses for Authorized Agents, Entry Clerks, Far-rier/Plater/Blacksmith’s Assistants, Tattooers, Tooth Floaters,and Veterinarian’s Assistants.

There are no foreseeable implications relating to costs or rev-enues for state or local governments as a result of enforcing oradministering the proposed amendments.

There are no foreseeable implications relating to costs or rev-enues for small or micro-businesses as a result of enforcing oradministering the proposed amendments.

There are no economic costs to persons required to comply withthe proposed amendments.

There are no negative impacts upon employment conditions inthis state as a result of the proposed amendments.

All comments or questions regarding these proposed amend-ments may be submitted in writing within 30 days following publi-cation of this notice in the Texas Register to Gloria Giberson, As-sistant to the Executive Secretary for the Texas Racing Commis-sion, at P.O. Box 12080, Austin, Texas 78711-2080, telephone(512) 833-6699, or fax (512) 833-6907.

SUBCHAPTER A. ORGANIZATION OF THECOMMISSION16 TAC §303.4


The amendment is proposed under the Texas Civil Statutes, Ar-ticle 179e, §3.02 and §3.021, which authorizes the Commissionto make rules relating to all aspects of greyhound and horse rac-ing.

The amendment implements §2.11 of Texas Civil Statutes, Ar-ticle 179e, which establishes the frequency and conditions ofCommission meetings, and requires the Commission to, by rule,develop and implement policies that provide the public a reason-able opportunity to appear before the Commission and speak onany issue under the jurisdiction of the commission.

§303.4. Meetings.

(a) - (e) (No change.)

(f) The public is invited to comment regarding any agendaitem or any issue under the jurisdiction of the Commission. Publiccomments may be limited to a reasonable number, frequency andlength. All individuals wishing to address the Commission mustsign a registration form and make their remarks under oath. Allindividuals addressing the Commission are subject to questioning bythe Commission and the Commission staff.

(g) (No change.)



2006.

TRD-200605622Mark FennerGeneral CounselTexas Racing CommissionEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 490-4009

SUBCHAPTER B. POWERS AND DUTIES OFTHE COMMISSION16 TAC §303.31, §303.42

The amendments are proposed under the Texas Civil Statutes,Article 179e, §3.02 which authorizes the Commission to makerules relating exclusively to horse and greyhound racing; §8.02,which directs the Commission to adopt rules relating to the con-duct of charity race days; and §11.01, which authorizes the Com-mission to adopt rules to regulate pari-mutuel wagering on horseand greyhound races.

The amendments implement Article 8 and Article 11 of TexasCivil Statutes, Article 179e.

§303.31. Regulation of Racing.

The commission shall regulate each live and simulcast race meetingconducted in this state and supervise the operation of racetracks andthe persons other than patrons who participate in a race meeting.

§303.42. Approval of Charity Race Days.

(a) - (c) (No change.)

(d) At least one of the charity days must be conducted for acharity that directly bene�ts the persons who work in the stable or ken-nel area of the racetrack. At least one of the charity days must be con-

ducted for a charity that primarily bene�ts the welfare of race animalsor research into the health or safety of race animals.



2006.


SUBCHAPTER D. TEXAS BRED INCENTIVEPROGRAMSDIVISION 2. PROGRAM FOR HORSES16 TAC §303.94

The amendment is proposed under the Texas Civil Statutes, Arti-cle 179e, §3.02 and §3.021, which authorizes the Commission tomake rules relating to all aspects of greyhound and horse racing,and §9.01, which establishes that the rules of horse breed reg-istries establishing the quali�cations of Texas-bred horses aresubject to rules adopted by the Commission.

The amendment implements Article 9 of Texas Civil Statutes,Article 179e.

§303.94. Arabian Horse Rules.The Commission adopts by reference the rules of the Texas ArabianBreeders Association dated March 25, 2006 [June 23, 2002], regardingthe administration of the Texas Bred Incentive Program for Arabianhorses. Copies of these rules are available at the Texas Racing Com-mission, P.O. Box 12080, Austin, Texas 78711, or at the Commissionof�ce at 8505 Cross Park Drive, #110, Austin, Texas 78754-4594.



2006.


SUBCHAPTER F. LICENSING PERSONSWITH CRIMINAL BACKGROUNDS16 TAC §303.202

The amendment is proposed under the Texas Civil Statutes, Ar-ticle 179e, §3.02 and §3.021, which authorizes the Commissionto make rules relating to all aspects of greyhound and horse rac-


ing, and §7.04, which provides the grounds on which the Com-mission may revoke, deny or suspend a license.

The amendment implements Article 7 of Texas Civil Statutes,Article 179e.

§303.202. Guidelines.


(c) Based on the factors described in subsection (b) of this sec-tion, the commission has determined that the offenses described in sub-section (a) of this section are directly related to the following occupa-tional licenses. (An "X" on the chart means the offense directly relatesto the license.)Figure: 16 TAC §303.202(c)



2006.


TITLE 22. EXAMINING BOARDS

PART 24. TEXAS BOARD OFVETERINARY MEDICAL EXAMINERS

CHAPTER 573. RULES OF PROFESSIONALCONDUCTSUBCHAPTER B. SUPERVISION OFPERSONNEL22 TAC §573.10

The Texas Board of Veterinary Medical Examiners ("Board") pro-poses amendments to §573.10, concerning Supervision of Non-Licensed Employees. These amendments facilitate the gath-ering of blood samples by a livestock owner’s employees ortechnicians for those situations where cattle, instead of beingshipped to a sales barn where brucellosis testing is conducted,are moved directly to slaughter from an originating location, usu-ally a ranch. These cattle must be tested at the ranch location.Often these locations do not have locally available veterinari-ans to collect the blood samples prior to shipment, but trainedpersons approved by the Texas Animal Health Commission areavailable to collect blood samples for testing under the generalsupervision of a veterinarian. The amendments allow these per-sons to collect the samples and send them to the appropriatelaboratory for testing.

Mr. Ron Allen, Executive Director, has determined that for the�rst �ve-year period the amended section is in effect there willbe no �scal implications for state or local government as a resultof enforcing or administering the section.

Mr. Allen has also determined that for the �rst �ve years theamended section is in effect the public bene�t anticipated as aresult of enforcing the section will be to provide an ef�cient andsafe method of collecting blood and testing for brucellosis wherecattle are not initially shipped to a livestock market but rather areshipped directly to slaughter. Safety is assured by having thepersons collecting the blood samples do so under the generalsupervision of a veterinarian. In addition, this practice is consis-tent with the testing procedures conducted at livestock markets(sales barns). There will be no effect on small or micro busi-nesses. There will be no economic cost to persons required tocomply with the section as proposed.

Comments on the proposed amended section may be sub-mitted in writing to Julie Barker, Texas Board of VeterinaryMedical Examiners, 333 Guadalupe, Suite 3-810, Austin, Texas78701, phone (512) 305-7555, fax (512) 305-7556, [email protected] and must be received by Decem-ber 20, 2006.

The amendment is proposed under the authority of the Vet-erinary Licensing Act, Occupations Code, §801.151(a), whichstates that the Board may adopt rules necessary to administerthe chapter, and §801.151(d), which states that the Board mayadopt rules for persons who work under the supervision of aveterinarian.

The amendment affects the Agriculture Code, Chapter 163, re-lating to testing for brucellosis.

§573.10. Supervision of Non-Licensed Employees.

(a) - (c) (No change.)

(d) Delegation Relating to Of�cial Health/Test Documents

(1) A licensee must personally sign any of�cial health doc-uments issued by the licensee provided, however, that rabies certi�-cates may be authenticated by either:

(A) (No change.)

(B) the use of a signature stamp in accordance with therequirements of §573.51 of this title (relating to Rabies Control).

(2) The issuance of any pre-signed or pre-stamped of�cialhealth documents by a licensee is prohibited [a violation of this rule].

(3) (No change.)

(4) A person approved by the Texas Animal Health Com-mission (TAHC) and under the general supervision of a TAHC ap-proved veterinarian may perform testing for brucellosis at a livestockmarket or collect blood samples on animals to be consigned directlyfrom the ranch to slaughter and submit them to the state/federal labo-ratory for brucellosis testing.

(5) (No change.)

(e) - (i) (No change.)



2006.

TRD-200605633


Julie A. BarkerExecutive AssistantTexas Board of Veterinary Medical ExaminersProposed date of adoption: February 8, 2007For further information, please call: (512) 305-7555

CHAPTER 575. PRACTICE AND PROCEDURE22 TAC §575.27

The Texas Board of Veterinary Medical Examiners ("Board")proposes amendments to §575.27 concerning Complaints--Re-ceipt, Investigation, and Disposition. This section sets out theprocess used by the Board in receiving and processing com-plaints. The amendments re�ect recent changes in the Board’senforcement procedures and changes in the way complaintsare handled by the Board’s staff.

One amendment concerns the practice of veterinary medicinewithout a license. The amendment states that such practicecan be handled informally, by which the non-licensee voluntarilyagrees to cease illegal acts, or formally by cease and desist pro-cedures set out in §801.508, Occupations Code. Other changesre�ect the current roles and functions of the Board’s investiga-tors and the director of enforcement in processing complaints.Finally, upon receipt of a complaint, and before the licensee re-ceives a copy of the complaint against him, the Board will re-quest a copy of the licensee’s records pertaining to the patientin question. This is a change from the previous practice in whichthe licensee �rst received a copy of the complaint and then wasrequired to send a copy of the patient records to the Board.

Mr. Ron Allen, Executive Director, has determined for the �rst�ve-year period the amended section is in effect there will beno �scal implications for state or local government as a result ofenforcing or administering the section.

Mr. Allen has also determined that for the �rst �ve years the sec-tion is in effect the public bene�t anticipated as a result of enforc-ing the amended section will be to better inform the public andveterinarians on how complaints are handled. There will be noeffect on small or micro businesses. There will be no economiccost to persons required to comply with the amended section asproposed.

Comments on the proposed amendments may be submitted inwriting to Julie Barker, Texas Board of Veterinary Medical Exam-iners, 333 Guadalupe, Suite 3-810, Austin, Texas 78701, phone(512) 305-7555, fax (512) 305-7556, e-mail [email protected], and must be received by December 20, 2006.

The amendments are proposed under the authority of the Vet-erinary Licensing Act, Occupations Code, §801.151(a) whichstates that the Board may adopt rules necessary to administerthe chapter.

The amendments affect the Veterinary Licensing Act, Occu-pations Code, Chapter 801, Subchapter E, which requires theBoard to develop and implement a complaint procedure.

§575.27. Complaints--Receipt, Investigation and Disposition.

(a) (No change.)

(b) Complaints against non-licensees. Complaints against per-sons alleged to be practicing veterinary medicine without a license maybe investigated and resolved informally by the executive director withthe consent of the non-licensee, or the Board may utilize formal cease

and desist procedures speci�ed in §801.508, Occupations Code. Com-plaints not resolved by the executive director may be referred [by theBoard] to a local prosecutor or the attorney general for legal action.

(c) Investigation of complaints.

(1) - (3) (No change.)

(4) Complaints will be reviewed every thirty (30) days todetermine the status of the complaint. Parties to a complaint will beinformed on the status of a complaint at approximately 45 day intervals[least on a quarterly basis].

(5) Upon receipt of a complaint, the director of enforce-ment will [a board investigator shall] review it and may interview thecomplainant to develop additional information. If the director of en-forcement [investigator] concludes that the complaint resulted from amisunderstanding, is outside the jurisdiction of the board, or is with-out merit, the director of enforcement [investigator] shall recommendthrough the general counsel [director of enforcement] to the executivedirector that the investigation not be initiated [closed]. If the executivedirector concurs with the recommendation, the complainant will be sonoti�ed[, the investigation will be closed, and the complaint �le will bemaintained in a secure �le in the board of�ce]. If the executive direc-tor does not concur with the recommendations, the investigation willproceed.

(6) The director of enforcement will assign an investiga-tor to the complaint, and the investigator will send a request for pa-tient records to the licensee. Once the investigator receives the patientrecords, the licensee will be sent a copy of the complaint and a requestfor a written response to the complaint. [If the executive director re-turns the complaint to the investigator with a notation of non-concur-rence under paragraph (5) of this subsection, or if the executive directorconcurs with the investigator’s determination that a potential violationexists, the licensee is furnished with a copy of the complaint, unlessthe executive director determines that an undercover investigation isrequired. If no undercover investigation is required, the investigatorshall contact the licensee in writing, and request any patient records orother pertinent documents deemed necessary for the investigation. Theinvestigator may schedule an interview with the licensee. The investi-gator may request a written narrative statement from the licensee.]

(7) After the licensee’s response to the complaint isreceived, further investigation may be necessary to corroborate theinformation provided by the complainant and the licensee. During theinvestigation, the investigator will [shall] interview the complainant,if possible. The investigator may request additional medical opinions,supporting documents, and interviews with other witnesses.

(8) (No change.)

(d) - (h) (No change.)



2006.

TRD-200605632Julie A. BarkerExecutive AssistantTexas Board of Veterinary Medical ExaminersProposed date of adoption: February 8, 2007For further information, please call: (512) 305-7555


PART 29. TEXAS BOARD OFPROFESSIONAL LAND SURVEYING

CHAPTER 661. GENERAL RULES OFPROCEDURES AND PRACTICESSUBCHAPTER D. APPLICATIONS,EXAMINATIONS, AND LICENSING22 TAC §661.46

The Texas Board of Professional Land Surveying (TBPLS) pro-poses an amendment to §661.46, concerning Seal and Stamps.This section identi�es what the registered land surveyor is re-quired to have in order to sign and seal his work.

The amendment will further clarify the procedures that a landsurveyor must follow in the use of electronic signature and seal.

Sandy Smith, Executive Director, has determined that for the�rst �ve year period the rule is in effect there will be no �scalimpact to state or local government as a result of enforcing oradministering this amendment.

Ms. Smith has also determined that for each year of the �rst�ve years the rule is in effect the public will bene�t from the rulebecause it will clarify the use of electronic signature and seal.

There will be no effect on small or micro businesses that arein compliance with the Board’s Act and Rules. There are noanticipated costs to those who are required to comply with therule as proposed.

Comments on the proposed amendment may be submittedin writing to Sandy Smith, Executive Director, Texas Board ofProfessional Land Surveying, 12100 Park 35 Circle, BuildingA, Suite 156, Austin, TX 78753. Comments may also be faxedto Ms. Smith at the Board at (512) 239-5253 or may be sentelectronically to [email protected]. All requests for apublic hearing on the proposed section submitted under theAdministrative Procedure Act must be received by the Exec-utive Director not more than 15 calendar days after notice ofa proposed change in the section has been published in theTexas Register.

The amendment is proposed pursuant to §1071.151, Title 6, Oc-cupations Code, Subtitle C, which authorizes the Board to adoptand enforce reasonable and necessary rules to perform its du-ties.

The proposed amendment implements the Texas AdministrativeCode, Title 22, Part 29, General Rules of Procedures and Prac-tices.

§661.46. Seal and Stamps.At the time the applicant receives a certi�cate of registration/licensure,the applicant will also be instructed to secure an impression seal of thetype speci�ed by the board. As soon as the registrant has secured animpression seal, the registrant shall make an imprint thereof and shallforward said imprint to the board for its �les. A rubber stamp is notconsidered an impression seal, but may be used at the discretion of thelicensee for the purpose of this rule. A rubber stamp signature is notpermitted.[A registrant or licensee may place their seal and signature onelectronic data at the surveyor’s discretion, provided that a hard copyform is signed, sealed and retained by the surveyor.]



2006.

TRD-200605693Sandy SmithExecutive DirectorTexas Board of Professional Land SurveyingEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 239-5263

CHAPTER 663. STANDARDS OFRESPONSIBILITY AND RULES OF CONDUCTSUBCHAPTER A. ETHICAL STANDARDS22 TAC §663.10

The Texas Board of Professional Land Surveying (TBPLS) pro-poses an amendment to §663.10, concerning Disciplinary Rules.This section provides a guideline for conduct that a surveyorshould not engage in.

The amendment will further clarify the placement of a surveyor’sseal and signature on electronic data.


Ms. Smith has also determined that for each year of the �rst�ve years the rule is in effect the public will bene�t from the rulebecause it will clarify the use of electronic signature and seal.





§663.10. Disciplinary Rules.

The surveyor shall not:

(1) violate any provision of the Professional Land Survey-ing Practices Act (the Act) or disciplinary rules thereof;

(2) circumvent or attempt to circumvent any provision ofthe Act or disciplinary rules thereof through actions of another;


(3) participate, directly or indirectly, in any plan, scheme,or arrangement attempting to or having as its purpose the evasion ofany provision of the Act and disciplinary rules;

(4) fail to exercise reasonable care or diligence to preventhis/her partners, associates, or employees from engaging in conductwhich, if done by him, would violate any of the provisions of the Actor rules;

(5) engage in any conduct that discredits or attempts to dis-credit the profession of surveying;

(6) permit or allow any professional identi�cation, seal,form, or business name, or service to be used or made use of, directly orindirectly, or any manner whatsoever, so as to make possible to createthe opportunity for the unauthorized practice of professional surveyingby any person, �rm, or corporation in this state. A registrant or licenseemay place their seal and signature on electronic data at the surveyor’sdiscretion, provided that a hard copy form is signed and sealed or a re-trievable electronic copy of the signed and sealed survey is retained bythe surveyor. [;]

(7) perform any acts, allow any omission, or make any as-sertions or representation which are fraudulent, deceitful, or mislead-ing, or which in any manner whatsoever, tend to create a misleadingimpression;

(8) aid or abet, directly or indirectly, any unlicensed personin connection with the unauthorized practice of professional surveyingor any �rm or corporation in the practice of professional surveyingunless carried on in accordance with the Act.



2006.


SUBCHAPTER B. PROFESSIONAL ANDTECHNICAL STANDARDS22 TAC §663.17

The Texas Board of Professional Land Surveying (TBPLS) pro-poses an amendment to §663.17, concerning Monumentation.This section identi�es what the registered land surveyor is re-quired to do in regards to monumentation.

The amendment will further clarify the procedures that a landsurveyor must follow in setting monumentation for subdivisions.


Ms. Smith has also determined that for each year of the �rst�ve years the rule is in effect the public will bene�t from the rulebecause it will clarify the monumentation process.





§663.17. Monumentation.(a) - (d) (No change.)

(e) Subdivisions that require infrastructure construction musthave exterior corner monumentation set prior to plat recordation. Itis the responsibility of the surveyor signing the recorded subdivisionplat and the Company he is registered to work under to ensure thatthe setting of interior lot and block corners be completed within onecalendar year from the date of recordation.



2006.


CHAPTER 665. EXAMINATION ADVISORYCOMMITTEE22 TAC §665.2

The Texas Board of Professional Land Surveying (TBPLS) pro-poses an amendment to §665.2, concerning the Size, Quorumand Quali�cations of advisory committee members. The amend-ment will clarify what is expected of examination advisory com-mittees.

The amendment to the Size, Quorum and Quali�cations will clar-ify the quali�cations of being a member of the committee and whyyou can be removed from the committee.

Sandy Smith, Executive Director, has determined that, for the�rst �ve year period the rule is in effect, there will be no �scal


impact to state or local government as a result of enforcing oradministering this amendment.

Ms. Smith has also determined that, for each year of the �rst�ve years the rule is in effect, the public will bene�t from the rulebecause it will make clear what constitutes grounds for removalfrom the committee.





§665.2. Size, Quorum and Quali�cations.(a) - (c) (No change.)

(d) It is grounds for removal from the committee if a membercannot discharge the member’s duties for a substantial part of the termfor which the member is appointed because of illness or disability, isabsent from more than half of the committee and subcommittee meet-ings during a calendar year, is absent from at least three consecutivecommittee meetings or is found to have practiced in violation of theProfessional Land Surveying Practices Act and/or Rules of the Board[or fails to develop a minimum of one analytical or six legal questionseach year]. The committee chair will notify the board of such vacan-cies.

(e) (No change.)



2006.


22 TAC §665.4

The Texas Board of Professional Land Surveying (TBPLS) pro-poses an amendment to §665.4, concerning the terms of of�ce.

The amendment will clarify what the terms of of�ce for membersof the examination advisory committees will be.

The amendment to the terms of of�ce will delete the board ap-pointing the chair and vice chair of each committee, announcingeach meeting under the Open Meetings Act, procedures for par-liamentary decisions, and minutes being taken, approved andsigned by the committee of�cer.


Ms. Smith has also determined that for each year of the �rst �veyears the rule is in effect the public will bene�t from the rule be-cause it will clarify the terms of of�ce as it relates to examinationadvisory committees.


Comments on the proposed amendment may be submittedin writing to Sandy Smith, Executive Director, Texas Board ofProfessional Land Surveying, 12100 Park 35 Circle, BuildingA, Suite 156, Austin, TX 78753. Comments may also be faxedto Ms. Smith at the Board at (512) 239-5253 or may be sentelectronically to [email protected]. All requests for apublic hearing on the proposed amendment submitted underthe Administrative Procedure Act must be received by theExecutive Director not more than 15 calendar days after noticeof a proposed change to the section has been published in theTexas Register.

The amendment is proposed pursuant to Section 1071.151, Title6, Occupations Code, Subtitle C, which authorizes the Board toadopt and enforce reasonable and necessary rules to performits duties.


§665.4. Terms of Of�ce.

(a) The term of of�ce of each member shall be six years. Mem-bers shall serve after expiration of their terms until a replacement isappointed.

(b) Members shall be appointed for staggered terms so that theterms of an equivalent number of members will expire on August 31stof each even-numbered year.

(c) If a vacancy occurs, a person shall be appointed to servethe unexpired portion of that term.

(d) The chair of the board shall appoint a chair and vice chair ofeach committee. Each of�cer may holdover until his or her replacementis appointed by the chair of the board.

(e) The advisory committee chair shall preside at all commit-tee meetings at which he or she is in attendance, call meetings in ac-cordance with this section, appoint subcommittees of the committee asnecessary, and cause proper reports to be made to the board. The pre-siding of�cer may serve as an ex-of�cio member of any subcommitteeof the committee.

(f) The advisory committee vice chair shall perform the dutiesof the chair in case of the absence or disability of the presiding of�cer.


In case the of�ce of chair becomes vacant, the vice chair will serve untila successor is appointed to complete the unexpired portion of the term.

[(g) The Board shall appoint those currently serving as chairand vice chair on each committee to continue to serve until the boardappoints their successors.]

[(h) Each meeting of the committee shall be announced andconducted in accordance with the Open Meetings Act, Texas Govern-ment Code, Chapter 551. Meetings regarding test items will be closed.]

(g) [(i)] Members shall attend committee meetings as sched-uled. Members shall attend meetings of subcommittees to which themember is assigned. A member shall notify the presiding of�cer or ap-propriate board staff if he or she is unable to attend a scheduled meeting.

(h) [(j)] It is grounds for removal from the committee if a mem-ber cannot discharge the member’s duties for a substantial part of theterm for which the member is appointed because of illness or disabil-ity, is absent from more than half of the committee and subcommitteemeetings during a calendar year, or is absent from at least three con-secutive committee meetings.

(i) [(k)] The validity of an action of the committee is not af-fected by the fact that it is taken when a ground for removal of a memberexists.

(j) [(l)] Staff support for the committee shall be provided bythe board.

[(m) Procedures. Roberts Rules of Order, Newly Revised,shall be the basis of parliamentary decisions except where otherwiseprovided by law or rule.]

(k) [(n)]Any action taken by the committee must be approvedby a majority vote of the members present once quorum is established.

(l) [(o)] Each member shall have one vote.

[(p) Minutes of each committee meeting shall be taken by acommittee member or board staff.]

[(q) A draft of the minutes approved by the presiding of�-cer shall be provided to the board and each member of the committeewithin 30 days of each meeting.]

[(r) After approval by the committee, the minutes shall besigned by the presiding of�cer for each committee.]

(m) [(s)] The committee may establish subcommittees as nec-essary to assist the committee in carrying out its duties. The chair shallappoint members of the committee to serve on subcommittees and toact as subcommittee chairs. Subcommittees shall meet when called bythe subcommittee chair or when so directed by the committee.



2006.


22 TAC §665.7

The Texas Board of Professional Land Surveying (TBPLS)proposes an amendment to §665.7, concerning training. Theamendment will change what training is required in order to beon an examination advisory committee.

The amendment will change the required training needed to bea member of the examination advisory committee.


Ms. Smith has also determined that for each year of the �rst �veyears the rule is in effect the public will bene�t from the rule be-cause it will ensure that examination advisory committee mem-bers receive the necessary training before they vote, deliberate,or be counted as a member.



The amendment is proposed pursuant to Section 1071.151, Title6, Occupations Code, Subtitle C, which authorizes the Board toadopt and enforce reasonable and necessary rules to performits duties.


§665.7. Training.

A person who is appointed to an advisory committee may not vote,deliberate, or be counted as a member until the person has receivedand reviewed the following:

(1) The Professional Land Surveying Practices Act andRules of the Board; and

(2) Test Blueprints [The Open Meetings Law, Chapter 551Government Code]; and

(3) Item Writers Guide [The Public Information Law,Chapter 552 Government Code].



2006.

TRD-200605691


Sandy SmithExecutive DirectorTexas Board of Professional Land SurveyingEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 239-5263

TITLE 31. NATURAL RESOURCES ANDCONSERVATION

PART 1. GENERAL LAND OFFICE

CHAPTER 15. COASTAL AREA PLANNINGSUBCHAPTER A. MANAGEMENT OF THEBEACH/DUNE SYSTEM31 TAC §15.6

The General Land Of�ce (GLO) proposes an amendment to§15.6, relating to Concurrent Dune Protection and BeachfrontConstruction Standards. The GLO proposes to amend §15.6(f)to allow a local government to permit the construction of a stor-age area or areas with breakaway or louvered walls in erodingareas if such construction is consistent with the requirementsof the National Flood Insurance Program (NFIP) and not other-wise restricted by the local government’s dune protection andbeach access plan. The amendment also would allow a localgovernment to permit enclosures as required by local buildingor safety codes.

The existing §15.6(f)(4) provides that local governments withdune protection and beach access plans certi�ed by the GLOin accordance with Texas Natural Resources Code §61.015(b)may permit construction in eroding areas of breakaway or lou-vered walls to create a storage area, but limits the enclosed areato a maximum of 300 square feet in eroding areas. The amend-ment to §15.6(f)(4) deletes the 300-square foot maximum allow-able area for a storage area. The amendment also allows a localgovernment to permit the construction of more than one storagearea if such construction is consistent with the requirements ofthe NFIP. Finally, the amendment allows a local government topermit enclosures required by local building or safety codes.

The NFIP was created in 1968 to provide previously unavailable�ood insurance protection to property owners in �ood-prone ar-eas. 44 Code of Federal Regulations (CFR) §59.2(a). To qual-ify for the NFIP, a community must adopt �ood plain manage-ment regulations, satisfying at a minimum the criteria set forth in44 CFR Part 60, relating to Criteria for Land Management andUse. The criteria in Part 60 are designed to reduce or avoid fu-ture �ood, mudslide or �ood-related erosion damages. 44 CFR§59.2(b).

The NFIP regulations designate the land in the �ood plain withina community subject to a 1 percent or greater chance of �ood-ing in any given year an A Zone on a community’s Flood HazardBoundary Map (FHBM). 44 CFR §59.1. An A Zone can then besubdivided on the FHBM into a number of subzones, including aV Zone in a coastal area. V Zones are described as those areasalong the coast where water depth and other conditions wouldsupport at least a 3-foot wave height. For new or substantiallyimproved buildings in V Zones, a local government’s develop-ment regulations, such as zoning rules or building codes, mustrequire, among other things, the ground level must be free of ob-structions, or any enclosure must be constructed with non-load

bearing breakaway walls, that meet NFIP criteria. Any such en-closures may be used only for the parking of vehicles, buildingaccess, or storage. 44 CFR §60.3(e)(5).

The 77th Texas Legislature passed H.B. 1018, which requiresthat each Texas community to adopt �oodplain managementplans to become eligible for the NFIP. Water Code §16.3145.The Texas Commission on Environmental Quality coordinatesthe NFIP in Texas.

The intent of this rulemaking is to make the requirements of theBeach Dune Rules relating to ground-level enclosures consis-tent with the requirements of the NFIP. The passage of H.B.1018 and its implementation in 2001 requires that each com-munity comply with these standards. Such a requirement wasnot in effect in 1996 when the existing §15.6(f) was adopted. 21TexReg 3004 (Apr. 5, 1996). The NFIP requirements ensurethat debris and beach obstruction caused by building collapse instorm events will be minimized. These are also the objectivesof §15.6(f). The extensive scrutiny given to international build-ing codes and model �ood ordinances adopted by local govern-ments to comply with the requirements of FEMA and the NationalFlood Insurance Program ensures that allowing storage areas ormultiple enclosures promotes the maintenance of safe, accessi-ble beaches.

Pursuant to Texas Government Code §2001.0225, a regulatoryanalysis is not required for the proposed rulemaking as a "ma-jor environmental rule." The proposed rulemaking will not ad-versely affect, in a material way, the economy, a sector of theeconomy, productivity, competition, jobs, the environment, or thepublic health and safety of the state or a sector of the state. Theproposed rulemaking does not exceed a standard set by federallaw, does not exceed an express requirement of state law, doesnot exceed a requirement of a delegation agreement or contractbetween the state and an agency or representative of the federalgovernment to implement a state or federal program, and is notadopted solely under the general powers of the GLO.

The proposed rulemaking is subject to the Texas Coastal Man-agement Program (CMP) pursuant to 31 TAC §505.11(b)(4) be-cause it governs individual agency actions listed in Texas NaturalResources Code §33.2053(a)(10) and 31 TAC §505.11(a)(1)(J).The proposed rule amendment must be consistent with appli-cable CMP goals and policies. The applicable CMP goals andpolicies related to this proposed rulemaking is 31 TAC §501.26,relating to Policies for Construction in the Beach/Dune System.The GLO �nds the proposed amendment to be consistent withthe applicable goals and policies of the CMP.

The GLO has evaluated the proposed rulemaking in accordancewith Texas Government Code, §2007.043(b), and §2.18 of theAttorney General’s Private Real Property Rights PreservationAct Guidelines and determined that a detailed takings impact as-sessment is not required. The proposed rulemaking does not af-fect private real property in a manner that requires real propertyowners to be compensated as provided by the Fifth and Four-teenth Amendments to the United States Constitution or ArticleI, Sections 17 and 19, of the Texas Constitution. Furthermore,the proposed rulemaking would not affect any private real prop-erty in a manner that restricts or limits the owner’s right to theproperty that would otherwise exist in the absence of the ruleamendments. The proposed rulemaking will not result in a takingof private property and there are no adverse impacts on privatereal property interests.


Mr. Sam Webb, Deputy Commissioner for the GLO’s CoastalResources Program Area, has determined that for each year ofthe �rst �ve years the amended sections as proposed are in ef-fect there will be no �scal implications for the state or units oflocal government as a result of enforcing or administering theamended sections as the amendments impose no additional du-ties or obligations on the state or units of local government.

Mr. Sam Webb, Deputy Commissioner for the GLO’s CoastalResources Program Area, has determined that there will beno additional economic cost to persons required to complywith these regulations, as these amendments add no addi-tional restrictions or requirements that did not already exist.The public will bene�t from the proposed rule amendmentsbecause the amended rules will allow local governments torespond to updates to international building codes and model�ood ordinances in a manner consistent with requirements ofFEMA and the National Flood Insurance Program to promotemaintenance of safe, accessible beaches. There will be noadditional costs of compliance for large or small businesses,and a local employment impact statement on these proposedregulations is not required, because the proposed regulationswill not adversely affect any local economy in a material mannerfor the �rst �ve years they will be in effect.

To comment on the proposed rulemaking, please send awritten comment to Mr. Walter Talley, Texas Register Liai-son, Texas General Land Of�ce, P.O. Box 12873, Austin, TX78711-2873, facsimile number (512) 463-6311 or email to [email protected]. Comments must be received no laterthan thirty (30) days from the date of publication of this proposal.

The amendments are proposed under authority granted in TexasNatural Resources Code §§61.011(b), which gives the TexasLand Commissioner the authority to promulgate rules regard-ing the construction on land adjacent to and landward of publicbeaches and lying in an area either up to the �rst public roadgenerally parallel to the beach or to any closer public road notparallel to the beach, or to within 1,000 feet of mean high tide,whichever is greater, that affects or may affect public access toand use of public beaches. In addition, Texas Natural ResourcesCode §63.121 provides the Texas General Land Of�ce with au-thority to adopt rules for protection of critical dune areas.

The proposed amendments are necessary to implement TexasNatural Resources Code, Chapter 61, Subchapter B.

§15.6. Concurrent Dune Protection and Beachfront ConstructionStandards.

(a) - (e) (No change.)

(f) Construction in eroding areas. Local governments with ju-risdiction over eroding areas shall follow the standards provided in§15.4 of this title (relating to Dune Protection Standards) and §15.5of this title (relating to Beachfront Construction Standards). If thereis any con�ict between this subsection, §15.4 of this title (relating toDune Protection Standards), and §15.5 of this title (relating to Beach-front Construction Standards), this subsection applies. The GeneralLand Of�ce shall supply information for or assist a local governmentin determining eroding areas and the landward boundary of eroding ar-eas. In addition, because of the higher risk of damage from �ooding orerosion in such areas, local governments shall:

(1) require that structures built in eroding areas be elevatedon pilings in accordance with FEMA minimum standards or above thenatural elevation (whichever is greater);

(2) require that structures located on property adjacent tothe public beach be designed for feasible relocation;

(3) allow a permittee to alter or pave only the ground withinthe footprint of the habitable structure (however, brick pavers, gravelor crushed limestone may be used to stabilize driveways) only if the al-teration or paving will be entirely undertaken, constructed, and locatedlandward of 200 feet from the line of vegetation or landward of an erod-ing area boundary established in the local beach/dune plan, whicheverdistance is greater; and

(4) Unless otherwise restricted by the local plan, and if con-sistent with the requirements of National Flood Insurance Program, lo-cal governments may permit the construction of [breakaway or lou-vered walls for] a storage area or areas with breakaway or louveredwalls or for enclosures required by local building or safety codes [nolarger than 300 square feet].

(g) - (h) (No change.)



2006.

TRD-200605752Trace FinleyPolicy DirectorGeneral Land Of¿ceEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 305-8598

31 TAC §15.32

The General Land Of�ce (GLO) proposes amendments to§15.32 relating to Certi�cation Status of Cameron County DuneProtection and Beach Access Plan (Plan). The GLO proposesan amendment to §15.32 to the certi�cation status of the Plan,adopted on September 20, 1994, and previously amended onNovember 5, 1996, by order of the Commissioners’ Court ofCameron County, Texas (County), on November 5, 1996, to in-corporate the Padre Shore Ltd. Final Master Plan Amendment.The County seeks approval of proposed amendments to its Planadopted by order of the Commissioners’ Court of the County onAugust 29, 2006 as Order No. 2006O8004 (2006 Plan Amend-ments). The proposed amendment to §15.32 deletes languagein subsection (b) concerning the 440-foot building line that hasbeen eliminated by the County’s proposed amendment to itsPlan. The amendment to §15.32 also deletes subsection (c)concerning the Padre Shore Ltd. Final Master Plan Amendmentbecause the area governed by the Master Plan Amendmenthas been annexed by the Town of South Padre Island and is nolonger within the County’s jurisdiction.

Pursuant to the Open Beaches Act (Texas Natural ResourcesCode, Chapter 61), the Dune Protection Act (Texas Natural Re-sources Code, Chapter 63), and the Beach/Dune Rules (31 TAC§§15.1 through 15.12, and 15.21 through 15.36), a local govern-ment with jurisdiction over Gulf Coast beaches must submit itsdune protection and beach access plan and any amendments tosuch a plan to the GLO for certi�cation. 31 TAC §15.3(o). TheGLO reviews a local beach access and dune protection plan and,if appropriate, certi�es that the plan is consistent with state lawby adoption or amendment of a rule as authorized in Texas Nat-


ural Resources Code §§61.011(d)(5) and 61.015(b). The certi-�cation by rule re�ects the state’s approval of the plan, but thetext of the plan is not adopted by the GLO. 31 TAC §15.3(o)(4).

A local jurisdiction proposing to adopt or amend beach user feesmust submit a plan detailing the proposed action to the GLOfor certi�cation. The GLO reviews a local jurisdiction’s beachuser fee plan and, if appropriate, certi�es by rule that the beachuser fee plan is consistent with the Open Beaches Act, the DuneProtection Act, and the Beach/Dune Rules. Texas Natural Re-sources Code §61.022(c), 31 TAC §15.8(e).

A local government requesting certi�cation of a plan or planamendment that includes a variance of any requirement orprohibition in the GLO’s Beach/Dune Rules must submit to theGLO a reasoned justi�cation demonstrating how the varianceprovides equal or better protection of dunes, dune vegetation,and public access to and use of the public beach than is pro-vided by the Beach/Dune Rules. 31 TAC §15.3(o)(6).

Cameron County is a coastal county that borders the Gulf ofMexico to the east, extending from the Rio Grande River, itssouthern boundary with Mexico, northward to the southernmostboundary of Willacy County on South Padre Island. South PadreIsland is a barrier island, accessible by car from Cameron Countyand points west by the Queen Isabella Causeway on State ParkRoad 100. Boca Chica Beach is separated from South PadreIsland by Brazos Santiago Pass, an inlet connecting the LagunaMadre to the Gulf of Mexico. Highway access to Boca ChicaBeach is from Cameron County to the west via Boca Chica High-way, State Highway 4, removed from populated areas.

The Gulf beaches governed by the Plan are those unincorpo-rated areas within the County including Boca Chica Beach andthe following areas on South Padre Island: Isla Blanca Park,Andy Bowie Park, and the Gulf beaches north of the Town ofSouth Padre Island. The Gulf beaches within the corporate limitsof the Town of South Padre Island are governed by the Town ofSouth Padre Island’s Dune Protection and Beach Access Plan,certi�ed at 31 TAC §15.30.

The 2006 Plan Amendments change the Plan by deleting Sec-tion III, Paragraph I - Building Line, in its entirety and by adopt-ing language amending Section III, Paragraph G - Special Pro-visions Regarding Dunes and Section IV, Paragraph A, Devel-opment in Eroding Coastal Areas, to limit the use of concrete orother impervious surfaces within 200 feet from the line of veg-etation as de�ned in the OBA. In addition, the Plan is modi�edto clearly identify locations in the area covered by the County’sPlan where beach access is provided (Beach Access Points) thatrequire conservation fees and those County Beach Access loca-tions that permit free vehicular beach access. The modi�cationsto the Plan also increase the beach conservation fee for passen-ger cars at Isla Blanca Park and Andy Bowie Park from $1.00 perday to $4.00 per day and increase the beach conservation feefor passenger cars at Beach Access Points 5 and 6 from $1.00per day to $3.00 per day. The modi�cations to the Plan increasethe beach conservation fee for quarterly passes from $7.50 to$15.00 and for annual passes from $20.00 to $39.00. Annualpasses purchased in bulk quantities of 25 or more are availablefor $22.50. New beach conservation fees at Isla Blanca Parkand Andy Bowie Park for buses up to 45 passengers will be $10per day and $15.00 per day for buses with over 45 passengers.Finally, the County seeks to impose a beach conservation feeof $2.00 for motorcycles at Isla Blanca Park, Andy Bowie Park,and Beach Access Points 5 and 6. The 2006 Plan also identi�esno-fee on-beach parking areas at Beach Access Points 7 (Boca

Chica Beach), Beach Access Point 4, and Beach Access Point 6(seasonal), as well as no-fee off-beach parking areas at BeachAccess Points 3, 4, 5, and 7.

The GLO reviewed information provided by the County in sup-port of its 2006 Plan Amendments and request to change itsbeach user fee plan as required by 31 TAC §15.8(d), includ-ing the following: (1) revenue and expense information providedJuly 20, 2006, at a meeting in Austin, Texas between CameronCounty Judge Gilberto Hinojosa and Texas Land CommissionerJerry Patterson, including their respective staff members; (2) vis-itor counts and revenue and expense information in a proposedbeach user fee plan provided by the Cameron County Parks Sys-tem Director by email dated August 3, 2006; (3) beach user feereports required by 31 TAC §15.8(f) with revenue and expenseinformation spanning 2002 through the County’s 3rd quarter of2006 submitted by the Cameron County Parks System DirectorAugust 23, 2006; (4) revenue statistics for 90-day, day use, andannual passes received from the County by email and facsimileon August 25, 2006; (5) responses received from the County onSeptember 7, 2006, and September 11, 2006, to inquiries fromthe GLO concerning beach user fee reports and revenue statis-tics; and (6) the County’s 2005 Parks System Audit submittedby the Cameron County Auditor on September 14, 2006. Basedon the information provided by the County, the GLO has madea preliminary determination that the fee requested is reasonablein that it does not exceed the necessary and actual cost of pro-viding reasonable beach-related facilities and services, does notunfairly limit public use of and access to and from public beachesin any manner, and may be certi�ed as consistent with §15.8 ofthe Beach/Dune Rules and the Open Beaches Act.

The 2006 Plan also updates the description of Beach AccessPoints. A detailed designation of the beach accessways on BocaChica Beach and the unincorporated areas of South Padre Is-land can be found in Section II of the 2006 Plan, with maps in-cluded as exhibits to the Plan. The 2006 Plan provides for re-stricted vehicular access with off-beach parking at Access Point1 - Isla Blanca Park; Beach Access Point 2 - Andy Bowie Park;Beach Access Point 3 - (approximately 0.3 miles north of AndyBowie Park); and Beach Access Point 4 (approximately one milenorth of Andy Bowie Park). Vehicular access is provided atthree existing beach access points: Beach Access Point 5 - E.K. Atwood Park (approximately 1.6 miles north of Andy BowiePark); and Beach Access Point 6 (approximately 4.5 miles northof Andy Bowie Park); and Beach Access Point 7 - Boca ChicaBeach. Vehicular traf�c is allowed on the beach between BeachAccess Points 5 and 6.

A local government shall regulate pedestrian or vehicular beachaccess, traf�c, and parking on the beach only in a manner thatpreserves or enhances existing public right to use and have ac-cess to and from the beach. If vehicular access is restricted toa stretch of beach, beach access and use is presumed to bepreserved if these criteria are met: One parking space on or ad-jacent to the beach for every �fteen linear feet of beach restrictedto vehicular traf�c, ingress/egress ways no farther apart than 1/2mile, and conspicuous signage explaining the nature and extentof vehicular controls, parking areas, and access points. 31 TAC§15.7(h)(1).

The distance between Beach Access Point 4 and Beach AccessPoint 5 is approximately 3,100 feet, which is 460 feet greater thanthe 1/2 mile criteria provided in 31 TAC §15.7(h)(1)(B). Consid-ering the fact that the distance between Beach Access Point 4and Beach Access Point 5 is less than 0.1 miles greater than the


presumptive 1/2 mile criteria, and that the County has suggestedother enhancements to beach access and use, the County maycontinue to restrict vehicular access to the area between BeachAccess Point 4 and Beach Access Point 5 if it demonstrates thatbeach access is enhanced by providing on-beach parking at Ac-cess Point 5 immediately adjacent to the pedestrian beach, com-bined with off-beach parking at Beach Access Points 4 and 5 thatexceeds the presumptive criteria (one parking space on or adja-cent to the beach for every �fteen linear feet of beach restrictedto vehicular traf�c) by at least 88 parking spaces. This justi�ca-tion that beach access is preserved and enhanced must be pro-vided in writing by the County before �nal approval and adoptionof this proposed amendment concerning the certi�cation statusof the County’s Plan.

The 2006 Plan Amendments that change the Plan by deletingSection III, Paragraph I - Building Line, in its entirety are ac-companied by changes adopting language amending Section III,Paragraph G - Special Provisions Regarding Dunes and SectionIV, Paragraph A, Development in Eroding Coastal Areas, to limitthe use of concrete or other impervious surfaces within 200 feetfrom the line of vegetation as de�ned in OBA. The Building Line,also referred to as the 440-foot building line, prohibited the con-struction of a permanent structure or building east or seaward ofa line 240 feet landward of the line of vegetation as determinedin accordance with the OBA, running generally north and southand extending no further landward than 440 feet from mean lowtide.

The GLO proposes to certify the County’s 2006 Plan Amend-ments as consistent with state law since the deleted provisionsconcerning the 440-foot building line provided a stricter standardthan required by the Beach/Dune Rules and is accompanied bythe adoption of language to limit the use of concrete or otherimpervious surfaces within 200 feet from the line of vegeta-tion, consistent with the provisions of the Beach/Dune Rulesin §§15.4(c)(8), 15.5(b)(3), and 15.6(f)(3) of the Beach/DuneRules. Section 15.4(c)(8) prohibits the construction of concreteslabs or other impervious surfaces outside the perimeter of ahabitable structure whose area exceeds 5.0% of the footprint ofthe habitable structure within 200 feet landward of the naturalline of vegetation. Section 15.5(b)(3) prohibits a local govern-ment from issuing a beachfront construction certi�cate if theconstruction includes a proposal to build a concrete slab orother impervious surface outside the perimeter of a habitablestructure whose area exceeds 5.0% of the footprint of thehabitable structure and is structurally attached to the building’sfoundation within 200 feet landward of the line of vegetation.Section 15.6(f)(3) applies to construction in eroding areas andprovides that a local government may allow a permittee to alteror pave only the ground within the footprint of the habitablestructure and only if the alteration or paving will be entirelyundertaken, constructed, and located landward of 200 feetlandward from the line of vegetation or landward of an erodingarea boundary established in the local dune protection andbeach access plan, whichever distance is greater. Most, if notall, of the unincorporated area of Cameron County north of theTown of South Padre Island that is covered by this Plan is in aneroding area with erosion rates at least 5 to 10 feet per year,as determined by the University of Texas, Bureau of EconomicGeology.

The GLO’s original certi�cation of the County’s 1994 Plan specif-ically provided that the 440-foot building line shall not be opera-tive unless it is landward of the line of vegetation established asrequired in the OBA. In those areas where the 440-foot building

line was landward of the line of vegetation, it provided a stricterstandard than required by the Beach/Dune Rules.

The 2006 Plan Amendments will allow the permitting of construc-tion in some areas in which it was previously prohibited by the440-foot building line. As recognized in the GLO’s certi�cationof the County’s 1994 Plan, there are areas in the unincorporatedarea of Cameron County covered by this Plan where the line ofvegetation (landward boundary of the public beach) may extendfurther landward than 440 feet from mean low tide. These areasare very dynamic and the line of vegetation (landward boundaryof the public beach) may be determined in accordance with theprovisions of §§61.016 and 61.017 of the OBA. The boundary ofthe public beach easement does not automatically revert to 200feet from the line of mean low tide by the repeal of the 440-footbuilding line. Construction on the public beach or any larger areaabutting on or contiguous to a public beach if the public has ac-quired a right of use or easement to or over the area by prescrip-tion, dedication, or has retained a right by virtue of continuousright in the public is prohibited by §61.013 of the OBA and is notallowed by the County’s 2006 Plan Amendments.

Mr. Sam Webb, Deputy Commissioner for the GLO’s CoastalResources Program Area, has determined that for each year ofthe �rst �ve years the amended section as proposed is in effectthere will be no �scal implications for the state government as aresult of enforcing or administering the amended section. Therewill be a �scal impact on the local government as a result of en-forcing or administering the amended section. The County willexperience an increase in revenue estimated at approximately$610,000.00 for each year of the �rst �ve years the amendedsection as proposed is in effect as a result of the increased beachuser fees to be collected. This increased revenue estimate is cal-culated based on the visitor statistics provided by the CameronCounty Parks System comparing the fee authorized to be col-lected under the current plan with the estimate to be collectedunder the proposed amendment to the beach user fee plan.

The GLO has determined that the proposed rule change will nothave an effect on the costs of compliance for small businessesor large businesses as the proposed changes relate to permitsfor parking on the beach. Individuals required to comply with theCounty’s amended plan to increase the beach user fee to be col-lected in fee areas for access to County beach parks and parkingon the beach will experience increased costs for parking of upto $3.00 per day. The 2006 Plan also identi�es no-fee on-beachparking areas at Beach Access Points 7 (Boca Chica Beach),Beach Access Point 4, and Beach Access Point 6 (seasonal), aswell as no-fee off-beach parking areas at Beach Access Points3, 4, 5, and 7., as required by 31 TAC §15.8(h), which servesto mitigate the �nancial impact of the new beach user fees onCounty beachgoers.

Mr. Sam Webb has determined the public will bene�t from theincrease in the beach user fees imposed by Cameron County,which will continue to fund and provide adequate and improvedbeach-related services to the public including the following: fund-ing for ensuring safe use of and access to and from the publicbeach, including vehicular controls, management, and parkingregulations; sanitation and litter control, including providing andservicing trash receptacles; law enforcement; providing publicfacilities such as restrooms; and installing signage explaining thenature and extent of vehicular controls, parking areas, and ac-cess points. The public bene�t from the elimination of the 440-foot building line from the County’s Plan will be that the change tothe Plan removing limitations on construction that exceed state


standards will promote economic development in the area adja-cent to the beach within the County’s jurisdiction, while maintain-ing regulations that are consistent with the Open Beaches Act,the Dune Protection Act, and the Beach/Dune Rules.

The GLO has determined a local employment impact statementon these proposed regulations is not required, because the pro-posed regulations will not adversely affect any local economy ina material manner for the �rst �ve years they will be in effect.

The proposal to amend §15.32 concerning Certi�cation Statusof Cameron County Dune Protection and Beach Access Planis subject to the Coastal Management Program (CMP), 31 TAC§505.11(a)(1)(J), relating to the Actions and Rules Subject tothe CMP. The Land Of�ce has reviewed these proposed ac-tions for consistency with the CMP’s goals and policies in accor-dance with the regulations of the Coastal Coordination Council(Council). The applicable goals and policies are found at 31 TAC§501.26, relating to Policies for Construction in the Beach/DuneSystem, and §501.27, relating to Policies for Development inCoastal Hazard Areas. The proposed actions are consistent withthe Land Of�ce’s Beach/Dune Rules that the Council has deter-mined to be consistent with the CMP. Consequently, the LandOf�ce has determined that the proposed actions are consistentwith applicable CMP goals and policies. The proposed amend-ments will be distributed to Council members in order to providethem an opportunity to provide comment on the consistency ofthe proposed rule during the comment period.

The GLO has evaluated the proposed amendments to determinewhether Texas Government Code, Chapter 2007, is applicableand a detailed takings impact assessment required. The GLOhas determined the proposed amendments do not affect privatereal property in a manner that requires real property owners to becompensated as provided by the Fifth and Fourteenth Amend-ments to the United States Constitution or Article I, Sections 17and 19, of the Texas Constitution. Furthermore, the GLO hasdetermined the proposed amendments would not affect any pri-vate real property in a manner that restricts or limits the owner’sright to the property that would otherwise exist in the absence ofthe rule amendments being proposed.

The GLO has evaluated the proposed rulemaking action in lightof the regulatory analysis requirements of Texas GovernmentCode §2001.0225, and determined that the action is not sub-ject to §2001.0225 because it does not meet the de�nition of a"major environmental rule" as de�ned in the statute. "Major en-vironmental rule" means a rule of which the speci�c intent is toprotect the environment or reduce risks to human health from en-vironmental exposure and that may adversely affect in a materialway the economy, a sector of the economy, productivity, compe-tition, jobs, the environment, or the public health and safety of thestate or a sector of the state. The proposed amendments are notanticipated to adversely affect in a material way the economy, asector of the economy, productivity, competition, jobs, the envi-ronment, or the public health and safety of the state or a sector ofthe state because the proposed rulemaking implements legisla-tive requirements in Texas Natural Resources Code §§61.011,61.015(b), and 61.022(c), which provide the GLO with the au-thority to adopt rules to preserve and enhance the public’s rightto use and have access to and from the public beaches of Texasand to certify that plans to impose or increase public beach ac-cess, parking, or use fees are consistent with state law.

Written comments may be submitted to Ms. Deborah Cantu,Texas Register Liaison, Texas General Land Of�ce, Legal Ser-vices Division, P.O. Box 12873, Austin, TX, 78711-2873;

facsimile number (512) 463-6311; email address [email protected]. Comments must be received nolater than 5:00 p.m., 30 (thirty) days after the proposed amend-ments are published. Copies of the local government duneprotection and beach access plan and any amendments tothe plan are available from the local government and from theGeneral Land Of�ce’s Archives Division, Texas General LandOf�ce, P.O. Box 12873, Austin, TX 78711-2873, phone number(512) 463-5277.

The amendments are proposed under the Texas Natural Re-sources Code §§61.011, 61.015(b), 61.022(c), and 61.070 whichprovide the GLO with the authority to adopt rules to preserve andenhance the public’s right to use and have access to and fromthe public beaches of Texas and to certify that plans to impose orincrease public beach access, parking, or use fees are consis-tent with state law. In addition, Texas Natural Resources Code§63.121 provides the Texas General Land Of�ce with authorityto adopt rules for protection of critical dune areas.

Texas Natural Resources Code §§61.011, 61.015, 61.022,61.070, and 63.121 are affected by the proposed amendments.

§15.32. Certi�cation Status of Cameron County Dune Protection andBeach Access Plan.

(a) Cameron County has submitted to the General Land Of�cea dune protection and beach access plan which is certi�ed as consistentwith state law. The county’s plan was adopted on September 20, 1994.

(b) The General Land Of�ce certi�es as consistent with statelaw the amendment to the Cameron County plan that was adopted bythe Cameron County Commissioners’ Court on August 29, 2006, OrderNo. 2006O8004. The order amended the plan to eliminate the 440-footbuilding line and to increase the beach user fees imposed for access toCounty beach parks and parking on the beach. [The 440-foot buildingline established in the Cameron County plan, Section III.I, shall not beoperative unless it is landward of the line of vegetation. The line ofvegetation shall be established as required in the Open Beaches Act,Texas Natural Resources Code, §61.017.]

[(c) The Padre Shore Ltd. Final Master Plan Amendment,adopted November 5, 1996, is certi�ed as consistent with state law.]



2006.

TRD-200605751Trace L. FinleyPolicy DirectorGeneral Land Of¿ceEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 305-8598

PART 10. TEXAS WATERDEVELOPMENT BOARD

CHAPTER 355. RESEARCH AND PLANNINGFUND


SUBCHAPTER B. ECONOMICALLYDISTRESSED AREAS FACILITY ENGINEERING31 TAC §§355.70 - 355.73, 355.75

The Texas Water Development Board (the board) proposesamendments to 31 TAC §§355.70 - 355.73 and §355.75concerning the Research and Planning Fund, SubchapterB, Economically Distressed Areas Facility Engineering. Theamendments are proposed in order to be consistent with recentstatutory amendments affecting these and other board rulesand proposes to align the requirement therein with other boardprograms.

The board proposes amendments to §355.70, De�nitions. Thepreamble to this section is amended to incorporate a reference tothe de�nitions of Chapter 16, Subchapter J, of the Texas WaterCode, which are also applicable. The board proposes to amendparagraph (1), which de�nes affected county, to delete exist-ing language that limits eligible counties based on per capita in-come and unemployment and adds language so that an affectedcounty is a county that has an economically distressed area witha median household income not greater than 75% of the medianstate household income. The board proposes this amendmentto be consistent with a statutory amendment made by the HouseBill 467 of the 79th Legislature (H.B. 467) which expands eligi-bility of this program. The board proposes to amend paragraph(2), which de�nes an economically distressed area to be an areathat lacks adequate water or sewer service and adequate �nan-cial resources to obtain those services, and changes the datethe economically distressed area was created from prior to June1, 1989 to prior to June 1, 2005. The date change captures 16additional years of eligible areas. This proposed amendmentis made in order for the rule to be consistent with a statutoryamendment made by the House Bill 467 of the 79th Legislaturewhich expands eligibility of this program. Proposed new para-graphs (6) and (7) are added to include a de�nition for politicalsubdivision and sewer services or sewer facilities in order to im-plement amendments to the statutes made by H.B. 467.

The board proposes an amendment to §355.71(c), Purpose andPolicy, to re�ect the statutory change made in a prior legisla-tive session that codi�ed the Texas Professional Engineering Actfrom Civil Statutes to the Occupations Code.

The board proposes amending §355.72, Criteria for Eligibility, bydeleting subsections (a), (b)(4), and (c). Currently, §355.72(a)identi�es the process for the board to identify affected countiesaccording to statutory criteria. The statutory criteria were re-pealed by H.B. 467 and therefore the board proposes to deletethe process it has used to identify affected counties. The boardproposes to amend paragraph (1), which deals in part with ob-taining copies of model subdivision rules, by deleting referencesto obtaining those copies from the Border Project ManagementDivision which no longer exists and, instead making those rulesavailable through the board’s website. A direct link is referenced.Current subsection (b)(4) requires that a district or water sup-ply corporation that applies for �nancial assistance obtain theconsent of the appropriate county or municipality. House Bill467 repealed this as a statutory requirement and the board pro-poses to delete it to be consistent with the statute and in orderto streamline the application process. Subsection (c) currentlyallows projects to maintain eligibility when the criteria identi�edin subsection (a) changes. The board proposes to delete thissubsection due to the deletion of subsection (a).

The board proposes amendments to §355.73, Scope of FacilityPlan. The board proposes deleting subsection (a)(1)(A), sincethis requirement is no longer applicable because H.B. 467repealed this requirement. The board proposes amending sub-section (a)(1)(H) to delete the requirement for household andper capita income information because H.B. 467 changed theincome determination from per capita income. In its place, theboard proposes to insert the requirement to provide U.S. Censusdata for median household income for the project area becauseH.B. 467 requires the use of median household income toestablish area eligibility. U.S. Census data is proposed becauseit is readily available and is currently used in the board’s otherprograms. The board proposes deleting the current provisionsof subsection (a)(1)(I) and proposes inserting an option that, inthe event that U.S. Census data is not available, the applicantmay provide a survey to establish median household income.The board proposes amending subsection (a)(3). This subsec-tion requires an environmental review that complies with theprovisions of §363.14, for those projects that are funded solelyfrom state funds projects, or §363.223 or §375.35 for thoseprojects that funded with federal funds projects and subject to aNational Environmental Policy Act review. The board proposesto delete the references to §363.223 and §375.35 since theseprovisions contain the same requirements and, in any event dueto amendments to Chapter 375, the appropriate requirementsare located in §375.214. The board proposes to insert thereference to §375.214 as the appropriate environmental reviewrequirements for those projects that are funded with federalfunds projects and subject to a National Environmental PolicyAct review. The board proposes amending subsection (a)(4)to change the reference to an emergency water shortage planto be a drought contingency plan in order to be consistent withcurrent industry nomenclature. The board proposes amendingsubsection (a)(5) to delete the requirement to include informa-tion regarding consultation with residents to determine the mosteconomical solutions and, additionally, to delete the requirementto provide evidence of individual user commitment to use thesystem. This amendment is proposed because the statutoryrequirement to prepare individual household surveys for eachproject has been repealed by H.B. 467 and is burdensomein the preparation of application without providing additionalvalue to the project. The board proposes to amend subsection(a)(6) to adjust the requirement to comply with the statutoryamendment made by H.B. 467. The board proposes to amendsubsection (a)(16) so that it includes the identi�cation of othersources of funds for other activities that the board concludes aresigni�cant for project completion. The board proposes to correctthe reference in subsection (a)(17) to be to the economicallydistressed area impact fee authorized by Water Code §17.936.The board proposes to delete (a)(18) in its entirety as a statutoryrequirement that was repealed by H.B. 467.

The board proposes an amendment to §355.75, Contracts, tobetter re�ect the content of the section. The board proposeschanging the section title to Application Approval and Termi-nation. The board proposes to add proposed new §355.75(e)to clarify that inadequate or incomplete planning activities aregrounds for termination, and that the board may cure the lackof progress in consultation with the applicant either by perfor-mance or new contract. This addition is proposed to includestatutory authorization provided to the board under Water Code§15.407(j).

Veronica Hinojosa-Segura, Chief Financial Of�cer, has deter-mined that for the �rst �ve-year period the amendments are in


effect, there will not be �scal implications on state and local gov-ernment as a result of enforcement and administration of theamended sections. As a �nancial assistance program, no localgovernment is required to apply for assistance. If a local govern-ment does apply, it is anticipated that the additional informationrequested will not have a �scal impact on the applicant.

Ms. Hinojosa-Segura also determined that for the �rst �ve yearsthe amendments, as proposed, are in effect, the public bene�tanticipated as a result of enforcing the proposed amendmentswill be greater consistency between the requirements of boardprograms resulting in greater ef�ciency in administering theseprograms. Ms. Hinojosa-Segura has determined there will notbe economic costs to small businesses or individuals requiredto comply with the amendments as proposed because the pro-visions apply only to political subdivisions applying for board as-sistance.

Comments on the proposal will be accepted for 30 days follow-ing publication and may be submitted to Robert Flores, Attorney,General Counsel Of�ce, Texas Water Development Board, P.O.Box 13231, Austin, Texas 78711-3231, by e-mail to robert.�[email protected] or by fax at (512) 463-5580.

The amendments are proposed under the authority of the TexasWater Code §6.101 and §15.995 which authorize the board topublish rules to carry out its duties provided in the Water Codeand for this program in particular.

Cross reference to statute: Water Code, Chapter 16, SubchapterJ and Chapter 17, Subchapter K.


The following words and terms, when used in this subchapter, shallhave the following meanings, unless the context clearly indicates oth-erwise. Words de�ned in the Texas Water Code, Chapter 15, 16 or 17,and not de�ned here shall have the meaning provided by the appropri-ate chapter.

(1) Affected county--Means a county that has an economi-cally distressed area which has a median household income that is notgreater than 75 percent of the median state household income. [Countythat:]

[(A) has a per capita income that averaged 25% belowthe state average for the most recent three consecutive calendar yearsfor which United States Bureau of Economic Analysis statistics areavailable and an unemployment rate that averaged 25% above the stateaverage for the most recent three consecutive calendar years for whichTexas Workforce Commission statistics are available and is on a list,calculated annually, and maintained by the executive administrator ofthe Texas Water Development Board; or ]

[(B) is adjacent to an international border.]

(2) Economically distressed area--An area within anaffected county in which:

(A) water supply or sewer services [wastewater facili-ties] are inadequate to meet minimal water supply or wastewater needsof residential users as de�ned by the minimum state standards adoptedby [the] board rules;

(B) �nancial resources are inadequate to provide watersupply or sewer services [wastewater facilities] that will satisfy [meet]those needs; and

(C) an established residential subdivision was locatedon June 1, 2005 [1989], as determined by the board.

(3) Facility planning--The studies and tasks that are re-quired to be performed pursuant to §355.73(a) of this title (relatingto Scope of Facility Plan) to determine the engineering feasibility ofwater or wastewater facilities for an economically distressed area,including the studies and tasks that may be required to be performedunder §355.73(b).

(4) Minimal wastewater needs--A wastewater system thatcomplies with the minimum state wastewater conveyance and treat-ment requirements as established by the Texas Commission on Envi-ronmental Quality.

(5) Minimal water supply needs--A water system that com-plies with the minimum state water treatment, conveyance, and storageregulatory requirements for human consumption as established by theTexas Commission on Environmental Quality.

(6) Political subdivision--Means an affected county, a mu-nicipality located in an affected county, a district or authority createdunder Article III, Section 52, or Article XVI, Section 59, of the TexasConstitution, located in an affected county, or a nonpro�t water supplycorporation created and operating under Water Code, Chapter 67, lo-cated in an affected county, that receives funds for facility engineeringunder Water Code §15.407 or �nancial assistance under Water Code,Chapter 17, Subchapter K, or an economically distressed area in an af-fected county for which �nancial assistance is received under WaterCode, Chapter 15, Subchapter C.

(7) Sewer services or sewer facilities-Means treatmentworks as de�ned by §17.001 of this code or individual, on-site, orcluster treatment systems such as septic tanks and includes drainagefacilities and other improvements for proper functioning of septic tanksystems.

(8) [(6)] Wastewater facilities--Any devices and systemswhich are used in the transport, storage, individual treatment, on-sitetreatment, cluster system treatment, centralized treatment, conser-vation, recycling, and reclamation of domestic waste or which arenecessary to recycle or reuse reclaimed domestic wastewater at themost economical cost over the estimated life of the new works, includ-ing intercepting sewers, outfall sewers, sewage collections systems,pumps, power equipment, septic tanks (including surface or subsurfacedrainage facilities and other improvements for proper functioning ofseptic tank systems), nonconventional treatment methods, and otherequipment and their appurtenances; and extensions, improvements,remodeling, additions, and alterations to existing wastewater facilities.The term does not include devices and systems within dwellings,businesses, or institutions.

(9) [(7)] Water facilities--Any devices and systems whichare used in the collection, supply, development, protection, storage,transmission, treatment, and retail distribution of water for safe humanuse and consumption. The term does not include devices and systemswithin dwellings, businesses, or institutions.

§355.71. Purpose and Policy.


(c) Professional engineer. All facility planning reports andplans shall be signed and sealed by a professional engineer in accor-dance with the Texas Engineering Practice Act, Texas OccupationsCode, Chapter 1001 [Civil Statutes, Article 3271a].

§355.72. Criteria for Eligibility.

[(a) The board shall determine the counties that are affected asthat term is de�ned in Texas Water Code, §16.341, based on and subjectto the receipt of annual statistics found by the executive administrator


to be suf�ciently reliable to make such determination. Within 60 daysof the receipt of the necessary statistics to determine the state averageof per capita income and unemployment rate, the executive administra-tor shall submit for publication in the Texas Register a list of affectedcounties. Political subdivisions in the affected counties identi�ed onthis list shall be eligible to apply to the board for funds to pay for all orpart of the cost of facility engineering in economically distressed areas,including plans and speci�cations, until the next list of eligible coun-ties is published in the Texas Register.]

(a) [(b)] Political subdivisions must meet the appropriate re-quirements of this section before the board may consider an applicationfor �nancial assistance for facility planning.

(1) A county within which the political subdivision apply-ing for assistance is wholly or partially located must have adopted themodel subdivision rules required by the Texas Water Code, §16.343.Copies of the model subdivision rules are available upon request fromthe Texas Water Development Board, Of�ce of General Counsel [Di-rector, Border Project Management Division], P.O. Box 13231, Austin,Texas 78711 or the board’s web site http://www.twdb.state.tx.us/pub-lications/rules.

(2) A municipality which applies for �nancial assistance orwithin which a political subdivision applying for assistance is whollyor partially located must have adopted the model subdivision rules re-quired by the Texas Water Code, §16.343, if the economically dis-tressed area to be served is partially or wholly located within the in-corporated limits of the municipality.

(3) A political subdivision applying for facility planningassistance must have any required certi�cate of public convenience andnecessity (CCN) that includes the project area and that is for the sametype of service to be addressed in the proposed facility planning study;or, as an alternative, the applicant may submit an executed interlocalagreement with the holder of the applicable CCN which authorizes theapplicant to provide the applicable services for the facility planningarea.

[(4) A district or a nonpro�t water supply corporation mayapply for assistance from the board if the eligible county or municipal-ity in which the economically distressed area is located do not intend toapply for �nancial assistance for the same project in the same area andthe eligible county or municipality approves by resolution the district’sor nonpro�t water supply corporation’s submittal of an application for�nancial assistance.]

(4) [(5)] A political subdivision shall have submitted forreview:

(A) an annual audit for the most recent �scal year ofthe political subdivision and �nancial statements for the three previouscomplete months;

(B) the most recent order or resolution establishing therates and charges for the utility service for which the planning will beperformed;

(C) the current capital improvement plan for the utilityservice for which the planning will be performed;

(D) an executed contract with the consulting engineer toprepare the facility plan and suf�cient documentation to establish thatthe political subdivision complied with §355.77 of this title in procur-ing the services of the consulting engineer; and

(E) evidence that the county commissioners court hasprepared a map showing the part of the county, outside the limits of themunicipalities, in which the different types of on-site sewage disposal

systems may be appropriately located and the parts of the county inwhich the different types of systems may not be appropriately located.

[(c) Political subdivisions must meet the appropriate require-ments of this section before the board may provide �nancial assistancefor facility planning. If, after submission of a facility planning assis-tance application, the county average per capita income increases orthe average unemployment rate decreases so that the county no longermeets the de�nition of affected county in §355.70 of this title (relatingto De�nitions), the political subdivision submitting the application willcontinue to be eligible for �nancial assistance provided the applicationis not substantially amended.]

(b) [(d)] If the applicant is a local governmental entity as de-�ned in the Health and Safety Code, Chapter 366, then before the boardprovides �nancial assistance for facility planning, the applicant mustprovide satisfactory evidence that it has taken and will take all actionsnecessary to receive and maintain a designation as an authorized agentof the commission as set forth in that chapter.

§355.73. Scope of Facility Plan.

(a) A facility plan shall incorporate appropriate data from ap-plicable existing planning reports and shall consist of:

(1) an analysis and explanation of the problems and needswithin the economically distressed area and the total project area in-cluding:

[(A) a description of the efforts that residents havetaken to provide necessary adequate water and wastewater facilities;]

(A) [(B)] existing and projected population;

(B) [(C)] existing water and wastewater facilities;

(C) [(D)] existing and projected water supply and waterdemand;

(D) [(E)] wastewater characterization;

(E) [(F)] in�ltration in�ow analysis, if applicable;

(F) [(G)] ability of the dwellings to utilize future waterand wastewater facilities;

(G) adjusted median household income is calculated asthe annual median household income identi�ed in the most recent U.S.Census from the closest applicable census tract multiplied by the cur-rent Texas Consumer Price Index divided by the most recent decennialTexas Consumer Price Index; and

(H) if the applicant demonstrates to the satisfaction ofthe executive administrator that census data for the particular area isinadequate or unavailable to calculate the adjusted median householdincome, the adjusted median income may also be calculated using datafrom a survey approved by the executive administrator of a statisticallyacceptable sampling of customers in the service area completed withinthe last 12 months;

[(H) household and per capita income; and]

[(I) average household size and average appraisal val-ues;]

(2) the identi�cation, selection, and evaluation of alterna-tives, including preparation of a cost-effectiveness analysis of the al-ternatives for providing adequate water and wastewater facilities. Forwastewater, alternatives include septic tanks and other on-site systems;regional and nonregional systems; conventional treatment technolo-gies; nonconventional treatment technologies, such as rock reed, rootzone, ponding, irrigation, or other technologies that may have been de-veloped by NASA and the Tennessee Valley Authority; and revenue


generating alternatives. The alternative evaluation will also considerfacilities which will allow for greatest utilization of local labor duringfacility construction, operation, and maintenance;

(3) environmental data and analysis in accordance with§363.14 of this title (relating to Environmental Assessment), [§363.223of this title (relating to Required Environmental Review and Deter-mination),] or §375.214 [§375.35] of this title (relating to RequiredEnvironmental Review and Determination) as determined by theexecutive administrator to be applicable to potential funding;

(4) a water conservation and drought contingency [emer-gency water shortage] plan for the applicant and an explanation of howwater conservation will be incorporated into the provision of adequatewater and wastewater facilities both to and in dwellings in the econom-ically distressed area;

(5) [documentation of consultation with residents of theeconomically distressed areas to determine the most economical so-lution without overriding social or environmental factors, evidence ofindividual user commitment to utilize the facilities, and] documenta-tion of public consent for the construction of water and wastewater fa-cilities to serve the economically distressed area;

(6) documentation that the area to be served by the projectwas an established residential subdivision pursuant to the criteria iden-ti�ed in §363.503(4) of this title (relating to Determination of Econom-ically Distressed Area) [of the number of dwellings occupied on June1, 1989], and number of dwellings to be served by the project withinthe facility planning area and the economically distressed area;

(7) a description of the proposed facilities, including anidenti�cation of any existing facilities to be acquired, replaced, en-larged, or improved;

(8) preliminary engineering design data;

(9) detailed construction cost estimates for each segment ofconstruction, estimates of the operation and maintenance costs for therecommended facilities, and a separate calculation of both constructionand operation and maintenance costs on a per dwelling basis. Separatecosts for the dwelling rehabilitation needed to allow use of the waterand wastewater facilities shall also be provided;

(10) estimated water usage and wastewater �ows for theproject area after completion of the project together with an explanationof the basis of the estimation;

(11) percentage of total existing utility water and/or waste-water system capacity that will be used to serve the colonia;

(12) percentage of proposed water and wastewater capac-ity that will serve economically distressed areas and non-economicallydistressed areas;

(13) the historical cost to the utility to build the system ca-pacity, by source of funds;

(14) a detailed implementation schedule for designing, per-mitting, �nancing, and constructing the facilities, and for any other ma-jor milestones. If the project is to be phased, major milestones, costs,and descriptions for each component and segment of the project shallbe provided;

(15) details or drafts of any proposed interlocal agreementor other agreements or contracts needed to implement the project;

(16) a determination of the amount of funds available fromfederal, state, local, and private organizations for plans and speci�ca-tions, project construction, [and] operation of the recommended facil-

ities, project management, hook-ups, facility planning, easement andland acquisition, or any other project components; and

(17) a user charge system, including the analysis of an eco-nomically [a] distressed areas impact [water �nancing] fee. [; and]

[(18) a determination of the feasibility of �nancing wateror wastewater services by creating a conservation and reclamation dis-trict.]

(b) (No change.)

§355.75. Application Approval and Termination [Contracts].

(a) - (d) (No change.)

(e) If the board determines that planning activities undertakenby an applicant under this subchapter have been inadequate or not com-pleted in a timely manner, the board may terminate the contract and onbehalf of and in consultation with the applicant may perform or con-tract for facility engineering in the economically distressed area.



2006.

TRD-200605686Jonathan SteinbergDeputy CounselTexas Water Development BoardProposed date of adoption: December 12, 2006For further information, please call: (512) 475-2052

CHAPTER 363 FINANCIAL ASSISTANCEPROGRAMSSUBCHAPTER E. ECONOMICALLYDISTRESSED AREASThe Texas Water Development Board (the board) proposesamendments to 31 TAC §363.502 and §363.503, repeal of§363.504 and §363.505 and proposes new §363.504 and§363.505 concerning Financial Assistance Programs, Sub-chapter E, the Economically Distressed Areas Program.Amendments to these sections are proposed to include andaddress recent statutory amendments affecting these and otherboard rules and to align the requirement therein with other boardprograms.

The board proposes an amendment to §363.502(4)(C), De�ni-tions, to re�ect the date change of when economically distressedareas are recognized. The current date is June 1, 1989. Theproposed date is June 1, 2005 and would capture 16 additionalyears of eligibility. This proposal is made in order for the rule tobe consistent with a statutory amendment made by the HouseBill 467, 79th Legislature (H.B. 467) which expands eligible ar-eas.

The board proposes changes to §363.503. The board proposesan amendment to the section preamble to change the date thata residential subdivision must be established in order to be eligi-ble for assistance because of the statutory amendments madeby H.B. 467. The board proposes amendments to paragraphs(1) and (2) to change speci�c references to Commission on En-


vironmental Quality (commission) regulations that identify min-imum standards for water and wastewater service to a refer-ence to the appropriate commission rules regarding drinking wa-ter standards, on-site storage facilities, and organized sewagecollection and treatment facilities. This amendment is proposedto allow for changes and consolidation by the commission of itsrules without requiring a rule amendment to this section, thusstreamlining board procedures and providing current referencesto applicants. The board proposes amendments to §363.503(3)and (4) to comply with applicable statutory changes, includingchanging the requirement that the board issue a determinationfor �nancial assistance only after �nding the area to be servedhas a median household income not greater than 75% of the me-dian state income. Current determinations are based on �ndingthe area served by a project has an average per capita incomethat is at least 25% below the state average. Also, the proposalwould eliminate the length of time for which the economic datamust be compiled from three years to the most recent year. Anadditional change is proposed to re�ect a date change alreadyintroduced. These changes are necessary to be consistent withstatutory amendments made by the 79th Legislature which helpsexpand eligibility.

The board proposes the repeal of §363.504, Facility EngineeringRequirements, and proposes new §363.504, Required Applica-tion Information. The existing section only identi�es one portionof the application that the board needs to evaluate a request for�nancial assistance under this subchapter. The board proposesnew subsection (a) to fully delineate the minimum contents of anapplication for �nancial assistance under this subchapter. Dueto the limited availability of funding for eligible projects, the boardis proposing new time limitations for the �ling of applications un-der this subchapter. The board concludes that speci�cally iden-tifying the contents of an application is necessary to insure thatall application materials are clearly delineated and applicants arefully aware of information that is necessary to meet the time limit.The board proposes new subsection (a)(1) to identify the mini-mum information that must be submitted by an applicant for theboard to adequately consider whether the appropriate entitieshave adopted and are adequately enforcing the model subdivi-sion rules as required by Water Code, Chapter 16, SubchapterJ, and Chapter 17, Subchapter K. Current board practice hasbeen for the executive administrator to request copies of the resi-dential subdivision regulations and three recently approved platsfrom the county, and city if appropriate. By this proposed newsubsection, the board is emphasizing the importance of receivingthis information in a timely and complete manner. The proposednew subsection also includes a new requirement that the chiefadministrative of�cial provide a sworn statement that the submit-ted materials comply with the model subdivision rules. This re-quirement is proposed to place responsibility for compliance oncounty and city of�cials rather than the diligence of the board andits staff. By providing this sworn statement, the board will alsobe placing substantial reliance on these of�cials by presumingcompliance with the model subdivision rules for a period of �veyears, subject to random veri�cation by the executive adminis-trator. This proposed new subsection also provides a methodfor the board to provide training for entities that have not hadthe experience with enforcing the model subdivision rules. Theboard proposes new subsection (a)(2) to require a complete fa-cility plan as prepared under board rule and as determined tobe substantially complete by the executive administrator. Theboard proposes new subsection (a)(3) - (8) to require the infor-mation that the executive administrator has previously requestedin order to clearly specify the minimum requirements under the

proposed new procedure. The board proposes new subsection(b) to address two circumstances that arise due to the provisionsof Local Government Code §232.071, which limits the authorityof counties to adopt and enforce the model subdivision rules untila political subdivision within such county has submitted an ap-plication for �nancial assistance under this program and that thecounty has an economically distressed area as determined bythe board. The board proposes new subsection (b)(1) for thoseinstances in which the board has funds available to �nance theproject contemplated by the political subdivision. This proposednew subsection requires that the applicant submit suf�cient infor-mation to establish the existence of an economically distressedarea and that the executive administrator review the informationto determine if it is suf�cient for board review. Only complete in-formation will be submitted to board for its review and only if thereis an economically distressed area will the board issue a writtendetermination of that fact. Once that is accomplished, the appli-cant must submit information on the adoption of the model sub-division rules within 90 days for the application to be processed.The board proposes new subsection (b)(2) for instances whenthe board does not have funds available to provide �nancial as-sistance to political subdivisions under Water Code, Chapter 17,Subchapter K, a political subdivision still may submit the sameinformation and follow the same procedure in order for the countyto have the authority to adopt and enforce the model subdivisionrules. The remaining application information may be submittedat any time.

The board proposes the repeal of §363.505, Applicability, andproposes new §363.505, Application Review and AssistanceConditions. The board proposes the repeal of the current sec-tion because it requires the submission of information requiredin the facility plan which is now a requirement in proposednew §363.504. The board proposes new subsection (a) toidentify speci�c amounts of funds available for two categories ofprojects that are eligible for �nancial assistance under this pro-gram. The program has limited amount of funds available andstatutory amendments by H.B. 467 have expanded eligibility toreceive funds under the program. The board is proposing theseamendments to expand the eligibility in order to implementthe statutory amendments but also recognize that the fundscurrently available were provided according to more restrictedeligibility criteria. It is the intent of the board to provide funds thatare currently available to projects that meet the prior eligibilitycriteria but only for a limited amount of time. After the proposedtime limit, all eligible projects may apply and receive any fundsthat remain available or any new funding that is made available.To implement this intent, the board proposes new subsection(a) that provides $15 million for projects that have receivedprevious board funding under the program (Tier A projects),$50 million for projects that are eligible for assistance pursuantto the Colonia Wastewater Treatment Assistance Program, ajoint assistance program with the United States EnvironmentalProtection Agency (Tier B projects), and any remaining fundsin the Economically Distressed Areas Program Account afterfunding Tier A and B projects are available for all projects eligi-ble for assistance under this subchapter (Tier C projects). Theboard proposes new subsection (b) that requires Tier A projectapplications to be �led with the board no later than the 90thcalendar day following the effective date of these rules and TierB project applications to be �led with the board no later than the180th calendar day following the effective date of these rules.Tier C projects will be considered by the board on a �rst-come�rst-served basis. The board proposes new subsection (c)(1) toauthorize the board to provide grant assistance for the planning,


easement acquisition, land acquisition and design for projectsthat provide water or sewer services to economically distressedareas. The board proposes new subsection (c)(2) so that theboard may provide assistance for the remaining constructionactivities only after the executive administrator has approvedthe work performed for proposed new subsection (c)(1) and inthe amount and manner as provided in §363.503. In order toinsure that the funds provided by the board are expended inan expeditious manner, the board proposes new subsection(d) which requires applicants that receive �nancial assistancefor construction as de�ned in proposed new subsection (c)(2)to commence the construction activities for which funds havebeen provided no later than one year from the date of thecommitment. The proposed new subsection allows the board toapprove a single three-month extension at the discretion of theboard in order for the applicant to commence construction. Thisproposed new subsection also prohibits the release of unex-pended funds that have been committed under proposed newsubsection (c)(2) after two years from the date of commitment,subject to the board approving a single six-month extension.

Veronica Hinojosa-Segura, Chief Financial Of�cer, has deter-mined that for the �rst �ve-year period the amendments, repealand new sections are in effect, there will not be �scal implica-tions on state and local government as a result of enforcementand administration of the amended sections. As a �nancial as-sistance program, no local government is required to apply forassistance. If a local government does apply, it is anticipatedthat the additional information requested will not have a �scalimpact on the applicant.

Ms. Hinojosa-Segura also determined that for the �rst �ve yearsthe amendments, repeal and new sections, as proposed, are ineffect, the public bene�t anticipated as a result of enforcing theproposed amendments, repeal and new sections will be greaterconsistency between the requirements of board programs result-ing in greater ef�ciency in administering these programs. Ms. Hi-nojosa-Segura has determined there will not be economic coststo small businesses or individuals required to comply with theamendments, repeal and new sections as proposed because theprovisions apply only to political subdivisions applying for boardassistance.

Comments on the proposal will be accepted for 30 days followingpublication and may be submitted to Robert Flores, Attorney, Of-�ce of General Counsel, Texas Water Development Board, P.O.Box 13231, Austin, Texas 78711-3231, by e-mail to robert.�[email protected] or by fax at (512) 463-5580.

DIVISION 1. ECONOMICALLY DISTRESSEDAREAS PROGRAM31 TAC §§363.502 - 363.505

The amendments and new sections are proposed under the au-thority of the Texas Water Code §6.101 and §15.995 which au-thorize the board to publish rules to carry out its duties providedin the Water Code and for this program in particular.


§363.502. De�nitions of Terms.

The following words and terms, when used in this subchapter, shallhave the following meanings, unless the context clearly indicates oth-erwise.

(1) - (3) (No change.)

(4) Economically distressed area--An area in which:

(A) water supply or sewer services are inadequate tomeet minimal needs of residential users as de�ned by board rules;

(B) �nancial resources are inadequate to provide watersupply or sewer services that will satisfy those needs; and

(C) an established residential subdivision was locatedon June 1, 2005 [1989], as determined by the board.

(5) - (11) (No change.)

§363.503. Determination of Economically Distressed Area.

To determine that an area is economically distressed, the board shallconsider information and data presented with the application or other-wise available to the board to determine that the water or sewer servicesare inadequate to meet the minimal needs of residential users; that the�nancial resources of the residential users of the services are inade-quate to provide water or sewer services that will satisfy those minimalneeds; and that an established residential subdivision was located in theeconomically distressed area on June 1, 2005 [1989].

(1) Water service is inadequate to meet the minimal needsof the residential users of an economically distressed area if the boarddetermines that water service:

(A) does not exist or is not provided;

(B) is provided by a community water system that doesnot meet drinking water standards established by the commission andset forth in applicable portions of 30 TAC Chapter 290, Subchapter F[§§290.01-290.26 and §§290.38-290.51];

(C) is provided by individual wells, which after treat-ment, do not meet drinking water standards established by the com-mission and set forth in applicable portions of 30 TAC Chapter 290,Subchapter F [§§290.3, 290.4, 290.10, and 290.13]; or

(D) does not meet applicable water quality standards ofany other governmental unit with jurisdiction over such area.

(2) Sewer service is inadequate to meet the minimal needsof residential users of an economically distressed area if the board de-termines that sewer service:

(A) does not exist or is not provided;

(B) is provided by an organized sewage collection andtreatment facility that does not comply with the standards and require-ments established by the commission and set forth in 30 TAC Chapter305;

(C) is provided by on-site sewerage facilities that do notcomply with the standards and requirements established by the com-mission and set forth in 30 TAC Chapter [Chapters] 285 [and 313]; or

(D) does not meet applicable wastewater standards ofany other governmental unit with jurisdiction over such area.

(3) The �nancial resources of the residential users of theeconomically distressed area are inadequate to provide the needed ser-vices if the board �nds that the area to be served by a proposed projecthas a median household income that is not greater than 75 percent ofthe median state household income [an average per capita income thatis at least 25 percent below the state average] for the most recent year[three consecutive years] for which statistics are available.

(4) An established residential subdivision was located inthe economically distressed area on June 1, 2005 [1989], if the boarddetermines the following:


(A) either a plat of the area is recorded in the countyplat or deed records; or a pattern of subdivision, without a recordedplat, is evidenced by existence of multiple residential lots derived froma common tract with roads, streets, utility easements, or other suchincidents of common usage or origin;

(B) at least one occupied residential dwelling existedwithin the platted or subdivided area on June 1, 2005 [1989], and

(C) such other factors as may be determined relevant bythe board.

(5) The boundary or limits of a water or sewage project toserve an economically distressed area may be determined by:

(A) a subdivision plat prepared by a registered engineer,whether recorded or not;

(B) a metes and bounds description, natural boundaries,roads, or other natural features that delineate an unplatted area withinwhich a feasible cost-effective project can be developed; or

(C) inclusion of occupied dwellings with inadequatewater or wastewater services in close proximity to an economicallydistressed area delineated as provided above in a project area whensuch dwellings can be feasibly served by a proposed project withinwhich a feasible cost-effective project can be developed.

§363.504. Required Application Information.(a) An application shall be in the form and numbers prescribed

by the executive administrator and, in addition to any other informationthat may be required by the executive administrator or the board, theapplicant shall provide:

(1) information to establish to the satisfaction of the exec-utive administrator that the county in which the applicant is locatedhas adopted and is enforcing the model rules adopted by the board pur-suant to Water Code §16.343 (model rules) and that, if any part of theproject is located within the incorporated limits of a municipality, themunicipality has adopted and enforcing the model rules, including thefollowing information:

(A) A copy of the subdivision regulations adopted bythe county and the city, if applicable;

(B) From the county and the city, if applicable, thelesser of either the three most recently approved residential subdivisionplats or all recently approved subdivision plats that are within thejurisdiction of the county, and city if applicable; provided howeverthat if a county or city has not approved any residential subdivisionplats within the last �ve years, then the county judge and mayor, ifapplicable, shall submit a notarized statement to such effect;

(C) A notarized statement from the county judge that:

(i) the residential subdivision regulations adoptedby the county and submitted with the statement fully incorporate themodel rules;

(ii) any residential subdivision plats submitted withthis statement fully comply with the county regulations;

(iii) acknowledges if the executive administrator de-termines that the county is not enforcing the model rules, that all fundsprovided by the board under this subchapter and committed for projectsin the county shall be suspended; and

(iv) such statement shall be considered suf�cient toestablish compliance with the model rules for �ve years unless the ex-ecutive administrator identi�es signi�cant violations with the modelrules and the city is unable to correct the de�ciencies within 90 days ofnoti�cation of the violations;

(D) If any part of the project is located within the incor-porated limits of a municipality, a notarized statement from the mayorthat:

(i) the residential subdivision regulations adoptedby the city and submitted with the statement fully incorporate themodel rules;

(ii) any residential subdivision plats submitted withthis statement fully comply with the city regulations;

(iii) acknowledges if the executive administrator de-termines that the city is not enforcing the model rules, that all funds pro-vided by the board under this subchapter and committed for projects inthe city shall be suspended; and

(iv) such statement shall be considered suf�cient toestablish compliance with the model rules for �ve years unless the ex-ecutive administrator identi�es signi�cant violations with the modelrules and the city is unable to correct the de�ciencies within 90 days ofnoti�cation of the violations;

(E) If the county or city, if applicable, have only beenrequired or authorized to adopt residential subdivision rules that en-force the model rules within one year of the submission of the applica-tion, the executive administrator may require that each member of theapplicable governing body:

(i) complete a course of training of not more thantwo hours on the implementation of the model rules prepared and pro-vided by the executive administrator in a widely available medium atno cost; and

(ii) provide a notarized statement that the memberhas completed the training.

(2) a facility plan satisfactory in form and in substance tothe executive administrator that includes all of the facility engineeringdata, studies, and analysis described in §355.73(a) of this title (relatingto Scope of Facility Plan), and any relevant data or information iden-ti�ed in §355.73(b) as may be requested by the board or the executiveadministrator;

(3) a resolution from its governing body which shall:

(A) request �nancial assistance and identify the amountof requested assistance;

(B) designate the authorized representative to act on be-half of the governing body; and

(C) authorize the representative to submit the applica-tion, appear before the board on behalf of the applicant, and submitsuch other documentation as may be required by the executive admin-istrator or the board;

(4) a notarized af�davit from the authorized representativestating that:

(A) the decision to request �nancial assistance from theboard was made in a public meeting held in accordance with the OpenMeetings Act (Government Code, §551.001, et seq.,) and after pro-viding all such notice as required by such Act as is applicable to theapplicant or, for a corporation, that the decision to request �nancial as-sistance from the board was made in a meeting open to all customersand after providing all customers written notice at least 72 hours priorto such meeting that a decision to request public assistance would bemade during such meeting;

(B) the information submitted in the application is trueand correct according to best knowledge and belief of the representa-tive;


(C) the applicant has no outstanding judgments, orders,�nes, penalties, taxes, assessment or other enforcement or complianceissue of any kind or nature by EPA, the commission, Texas Comptrol-ler, Texas Secretary of State, or any other federal, state or local gov-ernment or identifying such judgments, orders, �nes, penalties, taxes,assessment or other enforcement or compliance issue as may be out-standing for the applicant;

(D) the applicant warrants compliance with the repre-sentations made in the application in the event that the board providesthe �nancial assistance; and

(E) the applicant will comply with all applicable federallaws, rules, and regulations as well as the laws of this state and the rulesand regulations of the board;

(5) copies of any proposed or existing contracts with anyappropriate consultants such as �nancial advisory, engineering, gen-eral counsel and bond counsel services to be used by the applicant inapplying for �nancial assistance or constructing the proposed project.Contracts for engineering services should include the scope of services,level of effort, costs, schedules, and other information necessary for ad-equate review by the executive administrator;

(6) a citation to the speci�c legal authority in the TexasConstitution and statutes pursuant to which the applicant is authorizedto provide the service for which the applicant is receiving �nancial as-sistance as well as the legal documentation identifying and establishingthe legal existence of the applicant as may be deemed necessary by theexecutive administrator;

(7) if the applicant provides or will provide water supplyor treatment or sewer service to another service provider, or receivessuch service from another service provider, the proposed agreement,contract, or other documentation which legally establishes such servicerelationship, with the �nal and binding agreements provided prior toclosing; and

(8) documentation of the ownership interest, with support-ing legal documentation, of property on which proposed project shallbe located, or if the property is to be acquired, certi�cation that theapplicant has the necessary legal power and authority to acquire theproperty.

(b) Pursuant to Local Government Code §232.071, the author-ity of a county to adopt and enforce the model rules may be subject to apolitical subdivision within such county submitting an application for�nancial assistance under Water Code, Chapter 17, Subchapter K. If aneconomically distressed area is located within such a county, the fol-lowing rules apply.

(1) If the board has funds available to provide the �nan-cial assistance to political subdivisions under Water Code, Chapter 17.Subchapter K, the applicant shall submit:

(A) all information required by subsection (a) exceptfor the information required pursuant to subsection (a)(1) of this sec-tion;

(B) upon the determination by the executive adminis-trator that the information provided complies with the requirements ofsubsection (a)(2) of this section, the board shall consider the informa-tion submitted by the applicant;

(C) if the board determines that there is an economicallydistressed area identi�ed in the county, the board will issue a writtenresolution �nding that such an area exists in the county; and

(D) the applicant must submit the information requiredby subsection (a)(1) of this section within 90 days of the determinationby the board.

(2) If the board does not have funds available to provide�nancial assistance to political subdivisions under Water Code, Chapter17, Subchapter K, a political subdivision may submit:

(A) all information required by subsection (a)(2) of thissection;

(B) upon the determination by the executive adminis-trator that the information provided complies with the requirements ofsubsection (a)(2) of this section, the board shall consider the informa-tion submitted by the political subdivision; and

(C) if the board determines that there is an economicallydistressed area identi�ed in the county, the board will issue a writtenresolution �nding that such an area exists in the county.

§363.505. Application Review and Assistance Conditions.(a) The funds available for projects eligible for �nancial assis-

tance from the Economically Distressed Areas Program Account underthis subchapter are allocated as follows:

(1) $15 million for projects that have received previousboard funding under this subchapter, referred to herein as Tier Aprojects;

(2) $50 million for projects that are eligible for assistancepursuant to the Colonia Wastewater Treatment Assistance Program, asde�ned pursuant to the grant agreement for that assistance programwith the United States Environmental Protection Agency, referred toherein as Tier B projects; and

(3) any funds in the Economically Distressed Areas Pro-gram Account in excess of the funds available for Tier A and B projectsfor all projects eligible for assistance under this subchapter herein re-ferred to as Tier C projects.

(b) An application to receive �nancial assistance as a Tier Aproject must be �led no later than the 90th calendar day following theeffective date of these rules. An application to receive �nancial assis-tance as a Tier B project must be �led no later than the 180th calendarday following the effective date of these rules. An application for allother projects will be considered by the board on the basis in the orderthat an administratively complete application, as determined by the ex-ecutive administrator, is �led with the board.

(c) The board may provide �nancial assistance from the Eco-nomically Distressed Areas Program Account for the following con-struction activities as de�ned in Water Code §17.001(8):

(1) The board may provide �nancial assistance for whichno repayment is required for costs necessary to provide water or sewerservices to economically distressed areas for the following activities:

(A) preliminary planning to determine the feasibility ofa water supply project, treatment works, or �ood control measures;

(B) engineering, architectural, legal, title, �scal, or eco-nomic investigations or studies, surveys, designs, plans, working draw-ings, speci�cations, procedures, or other necessary actions; and

(C) the expense of any condemnation or other legal pro-ceedings associated with real property acquisitions;

(2) upon approval by the executive administrator of thecompletion of activities identi�ed in subsection (c)(1) of this section,the board may provide �nancial assistance in the amount and man-ner provided in §363.503 of this title (relating to Determination ofEconomically Distressed Area) for costs necessary to provide water


or sewer services to economically distressed areas for the followingactivities:

(A) construction including erecting, building, acquir-ing, altering, remodeling, improving, acquiring or extending a watersupply project or water services, treatment works or sewer services orfacilities; and

(B) the inspection or supervision of any of the itemslisted herein.

(d) Applicants receiving funds committed under subsection(c)(2) of this section shall commence the construction activities forwhich funds have been provided no later than 1 year from the date ofthe commitment made by the board; provided however, the board, inits sole discretion, may approve a single three month extension. Nounexpended funds that have been committed under subsection (c)(2)of this section shall be provided to an applicant two years from the dateof commitment; provided however, the board, in its sole discretion,may approve a single six-month extension.



2006.


31 TAC §363.504, §363.505

(Editor’s note: The text of the following sections proposed for repealwill not be published. The sections may be examined in the of�ces of theTexas Water Development Board or in the Texas Register of�ce, Room245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal is proposed under the authority of the Texas WaterCode §6.101 and §15.995 which authorize the board to publishrules to carry out its duties provided in the Water Code and forthis program in particular.


§363.504. Facility Engineering Requirements.§363.505. Applicability.This agency hereby certi�es that the proposal has been reviewedby legal counsel and found to be within the agency’s legal author-ity to adopt.


2006.


TITLE 34. PUBLIC FINANCE

PART 4. EMPLOYEES RETIREMENTSYSTEM OF TEXAS

CHAPTER 81. INSURANCE34 TAC §81.11

The Employees Retirement System of Texas (ERS) proposesamendments to 34 Texas Administrative Code §81.11, concern-ing Termination of Coverage and sanctions for insurance pro-gram violations.

The proposed amendments to §81.11(a)(1) and (4) clarify therule’s application to reinstatement of coverage for a survivingspouse or dependent, and it continues to comport with currentprocedures. The proposed amendments to §81.11(c)(2) willmake the rule consistent with Tex. Ins. Code, §1551.351(d),which states that any sanction imposed for a violation of thestatute is not stayed during an appeal. The proposed amend-ments also clarify that participants may appeal denials relatedto the payment of claims as permitted by ERS and which is cur-rently permitted under Chapter 1551. The proposed amendmentto §81.11(c)(3) will make the rule consistent with Tex. Gov’tCode, §815.102(b) and also with ERS rule §67.1(b), whichstates that Chapter 67 shall exclusively govern the procedurefor all proceedings before the Board, its designee or ERS wherenotice and hearing are required.

Paula A. Jones, General Counsel, has determined that, for the�rst �ve-year period this amended rule is in effect, there will beno �scal implications for state or local government as a result ofenforcing or administering the rule as proposed.

Ms. Jones has also determined that, for each year of the �rst �veyears the proposed amendment is in effect, the public bene�tanticipated as a result of enforcing the rule will be that the rule isconsistent with current statutes and rules. There will be no effecton small businesses. There are no anticipated economic coststo persons who are required to comply with this rule as proposed.

Comments on the proposed amendments may be submit-ted to Paula A. Jones, General Counsel, P. O. Box 13207,Austin, Texas 78711-3207 or you may e-mail Ms. Jones [email protected]. The deadline for receiving com-ments is Monday, December 4, 2006 at 10:00 a.m.

The amendments are proposed under Texas Insurance Code,§1551.052, which gives the Board of Trustees the authority toadopt rules it considers necessary to implement the chapter andits purposes.

The proposed amendments do not affect any other statutes, ar-ticles or codes beyond Chapters 1551, Tex. Ins. Code and 815,Tex. Gov’t Code.

§81.11. Termination of Coverage.(a) Cancellation of coverage.

(1) Coverage will continue through the last day of themonth in which coverage is canceled. Coverage canceled by a surviv-ing spouse or dependent of a deceased retiree may never be reinstated,except as provided in subsection (4) below.

(2) - (3) (No change.)

(4) Surviving spouse and eligible dependent coverage fora person who becomes a state employee shall be canceled as of theeffective date of coverage as an active employee. Surviving spouse


and eligible dependent coverage may be reinstated when the survivingspouse terminates employment with the state.

(5) (No change.)

(b) (No change.)

(c) Sanctions for Insurance Program Violations.

(1) (No change.)

(2) Any person with a grievance regarding eligibility, pay-ment of a claim or other matters for which an appeal is permitted in-volving the Program may submit a written request to the ExecutiveDirector to make a determination on the matter in dispute. Any personwho disputes a rescission of coverage, a denial of bene�ts or [other]sanctions imposed in connection with a determination made under In-surance Code, Chapter 1551, may appeal the determination in accor-dance with §81.9 of this chapter (relating to Grievance Procedure). Atimely appeal of a determination made pursuant to Insurance Code,Chapter 1551 shall not [automatically] stay the imposition of sanctions.At [However, at] the time such a determination is made pursuant to In-surance Code, Chapter 1551, no further claims will be paid until theagency decision is �nal. Upon �nal agency action, all eligible claims,if any, will be processed subject to any offsets for overpayments [madeby the carrier].

(3) Any hearing provided pursuant to this section shall bea contested case under Government Code, Chapter 2001, and be con-ducted in the manner prescribed by law and by Chapter 67 of this title(relating to Hearings on Disputed Claims) [or the rules of the State Of-�ce of Administrative Hearings, when applicable. In the event of anycon�ict between a provision of Chapter 67 and the rules of the StateOf�ce of Administrative Hearings, the provisions of Chapter 67 shallcontrol].

(4) - (6) (No change.)



2006.

TRD-200605761Paula A. JonesGeneral CounselEmployees Retirement System of TexasEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 867-7421

TITLE 37. PUBLIC SAFETY AND CORREC-TIONS

PART 3. TEXAS YOUTH COMMISSION

CHAPTER 91. PROGRAM SERVICESSUBCHAPTER D. HEALTH CARE SERVICES37 TAC §91.87, §91.88

The Texas Youth Commission (the commission) proposes anamendment to §91.87 and §91.88, concerning health care ser-vices for youth who may be at risk for suicide. The amendmentto §91.87 will broaden the one-to-one (1:1) observation de�ni-tion to allow security doors to remain unlocked for youth on sui-

cide alert with 1:1 observation, except when the youth’s behaviorpresents imminent danger to self or others. The amendment to§91.88 will no longer automatically admit a youth to security if theyouth answers "yes" to items 2 or 3 on the suicide risk screen-ing. The amendment will allow the mental health professionalthe discretion to make a clinical judgment to return youth to thegeneral population on suicide alert pending a face-to-face sui-cide risk assessment within 72 hours based on recent historyof the youth answering "yes" to these items for the purpose ofgaining admission to security and the youth does not present anovert risk of suicide.

Robin McKeever, Assistant Deputy Executive Director for Finan-cial Support, has determined that for the �rst �ve-year period theamendments are in effect there will be no �scal implications forstate or local government as a result of enforcing or administer-ing the amendments.

Dr. Don Brantley, Assistant Deputy Executive Director for Juve-nile Corrections, has determined that for each year of the �rst �veyears the amendments are in effect the public bene�t anticipatedas a result of enforcing the amendments will be the protection ofyouth that may be at risk of suicide. There will be no effect onsmall businesses. There is no anticipated economic cost to per-sons who are required to comply with the amendments as pro-posed. No private real property rights are affected by adoptionof these amendments.

Comments on the proposed amendments may be submittedwithin 30 days of the publication of this notice to DeAnna Lloyd,Chief of Policy Administration, Texas Youth Commission, 4900North Lamar, P.O. Box 4260, Austin, Texas 78765, or email [email protected].

The amendments are proposed under the Human ResourcesCode, §61.075 and §61.076, which provides the commissionwith the authority to provide conditions it believes is the best in-terests of the youth’s safety and any medical or psychiatric treat-ment that is necessary.

The proposed amendments affects the Human Resources Code,§61.034.

§91.87. Suicide Alert Explanation of Terms.(a) (No change.)

(b) Explanation of Terms Used.

(1) - (14) (No change.)

(15) Suicide Levels of Observation--Levels of observation,which are automatically assigned by policy or determined by an MHPto ensure youth safety. Levels of observation are:

(A) One-to-One (1:1) Observation--At a minimum, anassigned staff is within �ve (5) feet and youth is within sight of staffat all times. The staff will not be assigned other concurrent duties andmust be formally relieved of the duty by another staff or by the discon-tinuation of the 1:1 status. Doors to individual rooms shall remain un-locked for youth on SA 1:1 observation, except when a youth presentsan imminent danger to staff due to aggressive behavior. Procedures forobtaining approval to lock the door for such behavior are set forth in§91.88 of this title. [This level of observation may be assigned to youthin the general population or in the security unit.]

(B) Constant Observation--Youth is within sight of anassigned staff at all times. The staff may have concurrent duties if theduties do not interfere with observation of the youth. Other staff mayassist in visual observation of the youth. [This level of observation maybe assigned to youth in the general population or in the security unit.]


(C) Close Observation--Youth is visually checked atleast once every ten (10) minutes. Staff may be involved in concurrentduties that allow for the �exibility needed to check the youth. Thislevel of observation may be assigned to youth in the general popu-lation, but may not be applied to youth in the security unit or in theCorsicana Stabilization Unit (CSU) where youth are visually checkedevery three (3) minutes for overt suicidal behavior and every �ve (5)minutes for non-lethal suicidal behavior.

(16) - (18) (No change.)

§91.88. Suicide Alert for Secure Programs.

(a) (No change.)

(b) Applicability.

(1) (No change.)

(2) De�nitions pertaining to this rule are under §91.87 ofthis title. [This rule must be read in conjunction with (GAP) §91.87 ofthis title (relating to Suicide Alert Explanation of Terms).]

(3) If a youth is admitted to protective custody followinga face-to-face assessment by a mental health professional (MHP), thisrule must also be applied in conjunction with [(GAP)] §97.45 of thistitle relating to protective custody. [(relating to Protective Custody).]

(c) Initial Identi�cation of Youth at Risk for Suicide.

(1) Any staff hearing or observing a youth engage in or ver-balize non-lethal or overt suicide behavior must immediately respondin a manner that protects youth safety. Staff will immediately seekmedical attention for youth if necessary. Staff must provide minimumdorm precautions to prevent dangerous or potentially dangerous behav-ior, which includes constant observation and con�scating materials[,]which could potentially be used for self-injury.

(2) A youth in general population who has engaged in orverbalized suicide behavior must be referred to security intake accord-ing to the procedures in [(GAP)] §97.37 of this title [(relating to Secu-rity Intake)] and immediately placed on Suicide Alert Pending (SA-P).The youth is placed on overt suicide security precautions upon arrivalto security intake.

(3) - (6) (No change.)

(d) (No change.)

(e) MHP Face-to-Face Suicide Risk Assessment.

(1) Based on the face-to-face suicide risk assessment withthe youth, an MHP determines whether to place the youth on SA. AnMHP may do one [(1)] of the following:

(A) (No change.)

(B) place the youth on SA status and assign a level ofobservation, which may include admission to protective custody. Ifa youth is admitted to protective custody, this policy must be read inconjunction with §97.45 of this title; [Protective Custody, this policymust be read in conjunction with (GAP) §97.45 of this title (relating toProtective Custody);]

(C) (No change.)

(D) admit the youth to the in�rmary with 1:1 [one-to-one (1:1)] observation if no other options are available, or there arecompelling medical reasons.

(2) (No change.)

[(3) The MHP who is assigned to the youth on SA statusmay, with proper consultation with the DMHP, release a youth from

protective custody or reduce the level of observation of youth on SAstatus.]

(f) New Suicidal or Aggressive Behavior of Youth on SA Sta-tus.

(1) When a youth on SA in the general population is re-ferred to security intake for engaging in or verbalizing a new non-lethalor overt suicide behavior, an MHP will conduct a face-to-face suiciderisk assessment to determine SA status and treatment/placement op-tions.

(2) When a youth on SA in protective custody on non-lethalprecaution engages in or verbalizes overt suicide behavior, the youth isplaced on overt suicide precautions and the on-call MHP is immedi-ately contacted by telephone with a description of the new behavior inorder to determine the level of observation and minimum security pre-cautions.

(3) When a youth on SA on 1:1 observation in protectivecustody or in CSU presents an imminent danger to staff due to aggres-sive behavior, the youth’s room door may be locked provided that theMHP conducts a face-to-face assessment and determines (in consul-tation with the DMHP) that locking the door is necessary to containthe youth’s aggressive behavior and still allows adequate supervisionto ensure the youth’s safety.

(g) [(f)] Removal of Youth from SA Status.

(1) The MHP who is assigned to the youth on SA statusmay, with prior consultation with the DMHP, remove the SA status.

(2) The DMHP may remove a youth from SA status ormodify the level of supervision upon a face-to-face interview with theyouth.

(h) Release of Youth on SA Status in Security Unit. The MHPwho is assigned to the youth on SA status in protective custody may,with prior consultation with the DMHP, release a youth from protectivecustody to the general population, and reduce the level of observationof the youth on SA if deemed appropriate.

(i) [(g)] Transfer of Youth on SA Status.

(1) Youth who are on SA status may not be moved to an-other placement unless:

(A) the receiving placement is a TYC institution or res-idential treatment center, or other placement having on-site psychiatricstaff who may function as an MHP; and

(B) the DMHP at the sending site approves and coordi-nates the transfer of the youth and clinical responsibilities in consulta-tion with the DMHP at the receiving site.

(2) Youth who transfer from one facility to another mustreceive a suicide risk assessment from the receiving facility, within 72hours of arrival if:

(A) youth is on SA or SA-P status; or

(B) youth has history of suicide behavior within the pastsix (6) months.

(j) [(h)] Noti�cation.

(1) Every TYC facility and secure program develops a sys-tem of noti�cation of key personnel to identify youth on SA or SA-P.

(2) Facility staff shall notify the parent or guardian of ayouth placed on SA as a result of overt suicide behavior and when theyouth is removed from SA.


(3) Appropriate Central Of�ce [central of�ce] staff will benoti�ed of life threatening suicide attempts or completed suicide.

(k) [(i)] Training. All direct care staff in TYC facilities andin secure programs will receive initial suicide prevention training andannual updates. Staff designated to conduct suicide screenings receivetraining from an MHP regarding suicide alert policy, suicide indicators,and suicide screening.



2006.

TRD-200605636Dwight HarrisExecutive DirectorTexas Youth CommissionEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 424-6301

CHAPTER 97. SECURITY AND CONTROLSUBCHAPTER A. SECURITY AND CONTROL37 TAC §97.45

The Texas Youth Commission (the commission) proposes anamendment to §97.45, concerning security and placement ofyouth. The amendment will allow security doors to remain un-locked for youth on suicide alert one-to-one observation, exceptwhen the youth’s behavior presents imminent danger to self orothers.

Robin McKeever, Assistant Deputy Executive Director for Finan-cial Support, has determined that for the �rst �ve-year period theamendment is in effect there will be no �scal implications for stateor local government as a result of enforcing or administering theamendment.

Dr. Don Brantley, Assistant Deputy Executive Director for Juve-nile Corrections, has determined that for each year of the �rst�ve years the amendment is in effect the public bene�t antici-pated as a result of enforcing the amendment will be the protec-tion of youth that may be at risk of suicide. There will be no effecton small businesses. There is no anticipated economic cost topersons who are required to comply with the amendment as pro-posed. No private real property rights are affected by adoptionof this amendment.

Comments on the proposed amendment may be submittedwithin 30 days of the publication of this notice to DeAnna Lloyd,Chief of Policy Administration, Texas Youth Commission, 4900North Lamar, P.O. Box 4260, Austin, Texas 78765, or email [email protected].

The amendment is proposed under the Human Resources Code,§61.075, which affords the commission with the authority to pro-vide conditions it believes is the best interests of the youth’ssafety.

The proposed amendment affects the Human Resources Code,§61.034.

§97.45. Protective Custody.(a) - (c) (No change.)

(d) Admission Process. [Admission and Release Process.]

(1) (No change.)

(2) All admissions to protective custody are reviewedwithin one (1) working day to determine if policy and procedureshave been followed. If a determination has been made that policyand procedures have not been followed, youth must be released inaccordance to subsection (g) of this section.

[(3) The youth may be released from protective custodyonly if:]

[(A) an MHP determines the youth may return to theregular program immediately following a face-to-face suicide risk as-sessment; and]

[(B) the MHP has consulted with the designated mentalhealth professional (DMHP), as de�ned in §91.87 of this title (relatingto Suicide Alert Explanation of Terms), prior to releasing the youthfrom protective custody; or]

[(C) a review of the admission to protective custody re-veals that the youth is being held in violation of policy.]

(e) Program Requirement. Individual room doors shall remainunlocked for those youth on SA 1:1 observation, except when a youthpresents an imminent danger to staff due to aggressive behavior. Pro-cedures for obtaining approval to lock a door for such behavior are setforth in §91.88 of this title.

(f) [(e)] Extended Stay Requirements.

(1) A youth may not be held in protective custody beyond24 hours from admission to the program unless an MHP conducts asecond face-to-face suicide risk assessment and the MHP determinesthat the youth continues to be a serious and immediate physical dangerto himself/herself and continued con�nement is necessary to preventself-harm.

(2) The youth may continue to be held in protective cus-tody with a face-to-face suicide risk assessment completed every 24hours after initial placement to evaluate the youth’s status and need forcontinued placement.

(3) Each 24-hour extension decision will be reviewedwithin one (1) working day to determine if policy and procedures werefollowed.

(4) Every seven (7) days following a youth’s admissioninto protective custody, the TYC facility’s DMHP shall review the doc-umentation relating to protective custody including the youth’s treat-ment plan.

(5) If the youth remains in protective custody beyond 14days, the director of treatment and case management shall review theMHP’s evaluations and the youth’s treatment plan shall be reviewed atleast every three (3) days thereafter. Assessments will continue to becompleted by the MHP every 24 hours.

(g) Release Process. The youth may be released from protec-tive custody only if:

(1) an MHP determines the youth may return to the regularprogram immediately following a face-to-face suicide risk assessment;and

(2) the MHP has consulted with the designated mentalhealth professional (DMHP), as de�ned in §91.87 of this title, prior toreleasing the youth from protective custody; or

(3) a review of the admission to protective custody revealsthat the youth is being held in violation of policy.


(h) [(f)] Appeals. The youth has the right to appeal his/herplacement through the youth complaint system at any point in thisprocess.



2006.

TRD-200605637Dwight HarrisExecutive DirectorTexas Youth CommissionEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 424-6301

TITLE 40. SOCIAL SERVICES AND ASSIS-TANCE

PART 20. TEXAS WORKFORCECOMMISSION

CHAPTER 833. COMMUNITY DEVELOP-MENT INITIATIVESSUBCHAPTER B. TEXAS INDIVIDUALDEVELOPMENT ACCOUNT PILOT PROJECT40 TAC §§833.11 - 833.15

(Editor’s note: The text of the following sections proposed for repealwill not be published. The sections may be examined in the of�ces ofthe Texas Workforce Commission or in the Texas Register of�ce, Room245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Workforce Commission (Commission) proposes therepeal of the following sections of Chapter 833, relating to theCommunity Development Initiatives (CDI) rules:

Subchapter B, Texas Individual Development Account PilotProject, §§833.11 - 833.15

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

PART I. IMPACT STATEMENTS

PART III. COORDINATION ACTIVITIES

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

The purpose of the proposed repeal is to eliminate Chapter833, Subchapter B, relating to the Texas Individual Develop-ment (IDA) Account Pilot Project. In 1999, Texas Labor Code§301.068 directed the Commission to create the Texas IDAPilot Project. The goal of this project was to offer an opportunityfor employed, yet economically disadvantaged, individuals tosave earned income in order to purchase assets such as apostsecondary education, a home, or a small business. Basedon this legislative direction, the Commission adopted Chapter833, Subchapter B to administer the pilot project.

The Commission funded three pilot project consortia to assist el-igible low-income individuals in saving for the asset purchasesenvisioned in the statute. In July 2003, an independent entity be-gan an evaluation of the three IDA pilot projects. The contracts

for the three pilot sites expired in February 2005, and the evalua-tion of the project was completed in April 2005. The Commissionsubmitted the required report to the Legislature and the control-ling statute, Texas Labor Code §301.068, expired September 1,2005. Therefore, Subchapter B of Chapter 833 is no longer re-quired.

PART I. IMPACT STATEMENTS

Randy Townsend, Chief Financial Of�cer, has determined thatfor each year of the �rst �ve years the rules will be in effect, thefollowing statements will apply:

There are no estimated additional costs to the state and to localgovernments expected as a result of enforcing or administeringthe rules.

There are no estimated reductions in costs to the state and tolocal governments as a result of enforcing or administering therules.

There are no estimated losses or increases in revenue to thestate or to local governments as a result of enforcing or admin-istering the rules.

There are no foreseeable implications relating to costs or rev-enue of the state or local governments as a result of enforcingor administering the rules.

There will be no probable economic costs to persons requiredto comply with this rule, and there will be no adverse economiceffect on small businesses.

The Agency hereby certi�es that the proposal has been reviewedby legal counsel and found to be within the Agency’s legal au-thority to adopt.

Mark Hughes, Director of Labor Market Information, has deter-mined that there is no signi�cant negative impact upon employ-ment conditions in the state as a result of the rules.

Luis M. Macias, Director, Workforce Development Division, hasdetermined that for each year of the �rst �ve years the rules arein effect, the public bene�t anticipated as a result of enforcing theproposed repeal will be to ensure compliance with federal andstate requirements.

PART III. COORDINATION ACTIVITIES

In the development of these rules for publication and public com-ment, the Commission sought the involvement of each of Texas’28 Boards. The Commission provided the policy concept regard-ing the proposed repeal to the Boards for consideration and re-view.

Comments on the proposed repeal may be submitted to TWCPolicy Comments, Workforce and UI Policy, 101 East 15thStreet, Room 440T, Austin, Texas 78778; faxed to (512) 475-3577; or e-mailed to [email protected] Commission must receive comments postmarked no laterthan 30 days from the date this proposal is published in theTexas Register.

The repeal is proposed under Texas Labor Code §301.0015 and§302.002(d), which provide the Texas Workforce Commissionwith the authority to adopt, amend, or repeal such rules as itdeems necessary for the effective administration of Agency ser-vices and activities.

The repeal affects Title 4, Texas Labor Code, particularly Chap-ters 301 and 302.


§833.11. Purpose.

§833.12. Program Design, Intent, and Funding.


§833.14. Selection Criteria for the Pilot Project.

§833.15. Requirements for Account Administrators.



2006.

TRD-200605653Reagan MillerDeputy Director for Workforce and UI PolicyTexas Workforce CommissionEarliest possible date of adoption: December 3, 2006For further information, please call: (512) 475-0829



PART 8. JOINT FINANCIALREGULATORY AGENCIES

CHAPTER 153. HOME EQUITY LENDING7 TAC §153.22

The Finance Commission of Texas and the Texas Credit UnionCommission ("commissions") jointly withdraw the proposed re-peal of §153.22 which appeared in the July 28, 2006, issue ofthe Texas Register (31 TexReg 5885).


2006.

TRD-200605746Leslie L. PettijohnCommissionerJoint Financial Regulatory AgenciesEffective date: October 20, 2006For further information, please call: (512) 936-7640

7 TAC §153.22

The Finance Commission of Texas and the Texas Credit UnionCommission jointly withdraw the proposed new §153.22 whichappeared in the July 14, 2006, issue of the Texas Register (31TexReg 5511).


2006.

TRD-200605745

Leslie L. PettijohnCommissionerJoint Financial Regulatory AgenciesEffective date: October 20, 2006For further information, please call: (512) 936-7640



CHAPTER 573. RULES OF PROFESSIONALCONDUCTSUBCHAPTER B. RECORDS KEEPING22 TAC §573.52

The Texas Board of Veterinary Medical Examiners withdraws theproposed amendments to §573.52 which appeared in the July14, 2006, issue of the Texas Register (31 TexReg 5537).


2006.

TRD-200605626Julie A. BarkerExecutive AssistantTexas Board of Veterinary Medical ExaminersEffective date: October 17, 2006For further information, please call: (512) 305-7555

WITHDRAWN RULES November 3, 2006 31 TexReg 8981

TITLE 4. AGRICULTURE

PART 1. TEXAS DEPARTMENT OFAGRICULTURE

CHAPTER 10. SEED CERTIFICATIONSTANDARDSSUBCHAPTER J. SEED POTATO STANDARDS4 TAC §§10.40 - 10.50

The Texas Department of Agriculture (the department) and theState Seed and Plant Board (the Board) adopt new Chapter 10,Subchapter J, §§10.40 - 10.50, concerning standards for seedpotato, without changes to the proposal published in the Septem-ber 1, 2006, issue of the Texas Register (31 TexReg 7071). Thenew sections are adopted to establish limitations of generations,bulk sales labeling fees and additional requirements for certi�ca-tion of seed potato. The adoption of the new sections will providefor a supply of certi�ed seed potato materials in a form that will al-low participation in the certi�cation program. The department isthe certifying agency in the administration of the Seed and PlantCerti�cation Act, and is charged with administering and enforc-ing the standards adopted by the Board.

New §10.40 provides a statement of application for the stan-dards and de�nitions to be used in the new Subchapter J. New§10.41 provides general requirements for seed potato certi�ca-tion. New §10.42 provides requirements for labeling and issu-ing of bulk certi�cates and seals. New §10.43 provides require-ments for grades and grade inspection of certi�ed seed pota-toes. New §10.44 provides for �eld and storage inspections andfees. New §10.45 provides requirements for post harvest test-ing. New §10.46 provides requirements for out-of-state seedstocks. New §10.47 provides requirements for laboratory virustesting. New §10.48 provides special requirements for limitedgeneration seed potatoes. New §10.49 provides special require-ments for non-generation seed potatoes. New §10.50 providesgrade standards for certi�ed seed potatoes.

No comments were received on the proposal.

The new sections are adopted under the Texas Agriculture Code,§62.002, which provides the State Seed and Plant Board with theauthority to establish standards of genetic purity and identity asnecessary for the ef�cient enforcement of agricultural interest;and the Texas Agriculture Code, §12.016, which provides thedepartment with the authority to adopt rules for administration ofthe code.

This agency hereby certi�es that the adoption has been reviewedby legal counsel and found to be a valid exercise of the agency’slegal authority.


2006.

TRD-200605685Dolores Alvarado HibbsDeputy General CounselTexas Department of AgricultureEffective date: November 7, 2006Proposal publication date: September 1, 2006For further information, please call: (512) 463-4075


PART 1. FINANCE COMMISSION OFTEXAS

CHAPTER 1. CONSUMER CREDITREGULATIONSUBCHAPTER E. INTEREST CHARGES ONLOANS7 TAC §§1.501 - 1.505

The Finance Commission of Texas (the commission) adopts therepeal of 7 TAC, Part 1, Chapter 1, Subchapter E, §§1.501 -1.505, concerning Charges on Loans. The commission has de-termined as part of a rule review that this subchapter more ef-fectively belongs in Part 5, in new Chapter 83, concerning Con-sumer Loans. Therefore, these rules are being adopted for re-peal and new rules are adopted elsewhere in this issue of theTexas Register. The repeal is adopted without changes to theproposal published in the August 25, 2006, issue of the TexasRegister (31 TexReg 6567).

The commission received no written comments on the proposal.

The repeal is adopted under Texas Finance Code, §11.304,which authorizes the commission to adopt rules to enforceTitle 4 of the Texas Finance Code. Additionally, Texas FinanceCode, §342.551 authorizes the commission to adopt rules forthe enforcement of the consumer loan chapter.

The statutory provisions (as currently in effect) affected by theadopted repeal are contained in Texas Finance Code, Chapter342.


ADOPTED RULES November 3, 2006 31 TexReg 8983


2006.

TRD-200605724Leslie L. PettijohnCommissionerFinance Commission of TexasEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 936-7640

SUBCHAPTER F. ALTERNATE CHARGESFOR CONSUMER LOANS7 TAC §§1.601, 1.603 - 1.606

The Finance Commission of Texas (the commission) adoptsthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter F, §§1.601and 1.603 - 1.606, concerning Alternate Charges for ConsumerLoans. The commission has determined as part of a rule reviewthat this subchapter more effectively belongs in Part 5, in newChapter 83, concerning Consumer Loans. Therefore, theserules are being adopted for repeal and new rules are adoptedelsewhere in this issue of the Texas Register. The repealis adopted without changes to the proposal published in theAugust 25, 2006, issue of the Texas Register (31 TexReg 6568).






2006.


SUBCHAPTER G. INTEREST AND OTHERCHARGES ON SECONDARY MORTGAGELOANS7 TAC §§1.701 - 1.708

The Finance Commission of Texas (the commission) adopts therepeal of 7 TAC, Part 1, Chapter 1, Subchapter G, §§1.701 -

1.708, concerning Interest and Other Charges on SecondaryMortgage Loans. The commission has determined as part ofa rule review that this subchapter more effectively belongs inPart 5, in new Chapter 83, concerning Consumer Loans. There-fore, these rules are being adopted for repeal and new rules areadopted elsewhere in this issue of the Texas Register. The re-peal is adopted without changes to the proposal published in theAugust 25, 2006, issue of the Texas Register (31 TexReg 6568).






2006.


SUBCHAPTER H. REFUNDS INPRECOMPUTED LOANS7 TAC §§1.751, 1.752, 1.754, 1.755, 1.758 - 1.761

The Finance Commission of Texas (the commission) adopts therepeal of 7 TAC, Part 1, Chapter 1, Subchapter H, §§1.751,1.752, 1.754, 1.755, and 1.758 - 1.761, concerning Refunds inPrecomputed Loans. The commission has determined as partof a rule review that this subchapter more effectively belongs inPart 5, in new Chapter 83, concerning Consumer Loans. There-fore, these rules are being adopted for repeal and new rules areadopted elsewhere in this issue of the Texas Register. The re-peal is adopted without changes to the proposal published in theAugust 25, 2006, issue of the Texas Register (31 TexReg 6569).







2006.


SUBCHAPTER I. INSURANCE7 TAC §§1.801 - 1.811, 1.814

The Finance Commission of Texas (the commission) adopts therepeal of 7 TAC, Part 1, Chapter 1, Subchapter I, §§1.801 - 1.811and 1.814, concerning Insurance. The commission has deter-mined as part of a rule review that this subchapter more effec-tively belongs in Part 5, in new Chapter 83, concerning Con-sumer Loans. Therefore, these rules are being adopted for re-peal and new rules are adopted elsewhere in this issue of theTexas Register. The repeal is adopted without changes to theproposal published in the August 25, 2006, issue of the TexasRegister (31 TexReg 6569).






2006.


SUBCHAPTER J. AUTHORIZED LENDER’SDUTIES AND AUTHORITY7 TAC §§1.826, 1.828, 1.830 - 1.832, 1.834 - 1.839, 1.848

The Finance Commission of Texas (the commission) adoptsthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter J, §§1.826,1.828, 1.830 - 1.832, 1.834 - 1.839, and 1.848, concerningAuthorized Lender’s Duties and Authority. The commission hasdetermined as part of a rule review that this subchapter more

effectively belongs in Part 5, in new Chapter 83, concerningConsumer Loans. Therefore, these rules are being adopted forrepeal and new rules are adopted elsewhere in this issue of theTexas Register. The repeal is adopted without changes to theproposal published in the August 25, 2006, issue of the TexasRegister (31 TexReg 6570).






2006.


SUBCHAPTER K. PROHIBITIONS ONAUTHORIZED LENDERS7 TAC §§1.851 - 1.858, 1.860 - 1.863

The Finance Commission of Texas (the commission) adopts therepeal of 7 TAC, Part 1, Chapter 1, Subchapter K, §§1.851 -1.858 and 1.860 - 1.863, concerning Prohibitions on AuthorizedLenders. The commission has determined as part of a rule re-view that this subchapter more effectively belongs in Part 5, innew Chapter 83, concerning Consumer Loans. Therefore, theserules are being adopted for repeal and new rules are adoptedelsewhere in this issue of the Texas Register. The repeal isadopted without changes to the proposal published in the Au-gust 25, 2006, issue of the Texas Register (31 TexReg 6571).







2006.


SUBCHAPTER P. REGISTRATION OF RETAILCREDITORS7 TAC §1.901, §1.902

The Finance Commission of Texas (the commission) adoptsthe repeal of 7 TAC, Part 1, Chapter 1, Subchapter P, §1.901and §1.902, concerning Registration of Retail Creditors. Thecommission has determined as part of a rule review that thissubchapter more effectively belongs in Part 5, in new Chapter86, concerning Retail Creditors. Therefore, these rules arebeing adopted for repeal and new rules are adopted elsewherein this issue of the Texas Register. The repeal is adoptedwithout changes to the proposal published in the August 25,2006, issue of the Texas Register (31 TexReg 6571).


The repeal is adopted under Texas Finance Code, §11.304,which authorizes the commission to adopt rules to enforce Title4 of the Texas Finance Code. Additionally, Texas Finance Code,§345.351 and §347.451 authorize the commission to adoptrules regarding the registration of retail creditors.

The statutory provisions (as currently in effect) affected by theadopted repeal are contained in Texas Finance Code, Chapters345, 347, and 348.



2006.


CHAPTER 4. CURRENCY EXCHANGE7 TAC §4.2, §4.5

The Finance Commission of Texas (commission), on behalf ofthe Texas Department of Banking (department), adopts the re-peal of §4.2, concerning change of principal, and §4.5, concern-ing acquisition of control of corporate license. The repeal is

adopted without changes to the text as published in the August25, 2006, issue of the Texas Register (31 TexReg 6572).

Prior to September 1, 2005, money services businesses wereregulated under Finance Code, Chapter 152 (Sale of ChecksAct) and Chapter 153 (Currency Exchange Act). During the79th Regular Session, the Texas Legislature enacted the MoneyServices Act (Act of May 26, 2005, 79th Legislature, RegularSession, House Bill 2218, §1), effective September 1, 2005.The Money Services Act (MSA), codi�ed as Finance Code, Ti-tle 3, Subtitle E, Chapter 151, consolidates the regulation ofpersons engaged in the money transmission and currency ex-change businesses in Texas into one statute and repeals theSale of Checks and Currency Exchange Acts.

Chapter 4 consists of the administrative rules the commissionpreviously adopted to implement the repealed Currency Ex-change Act. The commission is adopting new regulations underthe MSA, which are located in Texas Administrative Code, Title7, Chapter 33 (Money Services Businesses). As the commis-sion has adopted new Chapter 33 sections, the commission hasrepealed existing sections of Chapter 4. With the adoption ofthe repeal of §4.2 and §4.5, the repeal of all sections of Chapter4 is complete.

The commission is repealing §4.2 and §4.5 because the sectionsare obsolete. Section 4.2 establishes requirements that apply ifa license holder under the repealed Currency Exchange Act em-ploys a new principal, or if certain changes occur with respect tothe ownership of a license holder organized as a partnership.Section 4.5 establishes requirements that apply to the acquisi-tion of control of a corporate license holder. The substance ofthese sections is inconsistent with the MSA or is incorporatedinto or rendered unnecessary by its provisions.

The commission received no comments regarding the proposal.

The repeal is adopted under Finance Code, §151.102, which au-thorizes the commission to adopt rules to administer and enforceFinance Code, Chapter 151.



2006.

TRD-200605699Everette D. JobeCertifying Of¿cialFinance Commission of TexasEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 475-1300

PART 2. TEXAS DEPARTMENT OFBANKING

CHAPTER 29. SALE OF CHECKS ACT7 TAC §29.1, §29.5

The Finance Commission of Texas (commission), on behalf ofthe Texas Department of Banking (department), adopts the re-


peal of §29.1, concerning permissible investments, and §29.5,concerning conduct of business through an agent. The repeal isadopted without changes to the text as published in the August25, 2006, issue of the Texas Register (31 TexReg 6573).

Prior to September 1, 2005, Texas law regulated money servicesbusinesses under Finance Code, Chapter 152 (Sale of ChecksAct) and Chapter 153 (Currency Exchange Act). During the 79thRegular Session, the Texas Legislature enacted the Money Ser-vices Act (Act of May 26, 2005, 79th Leg., R.S., H.B. 2218, §1),effective September 1, 2005. The Money Services Act (MSA),codi�ed as Finance Code, Title 3, Subtitle E, Chapter 151, con-solidates the regulation of persons engaged in the money trans-mission and currency exchange businesses in Texas into onestatute and repeals the Sale of Checks and Currency ExchangeActs.

Chapter 29 consists of the administrative rules the commissionpreviously adopted to implement the repealed Sale of ChecksAct. The commission is adopting new regulations under the MSAwhich are located in Texas Administrative Code, Title 7, Chap-ter 33 (Money Services Businesses). As the commission hasadopted new Chapter 33 sections, the commission has repealedexisting sections of Chapter 29. With the repeal of §29.1 and§29.5, the commission completes the repeal of all sections ofChapter 29.

The commission is repealing §29.1 and §29.5 because the sec-tions are obsolete as a result of the enactment of the MSA. Sec-tion 29.1 sets out categories of securities and assets that mayqualify as "permissible investments" and establishes related re-quirements. The substance of §29.1 is incorporated into FinanceCode, §151.309, and new 7 TAC §33.23 that the commissionis adopting in this issue of the Texas Register. Section 29.5establishes certain requirements that apply to a license holderthat conducts the sale of checks business through an agent.The MSA establishes comprehensive requirements related au-thorized delegates (agents) and license holders that conductmoney transmission through authorized delegates.

The commission received no comments regarding the proposal.

The repeal is adopted under Finance Code, §151.102, which au-thorizes the commission to adopt rules to administer and enforceFinance Code, Chapter 151.



2006.

TRD-200605701Everette D. JobeCertifying Of¿cialTexas Department of BankingEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 475-1300

CHAPTER 33. MONEY SERVICESBUSINESSES7 TAC §33.23

The Finance Commission of Texas (commission), on behalf ofthe Texas Department of Banking (department), adopts new§33.23, concerning additional provisions that apply to permissi-ble investments. The new section is adopted with changes tothe proposed text as published in the August 25, 2006, issue ofthe Texas Register (31 TexReg 6573). The text of adopted new§33.23 will be republished.

The new section is adopted under the Money Services Act (Actof May 26, 2005, 79th Leg., R.S., H.B. 2218, §1) (MSA), whichtook effect September 1, 2005 and is codi�ed as Finance Code,Title 3, Subtitle E, Chapter 151. The MSA regulates persons thatengage in the money transmission and currency exchange busi-nesses in Texas. Prior to the enactment of the MSA, Texas lawregulated these businesses under two separate chapters of theFinance Code, Chapter 152 (Sale of Checks Act) and Chapter153 (Currency Exchange Act). The MSA consolidates regulationinto one statute and repeals the Sale of Checks and CurrencyExchange Acts.

During the past year, the commission has adopted new regula-tions to implement the MSA. The adopted new section replaces7 TAC §29.1, concerning permissible investments, which sectionwas adopted under the repealed Sale of Checks Act. The com-mission is repealing §29.1 in this issue of the Texas Register.

Finance Code, §151.309, requires a money transmission licenseholder to maintain a certain amount of "permissible investments",assets and investments considered to be safe and relatively liq-uid. As explained in this preamble, adopted new §33.23 ap-plies to a person that holds a money transmission license underFinance Code, Chapter 151, and implements and clari�es thestatutory permissible investment requirement.

Under Finance Code, §151.309(a), the aggregate market valueof permissible investments a license holder must maintain isbased on the license holder’s average outstanding money trans-mission obligations in the United States. Adopted new §33.23(b)requires a license holder to calculate its average outstandingU.S. money transmission obligations on a quarterly basis anddisclose the quarterly average in the permissible investments re-port prepared pursuant to Finance Code, §151.603(b)(2). Theadopted new subsection also explains the method for calculat-ing the quarterly averages.

Adopted new §33.23(c) clari�es the meaning of "past due anddoubtful of collection" when a license holder reports "accountsreceivable" as a permissible investment.

Adopted new §33.23(d) recognizes several types of assets andinvestments that constitute "permissible investments" for pur-poses of Finance Code, §151.309, in addition to those specif-ically identi�ed in the statute. As originally proposed, §33.23(d)added only highly rated commercial paper to the list of permissi-ble investments. However, the commission received commentsfrom Western Union, First Data Corporation, and The MoneyServices Round Table (TMSRT), suggesting that subsection (d)also include certain interest bearing bills, notes, and bonds aspermissible investments for purposes of satisfying the statutoryrequirement. The commenters noted that the money transmis-sion laws of many other states authorize highly rated interestbearing bills, notes and bonds as permissible investments. Thecommenters further noted that these types of investments werepermitted under 7 TAC §29.1, the section that the commissionis repealing in this issue of the Texas Register and that new§33.23(d) is replacing.


The commission did not include interest bearing bills, notes andbonds in the initial proposal because the department did not re-alize the extent to which the large license holders with nation-wide operations hold interest bearing bills, notes and bonds as"permissible investments", not because of concerns about theirsafety and soundness. The commission agrees with the com-menters that highly rated interest bearing bills, notes and bondsshould continue to be included as "permissible investments" andhas revised §33.23(d) accordingly. As adopted, new §33.23(d)provides in paragraph (1) that "permissible investments" includecommercial paper within the top three rating categories, andin paragraph (2) that "permissible investments" include interestbearing bills, notes or bonds that bear a rating within the topthree rating categories of a nationally recognized rating service.Because the adopted revision to §33.23(d) does not address anew subject or affect new persons and is a logical outgrowth ofthe original proposal, §33.23(d) is not being republished for com-ment.

Adopted new §33.23(e) establishes requirements related to therecords a license holder must maintain for purposes of calcu-lating the amount of the license holder’s required permissibleinvestments. Among other requirements, subsection (e)(1)(A)requires that the records be maintained in a log or by anothermeans of retention that allows the information to be "readily re-trieved." TMSRT requested deletion of the word "readily", ar-guing that the term is ambiguous and might be interpreted torequire a license holder to construct a record retention systemthat instantly provides the data. The commission notes that sub-section (e)(2) requires that information be made available to thedepartment "within the time period reasonably requested." Theterm "readily" in subsection (e)(1)(A) thus applies only to howa license holder must keep the required information for its ownpurposes. The commission further notes that use of the term"readily" is used in recently adopted 7 TAC §33.31(b)(2) and§33.35(b)(2), which establish recordkeeping requirements re-lated to currency exchange and money transmission transac-tions, respectively, and require that information be retained in amanner that allows the information to be "readily" retrieved. Forpurposes of consistency, the commission declines to delete theterm "readily". However, the department interprets "readily" forpurposes of subsection (e)(1)(A) to mean "within a reasonabletime."

New §33.23 is adopted under the authority of Finance Code,§151.102(a), which authorizes the commission to adopt rulesto administer and enforce the MSA, §151.309, relating topermissible investments, §151.602, relating to records, and§151.603(b)(2), relating to permissible investment reports.

§33.23. What Additional Provisions Apply to Permissible Invest-ments?

(a) Does this section apply to me? This section applies if youhold a money transmission license under Finance Code, Chapter 151.

(b) How do I calculate and report my average outstandingmoney transmissions for purposes of Finance Code, §151.309(a)?

(1) For purposes of this subsection and subsection (e), "out-standing" has the meaning assigned by Finance Code, §151.301(b)(5).

(2) Under Finance Code, §151.309(a), the aggregateamount of permissible investments that a money transmission licenseholder must maintain is calculated on the basis of the license holder’saverage outstanding money transmission obligations in the UnitedStates (U.S.). You must calculate and report your average outstanding

U.S. money transmission obligations for purposes of §151.309(a) inthe following manner:

(A) You must calculate your average outstanding U.S.money transmission obligations for the calendar quarters ending March31st, June 30th, September 30th, and December 31st.

(B) At the end of each calendar quarter, you must aggre-gate the daily amount of your outstanding U.S. money transmissionscomputed for each day in the quarter. You must then divide the aggre-gate of the daily amount of outstanding U.S. money transmissions forthe quarter by the number of days in the quarter. The resulting �gureis the amount of average outstanding U.S. money transmission obliga-tions for the quarter and must be disclosed in the report of permissibleinvestments prepared under Finance Code, §151.603(b)(2).

(c) What does "past due and doubtful of collection" meanfor purposes of Finance Code, §151.309(b)(1)? Under Finance Code,§151.309(b)(1), a permissible investment may include 40 percentof the receivables due a license holder from authorized delegatesresulting from money transmission that is not "past due or doubtful ofcollection." For purposes of §151.309(b)(1), "past due and doubtfulof collection" means cash due from an authorized delegate that isnot remitted on or before the 10th business day after the date theauthorized delegate is required to remit the money under the writtenagreement between the license holder and the authorized delegate.

(d) Does the department recognize any speci�c category of as-sets or securities as "permissible investments" in addition to the cate-gories listed in Finance Code, §151.309(b)? In addition to the assetsand securities listed in Finance Code, §151.309(b), to be a "permissibleinvestment", a permissible investment for purposes of Finance Code,Chapter 151, includes:

(1) commercial paper within the top three rating categoriesof a nationally recognized rating service; and

(2) interest bearing bills, notes or bonds that bear a ratingwithin the top three rating categories of a nationally recognized ratingservice.

(e) What general records must I maintain for purposes of cal-culating my permissible investment requirement?

(1) At a minimum, you must maintain a daily record ofyour outstanding money transmission transactions in the United States(U.S.). The record must be maintained:

(A) in a log or by another means of retention that allowsthe information to be readily retrieved; and

(B) in a manner that enables you to identify and makeavailable to the department the records related to your U.S. moneytransmission activity and to separately account for your U.S. moneytransmission activity.

(2) You must make the records required under this subsec-tion available to the department within the time period reasonably re-quested.



2006.

TRD-200605706


Everette D. JobeCertifying Of¿cialTexas Department of BankingEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 475-1300

PART 5. OFFICE OF CONSUMERCREDIT COMMISSIONER

CHAPTER 83. CONSUMER LOANSSUBCHAPTER E. INTEREST CHARGES ONLOANS7 TAC §§83.501 - 83.505

The Finance Commission of Texas (the commission) adopts new7 TAC, Chapter 83, §§83.501 - 83.505, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.501 - 83.505outline Subchapter E, concerning Interest Charges on Loans.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar tothe rules being repealed, as found in 7 TAC, Subchapter E,§§1.501 - 1.505, concerning Interest Charges on Loans. Thecommission’s adopted repeal of Subchapter E is publishedelsewhere in this issue of the Texas Register. The new rules areadopted with changes to the proposal published in the August25, 2006, issue of the Texas Register (31 TexReg 6575).

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided under sections where recent changes inlanguage have been incorporated into the new rules as a resultof the agency’s rule review of Subchapter E under Title 7, Part1, Chapter 1 of the Texas Administrative Code. The remainingchanges throughout all sections consist of revisions to format-ting, grammar, punctuation, spelling, and other technical correc-tions. If no additional explanation is provided other than the mainpurpose of the rule, then the only changes made from the priorversion of a rule being repealed to the new rule being adoptedare technical and nonsubstantive in nature.

New 7 TAC §§83.501 - 83.505 outline the methods for calculatingmaximum interest charges, and additional interest for default anddeferment under Texas Finance Code, Chapter 342, SubchapterE. Additionally, the rules prescribe appropriate procedures forthese transactions.

Section 83.501 (former §1.501) describes the manner for deter-mining the maximum rate or amount of interest by type of trans-action.

Section 83.502 (former §1.502) details the treatment of odd peri-ods of time, generally those less than a full month, for calculatinginterest.

Section 83.502 has been revised in order to place into regula-tion the commission’s previous interpretations on this issue. Thechanges also serve to align this Subchapter E loan provisionwith that of Subchapter G (§83.702). In addition, the rule has

been amended to address the fact that any term of greater than15 days constitutes a month for interest calculation purposes ononly consumer loans utilizing the §342.201(a)-rate.

Section 83.503 (former §1.503) provides the procedures for as-sessing the administrative fee.

Section 83.503(5) has been revised in order to place into regula-tion the agency’s policy position on this matter, which has beenpreviously addressed in compliance bulletins. The revised lan-guage speci�cally states (in pertinent part) that "[a]n administra-tive fee is a prepaid interest charge . . . ."

Section 83.504 (former §1.504) clari�es the procedures for as-sessing and collecting default charges in connection with a Sub-chapter E loan.

Section 83.505 (former §1.505) explains the methods and pro-cedures for calculating and collecting a deferment charge on aSubchapter E loan.

Subsections (a) and (e) of §83.505 have experienced substan-tial revisions. Concerning subsection (a), the de�nition of "de-ferment" has been changed so that it will be more consistentwith the de�nition contained in 7 TAC §1.102. Further clari�ca-tion and explanation have been provided in subsection (e) con-cerning the computations of deferment charges. However, themethods of calculation for deferment have not changed. In ad-dition, subsection (h) has been added to provide a regulatorystatement of the agency’s position that a deferment charge mustbe waived on any payment that is covered by an insurance claim.This waiver is also authorized by subsection (f), but the agencybelieves that a separate, more de�nitive statement on this issuewould bene�t licensees.

Since the proposal of §83.505, some changes have been madeto subsection (e)(1) in order to clarify the computations of defer-ment charges. The clari�cation relates to the terms used in orderto maintain consistent concepts throughout the explanation andexample provided.


The new rules are adopted under Texas Finance Code, §11.304,which authorizes the commission to adopt rules to enforce Title4 of the Texas Finance Code. Additionally, Texas Finance Code,§342.551 authorizes the commission to adopt rules for the en-forcement of the consumer loan chapter.

The statutory provisions (as currently in effect) affected by theadoption are contained in Texas Finance Code, Chapter 342.

§83.501. Maximum Interest Charge.

(a) Precomputed loans. An authorized lender may charge theadd-on rates authorized by Texas Finance Code, §342.201(a) or thealternative simple interest rate authorized by Texas Finance Code,§342.201(d) or (e) as calculated by the scheduled installment earningsmethod, for precomputed loans that are either unsecured or secured bypersonal property. Prepaid interest in the form of points is not permit-ted, unless expressly authorized by statute (e.g. an administrative fee).

(b) Interest-bearing loans. An authorized lender may chargeany rate of interest that does not exceed the maximum rate authorizedby Texas Finance Code, §342.201(d) or (e) as calculated by the truedaily earnings method or the scheduled installment earnings method,for an interest-bearing loan that is either unsecured or secured by per-sonal property. Prepaid interest in the form of points is not permitted,unless expressly authorized by statute (e.g. an administrative loan fee).

(c) Method of calculation.


(1) An authorized lender making loans under TexasFinance Code, §342.201(a), (d), or (e) may calculate the rate andamount of interest by any method of calculation as long as the amountof interest charged does not exceed the maximum rate or amountof interest set forth in Texas Finance Code, §342.201(a), (d), or (e)calculated using the speci�ed earnings methods of Texas FinanceCode, §342.201.

(2) An authorized lender making a loan under TexasFinance Code, §342.201(e) may contract for, charge, and receive anamount of interest, calculated according to the scheduled installmentearnings method or true daily earnings method, not exceeding theequivalent total of a:

(A) simple annual rate of 30% on that portion of theunpaid balance of the cash advance that is less than or equal to theamount computed under Texas Finance Code, Chapter 341, SubchapterC, using the reference base amount of $500;

(B) simple annual rate of 24% on that portion of the un-paid balance of the cash advance that is more than the amount com-puted for subparagraph (A) of this paragraph but less than or equal toan amount computed under Texas Finance Code, Chapter 341, Sub-chapter C, using the reference base amount of $1,050; and

(C) simple annual rate of 18% on that portion of the un-paid balance of the cash advance that is more than the amount com-puted for subparagraph (B) of this paragraph but less than or equal toan amount computed under Texas Finance Code, Chapter 341, Sub-chapter C, using the reference base amount of $2,500.

§83.502. Treatment of Periods Less Than a Full Month Before theFirst Installment Date.

(a) For a precomputed loan using the earnings method speci-�ed under Texas Finance Code, §342.201(a), an authorized lender mayconsider:

(1) any period before the �rst installment date that includesa part of a month longer than 15 days as a full month for interest cal-culation purposes; and

(2) any period before the �rst installment date that includesa part of a month that is 15 days or less as additional odd days forinterest calculation purposes. The amount of interest for the additionalodd days of 15 days or less must be calculated under the true dailyearnings method. This amount may be added to the �rst installment or,alternatively, it may be allocated among all of the installments.

(b) An authorized lender may use one of the methods listedbelow, in a regular transaction, when counting additional odd days ina �rst installment period, so long as the method utilized is consistentlyapplied to all applicable loan transactions initiated by the authorizedlender.

(1) Texas Credit Title method. Under this method, the odddays are determined by counting the number of days beyond one monthfrom the date of the loan to the scheduled installment due date; or

(2) Regulation Z method. Under this method, the odd daysshould be determined in accordance with Regulation Z - Truth in Lend-ing, 12 C.F.R. Part 226, Appendix J. The odd days are determined by�rst ascertaining the one-month anniversary date preceding the �rstscheduled installment due date. After determining the one-month an-niversary date preceding the �rst scheduled installment due date, theodd days are determined by counting the number of days between thedate of the loan and the one-month anniversary date.

(c) An authorized lender may not charge more than the max-imum effective rate authorized by Texas Finance Code, §342.201(a),(d), or (e) for calculating the interest charge for the additional odd days.

An authorized lender may not charge more than the authorized lendercontracted for in the loan.

§83.503. Administrative Fee.

An authorized lender may collect an administrative fee pursuant toTexas Finance Code, §342.201(f), on interest-bearing and precomputedloans.

(1) To determine the maximum amount of the administra-tive fee, an authorized lender should ascertain the amount of the cashadvance of the loan. If the cash advance is more than $1,000, then theauthorized lender may contract for, charge, or receive $25. If the cashadvance is $1,000 or less, then the authorized lender may contract for,charge, or receive $20.

(2) An administrative fee may not be contracted for,charged, or received by an authorized lender directly or indirectly ona renewal or modi�cation of an existing obligation that has an interestcharge authorized by Texas Finance Code, §342.201(e) more than oncein any 365-day period. An administrative fee may not be contractedfor, charged, or received by an authorized lender directly or indirectlyon a renewal or modi�cation of an existing obligation that has aninterest charge authorized by Texas Finance Code, §342.201(a) or (d)more than once in any 180-day period. The administrative fee maybe contracted for, charged, or received in a renewal or modi�cationif the authorized lender did not contract for, charge, or receive theadministrative fee on any previous obligation within the appropriateperiod.

(3) An administrative fee may not be contracted for,charged, or received by an authorized lender on the re�nance of aloan that utilizes Texas Finance Code, §342.201(a), (d), or (e) ratesfor a period of 365 days after the lender has entered into a TexasFinance Code, §342.201(e) rate loan in which an administrative feewas contracted for, charged, or received.

(4) Interest may not be assessed, charged, or received on anadministrative fee if the assessment causes the total amount of interestto exceed the maximum amount authorized under Texas Finance Code,Chapter 342.

(5) An administrative fee is a prepaid interest charge andmay be contracted for, charged, or received in addition to the contrac-tual interest charge authorized by Texas Finance Code, §342.201(a),(d), or (e).

§83.504. Default Charges.

(a) Precomputed loans. Additional interest for default may becharged on a precomputed loans, whether regular or irregular, or on aprecomputed loan contracted for on a scheduled installment earningsmethod, to the extent it is authorized by Texas Finance Code, §342.203or §342.206.

(b) Interest-bearing loans. Additional interest for default maybe charged on an interest-bearing Chapter 342, Subchapter E loan asauthorized under Texas Finance Code, §342.203 or §342.206.

(c) Contract required. No default charge may be assessed, im-posed, charged, or collected unless contracted for in writing by the par-ties.

(d) Default period. A default charge may not be assessed untilthe 10th day after the installment due date. For example, if the in-stallment due date is the 1st of the month, a default charge may not beassessed until the 12th of the month.

(e) Missed payment covered by insurance. When any paymentor partial payment in default is later paid by some form of insurance,such as credit disability insurance, unemployment insurance, or collat-


eral protection insurance, any prior assessment of additional interestfor default must be waived.

(f) Pyramiding prohibited. An authorized lender seeking to as-sess additional interest for default on a precomputed loan under TexasFinance Code, §342.203 or §342.206 must comply with the prohibi-tion on the pyramiding of late charges set forth in the Federal TradeCommission Credit Practices Rule at 16 C.F.R. §444.4 or in Regula-tion AA, 12 C.F.R. Part 227, promulgated by the Board of Governorsof the Federal Reserve Board, as applicable.

(g) Default charge on �nal installment of multiple paymentloan. A default charge is allowed on the �nal installment of a mul-tiple installment loan.

(h) Default charge on single payment loan. A default chargeunder Texas Finance Code, §342.203(d) or §342.206(b) is not allowedon a single payment loan. After maturity interest may be contractedfor, charged, and collected on a single payment loan.

§83.505. Deferment.

(a) De�nition. A deferment means the payment of an addi-tional interest charge to defer the payment date of a scheduled paymenton a contract. A deferment charge prescribed by this section may onlyoccur in loan transactions that employ either the precomputed or thescheduled installment earnings methods of calculation.

(b) Unilateral deferment. A deferment may be made solelyby the lender if the full amount of any installment remains in defaultfor one month or more after its due date. The note or similar loanagreement must contain a provision allowing the unilateral deferment.Only one unilateral deferment may be made during any one six-monthperiod while the loan contract is in effect. Any deferment documentedon the account record will be considered to be unilateral in the absenceof proof or documentation of a mutual or bilateral deferment.

(c) Bilateral or mutual deferment. A borrower and a lendermay mutually agree to defer any scheduled installment. There is nolimit on the number of bilateral deferments that can be made duringthe time that a loan contract is in effect. Bilateral deferments must beagreed upon in writing.

(d) Deferment notice. Each deferment must be noted on theaccount record at the time the deferment is made. A written noticecontaining the conditions of the deferment must be furnished to theborrower. The deferment notice shall include the name of the lender,the name of the borrower, the loan number, the date of the deferment,the installment or installments being deferred, the deferment period,the amount of the deferment charge, the balance on the account, andthe date and amount of the next installment due. A signature of theborrower denotes the borrower’s agreement to a bilateral deferment.

(e) Computation of deferment charge for regular transaction.Each deferment charge on a regular loan transaction shall be computedin accordance with the method prescribed by the loan contract. If theloan contract does not provide for a deferment charge, then no defer-ment charge may be assessed or collected. A lender may employ anyof the prescribed computational methods described herein so long asthe computational method employed is consistently utilized throughoutthe term of the loan. An authorized lender may calculate the defermentcharge using the balance method or the date method.

(1) Balance method. The balance method is used to deter-mine the difference between the refund of unearned interest as of thedue date of the last entirely paid installment and the due date of the nextsucceeding installment.

(A) Calculation for deferment before �rst installment.The interest for the deferment may be no more than the difference be-

tween the refund that would be required for prepayment in full on the�rst installment due date, if it were one month from the date of the loan,and the total interest charged on the loan, exclusive of any charge forany additional odd days or an administrative fee. The deferment chargefor the �rst installment is essentially the charge for the �rst month ofinterest.

(B) Calculation for deferment after �rst installment.The �rst step in determining the deferment charge using the balancemethod for any installment after the �rst installment is to determinethe deferment period.

(i) "Deferment period." The deferment period is theperiod from the last entirely paid installment to the "next succeedingunpaid installment." The deferment period will constitute the defer-ment of the "�rst entirely unpaid installment."

(ii) Determination of the "last entirely paid install-ment." In order to determine the "last entirely paid installment," �rstthe remaining precomputed balance must be computed. The determi-nation of the balance will identify the last entirely paid installment. Indetermining the remaining precomputed balance, an authorized lendermust adjust the amount of the remaining precomputed balance for anyamounts relating to any minor payment schedule irregularities or anyadd-on insurance premiums or other permissible charges applied to theprecomputed balance after the consummation of the loan. After de-termining the remaining precomputed balance, the remaining precom-puted balance must be divided by the regular installment amount. Thiscalculation will reveal the number of remaining installments to be paid.By determining the number of remaining installments to be paid, thedue date of the last paid installment may be determined (this must be awholly unpaid installment). Texas Finance Code, §342.204(a)(1) onlypermits a deferment charge to be assessed on an installment that is com-pletely unpaid.

(iii) Determination of the "next succeeding unpaidinstallment." The due date of the next succeeding unpaid installment isthe end of the "deferment period."

(iv) Calculation for the deferment charge. The cal-culation for the deferment charge is the scheduled interest charge forthe "deferment period."

(v) Example of deferment calculation. The terms ofa precomputed Texas Finance Code, §342.201(e) loan are as follows:Date of loan: 09/01/2001; First installment due date: 10/01/2001;Cash Advance: $2,356.21; Finance Charge (no administrative fee):$1,243.79; Total of Payments: $3,600.00; Term: 36 months; Regularinstallment amount: $100; Refunding method: Scheduled installmentearnings method; and Annual Percentage Rate: 30%. If an authorizedlender agrees to a deferment roughly six months into the contractand the remaining precomputed balance is $3,095.00 (no adjustmentsare necessary), to determine the "last entirely paid installment," theauthorized lender must divide the precomputed balance by the regularinstallment amount ($3,095.00 divided by $100.00 = 30.95). Becausethe entire amount of the installment must be unpaid, the result mustbe rounded to the next lowest whole number, 30. For calculationpurposes, there are 30 remaining installments and 6 installmentshave been made. In this case, the 7th scheduled installment is beingdeferred. The deferment charge is calculated by determining thescheduled interest charge for the deferment period, or, from the lastentirely paid installment to the "�rst entirely unpaid installment" (the6th entirely paid scheduled installment) to the "next succeeding unpaidinstallment" (7th scheduled installment). The "next succeeding unpaidinstallment" is determined by subtracting one unit period from the"last entirely paid installment" (30 - 1 = 29). The calculation of thedeferment charge is the difference between the interest refund of the


6th entirely paid installment (36 - 30) and the 7th �rst entirely unpaidinstallment (36 - 29). This difference would be $53.28.

(2) Date method. The date method determines the defer-ment charge by computing the difference between the amount of therefund of unearned interest as if a full prepayment of the loan occurredas of the date of the deferment, and the amount of the refund of un-earned interest for a full prepayment of the loan one full month priorto the date of the deferment.

(f) No deferment when payment applied to account balance.When a payment has been applied to reduce an account balance, nodeferment of any prior balance or installments may be made. This doesnot preclude the collection of a deferment fee previously assessed, butnot collected.

(g) No deferment when default charge already collected. Noinstallment may be deferred if a default charge has already been col-lected on the account or if a partial payment in any amount has beencredited to any installment. If an amount equal to one whole installmenthas already been credited to an account, this entry cannot be altered inorder to credit part of the installment to a deferment charge.

(h) Missed payment covered by insurance. When any paymentor partial payment is deferred that is later paid by some form of insur-ance, such as credit disability insurance, unemployment insurance, orcollateral protection insurance, any prior assessment of additional in-terest for deferment must be waived.

(i) Accounting of payment. If a payment is submitted fromwhich a deferment charge is taken, the excess of the amount necessaryto bring the account current shall be applied to the remaining balanceof the loan. However, any difference that exceeds three dollars ($3.00)shall be returned to the borrower upon the borrower’s request.

(j) Noncompliance. Deferment fees not assessed or collectedin accordance with the requirements of this section are subject to re-fund to the borrower. In the event deferment fees are refunded to theborrower, no rescheduling of the loan contract is permitted.



2006.

TRD-200605711Leslie L. PettijohnCommissionerOf¿ce of Consumer Credit CommissionerEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 936-7640

SUBCHAPTER F. ALTERNATE CHARGESFOR CONSUMER LOANS7 TAC §§83.601 - 83.605

The Finance Commission of Texas (the commission) adopts new7 TAC, Chapter 83, §§83.601 - 83.605, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.601 - 83.605 out-line Subchapter F, concerning Alternate Charges for ConsumerLoans.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and will beeasier to �nd. The new rules are substantially similar to the rulesbeing repealed, as found in 7 TAC, Subchapter F, §1.601 and§§1.603 - 1.606, concerning Alternate Charges for ConsumerLoans. The commission’s adopted repeal of Subchapter F ispublished elsewhere in this issue of the Texas Register. Thenew rules are adopted with changes to the proposal publishedin the August 25, 2006, issue of the Texas Register (31 TexReg6578).

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided under sections where recent changes inlanguage have been incorporated into the new rules as a resultof the agency’s rule review of Subchapter F under Title 7, Part1, Chapter 1 of the Texas Administrative Code. The remainingchanges throughout all sections consist of revisions to format-ting, grammar, punctuation, spelling, and other technical correc-tions. If no additional explanation is provided other than the mainpurpose of the rule, then the only changes made from the priorversion of a rule being repealed to the new rule being adoptedare technical and nonsubstantive in nature.

New 7 TAC §§83.601 - 83.605 outline the methods for calculatingmaximum interest charges, and additional interest for default anddeferment under Texas Finance Code, Chapter 342, Subchap-ter F. Additionally, the rules prescribe appropriate procedures forthese transactions.

Section 83.601 (former §1.601) describes the manner for deter-mining the maximum rate or amount of interest for this type oftransaction.

Section 83.602 (former §1.603) clari�es the procedures for as-sessing and collecting default charges in connection with a Sub-chapter F loan.

Subsections (a) - (c) have been added to §83.602 due to the re-cent authorization for late charges on loans of $100 or greater asper Texas Finance Code, §342.257. The remaining subsectionscontained in (d) through (h) echo the language of the SubchapterE rule (§83.504). However, instead of referring back to that ruleas re�ected in the former language, the agency decided it wouldbe best to list all of the Subchapter F default charge provisionstogether in one rule.

Section 83.603 (former §1.604) provides that the methods andprocedures for calculating and collecting a deferment charge ona Subchapter E loan are applicable to Subchapter F loans andrefers the reader to §83.505.

Section 83.604 (former §1.605) authorizes regulated lenders toengage in deferred presentment transactions under the authorityof Texas Finance Code, Chapter 342, Subchapter F. In essence,this rule permits the lender to take and hold a check as collateralfor the payment of a consumer loan. The rule recognizes andauthorizes this type of "payday loan" within the Texas statutoryusury framework.

Section 83.604 has been amended to add references to TexasFinance Code, §342.259, a recently passed statutory provisionwhich doubled the bracket amounts for Subchapter F loans.In addition, the de�nition of "payday loan or deferred present-ment transaction" contained in §83.604(a)(2) has been revised


to conform with the de�nition found in Texas Finance Code,§341.001(6).

Section 83.605 (former §1.606) relates to consistent limitationson acquisition charges under Subchapter F. Section 83.605 pro-vides that an acquisition charge ($10 on a cash advance of $100to $1,120) may only be assessed to a borrower once in a givenmonth for loans with a term of one month or less. This is a con-forming charge, consistent with the application of the agency’sexamination policy for more than thirty years. Additionally, thisrule provides consistency on the earning of acquisition chargesbetween the intent of the creation of Subchapter F and its appli-cation through the present day, including the treatment of paydayloans under this area of law. This rule is necessary to provideclarity and consistency to lenders who construct their transac-tions in compliance with Chapter 342.




§83.601. Authorized Charges.

(a) An authorized lender may contract for, charge, or collect ona loan made pursuant to Texas Finance Code, Chapter 342, SubchapterF:

(1) an acquisition charge;

(2) an installment account handling charge;

(3) a default charge;

(4) a deferment charge;

(5) a processing fee for the return of a dishonored checkpursuant to Texas Business and Commerce Code, §3.506; and

(6) interest after maturity that does not exceed the TexasFinance Code, Chapter 303, Subchapter A rate.

(b) No other charges are authorized in connection with a Sub-chapter F loan.

§83.602. Default Charges.

(a) Precomputed loans. Additional interest for default may becharged on a Texas Finance Code, Chapter 342, Subchapter F pre-computed loan to the extent it is authorized by Texas Finance Code,§342.257.

(b) Subchapter F loans less than $100. If the cash advance ofthe loan is less than $100, an authorized lender may assess, charge,and collect a default charge equal to 5% of the scheduled installmentamount if any part of the installment remains unpaid after the 10th dayafter the date on which the installment is due, including Sundays andholidays.

(c) Subchapter F loans equal to or greater than $100. If thecash advance of the loan is equal to or greater than $100, an authorizedlender may contract for a default charge:

(1) that does not exceed 5% of the scheduled installmentamount if any part of the installment remains unpaid after the 10th dayafter the date on which the installment is due, including Sundays andholidays; or

(2) that does not exceed 5% of the scheduled installmentamount or $10, whichever is greater, if any part of the installment re-mains unpaid after the 10th day after the date on which the installmentis due, including Sundays and holidays.

(d) Contract required. No default charge may be assessed, im-posed, charged, or collected unless contracted for in writing by the par-ties.

(e) Default period. A default charge may not be assessed untilthe 10th day after the installment due date. For example, if the in-stallment due date is the 1st of the month, a default charge may not beassessed until the 12th of the month.

(f) Pyramiding prohibited. An authorized lender seeking to as-sess additional interest for default on a precomputed loan under TexasFinance Code, §342.257 must comply with the prohibition on the pyra-miding of late charges set forth in the Federal Trade Commission CreditPractices Rule at 16 C.F.R. §444.4 or in Regulation AA, 12 C.F.R. Part227, promulgated by the Board of Governors of the Federal ReserveBoard, as applicable.

(g) Default charge on �nal installment of multiple paymentloan. A default charge is allowed on the �nal installment of a mul-tiple installment loan.

(h) Default charge on single payment loan. A default chargeunder Texas Finance Code, §342.257 is not allowed on a single pay-ment loan. After maturity interest may be contracted for, charged, andcollected on a single payment loan.

§83.603. Deferment Charges.

The rules for deferment charges applicable to Texas Finance Code,Chapter 342, Subchapter E loans as set forth in §83.505 of this title(relating to Deferment) are also applicable to loans made under Sub-chapter F.

§83.604. Payday Loans; Deferred Presentment Transactions.

(a) De�nitions. For the purposes of this chapter, the followingwords and terms, when used in this chapter, shall have the followingmeanings, unless the context clearly indicates otherwise.

(1) Check--A check, draft, share draft, or other instrumentfor the payment of money.

(2) Payday loan or deferred presentment transaction--

(A) A transaction in which:

(i) a cash advance in whole or part is made in ex-change for a personal check or authorization to debit a deposit account;

(ii) the amount of the check or authorized debitequals the amount of the advance plus a fee; and

(iii) the person making the advance agrees that thecheck will not be cashed or deposited or the authorized debit will notbe made until a designated future date.

(B) This type of transaction is often referred to as a"payday loan," "payday advance," or "deferred deposit loan."

(b) Authorization. A licensee may engage in a payday loan ordeferred presentment transaction under this chapter and subject to theprovisions of Texas Finance Code, Chapter 342, Subchapter F. A pay-day loan or deferred presentment transaction is a loan of money. Thecheck given in the transaction may serve as security for the payment ofthe loan. A person who negotiates, arranges, or acts as an agent for anauthorized lender in a payday loan or deferred presentment transactionthat has an effective annual rate of greater than 10% is required to belicensed.


(c) Maximum charge. A licensee may charge an amount thatdoes not exceed the rates authorized in Texas Finance Code, §§342.251- 342.259. The chart in Figure: 7 TAC §83.604(c) provides exam-ples of the maximum authorized rates for loans made under Texas Fi-nance Code, Chapter 342, Subchapter F. Texas Finance Code, §342.254which prohibits other charges applies to this section.Figure: 7 TAC §83.604(c)

(d) Minimum term. A licensee may engage in a payday loanor deferred presentment transaction with a term of not less than 7 days.

(e) Procedures.

(1) If a check is accepted, the licensee must require that thecheck be made payable to the actual name of the company printed onthe license and must be dated the day the loan is made.

(2) The transaction must be documented by a written agree-ment signed by the borrower and the licensee. The agreement mustcontain the name of the licensee; the transaction date; the amount ofthe check; a statement of the total amount charged, expressed bothas a dollar amount and as an annual percentage rate (APR); and theearliest date on which the check may be deposited. The agreementmust also contain a notice of the name and address of the Of�ce ofConsumer Credit Commissioner and the telephone number of the con-sumer helpline. Additionally, the lender shall provide a notice to theconsumer that reads as follows: "This cash advance is not intended tomeet long-term �nancial needs. This loan should only be used to meetimmediate short-term cash needs. Renewing the loan rather than pay-ing the debt in full when due will require the payment of additionalcharges."

(3) The borrower shall have a right to prepay the loan andredeem the check at any time prior to the due date. If the loan is prepaidin full, the lender must refund any unearned �nance charges.

(4) A check may not be held for more than 31 days and thensubsequently presented to the bank for payment.

(5) The licensee must post a notice of the fee schedule forengaging in a payday or deferred presentment loan.

(f) Conditions. A lender may accept a check to secure paymentof a payday loan if the lender complies with the following paragraphs.

(1) Duplicate and multiple loans. The provisions of TexasFinance Code, §342.501 and §83.851 of this title (relating to Duplica-tion of Loans) apply to loans made under the authority of this section.In accordance with Texas Finance Code, §342.501, a lender and a bor-rower may renew a loan, but the loan must be converted from a singlepayment balloon loan to a declining balance installment note. Alter-natively, the payday loan or deferred presentment transaction may berenewed without limitation to the number of renewals where the effectof the total amount of the interest charge would not exceed the totalamount authorized by Texas Finance Code, §342.252 and §342.259having due regard for the amount of the cash advance and the time thecash advance is outstanding. The result is that the acquisition chargemay only be earned once in a month and the installment account han-dling charge may continue to be earned on a equivalent daily chargebasis in accordance with the limitations of Texas Finance Code, Chap-ter 342, Subchapter F. In lieu of a renewal, a lender and a borrowermay agree to extend the maturity date of the existing payday loan ordeferred presentment transaction.

(2) Collection practices. A payday loan constitutes a creditrelationship for all purposes, including collection. If a borrower de-faults, including the return of the check to the licensee from a �nancialinstitution due to insuf�cient funds, closed account, or stop payment or-der, the licensee may pursue all legally available civil means to collect

the debt. Collection practices must be in accordance with this chapterand with the Texas Debt Collection Practices Act, Texas Finance Code,§392.001 et seq.

(3) Fair lending. A lender must make a good faith effortto assess the borrower’s ability to repay the payday loan or deferredpresentment transaction under the loan terms.

§83.605. Limitation on Acquisition Charge.

For a Texas Finance Code, Chapter 342, Subchapter F loan with a termof one month or less, an acquisition charge may only be contracted for,charged, or collected once during a month to the same borrower forthat loan, any re�nancing of that loan, or any new loan made to theborrower within the same month.



2006.


SUBCHAPTER G. INTEREST AND OTHERCHARGES ON SECONDARY MORTGAGELOANS7 TAC §§83.701 - 83.708

The Finance Commission of Texas (the commission) adopts new7 TAC, Chapter 83, §§83.701 - 83.708, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.701 - 83.708outline Subchapter G, concerning Interest and Other Chargeson Secondary Mortgage Loans.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar tothe rules being repealed, as found in 7 TAC, Subchapter G,§§1.701 - 1.708, concerning Interest and Other Charges onSecondary Mortgage Loans. The commission’s adopted repealof Subchapter G is published elsewhere in this issue of theTexas Register. The new rules are adopted with changes to theproposal published in the August 25, 2006, issue of the TexasRegister (31 TexReg 6581).

The commission received one written comment on the proposalfrom Black, Mann & Graham, L.L.P. The comment will be ad-dressed under the rules commented upon, §§83.703, 83.706,and 83.707.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided under sections where recent changes inlanguage have been incorporated into the new rules as a resultof the agency’s rule review of Subchapter G under Title 7, Part


1, Chapter 1 of the Texas Administrative Code. The remainingchanges throughout all sections consist of revisions to format-ting, grammar, punctuation, spelling, and other technical correc-tions. If no additional explanation is provided other than the mainpurpose of the rule, then the only changes made from the priorversion of a rule being repealed to the new rule being adoptedare technical and nonsubstantive in nature.

New 7 TAC §§83.701 - 83.708 outline the methods for calculatingmaximum interest and other charges, and additional interest fordefault and deferment under Texas Finance Code, Chapter 342,Subchapter G. Additionally, the rules prescribe procedures forthese transactions.

Section 83.701 (former §1.701) describes the manner for deter-mining the maximum rate or amount of interest by type of trans-action.

Section 83.702 (former §1.702) details the treatment of odd peri-ods of time, generally those less than a month in the �rst install-ment period, for calculating interest.

Section 83.702(b) contains some clarifying language related tothe calculation of interest for periods of less than a full month.

Section 83.703 (former §1.703) clari�es the procedures for as-sessing and collecting default charges in connection with a Sub-chapter G loan.

The commenter suggested that regulation 7 TAC §83.703 shouldbe amended "to explicitly permit a late charge in the limited sit-uation in which a secondary mortgage loan using the scheduledinstallment earnings method" is an "irregular transaction" onlybecause the �rst installment is payable more than one monthand �fteen days from the date of the loan. An "irregular trans-action" is de�ned by Texas Finance Code, §342.001(1) as "aloan: (A) that is payable in installments that are not consecu-tive, monthly, and substantially equal in amount; or (B) the �rstscheduled installment of which is due later than one month and15 days after the date of the loan." The commission declines toamend the regulation because the regulation already addressesthe permissibility to assess, charge, and collect a default chargeas permitted by law.

Concerning irregular transactions, Texas Finance Code,§342.302 permits the collection of a default charge on two typesof transactions: (1) a "regular transaction" that is precomputedor uses the scheduled installment earnings method; or (2) a"regular transaction" or an "irregular transaction" that includessimple interest. With respect to an "irregular transaction,"Texas Finance Code, §342.302 permits an authorized lenderthe ability to assess, charge, and collect a default charge if thetransaction is an interest-bearing secondary mortgage loan thatuses the "scheduled installment earnings method" or "true dailyearnings method." Texas Finance Code, §342.305 permits alate charge on an "irregular transaction" secondary mortgageloan that includes precomputed interest. The regulation followsthe statutory language. Speci�cally, the regulation includes thata default charge is permissible for a precomputed secondarymortgage loan, whether regular or irregular, or on a secondarymortgage loan that employs the scheduled installment earningsmethod, to the extent it is authorized by Texas Finance Code,§342.302 or §342.305. Furthermore, the regulation providesfor a default charge on an interest-bearing secondary mortgageloan. The commission declines to change the regulation as thesuggested change would be outside the scope of the statutorylanguage that controls the issue.

Section 83.704 (former §1.704) explains the methods and pro-cedures for calculating and collecting a deferment charge on aSubchapter G loan.

Subsections (a) and (d) of §83.704 have experienced substan-tial revisions. Concerning subsection (a), the de�nition of "de-ferment" has been changed so that it will be more consistentwith the de�nition contained in 7 TAC §1.102. Further clari�ca-tion and explanation have been provided in subsection (d) con-cerning the computations of deferment charges. However, themethods of calculation for deferment have not changed. In ad-dition, subsection (g) has been added to provide a regulatorystatement of the agency’s position that a deferment charge mustbe waived on any payment that is covered by an insurance claim.This waiver is also authorized by subsection (e), but the agencybelieves that a separate, more de�nitive statement on this issuewould bene�t licensees.

Since the proposal of §83.704, some changes have been madeto subsection (d)(1) in order to clarify the computations of defer-ment charges. The clari�cation relates to the terms used in orderto maintain consistent concepts throughout the explanation andexample provided.

Section 83.705 (former §1.705) enumerates additional chargesthat may be assessed on a Subchapter G loan after consumma-tion of the loan.

Section 83.706 (former §1.706) enumerates additional chargesthat may be collected on or before the closing of a SubchapterG loan.

Section 83.706(b)(4) has been revised in order to place into reg-ulation the agency’s policy position on this matter, which hasbeen previously addressed in compliance bulletins. The revisedlanguage speci�cally states (in pertinent part) that "[a]n admin-istrative fee is a prepaid interest charge . . . ."

The commenter expressed concern that regulation 7 TAC§83.706 omitted language addressing appraisal fees that werefound in a previous regulation promulgated by the FinanceCommission of Texas. The commenter recommended thatthe authorization to collect appraisal fees be reinstated in thecurrent regulation. House Bill 955 was enacted by the 79thTexas Legislature. House Bill 955 omitted certain requirementsregarding appraisal fees (e.g., Section 2.21 amended TexasFinance Code, §342.308(a)). The rule was drafted to complywith the statutory change. Appraisal fees are still permitted forChapter 342 secondary mortgage loans under Texas FinanceCode, §342.308. The commission declines to make the re-quested change as the change is outside of current statutorylanguage.

Section 83.707 (former §1.707) discusses the treatment and ap-plicability of other fees in the context of a Subchapter G loan.

The commenter recommended revisions to subsection (d) of theregulation 7 TAC §83.707 relating to the authorization of mort-gage broker fees. The commenter believes that the regulationis too narrowly drafted. The regulation essentially permits thepayment of a third-party mortgage broker fee in connection witha secondary mortgage loan only if the consideration paid bythe borrower in a loan with that authorized lender that involvesa mortgage broker does not exceed the consideration paid bythe borrower if that same secondary mortgage loan was directlymade by the authorized lender making the loan. The commis-sion declines the commenter’s suggestion to expand the type ofpermissible mortgage broker fees.


Texas Finance Code, §342.502 limits the permissible charges orfees to an exclusive list of fees and charges that can be passedonto the borrower. As of this time, Texas Finance Code, Chap-ter 342 does not directly authorize any mortgage broker fees.On January 18, 1988, the Finance Commission of Texas permit-ted, in Interpretation Letter 88-1, an authorized lender the abil-ity to make lawful payments to third party arrangers (i.e., mort-gage brokers) provided the authorized lender charges borrow-ers the same for loans it makes or loans it acquires througha third party. Section 83.707(d) is identical to the previouslyadopted regulation, 7 TAC §1.707(d). The previous regulationwas never challenged. The previous regulation and Interpreta-tion Letter 88-1 do not permit any other mortgage broker fees.If an authorized lender cannot meet the narrow standards for anauthorized or lawful mortgage broker fee, then the broker fee isan unauthorized fee. The commission declines to make the re-quested change as the change is outside of the current statutorylanguage.

Regarding subsection (e), the commenter recommended that 7TAC §83.707(e) be deleted because the commenter believesthat the regulation does not have any legal basis. The com-menter alleges that seller’s points do not meet the statutory def-inition of "interest" found in Article XVI, Section 11 of the TexasConstitution or in Texas Finance Code, §301.002(a)(4). Fur-thermore, the commenter alleges that the regulation is in con-�ict "with the de�nition and disclosure requirements of the fed-eral Truth in Lending Act and the regulations promulgated there-under regarding annual percentage rate and �nance charge."The commission disagrees with the commenter’s statements.Seller’s points are interest under Texas law. Interpretation Letter82-15, holds that "seller’s points" may be received by a lenderin connection with a secondary mortgage loan provided they aretreated as prepaid interest. Furthermore, the Finance Commis-sion adopted a previous rule that provided that "seller’s points"should be considered with other interest charges in computingthe interest rate on the contract for the purpose of determiningwhether the rate exceeds the applicable usury ceiling. The con-cept contained in the §83.707(e) originated with InterpretationLetter 82-15 and was then placed in a rule which existed forseveral years. Section 83.707(e) is identical to the previouslyadopted regulation, 7 TAC §1.707(e). The commission declinesto make the suggested changes for the reasons stated aboveand subsection (e) will remain as proposed.

Additionally, the commenter’s statement that the regulation vio-lates the Truth in Lending Act and the applicable promulgatedregulations is incorrect. The Truth in Lending Act and its regula-tion - Regulation Z - were enacted to assure a meaningful disclo-sure of credit terms so that the consumer will be able to comparemore readily the various credit terms available and avoid the un-informed use of credit, and to protect the consumer against in-accurate and unfair credit billing and credit card practices. SeeTruth in Lending Act, 15 U.S.C. §1601, et seq. The Truth inLending Act "does not govern charges for consumer credit." SeeRegulation Z - Truth in Lending, 12 C.F.R. §226.1(b). For disclo-sure purposes only, Regulation Z indicates that "seller’s points"are excluded from the de�nition of "�nance charge" because the"seller’s points" are not paid by the consumer. The exclusionof "seller’s points" from the Regulation Z disclosure of �nancecharge is only for a disclosure to the consumer. The Truth inLending Act does not affect what is interest under Texas law.Texas law controls what fees are "interest" and how the calcula-tion for usury is determined. The current statutory de�nition of"interest" is "compensation for the use, forbearance or detention

of money," as per Texas Finance Code, §301.002(a)(4). Underthis de�nition, "seller’s points" are interest because the pointsare paid to lender as "compensation for the use . . . of money."This de�nition does not limit the interest charges to those interestcharges paid by the borrower. Again, the Finance Commissionof Texas has already determined that "seller’s points" are inter-est. The commission declines to make the requested change forthe reasons stated above.

Section 83.708 (former §1.708) addresses contracting for bal-loon payments on a Subchapter G loan.



§83.701. Maximum Interest Charge.

(a) Precomputed secondary mortgage loans. In a precom-puted secondary mortgage loan, an authorized lender may contractfor, charge, or receive an amount of interest that does not exceed theapplicable simple interest rate authorized by Texas Finance Code,Chapter 303, Subchapter A. Prepaid interest is not permitted unlessexpressly authorized by statute (e.g., an administrative fee).

(b) Interest-bearing loans. In an interest-bearing secondarymortgage loan, an authorized lender may contract for, charge, or re-ceive any rate of interest that does not exceed the applicable amountauthorized by Texas Finance Code, Chapter 303, Subchapter A, as cal-culated under the true daily earnings method or the scheduled install-ment earnings method. Prepaid interest in the form of points, such asorigination or discount points, may be contracted for, charged, or re-ceived by an originating lender, so long as the total amount of interestcontracted for, charged, or received, when spread over the full term ofthe loan as permitted by Texas Finance Code, §302.101 does not ex-ceed the applicable interest limit in Texas Finance Code, Chapter 303,Subchapter A.

(c) Method of calculation. An authorized lender making loansunder Texas Finance Code, §342.301(c) may calculate the rate andamount of interest by any method of calculation as long as the amountof interest charged does not exceed the maximum rate or amount ofinterest set forth in Texas Finance Code, §342.301, calculated usingthe speci�ed earnings methods contained in Texas Finance Code,§342.301.

§83.702. Treatment of Periods Less Than a Full Month.

(a) To calculate a period of time less than a full month on aprecomputed loan:

(1) any period before the �rst installment due date that in-cludes a part of a month longer than 15 days may be treated as a fullmonth for interest calculation purposes; and

(2) any period before the �rst installment due date that in-cludes a part of the month that is 15 days or less may not be treated asa full month for interest calculation purposes. The amount of interestfor the period of 15 days or less must be calculated under the true dailyearnings method. This amount may be added to the �rst installment or,alternatively, it may be allocated among all of the installments.

(b) An authorized lender may use one of the methods listedbelow, in a regular transaction, when counting additional odd days ina �rst installment period, so long as the method utilized is consistently


applied to all applicable loan transactions initiated by the authorizedlender.

(1) Texas Credit Title method. Under this method, the odddays are determined by counting the number of days beyond one monthfrom the date of the loan to the scheduled installment due date; or

(2) Regulation Z method. Under this method, the odd daysshould be determined in accordance with Regulation Z - Truth in Lend-ing, 12 C.F.R. Part 226, Appendix J. The odd days are determined by�rst ascertaining the one-month anniversary date preceding the �rstscheduled installment due date. After determining the one-month an-niversary date preceding the �rst scheduled installment due date, theodd days are determined by counting the number of days between thedate of the loan and the one-month anniversary date.

(c) An authorized lender may not contract for or charge morethan the maximum rate authorized by Texas Finance Code, Chapter303, Subchapter A in calculating the interest charge for the additionalodd days in the �rst installment period. An authorized lender may notcharge more than the authorized lender contracted for in the loan.

§83.703. Default Charges.(a) Precomputed loans. Additional interest for default may be

charged on a precomputed secondary mortgage loan, whether regular orirregular, or on a secondary mortgage loan that employs the scheduledinstallment earnings method, to the extent it is authorized by TexasFinance Code, §342.302 or §342.305.

(b) Interest-bearing loans. Additional interest for default maybe charged on an interest-bearing Texas Finance Code, Chapter 342,Subchapter G loan as authorized under Texas Finance Code, §342.302.

(c) Contract required. No default charge may be assessed, im-posed, charged, or collected unless contracted for in writing by the par-ties.

(d) Default period. A default charge may not be assessed untilthe 10th day after the installment due date. For example, if the in-stallment due date is the 1st of the month, a default charge may not beassessed until the 12th of the month.

(e) Missed payment covered by insurance. If any payment orpartial payment in default is later paid by some form of insurance,such as credit disability insurance or collateral protection insurance,any prior assessment of additional interest for default must be waived.

(f) Pyramiding prohibited. An authorized lender seeking to as-sess additional interest for default on a precomputed secondary mort-gage loan under Texas Finance Code, §342.302 or §342.305 must com-ply with the prohibition on the pyramiding of late charges set forthin the Federal Trade Commission Credit Practices Rule at 16 C.F.R.§444.4 or in Regulation AA, 12 C.F.R. Part 227, promulgated by theBoard of Governors of the Federal Reserve Board, as applicable.

§83.704. Deferment.(a) De�nition. A deferment means the payment of an addi-

tional interest charge to defer the payment date of a scheduled paymenton a contract. A deferment charge prescribed by this section may oc-cur in a loan transaction that employs either the precomputed or thescheduled installment earnings methods of calculation. A separate de-ferment charge is not applicable to a loan transaction that employs thetrue daily earnings method since an extension of time would be cal-culated on elapsed daily charges, and the parties may agree to modifythe terms of the transaction as long as the modi�cation conforms to therequirements of Texas Finance Code, Chapter 342, Subchapter G.

(b) Bilateral or mutual deferment. A borrower and a lendermay mutually agree to defer any scheduled installment. There is nolimit on the number of bilateral deferments that can be made during

the time that a loan contract is in effect. Bilateral or mutual defermentsmust be agreed upon in writing.

(c) Deferment notice. Each deferment must be noted on theaccount record at the time the deferment is made. A written noticecontaining the conditions of the deferment must be furnished to theborrower. The deferment notice shall include the name of the lender,the name of the borrower, the loan number, the date of the deferment,the installment or installments being deferred, the deferment period,the amount of the deferment charge, the balance on the account, andthe date and amount of the next installment due. The signature of theborrower denotes the borrower’s agreement to a bilateral deferment.

(d) Computation of deferment charge for regular transaction.Each deferment charge on a regular loan transaction shall be computedin accordance with the method prescribed by the loan contract. If theloan contract does not provide for a deferment charge, then no defer-ment charge may be assessed or collected. A lender may employ anyof the prescribed computational methods described herein so long asthe computational method employed is consistently utilized throughoutthe term of the loan. An authorized lender may calculate the defermentcharge using the balance method or the date method.

(1) Balance method. The balance method is used to deter-mine the difference between the refund of unearned interest as of thedue date of the last entirely paid installment and the due date of the nextsucceeding installment.

(A) Calculation for deferment before �rst installment.The interest for the deferment may be no more than the difference be-tween the refund that would be required for prepayment in full on the�rst installment due date, if it were one month from the date of the loan,and the total interest charged on the loan, exclusive of any charge forany additional odd days or an administrative fee. The deferment chargefor the �rst installment is essentially the charge for the �rst month ofinterest.

(B) Calculation for deferment after �rst installment.The �rst step in determining the deferment charge using the balancemethod for any installment after the �rst installment is to determinethe deferment period.

(i) "Deferment period." The deferment period is theperiod from the last entirely paid installment to the "next succeedingunpaid installment." The deferment period will constitute the defer-ment of the "�rst entirely unpaid installment."

(ii) Determination of the "last entirely paid install-ment." In order to determine the "last entirely paid installment," �rstthe remaining precomputed balance must be computed. The determi-nation of the balance will identify the last entirely paid installment. Indetermining the remaining precomputed balance, an authorized lendermust adjust the amount of the remaining precomputed balance for anyamounts relating to any minor payment schedule irregularities or anyadd-on insurance premiums or other permissible charges applied to theprecomputed balance after the consummation of the loan. After de-termining the remaining precomputed balance, the remaining precom-puted balance must be divided by the regular installment amount. Thiscalculation will reveal the number of remaining installments to be paid.By determining the number of remaining installments to be paid, thedue date of the last paid installment may be determined (this must be awholly unpaid installment). Texas Finance Code, §342.204(a)(1) onlypermits a deferment charge to be assessed on an installment that is com-pletely unpaid.

(iii) Determination of the "next succeeding unpaidinstallment." The due date of the next succeeding unpaid installment isthe end of the "deferment period."


(iv) Calculation for the deferment charge. The cal-culation for the deferment charge is the scheduled interest charge forthe "deferment period."

(v) Example of deferment calculation. The termsof a precomputed Texas Finance Code, §342.301 loan are as follows:Date of loan: 09/01/1997; First payment due date: 10/01/1997; CashAdvance: $2,766.48; Finance Charge: $833.52; Total of Payments:$3,600.00; Term: 36 months; Monthly installment: $100; Refundingmethod: Sum of the periodic balances; and Annual Percentage Rate:18%. If an authorized lender agrees to a deferment roughly six monthsinto the contract and the remaining precomputed balance is $3,095.00(no adjustments are necessary), to determine the "last entirely paid in-stallment," the authorized lender must divide the precomputed balanceby the regular installment amount ($3,095.00 divided by $100.00 =30.95). Because the entire amount of the installment must be unpaid,the result must be rounded to the next lowest whole number, 30. Forcalculation purposes, there are 30 remaining installments and 6 install-ments have been made. In this case, the 7th scheduled installment isbeing deferred. The deferment charge is calculated by determining thescheduled interest charge for the deferment period, or, from the lastentirely paid installment to the "�rst entirely unpaid installment" (the6th entirely paid scheduled installment) to the "next succeeding un-paid installment" (7th scheduled installment). The "next succeedingunpaid installment" is determined by subtracting one unit period fromthe "last entirely paid installment" (30 - 1 = 29). The calculation of thedeferment charge is the difference between the interest refund of the6th entirely paid installment (36 - 30) and the 7th �rst entirely unpaidinstallment (36 - 29). This difference would be $37.54. A scheduledinstallment earnings refund method would yield a slightly different re-sult of $36.69.

(2) Date method. The date method determines the defer-ment charge by taking the difference between the amount of the refundof unearned interest as if a full prepayment of the loan occurred as ofthe date of the deferment, and the amount of the refund of unearned in-terest for a full prepayment of the loan one full month prior to the dateof the deferment.

(e) No deferment when payment applied to account balance.If a payment has been applied to reduce an account balance, no defer-ment of any prior balance or installments may be made. This does notpreclude the collection of a deferment fee previously assessed but notcollected.

(f) No deferment when default charge already collected. Noinstallment may be deferred if a default charge has already been col-lected on the account or if a partial payment in any amount has beencredited to any installment. If an amount equal to one whole installmenthas already been credited to an account, this entry cannot be altered inorder to credit part of the installment to a deferment charge.

(g) Missed payment covered by insurance. When any paymentor partial payment is deferred that is later paid by some form of insur-ance, such as credit disability insurance, unemployment insurance, orcollateral protection insurance, any prior assessment of additional in-terest for deferment must be waived.

(h) Accounting of payment. If a payment is submitted fromwhich a deferment charge is taken, the excess of the amount necessaryto bring the account current shall be applied to the remaining balanceof the loan. However, any difference that exceeds three dollars ($3.00)shall be returned to the borrower upon the borrower’s request.

(i) Noncompliance. Deferment fees not assessed or collectedin accordance with the requirements of this section are subject to re-fund to the borrower. In the event deferment fees are refunded to theborrower, no rescheduling of the loan contract is permitted.

§83.705. Amounts Authorized To Be Charged After Consummation.

(a) Generally. A secondary mortgage loan contract may pro-vide for any one or more of the four listed categories of charges setforth in Texas Finance Code, §342.307. These charges may then beassessed and collected by an authorized lender after consummation ofthe loan if appropriately included in the contract.

(b) Check return fee. An authorized lender may contract for,assess, or collect the fee authorized by Texas Business and CommerceCode, §3.506, on a secondary mortgage loan.

§83.706. Amounts Authorized To Be Collected on or Before Closing.

(a) Generally. On or before the closing of a secondary mort-gage loan, an authorized lender may collect any one or more of the eightcategories of charges set forth in Texas Finance Code, §342.308(a).

(b) Administrative fee. An authorized lender may collect anadministrative fee pursuant to Texas Finance Code, §342.308(a)(9) oninterest-bearing and precomputed loans.

(1) To determine the maximum amount of the administra-tive fee, an authorized lender should ascertain the amount of the cashadvance of the loan. If the cash advance is more than $1,000, then theauthorized lender may contract for, charge, or receive $25. If the cashadvance is $1,000 or less, then the authorized lender may contract for,charge, or receive $20.

(2) An administrative fee may not be contracted for,charged, or received by an authorized lender directly or indirectly ona renewal or modi�cation of an existing obligation more than once inany 180-day period. The administrative fee may be contracted for,charged, or received in a renewal or modi�cation if the authorizedlender did not contract for, charge, or receive the administrative fee onany previous obligation within the 180-day period.

(3) Interest may not be assessed, charged, or received on anadministrative fee if the assessment causes the total amount of interestto exceed the maximum amount authorized under Texas Finance Code,Chapter 342.

(4) An administrative fee is a prepaid interest charge andmay be contracted for, charged, or received in addition to the contrac-tual interest charge authorized by Texas Finance Code, §342.301(a).

(c) Cost of credit report. An authorized lender may collect thecost paid to a credit reporting agency to obtain a credit report pursuantto Texas Finance Code, §342.308(a)(5), but may not charge an addi-tional fee for reviewing or evaluating a credit report.

(d) Survey fees. A survey fee may be charged when a surveyhas been performed by a surveyor, who is registered or licensed by theTexas Board of Professional Land Surveying pursuant to Texas Occu-pations Code, Chapter 1071, and who is not a salaried employee of thelender.

(e) Flood zone determination fees. An authorized lender maycollect a �ood zone determination fee when a �ood zone determinationis required by a federal agency.

§83.707. Other Fees.

(a) Generally. Fees not otherwise permitted by §83.705 or§83.706 of this title (relating to Amounts Authorized To Be ChargedAfter Consummation and Amounts Authorized To Be Collected on orBefore Closing) may not be charged or collected in a secondary mort-gage loan transaction.

(b) Examples of unauthorized fees. Fees not authorized byeither §83.705 or §83.706 of this title include, but are not limited to,commitment fees, broker fees not covered by subsection (d) of this


section, pay-off statement fees, prepayment penalties, fax fees, courierfees, and escrow management fees.

(c) Escrow services. An authorized lender making a secondarymortgage loan may require a borrower to make payments into an es-crow trust account for payment of anticipated tax and property insur-ance expenses. A fee may not be charged for managing an escrow trustaccount.

(d) Broker fees. An authorized lender may pay a broker fee ina secondary mortgage loan if the consideration paid by the borrowerin the loan which involves a broker does not exceed the considerationpaid by the borrower in a loan which does not involve a broker.

(1) Example 1: A prospective borrower is quoted a contractrate of 12% plus a 2% origination fee when he makes his inquiry di-rectly to an authorized lender. On this same individual, a broker quotesa contract rate of 12% plus a 4% origination fee for a loan of the sameamount from the same authorized lender. The charge for an additional2% origination fee is an unauthorized charge.

(2) Example 2: A prospective borrower is quoted a �nancecharge of 12% plus a 2% origination fee when the borrower makesthe inquiry directly to an authorized lender. On this same individual, abroker quotes a contract rate of 12% plus a 2% origination fee for a loanof the same amount from the same authorized lender. The loan was thenconsummated with the authorized lender paying a 2% fee to the brokerfor originating the loan. Since the authorized lender has absorbed theexpense of the fee, no unauthorized charge has been assessed, charged,or received.

(e) Seller’s points. Seller’s points are treated as interest.Seller’s points are aggregated with other interest charges for thepurposes of a usury calculation.

(f) Discount points. Discount points are treated as interest.Discount points are aggregated with other interest charges for the pur-poses of a usury calculation.

(g) Origination fees. Origination fees are treated as interest.Origination fees are aggregated with other interest charges for the pur-poses of a usury calculation.

§83.708. Balloon Payments.Balloon payments are authorized in a secondary mortgage loan unlessprohibited by other applicable law (for example, the high cost mortgagerules of Truth in Lending, Regulation Z, 12 C.F.R. §226.32(d)(1)).



2006.


SUBCHAPTER H. REFUNDS FORPRECOMPUTED LOANS7 TAC §§83.751 - 83.758

The Finance Commission of Texas (the commission) adopts new7 TAC, Chapter 83, §§83.751 - 83.758, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.751 - 83.758 out-line Subchapter H, concerning Refunds for Precomputed Loans.

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar tothe rules being repealed, as found in 7 TAC, Subchapter H,§§1.751 - 1.752, 1.754 - 1.755 and 1.758 - 1.761, concerningRefunds in Precomputed Loans. The commission’s adoptedrepeal of Subchapter H is published elsewhere in this issue ofthe Texas Register. The new rules are adopted with changesto the proposal published in the August 25, 2006, issue of theTexas Register (31 TexReg 6584).

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided under sections where recent changes inlanguage have been incorporated into the new rules as a resultof the agency’s rule review of Subchapter H under Title 7, Part1, Chapter 1 of the Texas Administrative Code. The remainingchanges throughout all sections consist of revisions to format-ting, grammar, punctuation, spelling, and other technical correc-tions. If no additional explanation is provided other than the mainpurpose of the rule, then the only changes made from the priorversion of a rule being repealed to the new rule being adoptedare technical and nonsubstantive in nature.

New 7 TAC §§83.751 - 83.758 outline the methods for computingrefunds of unearned interest due to prepayment or accelerationof transactions under Texas Finance Code, Chapter 342, Sub-chapter E, F, or G transactions that are precomputed.

Section 83.751 (former §1.751) explains the scope and applica-bility of the subchapter.

Section 83.752 (former §1.752) prescribes the method for calcu-lating refunds of interest on Subchapter E and G loans.

Section 83.753 (former §1.754) explains the method for refund-ing interest on Subchapter E and G loans with a term of 60months or less.

Subsection (c) has been added to §83.753 to provide clari�cationthat authorized lenders must consider deferment charges in thecalculation of interest refunds.

Section 83.754 (former §1.755) explains the method for refund-ing interest on Subchapter E and G loans with a term of morethan 60 months and for which prepayment occurs before the �rstinstallment due date.


Section 83.755 (former §1.758) explains the charges subject torefunding on Subchapter F loans.


Section 83.756 (former §1.759) explains the method for re-funding installment account handling charges and acquisitioncharges on Subchapter F loans for which prepayment occursbefore the �rst installment due date.



Section 83.757 (former §1.760) explains the method for re-funding installment account handling charges and acquisitioncharges on Subchapter F loans for which prepayment occursafter the �rst installment due date and before the �nal installmentdue date.


Section 83.758 (former §1.761) details the situation in which alender provides excess refunds to a borrower and the applicableprocedures for handling the situation.




§83.751. Scope.

(a) Scope. This subchapter applies to all precomputed loantransactions made pursuant to Texas Finance Code, Chapter 342, Sub-chapters E, F, and G. This subchapter is inapplicable to interest-bearingloans made under Texas Finance Code, Chapter 342.

(b) Refund methods. The chosen method of determining re-funds must be contracted for in the loan agreement. An authorizedlender may utilize one of the following methods of determining theamount of a refund:

(1) the sum of the periodic balances method;

(2) the installment earnings method; or

(3) the true daily earnings method.

(c) Refund method for Chapter 342, Subchapter E loans. Anauthorized lender may not use the sum of the period balances methodfor a Subchapter E loan.

§83.752. Speci�c Application to Subchapter E and G Loans.

(a) Interest subject to refund. Precomputed interest in TexasFinance Code, Chapter 342, Subchapter E and G loans is subject torefund.

(b) Interest not subject to refund.

(1) Administrative fees. Administrative fees authorized byTexas Finance Code, §342.201(f) and §342.308(c) are not subject torefund.

(2) Per diem interest. Per diem interest on odd days in the�rst installment period is not subject to being refunded if the per dieminterest for the �rst installment period has been earned and collectedduring the �rst installment period.

(3) Refunds less than one dollar. Refunds of unearned in-terest are not required when a partial prepayment is made or when thesum of interest to be refunded is less than $1.00.

§83.753. Refund of Precomputed Interest for Regular Subchapter ELoans.

(a) If prepayment in full is made by cash, renewal, or other-wise after the �rst installment due date, the authorized lender shall re-fund or credit to the borrower the unearned interest by the scheduledinstallment earnings method authorized by §83.751 of this title (relat-ing to Scope) and identi�ed in the loan agreement as the chosen refundmethod. If prepayment in full or demand for payment in full occursduring an installment period, the lender may retain an interest chargefor previous elapsed periods and the number of days beginning afterthe installment due date and ending on the date of the prepayment ordemand in full.

(b) If prepayment is made in full before the �rst installmentdue date, an authorized lender may retain an interest charge for eachelapsed day between the date of the loan and the date of prepayment.The interest charge may not exceed the amount of interest allowed un-der the true daily earnings method for the same time period. The autho-rized lender shall refund or credit to the borrower the unearned interest.

(c) In calculating the amount of the refund of the unearnedinterest, an authorized lender must consider any installments that weredeferred.

§83.754. Refund of Precomputed Interest for Subchapter G Loans.(a) Regular Transactions.

(1) If prepayment in full is made by cash, renewal, or oth-erwise, the authorized lender shall refund or credit to the borrower theunearned interest by the refund method authorized by §83.751 of thistitle (relating to Scope) and identi�ed in the loan agreement as the cho-sen refund method. One day earned into a month will allow the lenderto earn the interest applicable to the full month.

(2) If prepayment in full is made by cash, renewal, or oth-erwise, before the �rst installment due date, the authorized lender shallcompute the refund as provided by this paragraph.

(A) If the �rst installment due date is 15 days or lessfrom the date of the loan, the lender may retain for each elapsed daybetween the date of the loan and prepayment before the �rst installmentdue date, 1/30th of the interest that could be retained if the �rst install-ment period were one month and the loan was prepaid in full on the�rst installment due date. All interest in excess of such amount shallbe refunded or credited to the borrower.

(B) If the �rst installment due date is 16 days or greater,but less than one month, from the date of the loan, the lender mayretain for each elapsed day between the date of the loan and prepaymentbefore the �rst installment due date, 1/30th of the interest which couldbe retained if the �rst installment period were one month and the loanwas prepaid in full on the �rst installment due date.

(C) If the �rst installment due date is more than onemonth from the contract date, the lender may retain for each elapsedday between the date of the loan and prepayment, 1/30th of the interestwhich could be retained if the �rst installment period were one monthand the loan was prepaid in full on the �rst installment due date. Thedaily charge is multiplied by the number of elapsed days up until the�rst installment due date.

(b) Irregular transactions or transactions with a term of greaterthan 60 months.

(1) If prepayment in full is made by cash, renewal, or oth-erwise, after the �rst installment due date, the authorized lender shallrefund or credit to the borrower the unearned interest by the refundmethod authorized by §83.751 of this title and identi�ed in the loanagreement as the chosen refund method. The amount of interest whichmay be retained by the lender as earned shall be determined by use ofthe scheduled installment earnings method as authorized by Texas Fi-


nance Code, §342.352 If prepayment in full or demand for paymentin full occurs during an installment period, the lender may retain aninterest charge for previous elapsed periods and the number of daysbeginning after the installment due date and ending on the date of theprepayment or demand in full.

(2) If prepayment is made in full before the �rst installmentdue date, an authorized lender may retain an interest charge for eachelapsed day between the date of the loan and the date of prepayment.The interest charge may not exceed the amount of interest allowed un-der the true daily earnings method for the same time period.

(c) Consideration of deferment charges for interest refund cal-culations To calculate the amount of the refund of unearned interest, anauthorized lender must consider any installments that were deferred.

§83.755. Speci�c Application to Subchapter F Loans.

(a) Items subject to refund. The installment account handlingcharge is subject to refund.

(b) Items not subject to refund. An acquisition charge is notsubject to refund, as the charge is considered to be earned at the timethe loan is made.

§83.756. Refund of Precomputed Interest for Subchapter F Loans;Prepayment in Full Before the First Installment Due Date.

(a) If the �rst installment due date is one month or less fromthe date of the loan, the authorized lender may retain for each elapsedday between the date of the loan and prepayment before the �rst install-ment due date, 1/30th of the installment account handling charge andacquisition charge subject to being refunded, that could be retained ifthe �rst installment period were one month and the loan was prepaidin full on the �rst installment due date. All interest in excess of suchamount shall be refunded or credited to the borrower.

(b) If the �rst installment due date is more than one monthfrom the contract date, the authorized lender may retain for eachelapsed day between the date of the loan and prepayment before the�rst installment due date, 1/30th of the interest that could be retainedif the �rst installment period were one month and the loan was prepaidin full on the �rst installment due date up to a maximum of 30 days.All interest in excess of such amount shall be refunded or credited tothe borrower.

(c) To calculate the amount of the refund of unearned interest,an authorized lender must consider any installments that were deferred.

§83.757. Refund of Precomputed Interest for Subchapter F Loans;Prepayment in Full After the First Installment Due Date and Beforethe Final Installment Due Date.

(a) If prepayment in full is made by cash, renewal, or other-wise, the authorized lender shall refund or credit to the borrower theunearned installment account handling charge and acquisition chargesubject to refund by the refund method authorized by §83.751(b) of thistitle (relating to Scope) and identi�ed in the loan agreement as the cho-sen refund method. One day earned into a month will allow the lenderto earn the interest applicable to the full month.

(b) To calculate the amount of the refund of unearned interest,an authorized lender must consider any installments that were deferred.

§83.758. Excess Refunds.

If a lender has refunded more than required to a borrower, the excessrefund may not be collected from or debited from the account of theborrower, unless the borrower voluntarily agrees to pay back the ex-cess refund, or the borrower voluntarily agrees, in writing, to have hisexisting account adjusted when the excess refund was made on the re-newal of the preceding account.



2006.


SUBCHAPTER I. INSURANCE7 TAC §§83.801 - 83.812

The Finance Commission of Texas (the commission) adopts new7 TAC Chapter 83, §§83.801 - 83.812, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.801 - 83.812outline Subchapter I, concerning Insurance. The new rules areadopted with changes to the proposal as published in the August25, 2006, issue of the Texas Register (31 TexReg 6587).

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules being repealed, as found in 7 TAC Subchapter I, §§1.801- 1.811 and §1.814, concerning Insurance. The commission’sadopted repeal of Subchapter I is published elsewhere in thisissue of the Texas Register.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided under sections where recent changes inlanguage have been incorporated into the new rules as a resultof the agency’s rule review of Subchapter I under Title 7, Part1, Chapter 1 of the Texas Administrative Code. The remainingchanges throughout all sections consist of revisions to format-ting, grammar, punctuation, spelling, and other technical correc-tions. If no additional explanation is provided other than the mainpurpose of the rule, then the only changes made from the priorversion of a rule being repealed to the new rule being adoptedare technical and nonsubstantive in nature.

New 7 TAC §§83.801 - 83.812 relate to insurance as providedin Texas Finance Code, Chapter 342, Subchapter I. Pursuant toSubchapter I, a lender may request or require various insurancecoverages in connection with a loan made under Chapter 342.Sections 83.801 - 83.812 provide guidance concerning proce-dures involved in procuring, maintaining, and terminating theseinsurance coverages.

Section 83.801 (former §1.801) de�nes terms that are used inconnection with these transactions.

Section 83.802 (former §1.802) explains the procedures forproperty insurance that may be written in connection with a loanmade under Chapter 342. The commissioner has a responsibil-ity to determine if rates for property insurance that is obtainedby the lender at rates that are not �xed or approved by theTexas Department of Insurance bear a reasonable relationship


to the amount, term, and conditions of the loan, the value of thecollateral, and the existing hazards or risk of loss, damage, ordestruction. This rule provides the procedure for making thatdetermination.

Section 83.803 (former §1.803) provides the limits for propertyinsurance relative to the amount of the note and the value ofthe collateral. The rule also provides a procedure for substan-tiating the amount of property insurance, especially when thecredit insurance policy covers multiple items of collateral. Theprocedure is necessary to determine an appropriate settlementamount when a claim is made for a partial personal property loss.

Section 83.804 (former §1.804) details the manner of determin-ing the appropriate value of insured items, in the event of a claim.Speci�cally, the rule lays out the claims ratio as an approved for-mula for allocating value to individual items of collateral in theevent of a claim when the total amount of property insurancewritten is less than the total value of the collateral.

Section 83.805 (former §1.805) describes the types of credit in-surance authorized to be sold in connection with a Chapter 342loan. The rule is necessary to prescribe these types of insur-ance and require compliance with the applicable sections of theinsurance statutes.

Section 83.806 (former §1.806) requires the lender to provide aborrower with a copy of a policy or certi�cate of insurance forcoverage sold in connection with a Chapter 342 loan. This ruleis necessary to prescribe the speci�c information required to bedisclosed to the borrower and to provide for a reasonable timeframe in which the information is to be disclosed to the borrower.

Section 83.807 (former §1.807) refers the reader to other appli-cable requirements for placement of single-interest insurance ona loan written under the authority of Chapter 342.

Section 83.808 (former §1.808) provides the procedures for ter-minating insurance policies in the event that a loan has beendischarged. The procedure is necessary to provide lenders guid-ance for complying with the credit statutes and the insurancestatutes in the event of the termination of a policy.

Section 83.809 (former §1.809) explains refunding procedureswhen an account is paid in full due to the proceeds of an insuredproperty loss. The procedure is necessary to provide lendersguidance in crediting accounts or refunding the unearned por-tions of insurance premiums and interest charges when the ac-count has been paid in full by the insurance proceeds.

Section 83.810 (former §1.810) prescribes the procedure forcancellation of property insurance when a borrower provides alender with evidence that the borrower has equivalent insurance.This rule is necessary to provide a procedure for the cancel-lation of equivalent insurance so that borrowers and lendersunderstand the steps required to accomplish the cancellation.

Section 83.811 (former §1.811) provides the terms and condi-tions for writing a non�ling insurance policy on a Chapter 342loan. Non�ling insurance is insurance that is written in lieu ofthe fees that may be assessed for �ling, recording, and releas-ing �nancing statements on the security for a loan. This rule isnecessary to provide clarity to lenders regarding the instanceswhen a charge for this insurance may be assessed.

Section 83.812 (former §1.814) outlines the procedures for thesale of gap waiver agreements in connection with a Chapter 342loan that contains an interest charge computed under Texas Fi-nance Code, §342.201(d). The rule describes the disclosure that

must be provided to the borrower, as per Texas Finance Code,§342.4021. One of the principal consumer protections in the lawis that the amount charged for the "gap waiver" fee must be rea-sonable; the rule establishes the maximum reasonable fee ac-companied by certain limitations that may be addressed within agap waiver agreement.





Words and terms used in this subchapter that are de�ned in Texas Fi-nance Code, Chapter 342, have the meanings as de�ned in Chapter 342.The following words and terms, shall have the following meanings un-less the context clearly indicates otherwise.

(1) Personal property insurance--Coverage to insure tangi-ble personal property offered as security for a loan made under Chapter342.

(2) Property insurance--Coverage to insure either an inter-est in real estate or tangible personal property offered as security for aloan made under Chapter 342.

(3) Single-interest insurance--A form of property insur-ance that protects only the lender’s interest in the property.

(4) Credit insurance--Includes credit life insurance, creditaccident and health insurance, and involuntary unemployment insur-ance.

(5) Total personal property loss--The loss of all items ofpersonal property listed as security for a loan and insured by a particularinsurance policy.

(6) Partial personal property loss--Any loss other than a to-tal personal property loss.

(7) Gap waiver agreement--An agreement that eliminatesor reduces the de�ciency when the proceeds from the borrower’s in-surance policy do not cover the unpaid net balance after the vehiclehas suffered a total loss or constructive total loss. The unpaid net bal-ance on the loan does not include:

(A) delinquent payments (any outstanding payment thatis more than 10 days past due);

(B) late charges;

(C) unearned interest;

(D) unearned insurance premiums;

(E) fees added after the date of the loan; or

(F) any portion of the borrower’s basic comprehensiveand collision policy deductible that exceeds $1,000.

(8) Constructive total loss--A loss where the cost to repairor replace the motor vehicle covered under the gap waiver agreementwould exceed an amount equal to the actual cash value of the motorvehicle minus any salvage value. The actual cash value will be deter-mined as of the date of loss. The actual cash value will be based on the"retail value" in the National Automobile Dealers Association (NADA)or its equivalent, of�cial used car guide. The licensee will consider the


mileage, condition, and optional equipment of the motor vehicle whenusing the NADA, or its equivalent, of�cial used car guide.

§83.802. Authorized Property Insurance.

(a) Property insurance, other than insurance covering a motorvehicle, written in connection with a loan made under Texas FinanceCode, Chapter 342 must be written at rates not in excess of the rates�xed or approved by the Texas Department of Insurance if a rate struc-ture has been �xed or approved for that particular type of coverage.

(b) If property insurance, other than insurance covering a mo-tor vehicle, requested or required on a loan is sold or obtained by alicensee at a rate that is not �xed or approved by the Texas Departmentof Insurance, the licensee must �rst obtain prior acknowledgment fromthe commissioner that the coverage and the rate bear a reasonable re-lationship to:

(1) the amount, term, and conditions of the loan;

(2) the value of the collateral; and

(3) the existing hazards or risk of loss, damage, or destruc-tion.

(c) Insurance, other than insurance covering a motor vehicle,written at rates not �xed or approved by the Texas Department of In-surance, is subject to cancellation or adjustment if the insurance is nototherwise approved by the commissioner.

(d) If a licensee is seeking authority from the commissionerunder subsection (b) of this section for a rate not �xed or approved bythe Texas Department of Insurance, a copy of the relevant policy thatis to be issued shall be �led with the Of�ce of Consumer Credit Com-missioner, together with any evidence that is probative on the factorslisted in subsection (b) of this section.

(e) Property insurance written in connection with a Texas Fi-nance Code, Chapter 342 loan must be provided by a company autho-rized to do business in this state.

§83.803. Limitations on Property Insurance.

(a) Personal property insurance, other than insurance coveringa motor vehicle, must not be written in an amount in excess of the totalrelated note unless prior to writing the insurance, the complete policyof insurance, the proposed rates, and the proposed conditions have beenapproved by the commissioner.

(b) Property insurance must not be written for more than thevalue of the item or items insured.

(c) Motor vehicle insurance written in accordance with appli-cable law, the regulations promulgated by the Texas Department of In-surance, and the rating procedures established by the Texas Departmentof Insurance, is presumed to satisfy the requirements set forth in TexasFinance Code, Chapter 342, Subchapter I.

(d) Each licensee shall substantiate that the amount of personalproperty insurance, other than coverage on a motor vehicle, is reason-able in relation to the value of the item or items insured. The value shallbe established in writing by the borrower and the licensee on each in-sured item and each value shall be reasonable in relation to the actualreplacement cost of the item. A valuation that has been established ongoods to be insured may not be increased unless it can be shown therehas been a substantial change in the nature of the items insured or thevalue of these items.

§83.804. Claim Provisions for Property Insurance Other Than Insur-ance Covering Motor Vehicles.

(a) Personal property insurance, other than insurance propertycovering motor vehicles, written on a loan subject to Texas Finance

Code, Chapter 342, should provide a procedure for determining andadjusting the value of insured items in the event of a loss. If a licenseedoes not utilize a formula submitted to and approved by the commis-sioner for adjusting the value of the items insured and if a loss occurs,the value initially stated is presumed to be the actual replacement costof each insured item throughout the life of the policy.

(b) Personal property insurance may be written in an amountthat is less than the value of the loan collateral at rates not �xed or ap-proved by the Texas Department of Insurance. Personal property insur-ance may not be written unless it provides for payment of a sum not lessthan the claims ratio multiplied by the amount of the loss. The claimsratio is calculated by dividing the amount of insurance by the total valueof the secured collateral covered by the insurance policy, rounded to thefourth digit to the right of the decimal point. For example, the termsof a transaction are as follows: the original total of payments in aninstallment loan is $3,000; the term is 2 1/2 years with monthly install-ment payments of $100; property insurance is purchased to insure threeitems of collateral for up to $3,000: a piano worth $2,500, a computerworth $1,500, and a television worth $500; and the piano is then stolenand reported to the insurer by the borrower. The claims ratio is cal-culated by dividing the value of the insurance written, $3,000, by thetotal value of the collateral covered by the policy, $4,500. Applyingthe claims ratio of 2/3 or .6667 to the amount of the loss, $2,500, leadsto the conclusion that no less than $1,666.75 should be paid under theapplicable property insurance policy. A licensee may only write a pol-icy of property insurance that would provide for a payment of not lessthan $1,666.75 under the aforementioned facts.

§83.805. Authorized Credit Insurance.

(a) Credit insurance written in connection with a Texas Fi-nance Code, Chapter 342 loan shall be decreasing term insurance.

(b) Credit life insurance and credit accident and health insur-ance shall be written in compliance with Texas Insurance Code, Chap-ters 1131 and 1153, and any regulations issued by the Texas Departmentof Insurance under the authority of those provisions.

(c) Involuntary unemployment insurance shall be written incompliance with Texas Insurance Code, Chapter 3501, and any regula-tions issued by the Texas Department of Insurance under the authorityof that chapter.

§83.806. Provision of Policy or Certi�cate.

If a Texas Finance Code, Chapter 342 loan provides for the purchase ofinsurance by the borrower from the lender, the lender shall furnish tothe borrower, within 30 days of the date of the loan, a properly executedpolicy or certi�cate of insurance. The policy or certi�cate of insuranceshall clearly set forth:

(1) the amount of the premium;

(2) the kind of insurance provided;

(3) the coverage of the insurance; and

(4) all terms, including options, limitations, restrictionsand conditions of the insurance that has been purchased.

§83.807. Single-Interest Insurance.

If a lender arranges for single-interest insurance and assesses a chargefor the insurance to the borrower, the lender must comply with the pro-visions of Texas Finance Code, Chapter 307.

§83.808. Termination and Refund.

(a) Upon discharge of an indebtedness by prepayment, re-newal, or re�nancing, any insurance, other than non�ling insurance,written under the authority of Texas Finance Code, Chapter 342,


Subchapter I, shall be automatically terminated. At the option ofthe borrower, dual-interest motor vehicle insurance may be retainedwithout cancellation. If a policy of insurance is terminated prior toscheduled maturity, a credit of the unearned premium shall be appliedto the borrower’s account or a refund of the unearned premium shallbe paid by the lender to the borrower.

(b) Upon termination of a personal property insurance policyprior to the scheduled maturity of a loan, other than single-interest in-surance, the licensee shall provide the borrower a refund or credit cal-culated in accordance with the policy approved by the commissioner.The policy shall provide for a pro rata method of making refunds. Thepro rata method of making refunds involves computing a factor to ap-ply to the total premium to determine the unearned portion. The factoris determined by dividing the term remaining on the loan by the totalloan term.

(c) Upon termination of a single-interest insurance policy priorto the scheduled maturity of a loan, the lender shall provide the bor-rower a refund or credit calculated in accordance with the insurancepolicy approved by the Texas Department of Insurance.

(d) Upon termination of a credit life or credit accident andhealth insurance policy prior to the scheduled maturity of a loan, thelender shall provide the borrower a refund or credit calculated in com-pliance with Texas Insurance Code, Chapter 1153 and regulations is-sued by the Texas Department of Insurance under the authority of thatchapter.

(e) Upon termination of a credit involuntary unemploymentinsurance policy prior to the scheduled maturity of a loan, the lendershall provide the borrower a refund or credit calculated in accordancewith the insurance policy approved by the Texas Department of Insur-ance.

§83.809. Prepayment of Loan from Insurance Proceeds.

(a) Personal property insurance. If a loan is prepaid in fullfrom the proceeds of a personal property insurance policy following apersonal property loss, the refund should be computed as follows:

(1) Total personal property loss, other than motor vehicle.

(A) An interest refund shall be computed as of the datethe settlement check is received by the licensee or 45 days from thedate of loss, whichever occurs �rst.

(B) A credit insurance premium refund and single-in-terest insurance premium refund shall be computed as of the date thesettlement check is received by the licensee.

(C) A personal property insurance premium refund,other than an insurance premium refund on a motor vehicle, shall becomputed as of the day following the date of loss. In the event theborrower has requested cancellation, any dual-interest motor vehicleinsurance premium refund shall be computed as prescribed by theTexas Department of Insurance manual rules and rates.

(2) Partial personal property loss, other than motor vehicle.

(A) An interest refund shall be computed as of the datethe settlement check is received by the licensee or 45 days from thedate of loss, whichever occurs �rst.

(B) A credit insurance premium refund and single-in-terest insurance premium refund shall be computed as of the date thesettlement check is received by the licensee.

(C) A personal property insurance premium refundshall be computed as of the date the settlement check is received bythe licensee. A dual-interest motor vehicle insurance premium refund

shall be computed as prescribed by the Texas Department of Insurancemanual rules and rates.

(3) Total or partial motor vehicle insurance loss.

(A) An interest refund shall be computed as of thedate the settlement check is received or 45 days from the date of loss,whichever occurs �rst.

(B) A credit insurance premium refund shall be com-puted as of the date the settlement check is received by the licensee.

(C) A personal property insurance premium refundshall be computed as of the date the settlement check is received bythe licensee. A motor vehicle insurance premium refund shall becomputed as prescribed by Texas Department of Insurance manualrules and rates.

(b) Credit life insurance. If a loan is prepaid in full or in partby the proceeds of a credit life insurance claim, the refund should becomputed as follows:

(1) Complete prepayment. An interest refund, credit ac-cident and health insurance premium refund, credit involuntary un-employment insurance premium refund, single-interest insurance pre-mium refund, and personal property insurance premium refund shallbe computed as of the date of death. A dual-interest motor vehicle in-surance premium refund shall be computed as prescribed by the TexasDepartment of Insurance manual rules and rates in the event cancella-tion is requested by the proper representative of the estate.

(2) Partial prepayment. If a loan is prepaid in part by theproceeds of a credit life insurance claim following the death of the pri-mary borrower, any other credit insurance associated with the primaryborrower, such as credit accident and health insurance and credit invol-untary unemployment insurance, shall be canceled. The refunds of theunearned credit insurance premiums shall be computed as of the dateof death.

(c) Credit accident and health insurance. If an insurance car-rier has classi�ed a disability as permanent and elected to prepay aloan in full, the interest refund, credit life insurance premium refund,credit involuntary unemployment insurance premium refund, or per-sonal property insurance premium refund shall be computed as of theday the settlement check is received by the licensee. If cancellation isrequested by the borrower, any dual-interest motor vehicle insurancepremium refund shall be computed as prescribed by the Texas Depart-ment of Insurance motor vehicle manual rules and rates.

§83.810. Evidence of Equal Insurance Coverage.

If a borrower provides a lender with evidence of property insurancecoverage that names the lender as a loss payee and that is equiva-lent to insurance purchased already through the lender, the lender mustpromptly cancel any equivalent property insurance or single-interestinsurance. The refund of any unearned insurance premium shall be ap-plied to the balance of the loan or refunded to the borrower.

§83.811. Non�ling Insurance.

If a Texas Finance Code, Chapter 342 loan is renewed and a chargewas assessed for non�ling insurance in the original loan, a new chargefor non�ling insurance may not be assessed or contracted for in therenewed loan unless the term of the renewed loan extends more than�ve years after the date of the original loan. If different collateral issubstituted or added to a loan, then a new charge for non�ling insurancemay be assessed.

§83.812. Gap Waiver Agreement.

(a) Disclosure required by Texas Finance Code, §342.4021(d).


(1) Disclosure. A lender must provide the borrower withthe gap waiver agreement disclosure before presenting the borrowerwith the terms of the gap waiver agreement. The disclosure must not bein the loan agreement and must state that the borrower is not required topurchase the gap waiver agreement in order to obtain the loan. A lendermay request that the borrower authenticate the gap waiver agreementdisclosure acknowledging applicant’s timely receipt of the disclosure.A licensee may rely upon veri�able procedure to show that the gapwaiver agreement disclosure was provided to an applicant.

(2) Multiple applicants. In the case of multiple applicants,it is only necessary for the licensee to deliver the gap waiver agreementdisclosure to one applicant.

(b) Authorized gap waiver agreement provisions. The gapwaiver agreement may include a provision that:

(1) limits the calculation of the unpaid net balance;

(2) limits the scope of the gap waiver agreement to loanswhich require the borrower to make a balloon payment between 24 and48 months or to loans which are repayable in 48 months or more;

(3) excludes loss or damage as a result of:

(A) an act occurring prior to the date of the loan;

(B) any dishonest, fraudulent, criminal, or illegal act re-sulting in a felony conviction of the borrower;

(C) a mechanical or electrical breakdown or failure ofthe motor vehicle;

(D) conversion, embezzlement, or secretion by any per-son in lawful possession of the motor vehicle;

(E) con�scation; and

(F) the operation, use, or maintenance of the motor ve-hicle in any race, speed contest, or other contest;

(4) requires the borrower to notify the licensee of any po-tential loss under the gap waiver agreement; or

(5) requests the borrower to provide or complete the fol-lowing documents:

(A) a gap waiver agreement claim form;

(B) proof of loss and settlement check from the bor-rower’s basic comprehensive, collision, or uninsured/underinsured mo-torist policy or other parties’ liability insurance policy for the settle-ment of the insured total loss of the motor vehicle;

(C) veri�cation of the borrower’s primary insurance de-ductible; and

(D) a copy of the police report, if any, �led in connec-tion with the total loss to the motor vehicle.

(c) Certi�cate of coverage. If a borrower purchases a gapwaiver agreement, the licensee must provide the borrower, within areasonable amount of time not to exceed 10 days from the date of theloan, a certi�cate or similar form that clearly sets forth:

(1) the name of the borrower, and the name, address, andtelephone number of the place where claims are administered;

(2) the coverage amount and term of the gap waiver agree-ment;

(3) the cost of the gap waiver agreement; and

(4) the terms, including the limitations, exclusions and re-strictions.

(d) Premium or rate for gap waiver agreement. A licensee maycharge a reasonable gap waiver agreement fee that does not exceed therates contained in Figure: 7 TAC §83.812(d). The amount of the fee isbased upon the amount �nanced. The fee for the gap waiver agreementcan be adjusted to the nearest whole dollar. The fee may be included inthe amount �nanced and a �nance charge may be charged on the fee.Figure: 7 TAC §83.812(d)

(e) Refund of unearned gap waiver agreement fee.

(1) Refunding method. Upon termination of a gap waiveragreement prior to the scheduled maturity date of a loan, the licenseeshall provide the borrower a refund or credit calculated using the prorata method. The refund must be given upon prepayment of the loan orif the lender demands payment in full of the unpaid balance. The prorata method of making refunds involves computing a factor to applyto the total premium to determine the unearned portion. The factor isdetermined by dividing the term remaining on the loan by the total loanterm.

(2) Rounding of unearned insurance premium. The refundcredit for the gap waiver agreement can be rounded to the nearest wholedollar.

(3) Refund credit less than $1.00 not required. A refundcredit is not required if the amount of the refund credit is less than$1.00.

(4) Flat cancellation within 60 days. If the borrower can-cels the gap waiver agreement within 60 days from the date of the loan,the licensee will refund the entire gap waiver agreement fee. A bor-rower may not cancel the gap waiver agreement and then receive anybene�ts under the agreement.

(f) Prompt payment of claims. A licensee must comply withthe payment terms of the gap waiver agreement within 60 days of re-ceiving a completed gap waiver agreement claim form. If the licenseehas all of the information that a borrower would provide in the comple-tion of a gap waiver agreement claim form, the licensee must complywith the payment terms of the gap waiver agreement within 60 days ofreceipt of all of the information.

(g) Calculation of settlement amount. The calculation of thesettlement amount will be calculated under one of the following meth-ods:

(1) If the loan uses the scheduled installment earningsmethod, the licensee will calculate the settlement amount by addingthe remaining original scheduled installments together and thensubtracting any refunds due as of the date of total loss or constructivetotal loss; or

(2) If the loan uses the true daily earnings method, the li-censee will calculate the settlement amount by determining the sched-uled principal balance due as of the date of total loss or constructivetotal loss.

(h) Prepayment of loan by gap waiver agreement. If the gapwaiver agreement is triggered by the total loss or the constructive totalloss of the motor vehicle, all refunds should be calculated as of the dateof loss.

(1) Insurance refunds. Examples of refunds include creditlife premium, credit accident and health insurance premium, credit in-voluntary unemployment insurance premium, single-interest insurancepremium, and personal property insurance premium.

(2) Interest refund. If the loan uses the scheduled install-ment earnings method, the interest refund should be calculated as of


the date of loss. If the loan uses the true daily earnings method, thelicensee should not earn any interest after the date of loss.

(i) Prohibited practices. A licensee cannot offer a gap waiveragreement if:

(1) the loan is unsecured, secured by personal propertyother than a motor vehicle, or secured by real property;

(2) the interest charge on the loan is calculated under TexasFinance Code, §342.201(a) and (e);

(3) the loan is already protected by gap insurance;

(4) the licensee has not provided the disclosure required byTexas Finance Code, §342.4021(d);

(5) the purchase of the gap waiver agreement is requiredfor the borrower to obtain the extension of credit;

(6) the original term of the loan is less than 48 months, un-less the loan contracts for a balloon payment; and

(7) the agreement includes any exclusions or limitationsother than those listed in this section.



2006.


SUBCHAPTER J. DUTIES AND AUTHORITYOF AUTHORIZED LENDERS7 TAC §§83.826 - 83.837

The Finance Commission of Texas (the commission) adopts new7 TAC Chapter 83, §§83.826 - 83.837, concerning ConsumerLoans. The new rules contained in 7 TAC §§83.826 - 83.837outline Subchapter J, concerning Duties and Authority of Autho-rized Lenders. The new rules are adopted with changes to theproposal as published in the August 25, 2006, issue of the TexasRegister (31 TexReg 6592).

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules being repealed, as found in 7 TAC Subchapter J, §§1.826,1.828, 1.830 - 1.832, 1.834 - 1.839 and 1.848, concerningAuthorized Lender’s Duties and Authority. The commission’sadopted repeal of Subchapter J is published elsewhere in thisissue of the Texas Register.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. The rules in new§§83.826 - 83.837 (former §§1.826, 1.828, 1.830 - 1.832, 1.834

- 1.839 and 1.848) were reviewed during 2005, will have onlytechnical corrections, and are merely being relocated.

Section 83.826 (former §1.826) requires that a lender shall pro-vide a borrower with a payoff quote. This provision is necessaryto enable a borrower to prepay the loan at any time in accordancewith Chapter 342. The rule also outlines what is considered tobe a reasonable time in which to respond to an inquiry for a netpay-off for different types of loan transactions.

Section 83.827 (former §1.828) provides the procedures fora lender to satisfy the requirements of Texas Finance Code,§342.454. This rule is necessary to provide lenders with guid-ance for complying with the statute by outlining the proceduresfor the return of instruments to the borrower upon a dischargeof an indebtedness. The rule also provides a de�nition of"collected funds."

New 7 TAC §§83.828 - 83.833 outline the recordkeeping pro-cedures for licensees to maintain records of loans made underChapter 342.

Section 83.828 (former §1.830) speci�es the records that mustbe maintained for loans made under the authority of Chapter342, Subchapters E and F. The section also prescribes variousprocedures in the course of making or servicing a loan, such asin the disbursement of of�cial fees collected from the borrower.The rule is necessary to ensure that the appropriate documenta-tion is maintained by licensed lenders ensuring compliance withappropriate state and federal laws.

Section 83.829 (former §1.831) speci�es the records that mustbe maintained for loans made under the authority of Chapter342, Subchapter G. The section also prescribes various proce-dures in the course of making or servicing a loan, such as in thedisbursement of of�cial fees collected from the borrower. Thisrule is parallel to §83.828 in order to maintain consistency amongthe recordkeeping rules. The rule is necessary to ensure that theappropriate documentation is maintained by licensed lenders toensure compliance with appropriate state and federal laws.

Section 83.830 (former §1.832) speci�es the records that mustbe maintained for loans brokered under the authority of Chap-ter 342, Subchapter G. These rules closely conform to similarrules promulgated by the Savings and Mortgage Lending Com-missioner addressing required records by mortgage brokers for�rst mortgages. The rule is necessary to ensure that the appro-priate documentation is maintained by licensees to ensure com-pliance with appropriate state and federal laws.

Section 83.831 (former §1.834) provides the requirements, pro-cedures, and �exibility for licensees who choose to maintainrecords electronically or to optically image records. The ruleis necessary to ensure that automated systems appropriatelyrecord and maintain suf�cient information to demonstrate com-pliance with state and federal laws.

Section 83.832 (former §1.835) authorizes the commissioner torequire a licensee to review loan records and make corrections,if it is determined during the course of an examination that alicensee is engaging in transactions that do not comply with thelaw or the licensee is not maintaining records that comply withthe law. The rule is necessary to ensure that transactions complywith and that records are being maintained under the applicablelaw.

Section 83.833 (former §1.836) provides the procedures for cor-recting violations of law or errors on accounts. The rule is nec-


essary to provide a uniform procedure for curing violations of lawand correcting entries on accounts.

Section 83.834 (former §1.837) details the procedures for han-dling unclaimed funds that are due to a borrower. The rule pro-vides procedures that conform to Texas Property Code, Chapter25.

Section 83.835 (former §1.838) sets the required date and statesthe requirement for �ling an annual report.

Section 83.836 (former §1.839) provides for a fee in addition tothe assessment fee that may be charged to licensees who re-quire an expedited follow-up examination due to noncomplianceissues. The rule is necessary to permit the agency to recover thedirect and indirect costs associated with conducting follow-up ex-aminations.

Section 83.837 (former §1.848) concerns the disclosure requiredwhen an automobile club membership is offered in connectionwith a loan. The purpose of this rule is to establish the disclosureas required under Texas Finance Code, §342.457.




§83.826. Quotation of Net Pay-Offs.

(a) If a borrower, spouse of a borrower, or a co-obligor inquiresabout the net amount necessary to pay the borrower’s indebtedness infull, a lender shall provide the requested information to the person mak-ing the inquiry free of charge within a reasonable time. A lender shallprovide this information even if at the time the inquiry is made, the ac-count is delinquent. On a net pay-off inquiry relating to a secondarymortgage loan under Texas Finance Code, Chapter 342, Subchapter G,a lender shall provide the quote in writing.

(b) In the case of a loan made under Texas Finance Code,Chapter 342, Subchapter E or F, a reasonable time in which to respondto an inquiry for a net pay-off shall be two (2) business days. On asecondary mortgage loan made under Subchapter G, a reasonable timein which to respond to an inquiry for a net pay-off shall be seven (7)calendar days.

§83.827. Return of Instruments to Borrower.

(a) Upon discharge of an indebtedness by payment, renewal,or re�nancing, a lender shall return an original or true and correct copyof the instrument creating the indebtedness marked "PAID" or, in lieuof a marked original or copy, provide a discharge and release of allobligations under the loan to satisfy the requirements of Texas FinanceCode, §342.454. In addition, if a loan has been paid off, a lender shallgive the borrower, in a recordable form, a release of the lien, including alien on a motor vehicle title or on real estate, or shall provide documen-tation for the release to the borrower, at the option of the lender whoseloan has been paid, a copy of an endorsement, with or without recourse,representation or warranty, and assignment of the lien to a lender thatis re�nancing the loan. A lender shall comply with the requirements ofthis section within a reasonable time not to exceed 30 days after receiptof collected funds by the lender. An authorized lender must dischargeor release a lien on a motor vehicle not later than the 10th day after thedate of receipt of the collected funds by the lender pursuant to TexasTransportation Code, §501.115.

(b) "Collected funds" means cash or any other form of pay-ment that is, or has become, �nal. For example, an electronic fundstransfer that is actually received by the authorized lender from the bor-rower’s �nancial institution would be deemed to be collected funds.

§83.828. Files and Records Required (Subchapter E and F Lenders).

Each licensee must maintain records with respect to each loan madeunder Texas Finance Code, Chapter 342, Subchapters E and F, andmake those records available for examination. The records requiredby this section may be maintained by using either a paper or manualrecordkeeping system, electronic recordkeeping system, or opticallyimaged recordkeeping system unless otherwise speci�ed by statute orregulation.

(1) Loan register. Each licensee must maintain a loan reg-ister, containing the information required by subparagraphs (A) - (D)of this paragraph, for each Texas Finance Code, Chapter 342, Sub-chapter E and F loan made by the licensee. The loan register can bemaintained either as a paper or an electronic record. If the loan regis-ter is maintained as an electronic record, the licensee must be able tosort, generate, and print, as a separate record, the loan register for eachday the licensee originated or acquired Chapter 342, Subchapter E andF loans. A licensee may incorporate the loan register as part of therecord of daily transactions required by paragraph (7) of this section ifthe loan register is a separate and distinct section of the daily report.If the loan register is maintained as a paper record, the loan registermust be maintained currently. A licensee may �le, in chronological or-der, copies of any loan document or form prepared at the time a loan ismade re�ecting the information set forth in subparagraphs (A) - (D) ofthis paragraph to serve as a loan register. A loan register must containthe following information:

(A) Date of loan (day, month, and year);

(B) Surname of borrower;

(C) Total of payments (amount of loan); and

(D) Loan number. Loans may be numbered in ascend-ing sequence as made or may bear an account number permanentlyassigned to one borrower with a numerical suf�x re�ecting the numberof loans to the borrower. A permanent account number may be used inan automated system for each series of loans to a borrower; however, aconsecutive suf�x number must be assigned to each loan in the seriesto distinguish it from the others.

(2) Alphabetical index of current borrowers. A current al-phabetical index or report of outstanding loans showing the full nameof each borrower, co-borrower, or other obligor on the loan and theloan number assigned each loan must be maintained. A licensee maymaintain the alphabetical index of current borrowers either as a paperor an electronic record. If the alphabetical index of current borrowersis maintained as an electronic record, the licensee must be able to sort,generate, and print, as a separate record, the alphabetical index of cur-rent borrowers in strict alphabetical order. A licensee can maintain thealphabetical index of current borrowers by creating a rolodex of currentborrowers. In lieu of creating a rolodex of current borrowers, a licenseemay maintain the alphabetical index of current borrowers by �ling theloan �les of the borrowers or individual borrower’s account records instrict alphabetical order. The manual recordkeeping system for main-taining the alphabetical index of current borrowers must be currentlymaintained and include a card, �le, or record for each co-borrower orother obligor.

(3) Borrower’s account record (including payment and col-lection contact history). A separate paper or electronic record must bemaintained for the account of each borrower. The paper or electronicborrower’s account record must be readily available by reference to


either a name or loan number. The borrower’s account record mustcontain at least the following information on each loan:

(A) Loan number as recorded on loan register;

(B) Loan schedule and terms itemized to show:

(i) date of loan;

(ii) number of installments;

(iii) due date of installments;

(iv) amount of each installment; and

(v) maturity date;

(C) Name, address, and telephone number of borrower;

(D) Names and addresses of co-borrowers or otherobligors, if any;

(E) Type or brief description of security; if none, so in-dicate;

(F) Total of payments (amount of loan);

(G) Amount �nanced (cash advance);

(H) Total interest charges itemized to show:

(i) on Subchapter E loans, the base �nance charge,the administrative fee, and additional days charge for irregular install-ments; or

(ii) on Subchapter F loans, the acquisition chargeand the installment account handling charge shown separately;

(I) Amount of premium charges for insurance, gapwaiver agreements, and authorized ancillary products itemized toshow:

(i) credit life insurance;

(ii) credit accident and health (disability) insurance;

(iii) personal property insurance;

(iv) collateral protection physical damage insurance(single-interest or dual-interest coverage);

(v) non�ling insurance;

(vi) involuntary unemployment insurance;

(vii) gap waiver agreements; and

(viii) automobile club services memberships autho-rized by Texas Finance Code, §342.457;

(J) Amount of of�cial fees for recording, amending, orcontinuing a notice of security interest that is collected at the time theloan is made and which is to be disbursed within the period of 30 daysas prescribed in paragraph (6)(D)(i) of this section;

(K) Amount of personal property insurance when thecoverage amount of insurance is not equal to the amount of the total ofpayments (amount of loan);

(L) Individual payment entries itemized to show:

(i) date payment received; dual postings are accept-able if date of posting is other than date of receipt;

(ii) amounts received for application to principaland interest; and

(iii) amounts received for default, deferment, orother authorized charges;

(M) Refunds of unearned interest, insurance charges,gap waiver agreements, and authorized ancillary products, if any. Alicensee is responsible for substantiating �nal entries and that refundswere paid to the borrower. Refund amounts must be itemized to show:

(i) interest refunded;

(ii) credit life, accident and health, involuntary un-employment, collateral protection interest (single-interest or dual-inter-est coverage), and personal property insurance charges refunded, show-ing separately the refund applicable to each separate insurance policyor coverage;

(iii) dual motor vehicle physical damage insurancewhen borrower requests cancellation of the policy;

(iv) gap waiver agreements; and

(v) automobile club services memberships;

(N) Collection contact history. A licensee must makea written or an electronic record of each and every contact made by alicensee with the borrower or any other person. The written or elec-tronic record must also include every contact made by the borrowerwith the licensee. The written record must include the date, method ofcontact, contacted party, person initiating the contact, and a summaryof the contact; and

(O) Corrective entries. A licensee can make correctiveentries to the borrower’s account record if the corrective entry is justi-�ed. A licensee must maintain the reason and supporting documenta-tion for each corrective entry made to the borrower’s account record.The reason for the corrective entry can be recorded in the collectioncontact history of the borrower’s account record. The supporting doc-umentation justifying the corrective entry can be maintained in the in-dividual borrower’s account �le or properly stored and indexed in alicensee’s optically imaged recordkeeping system. If a licensee manu-ally maintains the borrower’s account record, the licensee must prop-erly correct an improper entry by drawing a single line through the im-proper entry and entering the correct information above or below theimproper entry. No erasures or other obliterations may be made on thepayments received or collection contact history section of the manualborrower’s account record.

(4) Transfer record. A licensee must maintain a transferrecord, whether paper or electronic, when any Texas Finance Code,Chapter 342 loan accounts made by or acquired by the licensee aretransferred from its licensed location. The record must show the nameof the borrower, the account number, the date of transfer, and the loca-tion to which the accounts are transferred.

(5) General business and accounting records. Generalbusiness and accounting records concerning the �nancial transactionsof the loan business must be maintained. The business and accountingrecords must include receipts, documents, canceled checks, or otherrecords for each disbursement made at the borrower’s direction orrequest on his behalf or for his bene�t, including repossession, fore-closure, or legal fees applied to the borrower’s account.

(6) Of�cial fee record (Subchapter E loans only).

(A) The amount of of�cial fees collected at the time theloan is made and to be disbursed within the period prescribed in sub-paragraph (D)(i) of this paragraph must be disclosed on the individualborrower’s account record.

(B) Information concerning fees for termination, con-tinuation, or amendment collected at the time a loan is made but notdisbursed, as prescribed by subparagraph (D)(i) of this paragraph, orcollected subsequent to the making of the loan, must be entered in a


record. Entries to this record must be in chronological order as to thedate the fees are collected. The record must show the date each fee iscollected, the amount of each fee collected, the date each fee is dis-bursed, and the amount of each fee disbursed. In addition, if a fee iscollected in advance for the purpose of �ling a UCC-3 to "continue"a notice of security interest, the record must show the date the present�ling expires.

(C) If more than one fee is included in a disbursementby check to the recording of�ce, the loan number of each account towhich the disbursement is related on the check copy, check stub, orvoucher must be documented.

(D) Disbursement procedures.

(i) Fees collected at the time a loan is made forrecording, amending, or continuing a notice of security interest mustbe disbursed to the recording agency within 30 days from the dateof collection from the borrowers. If fees are not properly disbursedwithin 30 days, the borrower must be given credit for the fee and any�ling may be made only at the licensee’s expense. If �ling of contin-uation fees may not be made during the 30 days following the date ofthe loan due to con�ict with Uniform Commercial Code, §9.515, thelicensee must follow the procedure outlined in subparagraph (B) of thisparagraph. (Note: Subparagraph (E)(i) of this paragraph summarizesthe �ling requirements of Uniform Commercial Code, §9.515.)

(ii) Each licensee should disburse, to the recordingagency, termination fees collected from borrowers within 30 days fromthe date the loan is paid in full. If the termination fees are not disbursedwithin this period, the fees must be returned to the borrowers and thetermination effected by the licensee and at the expense of the licensee.

(E) Continuation of liens will be dependent upon con-formity with the following:

(i) If a licensee desires to continue a notice of secu-rity interest on which a maturity date was not initially established onthe �nancing statement, a continuation statement must be �led no laterthan 60 days after the maturity date and no sooner than six (6) monthsprior to the maturity date. A licensee may exercise one of the followingoptions when "continuing" a lien:

(I) The cost of �ling a continuation statementmay be included in the of�cial fees collected in connection with arenewal loan that has a maturity date extending past the end of the�ve-year period or past the initial maturity date;

(II) The �ling fee may be collected directly fromthe borrower within the period for �ling prescribed by Uniform Com-mercial Code, §9.515; or

(III) The borrower and the licensee may agree tocharge the borrower’s account for the cost of �ling; or

(IV) The cost of �ling may be borne by the li-censee.

(ii) Record of fees collected under this section mustbe maintained as prescribed in subparagraph (A) or (B) of this para-graph.

(7) Record of daily transactions. Each licensee must main-tain suf�cient records, paper or electronic, to adequately re�ect, on anindividual account basis, the business occurring during each day. Therecords must re�ect the date on which each transaction occurred.

(8) Record of loans in litigation and repossession.

(A) An index of each repossession as it occurs and eachlegal action by or against the licensee as it is initiated must be recorded.

The index must show the borrower’s name, account number, and dateof action. If accounts have been transferred, it must be noted in thisindex as well as on the record of transferred accounts as prescribed inparagraph (4) of this section.

(B) All loan records, account cards, correspondence,and any other pertinent information must be maintained in the bor-rower’s account folders or �les. The �le must include the followingapplicable items:

(i) Identi�cation of the collateral sought or acquiredby the licensee;

(ii) A copy of the original petition and the most cur-rent amended petition, if any;

(iii) Proof of judgment if a judgment is taken andamounts awarded by the court;

(iv) The date and terms of settlement if settlement ismade between the borrower and the licensee before judgment;

(v) Record of all payments received after judgment,properly identi�ed and applied;

(vi) When the licensee, acting as a secured party,takes possession of the collateral and disposes of it at a public or pri-vate sale as provided under the Uniform Commercial Code, and thesale is not a judicial sale, written evidence substantiating the commer-cial reasonableness of all aspects of the sale of the collateral, and of itspreparation for sale, if any. These documents should include copies ofany invoices or receipts, condition reports indicating the condition ofthe collateral, notice of intended disposition sent to the borrower andany other obligor or the waiver of the notice signed after default by theborrower and other obligors, and evidence of fair sale of the collateral.One means of providing evidence of fair sale or the commercial rea-sonableness of sale is the taking of not less than three bona �de bids.Bids must disclose the names and addresses of the bidders;

(vii) Name and address of purchaser of repossessedcollateral; and

(viii) After the disposition of the collateral, a copyof any explanation of calculation of surplus or de�ciency sent to theborrower.

(9) Insurance loss registers. Each licensee must maintain aregister, paper or electronic, re�ecting information on life, accident andhealth, personal property, involuntary unemployment, and single-inter-est insurance claims whether paid or denied by the insurance carrier.

(A) Life insurance claims. The register pertaining tolife insurance claims must show the name of the borrower, the accountnumber, and the date of death.

(B) Accident and health insurance claims. The registerpertaining to accident and health insurance claims must show the nameof the borrower, the account number, and the date of the initial �ling ofa claim for any continuous period of disability.

(C) Personal property insurance claims. The registerpertaining to personal property insurance claims must show the nameof the borrower, the account number, the amount of insurance writtenon tangible personal property other than a motor vehicle, the amount ofthe settlement, and a notation as to whether the loss is a total or partialloss.

(D) Involuntary unemployment insurance claims. Theregister pertaining to involuntary unemployment insurance claims mustshow the name of the borrower, the account number, and the date of theinitial �ling of the claim.


(E) Single-interest insurance claims. The register per-taining to single-interest insurance claims must show the name of theborrower, the account number, the amount of the insurance written onthe motor vehicle, the amount of the settlement, and a notation as tothe basis of the settlement (actual cash value, repair, or the remainingoutstanding balance).

(10) Loan records and documents �le.

(A) Generally. A licensee must maintain loan recordsand documents �les for each individual borrower. The loan recordsand documents �le must contain all necessary records and documentsto evidence compliance with applicable state and federal laws and reg-ulations, including the Equal Credit Opportunity Act and the Truth inLending Act. The loan records and documents �le shall include copiesof the following records or documents:

(i) promissory notes including disclosures requiredby the Truth in Lending Act;

(ii) security agreements that describe the collateralin detail suf�cient to identify each individual item taken (including anyseparate valuation sheets reporting the replacement value of the per-sonal property items);

(iii) loan applications and any other written orrecorded information used in evaluating the application;

(iv) �nancing statements;

(v) certi�cates of title for motor vehicles securingthe loan and applications for certi�cate of titles;

(vi) records of insurance policies issued by orthrough the licensee in connection with the loan, including certi�cateof insurances;

(vii) if a motor vehicle physical damage insurancepolicy is required, a copy of the policy or insurance application andother pertinent records relating to the rating of the policy as �nallyissued;

(viii) supplemental insurance records;

(ix) supplemental gap waiver agreement records;

(x) any written or recorded records relating to repos-sessions, legal actions, or foreclosure actions relating to the borroweror the borrower’s collateral securing the loan; and

(xi) any separate disclosures that are required byfederal or state law, such as the notice to cosigner required by theFederal Trade Commission’s Credit Practices Trade regulation, 16C.F.R. §444.3.

(B) Supplemental insurance records. Each licenseemust maintain in the borrower’s �le supplemental records supportingthe settlement or denials of claims reported in the registers. If thereason for the denial of a life insurance or an accident and healthinsurance claim is based upon the medical records of the borrower,supplemental records supporting the denial of the claim must beforwarded to the commissioner upon request.

(i) Life insurance claims. The supplemental insur-ance records for life insurance claims shall include the death certi�cateor other written records relating to the death of the borrower; proofof loss or claim form that discloses the amount of indebtedness at thetime of death; check copies or electronic payment receipts that re�ectthe gross amount of the claim paid, including the amount of insurancebene�ts paid to bene�ciaries other than the licensee which is in excessof the net amount necessary to pay the indebtedness; and the amountthat is paid to bene�ciaries other than the licensee.

(ii) Accident and health insurance claims. The sup-plemental insurance records for accident and health insurance claimsshall include any written records relating to the disability, includingstatements from the physician, employer, and borrower; the proof ofloss or claim form �led by the borrower; and copies of the checks orelectronic payment receipts re�ecting disability payments paid by theinsurance carrier.

(iii) Personal property insurance claims. The sup-plemental insurance records for personal property insurance claimsshall include the law enforcement report, �re department report, orother written record re�ecting the loss or destruction of any covereditem; the proof of loss or claim form �led by the borrower; copiesof the checks or electronic payment receipts re�ecting the paymentof the claim by the insurance carrier; and any other pertinent writtenrecord relating to the personal property insurance claim. In the caseof property insurance claims, these supplemental insurance recordsmust clearly indicate whether the amount of the settlement on eachindividual item is based on the replacement value or based on the costof repair.

(iv) Involuntary unemployment insurance claims.The supplemental insurance records for involuntary unemploymentinsurance claims shall include any written document relating to thetermination, layoff, or dismissal of the borrower; the proof of loss orclaim form �led by the borrower; copies of the checks or electronicpayment receipts re�ecting the payment of the claim by the insurancecarrier; and any other pertinent written record relating to the involun-tary unemployment insurance claim.

(v) Single-interest insurance claims. The supple-mental insurance records for single-interest insurance claims shallinclude the law enforcement report, �re department report, or otherwritten record re�ecting the loss or destruction of any covered motorvehicle; the proof of loss or claim form �led by the borrower; copiesof the checks or electronic payment receipts re�ecting the paymentof the claim by the insurance carrier; and any other pertinent writtenrecord relating to the single-interest insurance claim.

(C) Supplemental gap waiver agreement records. Eachlicensee must maintain in the borrower’s individual �le records sup-porting the settlements or denials of gap waiver agreement claims re-ported in the gap wavier agreement register. The records must include,if applicable:

(i) the gap waiver agreement claim form;

(ii) proof of loss and settlement check from the bor-rower’s basic comprehensive, collision, or uninsured/underinsured pol-icy or other parties’ liability insurance policy for the settlement of theinsured total loss of the motor vehicle;

(iii) documents that provide veri�cation of the bor-rower’s primary insurance deductible;

(iv) if the accident was investigated by a law en-forcement of�cer, a copy of the offense or police report �led in con-nection with the total loss of the motor vehicle;

(v) if the accident was not investigated by a law en-forcement of�cer, a copy of the Texas Department of Public Safety"Driver’s Accident Report" (Form ST-2) �led in connection with thetotal loss of the motor vehicle; and

(vi) copies of the checks re�ecting the settlementamount paid by the licensee for the gap waiver agreement claim.

(11) Advertising record.


(A) Each licensee must maintain, either at the licensedof�ce or at a principal Texas of�ce, so designated to the commissioner,a complete record of all written and electronic communications solic-iting loans (including scripts of radio and television broadcasts, andreproductions of billboards and signs not at the licensed place of busi-ness) for a period of not less than one year from the date of use or untilthe next examination by a representative of the commissioner. The dateor period of use of each solicitation or advertisement must be indicated.

(B) If any language other than English is used in anyadvertising material, a true and correct translation must appear alongwith the advertising material.

(12) Adverse action record. Each licensee must maintaina record of all applications relating to Texas Finance Code, Chapter342 loans where the applicant was denied credit. The record must in-clude those records and documents required by Regulation B, EqualCredit Opportunity Act, 12 C.F.R. §202.1 et. seq., including the loanapplication; any written or recorded information used in evaluating theapplication; the adverse action notice (if required); notice of incom-pleteness, if applicable; and counteroffer notice, if applicable.

(13) Of�cial correspondence �le. Each licensee mustmaintain a separate �le for all communications from the Of�ce ofConsumer Credit Commissioner and for copies of correspondenceand reports addressed to the commissioner. This shall include acopy of the Texas Credit Title and applicable regulations, electronicor paper hard-copy version, and examination reports issued by thecommissioner.

(14) Retention and availability of records. All requiredbooks and records must be available for inspection at any time by thecommissioner or the commissioner’s authorized representatives, andmust be retained for a period of four years from the date of the loan, ortwo years from the date of the �nal entry made thereon, whichever islater. All obligations authenticated by the borrower, including promis-sory notes and security agreements, must be kept at an of�ce in the statedesignated by the licensee or made available in the state, except whentransferred under an agreement which gives the commissioner accessto the documents. Copies of loan documents, �nancing statements,loan applications, records of insurance policies issued by or throughthe licensee in connection with the loan, and books and records re-quired by this section must be maintained in the licensed location or bemade available at some location in the state designated by the licenseein writing to the commissioner. Documents may be maintained out ofstate if the licensee has in writing acknowledged responsibility for ei-ther making the records available within the state for examination orby acknowledging responsibility for additional examination costs as-sociated with examinations conducted out of state.

§83.829. Files and Records Required (Subchapter G Lenders).

Each licensee must maintain records with respect to each loan made un-der Texas Finance Code, Chapter 342, Subchapter G and each home eq-uity loan made under Texas Constitution, Article XVI, Section 50, andmake those records available for examination. The records requiredby this section may be maintained by using either a paper or manualrecordkeeping system, electronic recordkeeping system, or opticallyimaged recordkeeping system unless otherwise speci�ed by statute orregulation. The records required by this section must be retained andmade available for inspection in the same manner as that speci�ed in§83.828(14) of this title (relating to Files and Records Required (Sub-chapter E and F Lenders)).

(1) Required records. A licensee must maintain the follow-ing items in a substantially similar form to the respective provisions of§83.828 of this title, as follows:

(A) A loan register;

(B) A transfer record;

(C) General business and account records;

(D) A record of daily transactions;

(E) Insurance loss registers;

(F) An advertising record;

(G) An adverse action record; and

(H) An of�cial correspondence �le.

(2) Record of individual borrower’s account. A separaterecord must be maintained for the account of each borrower and therecord must contain at least the following information on each loan:

(A) Loan number as recorded on loan register;

(B) Loan schedule and terms itemized to show:

(i) date of loan;

(ii) number of installments;

(iii) due date of installments;

(iv) amount of each installment; and

(v) maturity date;

(C) Name, address, and telephone number of borrower;

(D) Names and addresses of co-borrowers, if any;

(E) Legal description of real property;

(F) Principal amount;

(G) Total interest charges, including the scheduled base�nance charge, the administrative fee, points, and odd days interest onthe �rst installment period;

(H) Amount of premium charges for insurance itemizedto show:

(i) credit life insurance;

(ii) credit accident and health (disability) insurance;and

(iii) personal property insurance;

(I) Amount of of�cial fees for recording, amending, orcontinuing a notice of security interest that are collected at the time theloan is made;

(J) Individual payment entries itemized to show:

(i) date payment received; dual postings are accept-able if date of posting is other than date of receipt;

(ii) actual amounts received for application to prin-cipal and interest; and

(iii) actual amounts paid for default, deferment, orother authorized charges;

(K) In the event a loan is prepaid in full, refunds of un-earned charges and unearned insurance premiums may be required. Alicensee is responsible for substantiating �nal entries and for substan-tiating that refunds due were paid to borrowers. Refund amounts mustbe itemized to show:

(i) interest charges refunded, including the refund ofany unearned points; and


(ii) credit life, accident and health, and personalproperty insurance charges refunded, showing separately the refundapplicable to each separate insurance policy or coverage;

(L) Collection contact history. A licensee must make awritten or an electronic record of each and every contact made by alicensee with the borrower or any other person. The written or elec-tronic record must also include every contact made by the borrowerwith the licensee. The written record must include the date, method ofcontact, contacted party, person initiating the contact, and a summaryof the contact; and

(M) Corrective entries. A licensee can make correctiveentries to the borrower’s account record if the corrective entry is justi-�ed. A licensee must maintain the reason and supporting documenta-tion for each corrective entry made to the borrower’s account record.The reason for the corrective entry can be recorded in the collectioncontact history of the borrower’s account record. The supporting doc-umentation justifying the corrective entry can be maintained in the in-dividual borrower’s account �le or properly stored and indexed in alicensee’s optically imaged recordkeeping system. If a licensee manu-ally maintains the borrower’s account record, the licensee must prop-erly correct an improper entry by drawing a single line through the im-proper entry and entering the correct information above or below theimproper entry. No erasures or other obliterations may be made on thepayments received or collection contact history section of the manualborrower’s account record.

(3) Of�cial fee record.

(A) The amount of of�cial fees collected at the time theloan is made must be recorded on the individual borrower’s accountrecord.

(B) Disbursement procedures.

(i) Fees collected at the time a loan is made forrecording, amending, or continuing a notice of security interest mustbe disbursed to the recording agency within 30 days from the date ofcollection from the borrowers.

(ii) Each licensee should disburse, to the recordingagency, release of lien fees collected from borrowers within 30 daysfrom the date the loan is paid in full. If the releases of lien fees are notdisbursed within this period, the fees must be returned to the borrowersand the release of lien effected by the licensee and at the expense of thelicensee.

(4) Record of loans in litigation and foreclosure.

(A) An index of each foreclosure as it occurs and eachlegal action by or against the licensee as it is initiated must be recorded.The index must show the borrower’s name, account number, and dateof action.

(B) All loan records, correspondence, and any other in-formation pertinent to the litigation or foreclosure must be maintainedin the borrower’s account folders or �les.

(5) Loan records and documents.

(A) Loan documents and other records must be main-tained as required to evidence compliance with applicable state andfederal laws and regulations including, but not limited to, the Real Es-tate Settlement Procedures Act, the Equal Credit Opportunity Act, andthe Truth in Lending Act.

(B) Supplemental insurance records. Each licenseemust maintain in the borrower’s �le supplemental records supportingthe settlement or denials of claims reported in the registers. If thereason for the denial of a life insurance or an accident and health

insurance claim is based upon the medical records of the borrower,supplemental records supporting the denial of the claim must be for-warded to the commissioner upon request. A licensee must maintainsupplemental insurance records in a form substantially similar to§83.828(10)(B)(i) - (iii) of this title.

§83.830. Files and Records Required (Subchapter G Mortgage Bro-kers).

(a) Generally. Each licensee must maintain records with re-spect to each loan brokered under Texas Finance Code, Chapter 342,Subchapter G and make those records available for examination. Therecords required by this section may be maintained by using either a pa-per or manual recordkeeping system, electronic recordkeeping system,or optically imaged recordkeeping system unless otherwise speci�edby statute or regulation. The records required by this section must beretained and made available for inspection in the same manner as thatspeci�ed in §83.828(14) of this title (relating to Files and Records Re-quired (Subchapter E and F Lenders)).

(b) Loan register or transaction record. A mortgage registeror transaction record, maintained on a current basis (which means thatall entries must be made within no more than seven (7) days from thedate on which the matters they relate to occurred), setting forth at aminimum:

(1) the date of the mortgage loan application;

(2) the surname and address of each mortgage applicant;

(3) a description of the disposition of the application for amortgage loan; and

(4) the identity of the person or entity who initially fundedor acquired the mortgage loan.

(c) Mortgage loan �le or borrower’s �le. A mortgage loan �leor borrower’s �le for each mortgage loan application received must bemaintained. Each �le must contain at least the following:

(1) a copy of the mortgage loan application;

(2) either:

(A) a copy of the signed closing statement if the mort-gage loan is closed in the name of an entity through which the mortgagebroker is providing mortgage lending services; or

(B) documentation of the timely denial or other dispo-sition of the application for the mortgage loan; and

(3) a copy of each item of correspondence, each evidenceof any contractual arrangement or understanding (including any inter-est rate lock-ins or loan commitments), and all notes and memorandaof conversations or meetings with any mortgage applicant or any otherparty in connection with the mortgage loan application or its ultimatedisposition.

(d) Loan records and documents. Other books and recordsmust be maintained as may be required to evidence compliance withapplicable state and federal laws and regulations including, but not lim-ited to, the Real Estate Settlement Procedures Act, the Equal CreditOpportunity Act, and the Truth in Lending Act.

(e) General business records. General business and account-ing records concerning disbursement and receipt of fees associated withthe mortgage loan activity must be maintained.

(f) Other records. A licensee must maintain the followingitems in a substantially similar form to the respective provisions of§83.828 of this title, as follows:

(1) an advertising record;


(2) an adverse action record; and

(3) an of�cial correspondence �le.

§83.831. Approval of Electronic Recordkeeping Systems and OpticalImaging Systems.

(a) Generally. Records and accounting systems maintained inwhole or in part by electronic systems must contain the equivalent in-formation as required in §83.828 and §83.829 of this title (relating toFiles and Records Required (Subchapter E and F Lenders) and Filesand Records Required (Subchapter G Lenders)). An approved soft-ware system must be used unless a manual system that complies with§83.828 and §83.829 of this title is used or a licensee is using a propri-etary electronic software system that is not sold or distributed to otherlicensees. A licensee must provide documentation of the system to thecommissioner that explains how the required information is maintainedwithin the system.

(b) Approval documentation.

(1) A licensee or vendor seeking approval of a system mustmake available a complete and detailed written description of the sys-tem proposed to be utilized, including:

(A) a statement specifying whether the system will beused in its entirety;

(B) operating manuals;

(C) instructions;

(D) a copy of the software to be used; and

(E) a full description of backup systems in place thatwill ensure business continuity and the protection of the data.

(2) Any amendment or change to a software system is re-quired to meet the minimum reporting requirements as established bythis section.

(c) If an examination of the system demonstrates that the re-quired records are not being maintained appropriately, the commis-sioner may disapprove the use of the system. A licensee will have 90days to bring the electronic system into compliance.

(d) Records may be retained and stored using optical imagestorage media, provided the following requirements are satis�ed:

(1) The optical image storage must be nonerasable "writeonce, read many" ("WORM") that does not allow changes to the storeddocument or record;

(2) The stored document or record is made or preserved aspart of and in the regular course of business;

(3) The custodian of the record is able to identify the storeddocument or record, the mode of its preparation, and the mode of stor-ing it on the optical image storage system;

(4) The optical image storage system contains a reliableindexing system that provides ready access to a desired document orrecord, appropriate quality control of the storage process to ensure thequality of imaged documents or records, and date-ordered arrangementof stored documents or records to assure a consistent and logical �owof paperwork to preclude unnecessary search time;

(5) The original documents must be maintained for oneyear after the date of the loan. If a licensee assigns loans to anotherauthorized lender and no longer services the loans, the licensee whosold the loans to another lender is no longer required to maintain theoriginal documents for the transferred loans; however, the licenseemust either maintain photocopies of the original form documents for

one year or enter into an agreement with the authorized lender acquir-ing the loans to provide access to the original form documents for aperiod of one year. The optical imaged records must be maintained forthe entire required retention period; and

(6) A licensee will maintain at the licensee’s of�ce amethod of viewing documents or records stored pursuant to thissection. A licensee must provide a hard copy of any document orrecord requested by the commissioner.

§83.832. Review of Records.

If it is determined during the course of an examination the extent oferror and discrepancies made by a licensee indicate that the licenseehas not been conducting business in substantial compliance with thelaw, the commissioner may direct the licensee to review the accountrecords and make proper adjustments to any accounts in error or makeany appropriate refunds.

§83.833. Correction of Errors or Violations.

(a) Any amount found to be due a borrower may be creditedto the next payment or payments on the account of the borrower, ifthe borrower has an existing obligation to the licensee. The licenseemust notify the borrower in writing of the date and amount of the nextpayment due after this credit has been given.

(b) In lieu of crediting an existing account, refunds may bemade directly to the borrower by cash or check.

(c) If the error correction or adjustment to an account is relatedto an improper charge or proceeds improperly held by the licensee onwhich interest has been precomputed, the licensee may alternativelycredit the �nal maturing installment or installments of the contract, pro-vided that credit is also given the borrower for the proportionate interestoriginally charged on the amount being credited.

(d) At the time of adjustment, if more than half the term ofa precomputed loan has expired, then an interest adjustment must bemade.

(e) If the error correction or adjustment is made to an accountwhere the interest charge is earned using the true daily earnings method,the licensee must refund the amount found to be due a borrower, plusthe amount of accrued interest on this correction or adjustment amount.

§83.834. Unclaimed Funds.

(a) Escheat suspense account. The licensee must transfer anyamounts due a borrower not paid within one year, i.e. unclaimed funds,to an escheat suspense account. The transfer must be noted on theaccount record of the borrower.

(b) Required information. Evidence of a bona �de attempt topay a refund to a borrower must be kept in the records of the borrower.The minimum acceptable evidence of a bona �de attempt must be a reg-istered or certi�ed letter sent to the last known address of the borrower.The licensee must place with the records of the borrower any informa-tion that indicates the borrower has died leaving no will or heirs, or hasleft the community and the borrower’s whereabouts are unknown.

(c) Use of unclaimed monies. Use of unclaimed funds withinthe business until such time as paid to the borrower, to the estate ofthe borrower, or to the State of Texas is not prohibited; however, fundstransferred to an escheat suspense account must not be commingledwith the funds of the business.

(d) Escheat to state. At the end of three (3) years, the un-claimed funds must be paid to the State of Texas Comptroller of Pub-lic Accounts, Treasury Division, as required by Texas Property Code,§72.101.


(e) Record Retention. The records of the escheat suspense ac-count must be retained for a period of 10 years.

§83.835. Annual Report.

Each licensee must �le the required annual report by May 1 for the prioryear’s calendar loan activity on forms prescribed by the commissionerand must comply with all instructions relating to submitting the report.

§83.836. Follow-Up Examination Fees.

If a follow-up examination visit is required within nine (9) months aftera written de�ciency report has been given as a result of a failure tocomply with Texas Finance Code, Chapter 342, this chapter, or thespecial instruction section of the examination report, an examinationfee at the hourly rate of $100 may be assessed.

§83.837. Disclosure When Automobile Club Membership Offered inConnection with Loan.

(a) If an automobile club membership is offered in connectionwith a loan under Texas Finance Code, Chapter 342, Subchapter E,the disclosure contained in subsection (c) of this section is suf�cientto satisfy the requirements of Texas Finance Code, §342.457 if printedin a size equal to at least 10-point type that is boldfaced, capitalized,underlined, or otherwise set out from surrounding written material soas to be conspicuous

(b) The text of the disclosure must be set in an easily readabletypeface. Typefaces considered to be readable include Times, Scala,Caslon, Century Schoolbook, Helvetica, Arial, and Garamond.

(c) The lender shall provide this disclosure in both English andSpanish to all borrowers who are offered an automobile club member-ship in connection with their loans. The automobile club membershipdisclosure shall read as follows:

(1) "I AM NOT REQUIRED TO PURCHASE THISAUTOMOBILE CLUB MEMBERSHIP AS A CONDITION FORAPPROVAL OF THIS LOAN. I CAN CANCEL THIS MEMBER-SHIP WITHIN 31 DAYS AND RECEIVE A FULL REFUND OFTHE PURCHASE PRICE."

(2) Spanish Translation: "NO SE REQUIERE QUECOMPRE ESTA MEMBRESIA DE CLUB AUTOMOTRIZ COMOCONDICION PARA LA APROBACION DE ESTE PRESTAMO.PUEDO CANCELAR ESTA MEMBRESIA DENTRO DE 31 DIAS YRECIBIR UN REEMBOLSO TOTAL DEL PRECIO DE COMPRA."

(d) The disclosure contained in subsection (c) of this sectionmay be located in one of the following:

(1) the enrollment agreement;

(2) the loan contract; or

(3) a separate document.

(e) Evidence of the borrower’s intent to purchase an automo-bile club membership must be acknowledged in writing by the bor-rower’s signature or initials on the document containing the disclosure.



2006.

TRD-200605716

Leslie L. PettijohnCommissionerOf¿ce of Consumer Credit CommissionerEffective date: November 9, 2006Proposal publication date: August 25, 2006For further information, please call: (512) 936-7640

SUBCHAPTER K. PROHIBITIONS ONAUTHORIZED LENDERS7 TAC §§83.851 - 83.862

The Finance Commission of Texas (the commission) adoptsnew 7 TAC Chapter 83, §§83.851 - 83.862, concerning Con-sumer Loans. The new rules contained in 7 TAC §§83.851- 83.862 outline Subchapter K, concerning Prohibitions onAuthorized Lenders. The new rules are adopted with changesto the proposal as published in the August 25, 2006, issue ofthe Texas Register (31 TexReg 6600).

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order andwill be easier to �nd. The new rules are substantially similarto the rules being repealed, as found in 7 TAC Subchapter K,§§1.851 - 1.858 and §§1.860 - 1.863, concerning Prohibitionson Authorized Lenders. The commission’s adopted repeal ofSubchapter K is published elsewhere in this issue of the TexasRegister.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. The rules in new§§83.851 - 83.862 (former §§1.851 - 1.858 and §§1.860 - 1.863)were reviewed during 2005, will have only technical corrections,and are merely being relocated.

Section 83.851 (former §1.851) addresses the prohibitions onobligating a consumer on more than one loan contract with thepurpose or effect of obtaining a higher interest charge than thestatute would allow on a single loan for the same aggregateamount. The rule serves to clarify and identify situations thatresult in a violation. The rule also provides that refunds may berequired to correct violations. The rule is necessary to effectuatethe intent of the statute and to prescribe procedures for handlingviolations of the statute.

Section 83.852 (former §1.852) serves to limit potential debtoverburdening of borrowers in the small loan classi�cationwhere the highest rates are charged. Section 83.852 requiresa licensee to consider the borrower’s �nancial ability to repay aloan when structuring the terms of a loan. This rule is designedto prohibit a lender from overburdening a consumer’s debt loadbeyond that consumer’s capacity to repay.

Section 83.853 (former §1.853) further clari�es the prohibitionfor licensees on misleading advertising found in Texas FinanceCode, §341.403 The rule de�nes phrases and practices thatare considered misleading. This section bene�ts consumers byeliminating or reducing confusing and potentially misleading ad-vertising.

Section 83.854 (former §1.854) prohibits the use of preapprovedoffers of credit unless the offer is unconditional. This provisionserves to reduce confusion of consumers who receive offers ofcredit that purport to be approved, but upon further review, in


fact, have conditional features. The rule further provides thatoffers of credit may not be conditioned upon the purchase ofgoods and services unless that practice has been speci�callyauthorized in statute. This rule is designed to protect consumersfrom usury violations.

Section 83.855 (former §1.855) restricts licensees from usingmailing pieces that resemble negotiable instruments. Advertis-ing using facsimile negotiable instruments is confusing and mis-leading to consumers. This rule intends to protect consumersfrom misleading advertising.

Section 83.856 (former §1.856) permits licensed lenders to pub-licly display their status as licensed and examined lenders.

Section 83.857 (former §1.857) and §83.858 (former §1.858)prescribe the disclosure requirements for advertising closed-endand open-end transactions. The rules also provide that a lenderwho complies with the federal Truth in Lending Act is deemed tocomply with these sections. The rules are intended to provideconsumers with accurate, comparable information for shoppingfor credit products.

New 7 TAC §§83.859 - 83.862 are intended to prevent abusiveand harassing collecting practices and to assure lawful remediesare used to collect debts.

Section 83.859 (former §1.860) addresses the collection prac-tices of licensed lenders.

Section 83.860 (former §1.861) outlines who may be contactedregarding a debt and when a lender may communicate with aborrower.

Section 83.861 (former §1.862) prohibits the use of simulatedlegal process by a licensee when attempting to collect a debt.

Section 83.862 (former §1.863) prohibits the use of imperson-ation and �ctitious names by a licensee when attempting to col-lect a debt.




§83.851. Duplication of Loans.

(a) A licensee may have more than one loan contract underTexas Finance Code, Chapter 342 with the same borrower at the sametime; however, in such an event the total interest charges assessed onthe several cash advances shall not exceed the total interest chargesthat could be legally imposed on one cash advance of an amount equalto the total of the several separate cash advances. The commissionermay require refunds of interest charges in excess of that which could belegally charged under Chapter 342. The commissioner shall prescribethe method of determining any excess charges.

(b) Married applicants, who under the authority of RegulationB, 12 C.F.R §202.11(c), voluntarily apply for and maintain separateaccounts, and who have the ability to repay the obligation, will notviolate the prohibition on duplicate loans.

(c) No loan may be made by a licensee in one of�ce to anyborrower or to the spouse of the borrower when the borrower or spousehas a loan in another of�ce operated by the same entity, af�liate, parent,

subsidiary, or an entity under the same ownership, management, orcontrol, whether partial or complete, when the total interest charges ofthe separate loans exceed the total interest charges that could be legallyimposed on one cash advance. If loans are granted that violate thissection, the rates shall be adjusted to rates applicable to a single loanof equivalent amounts.

§83.852. Loan Size, Duration, and Schedule of Installments: Limita-tion.When making or negotiating a loan under Texas Finance Code, Chap-ter 342, licensees shall consider, in determining the size, duration, andschedule of installments of a loan, the �nancial ability of the borrowerto repay the loan. The lender should evaluate whether the borrowershould be reasonably able to repay the loan in cash in the time andmeans provided in the loan contract and repay all other known obliga-tions concurrently.

§83.853. Misleading Advertising.(a) No licensee shall advertise that loans will be made at any

other place other than that named on its license, except for Texas Fi-nance Code, Chapter 342, Subchapter G loans, which may be closed ata title company or an attorney’s of�ce. Every advertisement shall stateor clearly indicate the identity of the licensee, and in such a manner asto prevent confusion with the name of any other unrelated licensee.

(b) No licensee shall use blind loan advertisements which giveonly telephone numbers or addresses.

(c) In determining whether any particular advertising matterviolates Texas Finance Code, §341.403, the general arrangement ofcopy and statements or representations made shall be considered to de-termine if the inference or impression may reasonably be drawn thatthe statements or representations are inaccurate, deceptive, or mislead-ing.

(d) It shall be considered misleading:

(1) to use phrases such as "lowest costs," "lowest rates,""quickest service," "easy payments," or "repayment in easy install-ments";

(2) to advertise "new reduced rates" or "a new type of ser-vice" or any similar comparative expression unless the statement is infact accurate with respect to the business of the licensee advertisedand unless the advertisement clearly indicates that the new plan refersspeci�cally to a change in the particular licensee’s plan of operation,and which change must be of more than minor importance with respectto the business of the licensee. Any such advertisement shall not beused for a period longer than 60 days after the plan has been put intoeffect;

(3) to make any statement or representation with referenceto the ease of procuring a loan, the speed with which it may be effected,the freedom from credit inquiries addressed to particular sources ofinformation, or to any other implied differentiation in policy or loanservice, unless the licensee shall comply with the representation made;

(4) to advertise offers to borrowers on loans in general oron particular classes or types of loans during a certain limited time, un-less in general practice, the licensee actually makes a reasonable num-ber of the loans within the limited time and upon the basis of the offer;or

(5) for any licensee other than a lawfully chartered bank-ing institution to use the word "bank," or any derivative, in any adver-tisement wherein its use might mislead the public to believe that thelicensee is an authorized banking institution or is conducting a bankingbusiness.

§83.854. Conditional Offers of Credit.


(a) No licensee shall solicit business by means of a "pre-ap-proved," "approved," or any similar expression unless the statement oroffer is unconditional. The term "unconditional" means not limited inany way.

(b) Subsection (a) of this section does not apply to a �rm offerof credit, as that term is de�ned in 15 U.S.C §1681a, that a creditorextends to a consumer following the procedures prescribed in 15 U.S.C§1681b and §1681m.

(c) No licensee shall require the purchase of any goods, ser-vices, or intangibles from any person or �rm as a condition to thegranting or extending of credit, except as speci�cally authorized by theTexas Credit Title. This prohibition is not applicable to insurance pre-mium �nancing or similar transactions wherein the loan is made solelyfor the purpose of �nancing the purchase. This section shall not be con-strued so as to prohibit the conduct of another business by a licensee asis authorized by Texas Finance Code, §342.560.

§83.855. Advertisements in Form of Negotiable Instruments.

No licensee shall advertise, display, or distribute mailing pieces whichhave a similarity or resemblance to a blank counter check, postal orexpress money order, U.S. currency, cash, exchange certi�cate, or anynegotiable instrument whatsoever, or any federal, state, or local gov-ernment warrant. No licensee shall use an envelope which in any wayindicates or implies that it is from federal, state, or local government.

§83.856. Use of State Agency Name.

It shall be permissible for a licensee of the Of�ce of Consumer CreditCommissioner to publicly display or advertise the following or a sub-stantially similar statement: "This of�ce is licensed and examined bythe Of�ce of Consumer Credit Commissioner of the State of Texas."

§83.857. Full Disclosure Requirements--Other Than Open-End orRevolving Loan Plans.

(a) If rates or charges are stated in advertising, they shall beexpressed in terms of an "annual percentage rate" (simple annual inter-est rate). Any advertisement that states the amount of any installmentpayment, the dollar amount of any �nance charge, or the number ofinstallments or the period of repayment, shall also state:

(1) the amount of the loan expressed as "amount �nanced"(cash advance);

(2) the number, amount, and due dates or periods of pay-ments scheduled to repay the indebtedness if the credit is extended;

(3) the rate of the �nance charge; and

(4) the sum of the payments expressed as "total of pay-ments" (amount of loan).

(b) The information required by this section shall be clearlyshown in such a manner as not to be deceiving or misleading.

(c) If any licensee advertises that the �rst installment on a loanmay be extended beyond one month from the loan date, the licenseemust also clearly state whether a charge is to be made for the extension.

(d) For purposes of this section, compliance by an authorizedlender with the federal Truth in Lending Act and regulations promul-gated thereunder relating to closed-end transactions shall constitutecompliance with Texas Finance Code, §342.505.

§83.858. Full Disclosure Requirements--Open-End and RevolvingLoan Plans.

(a) Any advertisement of an open-end or revolving loan planwhich states any of the speci�c terms of that plan, shall also clearly andconspicuously set forth the following items:

(1) the time period, if any, within which any credit ex-tended may be repaid without incurring a �nance charge;

(2) the method of determining the balance upon which a�nance charge will be imposed;

(3) the method of determining the amount of the �nancecharge;

(4) the method by which any charge for insurance, if any,is to be calculated; and

(5) when periodic rates may be used to compute the �nancecharge, with the periodic rates expressed as annual percentage rates.

(b) For purposes of this section, compliance by an authorizedlender with the federal Truth in Lending Act and regulations promul-gated thereunder relating to open-end credit transactions shall consti-tute compliance with the Texas Credit Title.

§83.859. Collection Practices.(a) In attempting to collect money due on a loan or to take

possession of any property securing a loan, a licensee or the licensee’sagent shall not use any means other than appeals to reason or lawfulremedies authorized under the laws of this state. The licensee is alsobound by the remedies prescribed in any instrument securing the loan.

(b) A licensee or the licensee’s agent shall not use any phys-ical force or violence against any person or use any physical force orviolence against any property.

§83.860. Collection Contacts.(a) A licensee or the licensee’s agent shall have the right

to contact any person in order to secure information concerning aborrower, unless any person other than the borrower, the borrower’sspouse, a member of the borrower’s household, a co-borrower, en-dorser, surety, or guarantor of the obligation, objects to any contact bya licensee or the licensee’s agent. Upon receipt of the objection, thelicensee or agent, shall cease and desist from any further contact withthe person.

(b) A licensee or the licensee’s agent shall not solicit the pay-ment of all or any part of any debt subject to this title from any personother than the borrower, a co-borrower, endorser, surety, or guarantorof the obligation.

(c) Without the prior written consent of the borrower given di-rectly to the licensee or the express permission of a court of competentjurisdiction, a licensee may not communicate with a borrower in con-nection with the collection of a loan at any unusual time or place. In theabsence of any knowledge to the contrary, a licensee can assume thatthe convenient time for communicating with a borrower is after 8:00a.m. and before 9:00 p.m., local time at the borrower’s location.

(d) A licensee may not communicate with a borrower in con-nection with the collection of a loan at the borrower’s place of employ-ment if the licensee has received written noti�cation from the borroweror the borrower’s employer to cease communications with the borrowerwhile at the place of employment. This restriction may be overriddenby court order.

(e) Without the prior written consent of the borrower given di-rectly to the licensee or the express permission of a court of competentjurisdiction, a licensee may not communicate any information pertain-ing to a debt or obligation unless the person receiving the informationis the borrower, the borrower’s attorney, a consumer reporting agency,another creditor, or the attorney of the creditor. Unless noti�ed pur-suant to subsection (a) of this section, this prohibition does not applyto a licensee seeking information about the location of the borrower.

§83.861. Simulated Legal Process or Documents Prohibited.


In attempting to collect money due on a loan or to take possession ofany property securing a loan, a licensee or the licensee’s agent shallnot use any simulated legal process, simulated legal document, or legalform designed to suggest that legal proceedings have been commencedor completed when in fact they have not.

§83.862. Impersonation and Fictitious Names Prohibited.

In attempting to collect money due on a loan, to take possession ofany property securing a loan, or to secure information concerning aloan, a licensee or the licensee’s agent shall not impersonate or attemptto impersonate any law enforcement of�cer or other agent of federal,state, or local governments, nor shall a licensee or a licensee’s agent useany �ctitious name unless the name used is an established or recognizedtrade name of the licensee.



2006.


CHAPTER 86. RETAIL CREDITORSSUBCHAPTER A. REGISTRATION OF RETAILCREDITORS7 TAC §86.101, §86.102

The Finance Commission of Texas (the commission) adopts new7 TAC Chapter 86, concerning Retail Creditors. The new rulescontained in 7 TAC §86.101 and §86.102 constitute SubchapterA, concerning Registration of Retail Creditors. The new rulesare adopted without changes to the proposal as published in theAugust 25, 2006, issue of the Texas Register (31 TexReg 6603).

These rules are being relocated and reorganized. The agencybelieves that the reorganization will bene�t licensees in thatthese rules will be in a more logical location and order and willbe easier to �nd. The new rules are substantially similar to therules being repealed, as found in 7 TAC Subchapter P, §1.901and §1.902, concerning Registration of Retail Creditors. Thecommission’s adopted repeal of Subchapter P is publishedelsewhere in this issue of the Texas Register.

The following paragraphs regarding the purpose of each ruletrack the original purpose language used when each rule wasoriginally adopted. These purposes still exist. Additional ex-planation is provided where recent, minor changes in languagehave been incorporated into the new rules. The remainingchanges consist of revisions to formatting, grammar, punctua-tion, and other technical corrections.

Section 86.101 (former §1.901) addresses the written notice re-quired in retail installment sales contracts. The required noticeprovides consumers with information on how to contact the cred-itor or the regulator for information.

The contact information in the required notice contained in§86.101 has been revised by deleting the agency’s local tele-phone number and adding the agency’s web address. While thenotice maintains the listing of the agency’s toll-free ConsumerHelpline, it will now also provide the agency’s website as analternative, convenient method of contact for consumers.

Section 86.101 provides for the required Consumer Credit Com-missioner (or complaints and inquiries) notice, which has beenrevised from its previously enacted version. The prior languageis acceptable and the agency will permit licensees to use thelanguage contained in former §1.901 until October 1, 2007, todeplete supplies of existing forms during a transition period afterthe effective date of the rule.

Section 86.102 (former §1.902) prescribes the procedures forprocessing the annual registration fees.

The changes to §86.102 are all technical in nature, primarily con-sisting of a few formatting and punctuation corrections.


The new rules are adopted under Texas Finance Code, §11.304,which authorizes the commission to adopt rules to enforce Title4 of the Texas Finance Code. Additionally, Texas Finance Code,§345.351 and §347.451 authorize the commission to adopt rulesconcerning the registration of retail creditors.

The statutory provisions (as currently in effect) affected by theadopted rules are contained in Texas Finance Code, Chapters345, 347, and 348.



2006.


PART 6. CREDIT UNIONDEPARTMENT

CHAPTER 91. CHARTERING, OPERATIONS,MERGERS, LIQUIDATIONSSUBCHAPTER G. LENDING POWERS7 TAC §91.701

The Credit Union Commission adopts amendments to §91.701concerning lending powers, without changes to the text pub-lished in the June 30, 2006, issue of the Texas Register (31TexReg 5230).

The amendments add language to expand and clarify underwrit-ing standards, liquidity guidelines, and waiver request require-


ments. The amendments are adopted as a result of the Depart-ment’s general rule review.

A public hearing on the amendments was held at the Departmentof�ces on September 15, 2006, at 9:00 am. No oral commentswere received.

Written comments in support of the amendment were receivedfrom Kelli Larsen on behalf of FirstMark Credit Union. Writ-ten comments against the proposal were received from SharonMoore on behalf of City Credit Union.

One commenter expressed support for the proposal, stating thatthe proposed changes are useful clari�cations to the existingrule. The commenter noted that the requirement to establishguidelines and procedures to ensure adequate liquidity is a pos-itive addition.

Another commenter stated that while the proposed language inSections 91.701(c)(9) and (e), concerning pricing and liquidity,has merit, she did not believe that the appropriate place for itwas in the lending powers section of the rules. The commenterfeared, for example, that under the proposed rule, using a lossleader loan program to stimulate loan demand, would prompt anegative view of that strategy by �eld examiners. The Commis-sion has considered this request and disagrees that the provi-sions are inappropriately placed. Monitoring loan volume anddeterminations of pricing and liquidity are an essential part of acredit union’s loan policy. The proposed amendments to the ruleclarify this. The Commission declines to amend the rule as sug-gested.

The amended rule is adopted under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §124.001, which authorizes the Commis-sion to adopt rules regarding loans to members.

The speci�c section affected by the amended rule is Texas Fi-nance Code, §124.001.



2006.

TRD-200605737Harold E. FeeneyCommissionerCredit Union DepartmentEffective date: November 9, 2006Proposal publication date: June 30, 2006For further information, please call: (512) 837-9236

7 TAC §91.704

The Credit Union Commission adopts amendments to §91.704concerning real estate lending, without changes to the text pub-lished in the June 30, 2006, issue of the Texas Register (31TexReg 5231).

The amendments add de�nitions and clarify certain provisionspertaining to loan to value limits, excluded transactions, and

loans to 100% of value. The amendments are adopted as a re-sult of the Department’s general rule review.


Written comments in support of the amendments were receivedfrom Kelli Larsen on behalf of FirstMark Credit Union.

The commenter expressed support for the proposal, stating thatthe de�nitions of terms were adequate and clear, and the addi-tion of the section (f), Loans to 100% of Value, is consistent withstandard real estate practices.





2006.


7 TAC §91.708

The Credit Union Commission adopts amendments to §91.708concerning real estate appraisals, without changes to the textpublished in the June 30, 2006, issue of the Texas Register (31TexReg 5233).

The amendments clarify that the credit union must maintain poli-cies and procedures for obtaining independent appraisals. Theamendments also expand on requirements for evaluating realproperty collateral for loans less than $250,000 and add a sec-tion alerting credit unions that they may have to also comply withPart 722 of the National Credit Union Administration’s Rules andRegulations if applicable. The amendments are adopted as aresult of the Department’s general rule review.

A public hearing on the amendments was held at the Departmentof�ces on September 15, 2006, at 9:00 a.m. No oral commentswere received.

Written comments in support of the amendment were receivedfrom Kelli Larsen on behalf of FirstMark Credit Union.

The commenter expressed support for the proposal, statingthat the changes are very reasonable and can easily be imple-mented.






2006.


7 TAC §91.710

The Credit Union Commission adopts amendments to §91.710concerning overdraft protection, with no changes to the text pub-lished in the June 30, 2006, issue of the Texas Register (31TexReg 5233).

The amendments clarify that the credit union must manage therisk associated with overdraft protection programs and ensurethat marketing materials and other communications with mem-bers regarding the program are not misleading and that the pro-tection does not encourage irresponsible member �nancial be-havior that might increase risk to the credit union. The amend-ments are adopted as a result of the Department’s general rulereview.


Written comments in support of the amendments were receivedfrom Kelli Larsen on behalf of FirstMark Credit Union. Writ-ten comments opposing the amendments were received fromSharon Moore on behalf of City Credit Union.

One commenter expressed support for the proposal, stating thatextending the time limit from 45 to 60 days before an overdraftmust be charged off would be useful. The commenter also be-lieved that limiting the dollar amount of overdrafts per account,and not per member, is a prudent rule change. The commenteradded that the sections on safety and soundness, and on com-munications with members are useful additions to the rule.

Another commenter objected to the placement of this section inthe Lending subchapter of the rules. The commenter stated that,since overdraft protection amounts are not loans, the proposedamendments could lead to the conclusion that these amountsare loans. In addition, the commenter expressed concern withthe ability of their data processing system to track the dollaramount of overdrafts per member versus the dollar amount peraccount.

The Commission understands the commenter’s concerns, butbelieves that the placement of the section is beyond the scopeand intent of the proposal. Section 91.710 was originally adoptedin 1999, and the proposal did not contemplate the repeal andrelocation of the rule. However, the Commission will considerthe suggestion in future revisions.

The amended rule is adopted under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §123.105, which authorizes credit unionsto collect fees.




2006.


7 TAC §91.711

The Credit Union Commission adopts amendments to §91.711concerning loan participations, with no changes to the text pub-lished in the June 30, 2006, issue of the Texas Register (31TexReg 5234).

The amendments more clearly outline loan participation policyrequirements and add a provision requiring the credit unionto monitor the performance of a third party loan servicer. Theamendments are adopted as a result of the Department’sgeneral rule review.



The commenter expressed support for the proposal, stating thatthe changes offer needed clari�cation on what a credit unionmust include in a Participation Policy and felt that the expandedrequirements should not pose any dif�culty in implementation.The commenter also stated that the additional language in sub-section (c) of this section, de�ning the servicing of participationloans, is reasonable.

The amended rule is adopted under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §123.351, which authorizes credit unionsto invest in participation loans.





2006.


7 TAC §91.712

The Credit Union Commission adopts amendments to §91.712concerning plastic cards, with no changes to the text publishedin the June 30, 2006, issue of the Texas Register (31 TexReg5235).

The amendments clarify annual program review requirementsfor plastic cards. The amendments are adopted as a result ofthe Department’s general rule review.


Written comments in support of the amendments were receivedfrom Kelli Larsen on behalf of FirstMark Credit Union. Writtencomments expressing concern with one aspect of the rule werereceived from Sharon Moore on behalf of City Credit Union.

One commenter expressed support for the proposal, stating thatthe changes offer useful clari�cation. The commenter noted thatsince paragraph (3) of this section is redundant, the eliminationof that paragraph should not raise complications, as the costbene�t analysis requirements remain in subparagraph (D) of thissection.

Another commenter expressed concern that the proposal as-sumes that all plastic cards are mailed from the issuer to thecardholder. The Commission disagrees with the comment. Al-though the instant-issued aspect of plastic cards is not specif-ically mentioned, §91.712(a)(1) simply de�nes card activationand is not intended to limit or exclude methods by which cardscan be issued. The Commission declines to amend the rule assuggested.

The amended rule is adopted under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §124.001 which authorizes the Commis-sion to adopt rules for loans to members and §124.051, whichauthorizes open-end credit plans for credit unions.

The speci�c sections affected by the amended rule are TexasFinance Code, §124.001 and §124.051.



2006.


7 TAC §91.713

The Credit Union Commission adopts amendments to §91.713,concerning indirect �nancing of motor vehicles or other chattels,with no changes to the text published in the June 30, 2006, issueof the Texas Register (31 TexReg 5236).

The amendments de�ne indirect �nancing and add requirementsrelating to written policies, third party providers and subprimeindirect lending programs. The amendments are adopted as aresult of the Department’s general rule review.


Written comments in support of the amendments with one ex-ception were received from Kelli Larsen on behalf of FirstMarkCredit Union.

The commenter stated that the addition of the section on ThirdParty Vendors is a reasonable addition to the rule and the sectionon Subprime Indirect Lending clearly de�nes the process for duediligence in obtaining a third party subprime vendor. The com-menter expressed concern with the last line of the rule and sug-gested that it be rewritten to read ”Such programs may also tar-get borrowers with questionable repayment capacity.” The com-menter felt that eliminating the remainder of the line ”evidencedby low credit scores or high debt-burden ratios” would allow thecredit union to de�ne it in internal policy. The Commission ap-preciates the concern and does not wish to unnecessarily limitthe �exibility of credit union management. However, it believesthat the quali�ers ”low credit scores” and ”high debt ratios” aresuf�ciently broad to cover most borrowers. The Commission de-clines to amend the rule as suggested.






2006.


7 TAC §91.714

The Credit Union Commission adopts amendments to §91.714,concerning leasing, with no changes to the text published in theJune 30, 2006, issue of the Texas Register (31 TexReg 5236).

The amendments add requirements relating to written policies,insurance, and holding period. The amendments are adoptedas a result of the Department’s general rule review.



The commenter expressed support for the proposal, stating thatthe amendments are clearly de�ned and can be implementedwithout dif�culty.

The amended rule is adopted under the provision of the TexasFinance Code, §15.402, which authorizes the Commission toadopt reasonable rules for administering Title 2, Chapter 15 andTitle 3, Subchapter D of the Texas Finance Code and underTexas Finance Code §124.351, which authorizes the Commis-sion to adopt rules regarding permitted investments.




2006.


7 TAC §91.715

The Credit Union Commission adopts amendments to §91.715concerning exceptions to the general lending policies, with nochanges to the text published in the June 30, 2006, issue of theTexas Register (31 TexReg 5237).

The amendments require that credit unions identify exceptionsto loan policies, report them at least annually to their board, and

set an aggregate limit. The amendments are adopted as a resultof the Department’s general rule review.


Written comments expressing concern with the amendmentswere received from Kelli Larsen on behalf of FirstMark CreditUnion and Sharon Moore on behalf of City Credit Union.

One commenter stated that the new subsection (c) of this sectionregarding the reporting of exception loans could be extremely dif-�cult for a credit union to track and report. The commenter goeson to state "Tracking every exception to policy will require a track-ing and reporting mechanism that could be cumbersome andvery dif�cult for large credit unions to utilize." The commenterfelt that the addition of this subsection was not necessary sincesubsections (a) and (b) of this section are well de�ned.

The other commenter also disagreed with the tracking mecha-nism and stated that a signi�cant number of exceptions to policyre�ect a need to address the inadequacies of the policy insteadof implementation of a manual tracking process for most creditunions.

The Commission understands the commenters’ concerns, butbelieves it has balanced safety and soundness concerns appro-priately with the burden associated with tracking and reportingthe aggregate amount of exception loans. The Commission de-clines to modify the proposal.





2006.


7 TAC §91.718

The Credit Union Commission adopts amendments to §91.718concerning charging off or setting up reserves, with no changesto the text published in the June 30, 2006, issue of the TexasRegister (31 TexReg 5238).

The amendments require that credit unions develop, maintainand document the methodology used to determine the appropri-ate amount of allowance for loan and lease losses and re�ect


those losses accurately on quarterly call reports. The amend-ments are adopted as a result of the Department’s general rulereview.


Written comments expressing support and requesting clari�ca-tion of the amendments were received from Kelli Larsen on be-half of FirstMark Credit Union.

The commenter generally supported the proposed changes butalso sought clari�cation as to whether credit unions are permittedto make adjustments to the ALLL more often than quarterly toavoid large discrepancies at the end of each quarter.

The Commission did not intend to limit how often a credit unioncould make adjustments and, in fact, encourages credit unionsto make adjustments as often as necessary to accurately re�ectloan and lease loss experience.





2006.


7 TAC §91.719

The Credit Union Commission adopts amendments to §91.719concerning loans to of�cials and senior management employ-ees, with no changes to the text published in the June 30, 2006,issue of the Texas Register (31 TexReg 5238).

The amendments allow the board of directors to increase thelimit for which the reporting requirement can be waived for loansto individuals subject to this rule. The amendments are adoptedas a result of the Department’s general rule review.


Written comments expressing support of the amendments werereceived from Kelli Larsen on behalf of FirstMark Credit Union.

The commenter expressed support for the proposal, stating thatthe addition to section (f) of the requirement for reporting loans

one quarter of one percent of the credit union’s net worth is rea-sonable and can easily be implemented.





2006.


PART 8. JOINT FINANCIALREGULATORY AGENCIES

CHAPTER 153. HOME EQUITY LENDING7 TAC §153.13

The Finance Commission of Texas and the Texas Credit UnionCommission ("commissions") adopts an amendment to interpre-tation §153.13, relating to home equity lending under Texas Con-stitution, Article XVI, §50(a)(6). The amendment is adopted with-out changes to the proposal as published in the September 1,2006, issue of the Texas Register (31 TexReg 7076).

Texas Constitution, Article XVI, Section 50 ("Section 50"), setsout the only permissible encumbrances on a homestead. Priorto 1998, Section 50 permitted liens on homestead property forthe purposes of purchase money, taxes, an owelty of partition,the re�nance of a lien, including tax liens, and home improve-ments. Effective January 1, 1998, Section 50 was amended toauthorize home equity loans, permitting a home owner to obtaina loan secured by a lien on the homestead, without restrictinghow the owner can use the loan proceeds. Section 50 has sincebeen amended in 1999, 2001, 2003, and 2005 to further addressaspects of home equity lending. Section 50 addresses only theelements necessary to create a valid lien on a homestead. Otherstatutes and constitutional provisions must also be consulted tofully evaluate the legality under Texas law of credit transactionsinvolving the homestead.

The commissions are separately and independently chargedwith interpreting Sections 50(a)(5) - (7), (e) - (p), and (t) of theConstitution, see Texas Finance Code, §11.308 and §15.413,and Texas Constitution, Article XVI, Section 50(u). The com-missions seek to jointly exercise their authority to interpretSection 50 in order to promote consistency and better supportthe con�dence of homeowners and lenders transacting home


equity loans in compliance with Section 50. In addition, thecommissions interpret the extent of their interpretive authorityto include not only determinations of the explicit meaning ofwords and terms in Section 50, but also to encompass "�lling inthe gaps" with respect to material matters that are inadequatelyaddressed in Section 50, including possible addition of furtherdetails to the extent the commissions believe this to be neces-sary to fully implement the intent and purposes of Section 50.

Because of the signi�cantly adverse consequences that can be-fall a lender who violates a provision of Section 50, clear and un-ambiguous guidance regarding the meaning of such provisionssupports the stability of the credit markets. This stability bene-�ts consumers by ensuring that home equity loans are as widelyavailable to Texas homeowners as possible. Availability, cer-tainty, and competition result in reducing the overall transactioncost to consumers for equity loans. To that end, the commissionshave previously adopted interpretations codi�ed to 7 TAC Chap-ters 151 and 153. These interpretations are intended to not onlyconstrue the actual language of the Constitution, but also to pro-vide a practical framework for home equity lending that re�ectsthe constitutional language and the intent of the legislature andthe voters. The commissions interpret the Constitution in har-mony with other statutes and provisions that govern loans andother credit transactions to ensure consistency in the applicationof law.

Concerns have been raised that several jointly adopted interpre-tations are potentially ambiguous. Consequently, the FinanceCommission and the Credit Union Commission recently revisedand re-adopted §153.13, the home equity lending interpretationconcerning the timing of preclosing disclosures. This new inter-pretation, along with two others, was published in the June 23,2006, issue of the Texas Register (31 TexReg 5080).

Following adoption, a typographical error was discovered in§153.13 that could lead to mistaken conclusions regardingthe intent of this interpretation. Speci�cally, the word "or"between §153.13(3)(B)(i) and (ii) should obviously have beenthe word "and." A literal reading of the word "or" in this contextwould con�ict with the Texas Constitution. The purpose of thisamendment is to correct this typographical error. In brief, therequirements of both clauses (§153.13(3)(B)(i) and (ii)) mustbe met to establish the de minimis good cause standard thatpermits an owner to consent to delivery of a modi�ed disclosureon the date of closing.

Texas Constitution, Article XVI, Section 50(a)(6)(M)(ii), requiresa lender to provide an owner with a preclosing disclosure offees, costs, points, and charges at least one day prior to clos-ing a home equity loan. Initial delivery of, or changes to, atimely delivered disclosure are not permitted after that time un-less good cause exists and the owner consents. Generally, re-vised §153.13 provides that good cause exists to deliver a modi-�ed disclosure on the date of closing if the variance in total costsis insigni�cant (a de minimis increase) under a speci�ed formula(see §153.13(3)(B)(i)).

However, an insigni�cant change in total costs can be misleadingif it conceals material but offsetting changes in individual fees,costs, points, and charges. Because variances of this naturedemand more thoughtful analysis and consideration, the de min-imis good cause standard requires the variance in any individualfee, cost, point, or charge to also be insigni�cant under the for-mula provided (see §153.13(3)(B)(ii)).

The obviously erroneous use of the term "or" in lieu of "and" be-tween the two clauses that de�ne the de minimis good causestandard does not mean that satisfying only one of these twoconditions is suf�cient to meet the de minimis good cause stan-dard, and the commissions will not endorse or support such areading.

The commissions received no written comments on the pro-posal.

The amendment to §153.13 is adopted pursuant to Texas Fi-nance Code, §11.308 and §15.413, which separately and inde-pendently authorize each commission to issue interpretations ofthe Texas Constitution, Article XVI, §50(a)(5) - (7), (e) - (p), (t),and (u), subject to Texas Government Code, Chapter 2001.

The Texas Constitution, Article XVI, §50(a)(6) is affected by theadopted amendment to the interpretation.



2006.

TRD-200605741Leslie L. PettijohnCommissionerJoint Financial Regulatory AgenciesEffective date: November 9, 2006Proposal publication date: September 1, 2006For further information, please call: (512) 936-7640

TITLE 16. ECONOMIC REGULATION

PART 2. PUBLIC UTILITYCOMMISSION OF TEXAS

CHAPTER 26. SUBSTANTIVE RULESAPPLICABLE TO TELECOMMUNICATIONSSERVICE PROVIDERSSUBCHAPTER F. REGULATION OFTELECOMMUNICATIONS SERVICE16 TAC §26.127

The Public Utility Commission of Texas (commission) adopts anamendment to §26.127, relating to Abbreviated Dialing Codes,without changes to the proposed text as published in the July14, 2006, issue of the Texas Register (31 TexReg 5512). Theamendment will designate the use of the abbreviated dialingcode "811" for "One Call" advanced noti�cation and inquiry re-lated to excavation activities and underground facilities. Thisamendment implements Use of N11 Codes and Other Abbrevi-ated Dialing Arrangements, Sixth Report and Order, CC DocketNo. 92-105, FCC 05-59 (Mar. 14, 2005) (Order), in which theFederal Communications Commission (FCC) designated 811 forOne Call purposes. The use of 811 is intended to replace a myr-iad of telephone numbers with a nationally uniform number toallow contractors and property owners to give advance noticeof excavation plans and allow facility operators to mark under-ground facilities prior to excavation to prevent facilities damage


and service outages. This amendment is adopted under ProjectNumber 32000.

A public hearing on the amendment was held at commissionof�ces on August 29, 2006, at 10:00 a.m. Representativesfrom Associated General Contractors of Texas (AGC), AT&TTexas (AT&T Texas), Eastex Telephone Cooperative (Eas-tex), Energy Transfer Company (ETC), Texas UndergroundFacility Noti�cation Corporation (doing business as One CallBoard of Texas and hereafter referred to as One Call Board),Texas Pipeline Safety Coalition (TPSC), Texas Statewide Tele-phone Cooperative, Inc. (TSTCI), United States Departmentof Transportation/Pipeline and Hazardous Materials SafetyAdministration (USDOT/PHMSA), United Telephone Companyof Texas, Inc. and Central Telephone Company of Texas,Incorporated, doing business as Embarq (hereafter collectivelyreferred to as Embarq), Verizon Southwest (Verizon), and Wind-stream Communications (Windstream), attended the hearingand provided comments. To the extent that these commentsdiffer from the submitted written comments, such comments aresummarized herein.

The commission received written comments on the proposedamendment from �ve parties; John Stauralakis Incorporated(JSI), TPSC, Consolidated Communications of Fort Bend Com-pany and Consolidated Communications of Texas Company(hereafter collectively Consolidated Communications), CHRSolutions (CHR), and United Telephone Company of Texasand Central Telephone Company of Texas, doing business asEmbarq (hereafter collectively Embarq).

Comments on §26.127(a)(7) and (f)

A public hearing was requested by TPSC in its August 14, 2006,comments. TPSC strongly supported adoption of the proposedamendment and stated that it believed the implementation of theabbreviated "811" number would provide a simpli�ed process fornoti�cation and result in a decrease of damage to pipelines andother underground facilities. TPSC expressed its concern thatthe abbreviated "811" number might not be fully functioning onApril 13, 2007, the deadline established by the FCC’s Order, andencouraged the commission to "require the implementation ofthe 811 system to be done in a manner that spreads the im-plementation costs across all consumers statewide." In addition,TPSC requested that any charges for the 811 implementationshould be comparable to those of other states, on a per switchbasis, and that "an informal study could be conducted to evaluateother states implementation process and cost to underground fa-cility operators."

JSI �led written comments on August 11, 2006, stating that 16telecommunications companies represented by its �rm had de-termined that implementation of 811 would be met by the FCC’sdeadline, that costs were minimal and that its companies werenot seeking reimbursement of implementation charges at thistime. JSI reserved the right to seek reimbursement for additionalexpenses should they arise.

Consolidated Communications also noted, in its August 16, 2006comments, that the FCC’s 811 implementation deadline wouldbe met by its companies. Consolidated Communications statedthat it was not seeking recovery of the costs for implementationat this time.

CHR, representing 34 companies, �led two comments, one onAugust 25, 2006, and the second on August 28, 2006, statingthat its companies were not seeking reimbursement of 811 im-plementation costs and were prepared to meet the FCC’s April

13, 2006, deadline for the implementation. CHR also reservedits right to seek reimbursement for future expenses required bymandate.

Embarq’s August 30, 2006, comments simply provided its es-timate of its companies’ costs for the 811 implementation andadvised that the estimated completion date would occur duringthe �rst quarter of 2007.

At the August 29, 2006, public hearing, TPSC reiterated its po-sitions regarding concern for the actual implementation date ofthe 811 service and the recovery of any implementation costs bythe One Call Board.

The One Call Board currently operates a toll free-number(1-800-545-6005) for "One Call" purposes. It is anticipated thatcalls to the current toll-free number will be gradually migratedto the abbreviated dialing code and that 811 will be fully func-tional throughout Texas by April 13, 2007. The toll free "800"number will continue to exist and receive incoming calls dialeddirectly to it. When the 811 number is dialed those calls will be"transparently" transferred to the One call Board’s same toll free"800" number. The One Call Board supervises its toll free "800"number and uses an automated system to direct calls receivedat that number to three other toll free "800" numbers in centersgeographically distributed across Texas.

At the August 29, 2006, public hearing the One Call Board dis-cussed its current operations and some concerns regarding theimplementation of 811. In particular, the One Call Board notedthat the majority of its end users are sophisticated excavators,some of whom are located in other states but doing construc-tion work in Texas. The One Call Board questioned how thosecalls would be directed if parties in other states contact theirhome-state 811 center. The One Call Board also discussedwhether telecommunications providers might prefer to direct 811calls to speci�c toll free 800 numbers, those assigned to the spe-ci�c centers, or to their central toll free 800 number. The One CallBoard noted that sophisticated users frequently have the speci�cnumber of a center they work with, even a speci�c individual atthat center, and would likely continue to contact that center andthat speci�c party. The One Call Board noted that excavatorsalso contact the centers via electronic mail (email) and facsim-ile transmissions (faxes). The One Call Board expressed someconcern regarding the anticipated spike in usage of 811 it ex-pects will be the result of the publicizing of the new abbreviatedcode. However, the One Call Board noted that such calls willlikely diminish when users understand that the purpose of theOne Call Board is marking for major excavation (digs of over 16inches) by facilities operators.

At the August 29, 2006, public hearing, the One Call Board ad-vised that it does not have the authority to pay any implementa-tion charges to the telecommunications utilities for the "overlay"of 811 onto the One Call Board’s toll free 800 number. However,the One Call Board stated it will not impede or interfere with theimplementation of the 811 abbreviated dialing code.

The Staff asked the company representatives present at the pub-lic hearing to state whether the implementation date ordered bythe FCC would be met and whether payment of costs incurred bythe companies (for programming and other central of�ce work)to implement the 811 "overlay" would be an issue. Representa-tives of AT&T Texas, Eastex, Embarq, Verizon, and Windstreamstated that there would be no problem meeting the FCC’s dead-line, that some conversions are taking place at this time and thatthe costs of the implementation would not be an issue. The at-


tending parties, much as the written commenters, noted that theydid not relinquish their right to seek reimbursement of implemen-tation costs or additional costs, should they arise through legisla-tive means.

The One Call Board noted for the record that telecommunica-tions providers were free to begin implementation of 811 usingthe One Call Board’s toll free 800 number central distributionnumber (1-800-545-6005). Staff requested the One Call Boardmake a �ling with the commission to formalize and memorializeits position regarding the inability to reimburse any costs and thepermission to proceed with 811 implementation.

Commission response

The commission notes that the FCC’s intention in providing auniform abbreviated dialing code for purposes of excavation no-ti�cation is an issue of public interest. The FCC seeks to insurethat consumers’ telecommunications services and other utilityservices will not be interrupted due to accidental damage to un-derground facilities and that all excavators will have a centralizedpoint of contact. Texas is fortunate to have the One Call Board,pursuant to Section 251 of the Texas Utilities Code, �rmly estab-lished and operating ef�ciently throughout the state. The currentsystem of excavation noti�cation in our state is excellent, and thecommission believes that the implementation of 811 will only en-hance the current noti�cation system.

The commission notes that the FCC did not provide speci�cguidance regarding reimbursement of costs, instead referringthis matter to the state commissions. The commission cannotmandate reimbursement for telecommunications providers un-der its current authority. However, the commission notes thattelecommunications providers are the bene�ciaries of the noti-�cation system, as their facilities and consumer base are pro-tected through its use. The commission is encouraged by thetelecommunications providers who have stated plainly that theywill meet the FCC’s implementation deadline and are not seek-ing reimbursement for the implementation of 811. The commis-sion also notes that the total costs projected by all providers par-ticipating in this proceeding (representing the majority of Texastelecommunications access lines) is minimal and amounts to asmall and reasonable cost of doing business for the companies.

Therefore, the commission does not propose any changes to thepublished rule amendment.

All comments, including any not speci�cally referenced herein,were fully considered by the commission.

This amendment is adopted under the Public Utility RegulatoryAct, Texas Utilities Code Annotated §14.002 (Vernon 1998, Sup-plement 2005) (PURA) which provides the commission with theauthority to make and enforce rules reasonably required in theexercise of its powers and jurisdiction.

Cross Reference to Statutes: Public Utility Regulatory Act§14.002 and §14.052; Underground Facility Damage Preven-tion and Safety Act, Texas Utilities Code Annotated (Vernon1998 & Supplement 2005) §§251.001 - 251.202.



2006.

TRD-200605635

Adriana A. GonzalesRules CoordinatorPublic Utility Commission of TexasEffective date: November 6, 2006Proposal publication date: July 14, 2006For further information, please call: (512) 936-7223

TITLE 19. EDUCATION

PART 2. TEXAS EDUCATION AGENCY

CHAPTER 61. SCHOOL DISTRICTSSUBCHAPTER II. COMMISSIONER’S RULESCONCERNING HIGH SCHOOL ALLOTMENT19 TAC §§61.1091 - 61.1101

The Texas Education Agency (TEA) adopts new §§61.1091 -61.1101, concerning the high school allotment for school dis-tricts. Sections 61.1091, 61.1093, and 61.1099 are adopted withchanges to the proposed text as published in the August 18,2006, issue of the Texas Register (31 TexReg 6449). Sections61.1092, 61.1094 - 61.1098, 61.1100, and 61.1101 are adoptedwithout changes to the proposed text as published in the August18, 2006, issue and will not be republished.

The adopted new sections implement provisions for the ad-ministration of high school allotment funds in accordance withthe Texas Education Code (TEC), §39.113, Recognition ofHigh School Completion and Success and College ReadinessPrograms, §39.114, High School Allotment, and §42.2516,Additional State Aid for Tax Reduction, as added by House Bill(HB) 1, 79th Texas Legislature, Third Called Session, 2006.

HB 1, 79th Texas Legislature, Third Called Session, amendedthe TEC by adding §42.2516(b)(3), which provides additionalstate aid to districts for the purpose of improving graduation andcollege readiness rates, and §39.113 and §39.114, which autho-rize the commissioner of education to adopt rules to implementprovisions relating to the use of this additional state aid referredto as the high school allotment.

Recognizing that overall graduation and college readiness ratesin Texas high schools, while improving, are still too low, the TexasLegislature provided additional funds for the purpose of address-ing these achievement issues. Speci�cally, the legislature di-rected that these funds be used for the purposes of: (1) preparingunderachieving students in Grades 6-12 for entrance into institu-tions of higher education, (2) encouraging all students in Grades6-12 to pursue advanced academic opportunities, (3) providingopportunities for students to take academically rigorous coursework, (4) aligning secondary and postsecondary curriculum andexpectations, and (5) supporting other promising high schoolcompletion and success initiatives in Grades 6-12 approved bythe commissioner of education.

The adopted new rules in 19 TAC Chapter 61, Subchapter II,implement the statutory provisions of the high school allotmentas follows.

Adopted new 19 TAC §61.1091, De�nitions, establishes applica-ble de�nitions when used in the context of the new subchapter.In response to further review by the TEA legal counsel, 19 TAC§61.1091(1) was modi�ed since published as proposed to clar-ify that academically rigorous course work includes high school


level mathematics and science. A technical edit was also madeto spell out the word "mathematics."

Adopted new 19 TAC §61.1092, Payment of the High School Al-lotment, establishes provisions relating to calculation, paymentand reconciliation, and reporting. No changes were made sincepublished as proposed.

Adopted new 19 TAC §61.1093, Use of Funds, delineates ac-ceptable programs and activities that may be funded. In re-sponse to public comment, 19 TAC §61.1093 was revised toinclude Grades 6-8 as target grades on which high school al-lotment funds may be spent. In response to further review bythe TEA legal counsel, 19 TAC §61.1093(1) was modi�ed sincepublished as proposed to clarify the de�nition of underachiev-ing students by adding "as de�ned by local policy." Also in re-sponse to public comment, 19 TAC §61.1093(1) was modi�edto add another program for which funds may be spent. A newsubparagraph (C) was added to include "support to participatein academic competitions" as a type of program on which highschool allotment funds may be spent. The subsequent programwas re-designated as subparagraph (D).

Adopted new 19 TAC §61.1094, Exceptions for Alternative Usesof Funds, establishes that eligible school districts will be identi-�ed that may receive exceptions for alternative uses of the funds.No changes were made since published as proposed.

Adopted new 19 TAC §61.1095, Allowable Expenditures, iden-ti�es allowable expenditures, including textbooks and profes-sional development, for example. No changes were made sincepublished as proposed.

Adopted new 19 TAC §61.1096, Unallowable Expenditures,identi�es speci�c unallowable expenditures, including indirector administrative costs or athletics. No changes were madesince published as proposed.

Adopted new 19 TAC §61.1097, Additional High School Comple-tion and Success Initiatives Approved by the Commissioner, es-tablishes procedures for submitting initiatives for commissionerapproval for uses other than those speci�ed. No changes weremade since published as proposed.

Adopted new 19 TAC §61.1098, Policy Advisory Group, de-scribes the composition and role of an advisory group that willreview activities and programs implemented with high school al-lotment funds and make recommendations to the commissioner.No changes were made since published as proposed.

Adopted new 19 TAC §61.1099, School District Annual Perfor-mance Review, sets forth requirements relating to local schooldistrict establishment and continuation of annual performancegoals for programs, activities, and strategies implemented withhigh school allotment funds. In response to public comment, 19TAC §61.1099(a) was modi�ed to clarify that an open meetinginstead of a public hearing of the board of trustees is a suf�cientforum to establish annual performance goals. Also in responseto public comment, 19 TAC §61.1099(b) was modi�ed to clarifythat the board of trustees is the entity required to review the dis-trict’s progress toward accomplishment of the allotment goals.

Adopted new 19 TAC §61.1100, Evaluation of Programs, de-scribes the TEA evaluation of programs implemented with highschool allotment funding. No changes were made since pub-lished as proposed.

Adopted new 19 TAC §61.1101, Standards for Selecting andMethods for Recognizing Districts and Campuses Offering

Exceptional Programs, describes the selection process andstandards for recognizing districts and campuses offering ex-ceptional programs using high school allotment funds. Thenew section also speci�es that recognition methods will beestablished by the commissioner. No changes were made sincepublished as proposed.

Stakeholder meetings and forums were held and input receivedduring the development of the new rules. These meetings in-clude the June 7 - 8, 2006, meeting with the Texas Associationof Secondary School Principals; the June 26 - 27, 2006, sum-mer conference of the University of Texas/Texas Association ofSchool Administrators; and the July 20, 2006, public stakeholdermeeting held at the TEA.

Subsequent to development of the proposal, a number of indi-viduals, including school of�cials, a member of the State Boardof Education, and representatives of regional education servicecenters and other interested organizations, submitted commentsand inquiries regarding the High School Allotment. Followingis a summary of public comments received relating to the pro-posed new 19 TAC Chapter 61, Subchapter II, and correspond-ing agency responses.

USE OF FUNDS

Comment. Several individuals, including school of�cials fromAmarillo Independent School District (ISD), Copperas Cove HighSchool, Friendswood High School, and Rusk Junior High Schoolas well as representatives of the educational consulting �rmsAVID and MyStudyHall, recommended extending the focus forhigh school allotment funds to include students in Grades 6-8.Commenters noted that critical decisions affecting a student’sability to prepare for and succeed in college are made in the mid-dle school years. For many students, the trajectory for collegeand career is in�uenced heavily by middle school courses takenand problems encountered prior to Grade 9.

Agency Response. The agency agrees. After seeking clari�ca-tion on legislative intent, the agency determined that a broaderinterpretation of the TEC, §39.114, as added by HB 1, 79th TexasLegislature, Third Called Session, 2006, is consistent with thelegislation’s overriding goals of preparing students for entranceinto institutions of higher education and therefore is justi�ed.Language in 19 TAC §61.1093, Use of Funds, was modi�ed tore�ect that high school allotment funds may be used to targetstudents in Grades 6-12.

Comment. A representative of Houston ISD, currently workingwith a University Interscholastic League (UIL) forensic program,which possesses a strong record of encouraging and equippinglow-income and minority students to attend college, inquiredabout the use of allotment funds to support and extend thisprogram to other district campuses.

Agency Response. The agency agrees with the use of highschool allotment funds to support programs that encourageacademic success. A UIL academic program designed toincrease college readiness by: actively recruiting studentswho are traditionally underrepresented in college populations;effectively equipping them with academic skills valuable forsuccessful completion of high school and college; and suc-cessfully motivating them to enroll in college is consistentwith the purposes established for high school allotment funds.Consequently, the agency modi�ed §61.1093(1) to clarify thathigh school allotment funds may be used to support programsencouraging underachieving students to participate in academiccompetitions.


Comment. A representative of the Texas Classroom TeachersAssociation requested that in §61.1095, Allowable Expendi-tures, subsection (b)(12), regarding use of allotment fundsfor teacher performance and incentive programs, be deleted.The commenter recommended that substitute language beincluded which narrows the use of allotment funds to "re-cruitment and retention of certi�ed teachers to staff the 4x4curriculum requirement, including stipends to recruit and retaindesignated shortage area teachers, and funds to assist othercerti�ed teachers in adding subject area shortage certi�cation."The commenter offered the following reasons for this recom-mendation: (1) state funds are already allocated for teacherperformance pay; (2) new state requirements that students takefour years of science and four years of math will require morecerti�ed math and science teachers; and (3) performance payhas yet to be evaluated.

Agency Response. The agency appreciates the commenter’sconcern about the current shortage of mathematics and scienceteachers; however, the agency disagrees with the commenter’sconclusion that the proposed rules need to be more narrowly fo-cused. Nothing in the proposed rules precludes allotment fundsfrom being used for recruitment and retention of mathematicsand science teachers as recommended by the commenter.Moreover, by retaining a broader focus, the proposed rulesoffer districts increased �exibility to respond to current as wellas future needs. While shortages in science and mathematicsteachers may be a current problem, shortages in the future maybe in entirely different content areas. Furthermore, more broadlyfocused rules enable districts to apply innovative solutions toproblems which may be unique to local conditions.

Comment. A representative of Region 10 Education ServiceCenter (ESC) inquired about whether a high school that receivedan unacceptable rating could use the funds to pay for a CampusImprovement Team (CIT).

Agency Response. The agency has determined that use of highschool allotment funds for a CIT would not be consistent with thelegislatively-established purposes of the funds. These funds areto be used for programs that directly relate to improving gradua-tion and college readiness rates.

Comment. A member of the State Board of Education, in re-sponse to a constituent’s inquiry, asked how parents could ob-tain high school allotment funds to pay for a study course for theirchild.

Agency Response. The agency notes that the funds were notappropriated by the legislature for direct use by parents to pur-chase individual study courses or programs. Rather the fundsare to be used by districts and campuses to ensure that all stu-dents have access to academically rigorous programs that pro-mote college readiness. Parents and other community membersare encouraged to contact school of�cials to provide input intotheir district’s process for determining the use of its high schoolallotment funds.

Comment. A representative of the education consulting �rmSureScore objected to the inclusion of Advanced Placement(AP) and International Baccalaureate (IB) courses as eligibleprograms for the use of high school allotment funds and rec-ommended that reference to them be deleted. The commenterexpressed concern that low-income as well as middle andlow-performing students may not be served by such coursesand may not be able to pay to take the exams. The commenterrecommended that as an alternative to funding AP/IB courses,

districts and campuses adopt proven approaches that allow forincreased rigor for all ranges of student capability.

Agency Response. The agency disagrees. Research studieshave established a strong relationship between successful par-ticipation in high school AP/IB courses and success in college.This relationship holds true even for students who take an APcourse but do not do well on the AP examination. Regarding thecommenter’s concern about serving low-income and low-per-forming students, the new rules are designed to encourage dis-tricts to extend the bene�ts of the AP/IB programs to a largerpopulation of students, including low-income and middle- andlow-performing students. The new rules encourage the fundingof programs designed to recruit and support students who tradi-tionally have not enrolled in AP/IB courses. In addition, the rulesspeci�cally mention that fees, which include those for AP/IB ex-aminations, are allowable expenditures. Districts may pay theAP examination fees for students unable to afford them, thusenabling low-income students to obtain college credit for AP/IBcourses while in high school just as their more �nancially ableclassmates do. Finally, nothing in rule prevents districts fromfunding other proven approaches that increase academic rigor,as recommended by the commenter.

Comment. A representative of the education consulting �rmSureScore asked for guidance in de�ning the term "underachiev-ing students" used in §61.1093, Use of Funds.

Agency Response. The agency offers the following guidance.Underachieving students are those whose course selections andacademic performance do not correspond to the level of rigorand achievement of which they are capable. The underlyingprinciple of HB 1, which is that all students should graduate fromhigh school prepared to succeed in college or a career, may con-tribute to an understanding of the rule’s focus on underachievingstudents. In response to further review by TEA legal counsel,the agency modi�ed language in §61.1093(1), since publishedas proposed, to clarify that the term "underachieving students"is to be de�ned by local policy.

Comment. A member of the Lockhart ISD board of trustees re-quested clari�cation concerning whether allotment funds may beused for Career and Technology Education (CATE) programs.Speci�cally, the commenter referenced efforts by Lockhart ISDto prepare its CATE students to attend institutions of higher edu-cation and noted that the district is developing articulation agree-ments with Austin Community College and Texas State TechnicalCollege.

Agency Response. The agency offers the following clari�cation.While CATE is not explicitly identi�ed as a program for use of al-lotment funds, programs, such as the one described by LockhartISD, which are directed at encouraging CATE students to partici-pate in dual and concurrent enrollment programs with institutionsof higher education as well as designed to ensure that CATE stu-dents have access to rigorous curriculum, are consistent with thepurposes established for high school allotment funds as set forthin new §61.1093(5) and (12).

Comment. Representatives from Region 16 ESC and a schoolof�cial from San Angelo ISD asked if districts may use the highschool allotment to construct or renovate science labs, in re-sponse to the new legislative requirement that students musttake an additional year of science to graduate from high schoolunder the recommended graduation plan.

Agency Response. The agency offers the following guidance.While the legislative language in the TEC, §39.411, does not


identify construction or renovation as a use for high schoolallotment funds, it does make provision, subject to the com-missioner’s approval, for using the funds for other high schoolcompletion and success initiatives not speci�cally addressedin the legislation. Consequently, the agency advises districtsinterested in using high school allotment funds for constructionor renovation to submit an application to the commissionerfor review and approval in compliance with 19 TAC §61.1097,Additional High School Completion and Success Initiatives Ap-proved by the Commissioner. The agency further recommendsthat such applications specify how the use of funds will addressthe criteria set forth in 19 TAC §61.1097(c). Finally, the agencynotes that the purchase of science laboratory equipment withhigh school allotment funds is an allowable expenditure anddoes not need to be included as a part of an application forconstruction or renovation.

Comment. School of�cials from Nueces and Winnsboro highschools and Clint ISD inquired whether allotment funds may beused to purchase technology, such as graphing calculators andcomputers, and whether such technology may be used for otherpurposes as well.

Agency Response. Technology, including graphing calculatorsand computers, is a permissible use for allotment funds, pro-vided the technology is used in a manner consistent with theintent of the legislation. If such technology is used for other pur-poses as well, then allotment funds may be used to pay only forthe percentage of the technology cost that corresponds to thepercentage of time used for allotment purposes.

Comment. A school of�cial from Bridgeport ISD asked whetherallotment funds may used for tutoring.

Agency Response. Allotment funds may be used for tutoring.

Comment. School of�cials from Bridgeport ISD, FriendswoodISD, and Winnsboro High School asked whether allotment fundsmay be used to fund staff.

Agency Response. Personnel costs, including salaries and ben-e�ts, are an allowable use of allotment funds. If the staff positioninvolves additional responsibilities, other than implementation ofprograms and activities addressing the intent of the legislation,then allotment funds may be used to pay only for that portion ofthe salary that corresponds to the percentage of the staff’s timedesignated for allotment purposes.

Comment. A school of�cial with Tomball High School askedwhether the allotment funds may be used for staff development.

Agency Response. Allotment funds may be used for staff devel-opment provided the training is designed to address the objec-tives of the legislation.

Comment. A school of�cial from Allen ISD asked whether allot-ment funds may be used for Pre-AP courses.

Agency Response. Pre-AP courses provide students access torigorous curriculum and are designed to prepare students forthe even more rigorous challenge of AP and IB coursework andtherefore are consistent with the purposes established for allot-ment funds.

Comment. A school of�cial from Chapel Hill ISD asked whetherallotment funds may used for transportation to enable studentsto attend tutorials.

Agency Response. Transportation is an allowable use for allot-ment funds provided it supports an activity or program that ad-dresses the objectives of the legislation, which tutoring does.

Comment. A school of�cial from Chapel Hill ISD asked whetherallotment funds may be used to pay teacher stipends to teachdual credit.

Agency Response. Stipends are an allowable use for allot-ment funds provided they support an activity or program thataddresses the objectives of the legislation, which dual creditcourses do.

Comment. A school of�cial from Lancaster ISD asked whetherallotment funds may be used for Campus Improvement Plan ac-tivities.

Agency Response. Campus Improvement Plan activities are anallowable use for allotment funds provided they address the ob-jectives of the enabling legislation.

Comment. A school of�cial from Tomball High School askedwhether allotment funds may be used to provide services to Lim-ited English Pro�cient (LEP) students to acquire English skills.

Agency Response. Allotment funds may be used to provide aca-demic support and instruction to increase the number of studentscompleting the Recommended High School Program or Distin-guished Achievement Program. Services to assist LEP studentsacquire English skills would be an appropriate way to achievethis purpose.

Comment. School of�cials from Tomball and Winnsboro highschools and Flatonia ISD asked whether allotment funds may beused to enable at-risk students to participate in alternative pro-grams such as night school, summer school, college vocationalcerti�cation programs, and accelerated credit recovery.

Agency Response. Tuition and fees for programs designed to in-crease the number of students who complete the RecommendedHigh School Program is an appropriate use for allotment funds.

ANNUAL GOAL SETTING AND PERFORMANCE REVIEW

Comment. A representative of Region 16 ESC asked whendistricts should establish annual performance goals and reviewprogress toward their achievement of those goals.

Agency Response. The agency recognizes the time constraintsfacing districts in this �rst year of implementation and appreci-ates that program goals for this year may need to be establishedconcurrently with their implementation. In subsequent years,however, setting goals for the allotment funds ideally would takeplace as a part of the district’s budget setting process for theupcoming school year. The district’s annual review of progresstoward achieving its allotment goals should be scheduled at theend of the funding year after conclusion of allotment-funded pro-grams and activities.

Comment. A school of�cial from Roma High School requestedclari�cation regarding the requirement in subsection (a) of 19TAC §61.1099, School District Annual Performance Review, thata public hearing of the board of trustees be held to establish an-nual performance goals. Speci�cally, the commenter questionedwhether the board was required to hold a special called meetingfor the exclusive purpose of taking public testimony regardingthe allotment’s performance goals or whether the board couldconsider the allotment’s goals as a part of its posted agenda fora regularly scheduled board meeting open for public discussionand comment.


Agency Response. The agency agrees. Section 61.1099(a) wasmodi�ed to re�ect that the allotment’s goals may be consideredas a part of a board of trustees’ regularly scheduled open meet-ing.

Comment. A representative of Region 16 ESC requested clari-�cation regarding the requirement in §61.1099(b) that a districtshould annually review its progress in relation to the fund’s per-formance indicators. Speci�cally, the commenter questionedwhether the review was to be conducted by the board of trusteesor by district employees.

Agency Response. The agency agrees the rule should be clari-�ed. Section 61.1099(b) was modi�ed to re�ect that the annualreview is to be conducted by the board of trustees.

POLICY ADVISORY GROUP

Comment. A representative of the education consulting �rmSureScore recommended that participation on the policy ad-visory group referenced in 19 TAC §61.1098, Policy AdvisoryGroup, be limited to experts and stakeholders "who have nobusiness interests that are directly or indirectly funded throughthe High School Allotment fund."

Agency Response. The agency disagrees. The agency appre-ciates the commenter’s concern but feels that the recommendedlanguage is unnecessary. It is the agency’s intent to ask individ-uals considered for an advisory committee appointment to dis-close potential con�icts of interest.

PROCEDURAL ISSUES

Comment. School of�cials from Stockdale, Los Fresnos, andBrooks ISDs asked which fund code should be used to accountfor expenditure of allocation funds.

Agency Response. Fund code 428 should be used.

Comment. School of�cials from Los Fresnos and New WaverleyISDs asked how districts would be noti�ed of and receive allot-ment funds.

Agency Response. Districts will be noti�ed of their allotmentamount on the Summary of Finances and will receive allotmentfunds on the same schedule as Foundation School Programfunds.

Comment. School of�cials from Sequora ISD asked whether un-expended allotment funds could be carried over for use in thefollowing year.

Agency Response. Allotment funds may be carried over in thesame manner as Foundation School Program funds.

Comment. Representatives from Region 5 and 16 ESCs askedhow the allotment would affect Chapter 41 schools.

Agency Response. The agency noti�ed Chapter 41 schoolsat the beginning of the 2006-2007 school year that they hada choice of either applying the amount of their allotment fundsagainst the amount they owed as a Chapter 41 school or receiv-ing the allotment and reimbursing the full amount of their Chapter41 obligation.

Comment. An individual asked for how many years will districtsreceive allotment funds.

Agency Response. Legislative appropriations cover a two-yearperiod. Each legislature has the opportunity to extend the allot-ment funds for an additional biennium.

The new sections are adopted under the Texas EducationCode (TEC), §39.113(b), which authorizes the commissioner toadopt rules for the administration of programs for recognitionof high school completion and success and college readiness,§39.114(d), which authorizes the commissioner to adopt rulesto administer provisions relating to high school allotment funds,and §42.2516(k), which authorizes the commissioner to adoptrules necessary to administer provisions relating to additionalstate aid for tax reduction.

The new sections implement the Texas Education Code,§§39.113, 39.114, and 42.2516.


The following words and terms, when used in this subchapter, shallhave the following meanings, unless the context clearly indicates oth-erwise.

(1) Academically rigorous course work--Academicallyrigorous course work is an academically intense and high-qualityprogram of study that provides students with the information and skillsnecessary to successfully enroll in entry-level courses at an institutionof higher education without the need for developmental course work.Academically rigorous coursework includes four years of high schoollevel mathematics and four years of high school level science.

(2) Advanced academic opportunity--An advanced aca-demic opportunity includes the following:

(A) advanced courses, such as College Board advancedplacement and International Baccalaureate courses, and others asde�ned in §74.30 of this title (relating to Identi�cation of AdvancedCourses), with the exception of the Social Studies Advanced Studies;

(B) dual enrollment courses for which students receiveboth high school and college credit, as limited by §74.25 of this title(relating to High School Credit for College Courses);

(C) an original research/project as de�ned by §74.54of this title (relating to Distinguished Achievement High School Pro-gram--Advanced High School Program) or by §74.64 of this title (re-lating to Distinguished Achievement High School Program--AdvancedHigh School Program); and

(D) advanced technical credit courses.

(3) College readiness program--A college readiness pro-gram is any program, activity, or strategy designed to do either of thefollowing:

(A) increase the number of students who are academi-cally prepared to enroll in entry-level courses at institutions of highereducation without the need for developmental course work; or

(B) increase the number of students who enroll in insti-tutions of higher education.

(4) Developmental course work--As de�ned in §4.53 ofthis title (relating to De�nitions), developmental course work refersto non-degree-credit course work designed to address a student’sde�ciencies.

(5) High school allotment--The high school allotmentrefers to funds allocated under the Texas Education Code (TEC),§42.2516(b)(3).

(6) High school completion and success initiative--A highschool completion and success initiative is any program, activity, orstrategy designed to do the following:

(A) improve student achievement in high school; and


(B) increase the number of students who graduate fromhigh school.

(7) Institution of higher education--An institution of highereducation is any public technical institute, public junior college, publicsenior college or university, medical or dental unit, or other agency ofhigher education as de�ned in the TEC, §61.003.

(8) School district--For the purposes of this subchapter, anopen-enrollment charter school is considered a school district.

§61.1093. Use of Funds.In accordance with the Texas Education Code, §39.114(a), high schoolallotment funds may be spent on the following, which, unless otherwisenoted, shall be targeted toward Grades 6-12:

(1) programs that provide underachieving students, as de-�ned by local policy, with the following:

(A) instruction in study skills for success in collegelevel work;

(B) academic and community support for success incollege preparatory classes;

(C) support to participate in academic competitions;and

(D) information about and access to college and �nan-cial aid;

(2) activities designed to increase the number of studentswho take preparatory college entrance examinations and college en-trance examinations;

(3) programs that increase the number of students who en-roll and succeed in College Board advanced placement courses and In-ternational Baccalaureate courses;

(4) programs that increase the number of students who takeCollege Board advanced placement examinations and InternationalBaccalaureate examinations;

(5) programs that expand participation in dual enrollmentor concurrent enrollment courses;

(6) activities designed to increase access for underachiev-ing students to college and �nancial aid;

(7) activities designed to create a college-going culturewithin a district or on a campus;

(8) early college high school programs that provide at-riskstudents and other students with the opportunity to graduate from highschool with an associate’s degree or 60 hours of credit toward a bac-calaureate degree;

(9) programs that provide academic support and instructionto increase the number of students who complete the RecommendedHigh School Program or the Distinguished Achievement Program asde�ned in Chapter 74, Subchapter E, of this title (relating to GraduationRequirements, Beginning with School Year 2004-2005), or Chapter74, Subchapter F, of this title (relating to Graduation Requirements,Beginning with School Year 2007-2008);

(10) strategies that create small learning communities, ad-vocacy programs, or advisory programs for students;

(11) programs or activities that create individualized highschool graduation and postsecondary plans for students;

(12) programs that ensure that students have access to rig-orous curriculum, effective instruction, and timely formative assess-ment;

(13) programs that create opportunities for middle and highschool educators and college and university faculty to jointly identifycollege and secondary curricular requirements and expectations anddevelop means to align these requirements and expectations;

(14) summer transition programs and other programs thatprovide academic support and instruction for students entering Grade9; and

(15) other high school completion and success initiativesas approved by the commissioner of education.

§61.1099. School District Annual Performance Review.

(a) At an open meeting of the board of trustees, each schooldistrict shall establish annual performance goals for programs, activi-ties, and strategies implemented with high school allotment funds re-lated to the following performance indicators:

(1) percentage of students graduating from high school;

(2) enrollment in advanced courses, including CollegeBoard advanced placement courses, International Baccalaureatecourses, and dual or college credit courses;

(3) percentage of students successfully graduating on theRecommended High School Program or Distinguished AchievementProgram described in Chapter 74, Subchapter E, of this title (relatingto Graduation Requirements, Beginning with School Year 2004-2005),or Chapter 74, Subchapter F, of this title (relating to Graduation Re-quirements, Beginning with School Year 2007-2008);

(4) percentage of students who achieve the higher educa-tion readiness component qualifying scores on the English languagearts section of the exit-level Texas Assessment of Knowledge and Skills(TAKS); and

(5) percentage of students who achieve the higher educa-tion readiness component qualifying scores on the mathematics sectionof the exit-level TAKS.

(b) Annually, the board of trustees of each school district shallreview its progress in relation to the performance indicators speci�edin subsection (a) of this section. Progress should be assessed based oninformation that is disaggregated with respect to race, ethnicity, gender,and socioeconomic status.

(c) Each school district shall ensure that decisions about thecontinuation or establishment of programs, activities, and strategiesimplemented with high school allotment funds are based on:

(1) state assessment results and other student performancedata;

(2) standards for success and cost-effectiveness as estab-lished by the commissioner of education in accordance with the TexasEducation Code (TEC), §39.113(a)(1); and

(3) guidance for improving high school completion andsuccess and college readiness programs as established by the commis-sioner in accordance with TEC, §39.113(a)(2).



2006.

TRD-200605747


Cristina De La Fuente-ValadezDirector, Policy CoordinationTexas Education AgencyEffective date: November 9, 2006Proposal publication date: August 18, 2006For further information, please call: (512) 475-1497

CHAPTER 100. CHARTERSSUBCHAPTER AA. COMMISSIONER’SRULES CONCERNING OPEN-ENROLLMENTCHARTER SCHOOLSDIVISION 6. CHARTER SCHOOLOPERATIONS19 TAC §100.1207

The Texas Education Agency (TEA) adopts an amendment to§100.1207, concerning open-enrollment charter schools. Theamendment is adopted without changes to the proposed text aspublished in the July 14, 2006, issue of the Texas Register (31TexReg 5520) and will not be republished.

The section addresses student admission procedures. Theadopted amendment sets forth provisions concerning studentadmission and enrollment for charter schools specializing inperforming arts.

The Texas Education Code (TEC), Chapter 12, Subchapter D,authorizes the commissioner of education to adopt rules and pro-cedures relating to the implementation of open-enrollment char-ter schools. Previously, the TEC, §12.111(a)(6), required thatcharter schools "prohibit discrimination in admission policy onthe basis of sex, national origin, ethnicity, religion, disability, aca-demic, artistic, or athletic ability, or the district the child wouldotherwise attend...." HB 1111, 79th Texas Legislature, amendedthe TEC, §12.111(a)(6), to permit charter schools specializingin performing arts to have admissions policies that require stu-dents to demonstrate artistic ability. The bill also added newTEC, §12.1171, to permit these schools to require applicants toaudition for admission. Accordingly, current commissioner rule(19 TAC §100.1207) must be amended to permit charter schoolsspecializing in performing arts to admit students based on artis-tic ability.

The adopted amendment to 19 TAC §100.1207 modi�es sub-section (d) to allow for this admission and enrollment exceptionfor these specialized charter schools. The adopted amendmentalso adds a new subsection (e) that sets forth the provisions con-cerning student admission and enrollment for charter schoolsspecializing in performing arts. New subsection (e) provides ade�nition of a "charter school specializing in performing arts" anddescribes allowable components, in addition to the required aca-demic curriculum, that could be included in an educational pro-gram that has an emphasis in one or more of the performing arts.New subsection (e) also addresses requiring students to demon-strate interest or ability in the performing arts or to audition foradmission. Other existing non-discrimination provisions and el-igibility criteria relating to admission and enrollment continue toapply.

No comments were received regarding adoption of the amend-ment.

The amendment is adopted under the Texas Education Code,Chapter 12, Charters, Subchapter D, Open-Enrollment CharterSchool, which authorizes the commissioner of education toadopt rules and procedures related to the implementation ofopen-enrollment charter schools.

The amendment implements the Texas Education Code, §12.111and §12.1171, as amended and added by HB 1111, 79th TexasLegislature, 2005.



2006.

TRD-200605748Cristina De La Fuente-ValadezDirector, Policy CoordinationTexas Education AgencyEffective date: November 9, 2006Proposal publication date: July 14, 2006For further information, please call: (512) 475-1497

CHAPTER 102. EDUCATIONAL PROGRAMSSUBCHAPTER CC. COMMISSIONER’SRULES CONCERNING COORDINATEDHEALTH PROGRAMS19 TAC §102.1031

The Texas Education Agency (TEA) adopts an amendment to§102.1031, concerning coordinated health programs for ele-mentary school students. The amendment is adopted withoutchanges to the proposed text as published in the April 21, 2006,issue of the Texas Register (31 TexReg 3343) and will not berepublished.

The section establishes the criteria for evaluating schoolhealth programs and addresses health programs developedby schools, submission of programs for evaluation, and avail-ability of programs. The adopted amendment implements therequirements of the Texas Education Code (TEC), Chapter 38,Health and Safety, Subchapter A, General Provisions, §38.013,Coordinated Health Program for Elementary, Middle, and JuniorHigh School Students, as amended by Senate Bill (SB) 42,79th Texas Legislature, 2005. TEC, §38.013, requires thecommissioner of education by rule to extend coordinated schoolhealth requirements to include middle and junior high schools.

SB 19, 77th Texas Legislature, 2001, added the TEC, §38.013,requiring school districts to implement school health programs.SB 1357, 78th Texas Legislature, 2003, amended the TEC,§38.013, to require the commissioner of education to include,in rule, the criteria for evaluating school health programs. Inaccordance with the TEC, §38.013, the commissioner exercisedrulemaking authority to adopt 19 TAC §102.1031, CoordinatedHealth Programs for Elementary School Students, which be-came effective May 2, 2004. As speci�ed in SB 1357, the criteriawas developed in consultation with the Texas Department ofState Health Services School Health Advisory Committee. Cur-rently, 19 TAC §102.1031 requires that the TEA make availableto each school one or more coordinated health programs; es-


tablishes the criteria for evaluating school health programs; andaddresses health programs developed by schools, submissionof programs for evaluation, and availability of programs.

SB 42, 79th Texas Legislature, 2005, amended the TEC,§38.013, by requiring the commissioner of education by ruleto extend coordinated school health requirements to includemiddle and junior high schools. The legislation also requiresthe commissioner by rule to adopt criteria for evaluating thenutritional services component of a program under this sectionthat includes an evaluation of program compliance with the De-partment of Agriculture guidelines relating to foods of minimalnutritional value. The TEA currently has a process in place forreviewing programs for inclusion on the Approved CoordinatedSchool Health Programs list based on 19 TAC §102.1031. Thisprocess will be modi�ed to include review of programs for middleand junior high schools in addition to elementary schools.

Speci�cally, the adopted amendment to 19 TAC §102.1031changes the title to "Coordinated Health Programs for Ele-mentary, Middle, and Junior High School Students" and addslanguage to subsections (a) and (b) to extend the requirementsto middle and junior high school. Language is also added insubsection (a) to clarify that development of school district pro-grams is allowed. The requirement for peer reviewed empiricalevidence of effectiveness in subsection (b)(5) is moved to newsubsection (d). New subsection (b)(9) is added to addressevaluation of the nutritional services component of programs.Clari�cation about materials that must be used for health pro-grams developed by school districts is added to subsection (c).New subsection (d) is added to address health programs notdeveloped by school districts. Changes in relettered subsection(e) reduce the frequency of program submissions and extendthe length of time programs will be approved.

In accordance with statute, the amendment was sent to mem-bers of the Texas Department of State Health Services SchoolHealth Advisory Committee for review and comment prior toadoption.

Following is a summary of public comments received andcorresponding agency responses regarding the proposedamendment to 19 TAC Chapter 102, Educational Programs,Subchapter CC, Commissioner’s Rules Concerning Coordi-nated Health Programs, §102.1031, Criteria for EvaluatingCoordinated Health Programs for Elementary School Students.

Comment. Concerning subsection (b)(2), a comment was re-ceived from the Texas Association of Health, Physical Education,Recreation, and Dance that expressed concern over the deletionof the word "implemented" from the rule.

Agency response. The agency disagrees with the comment andhas maintained language as �led as proposed. The rule is in-tended to outline criteria for evaluating coordinated health pro-grams only. Implementation of coordinated school health pro-grams is addressed in statute.

Comment. Concerning subsection (b)(5), a comment was re-ceived from the Texas Association of Health, Physical Education,Recreation, and Dance that expressed concern over the deletionof the criterion that requires peer reviewed empirical evidence ofeffectiveness.

Agency response. The agency disagrees with the comment andhas maintained language as �led as proposed. This languagewas not deleted from the rule, but rather moved to subsection(d).

Comment. Concerning subsection (d), comments were receivedfrom the Texas Association of Health, Physical Education,Recreation, and Dance; the American Cancer Society; and theCoordinated Approach to Child Health program provider thatexpressed concern that the requirement for peer-reviewed em-pirical evidence does not apply to district developed programs.Comments further expressed concern that amendments wouldallow ineffective programs to be approved for use within schooldistricts.

Agency response. The agency disagrees with the comment andhas maintained language as �led as proposed. Due to the dif�-culty school districts would have acquiring peer-reviewed empir-ical evidence; school districts are required, by rule, to use mate-rials as part of their programs that are proven effective.

Comment. Comments were received from the Department ofState Health Services and an individual that expressed supportfor the amendment to the rule.

Agency response. The agency agrees with the comments andhas maintained language as �led as proposed.

Comment. A comment was received from an individual that ex-pressed the hope that the Coordinated School Health Programreview committee will judiciously review programs submitted forapproval.

Agency response. The agency agrees with the comment andhas maintained language as �led as proposed.

The amendment is adopted under the Texas Education Code,§38.013, which authorizes the commissioner to by rule adopt cri-teria for evaluating a coordinated health program. As amendedby Senate Bill 42, 79th Texas Legislature, 2005, Texas Educa-tion Code, §38.013, requires the commissioner of education byrule to extend coordinated school health requirements to includemiddle and junior high schools. The legislation also requires thecommissioner by rule to adopt criteria for evaluating the nutri-tional services component of a program under this section thatincludes an evaluation of program compliance with the Depart-ment of Agriculture guidelines relating to foods of minimal nutri-tional value.

The amendment implements the Texas Education Code,§38.013.



2006.

TRD-200605749Cristina De La Fuente-ValadezDirector, Policy CoordinationTexas Education AgencyEffective date: November 9, 2006Proposal publication date: April 21, 2006For further information, please call: (512) 475-1497




CHAPTER 573. RULES OF PROFESSIONALCONDUCTSUBCHAPTER G. OTHER PROVISIONS22 TAC §573.71

The Texas Board of Veterinary Medical Examiners adoptsamendments to §573.71, concerning Employment by Nonpro�tor Municipal Corporations, without changes to the proposed textas published in the July 14, 2006, issue of the Texas Register(31 TexReg 5537).

This amendment clari�es existing law concerning the ability ofnonpro�t or municipal corporations to employ a veterinarian toperform veterinary services. Although the Veterinary LicensingAct states that a corporation may not engage in the practice ofveterinary medicine unless each shareholder of the corporationholds a license to practice, the Attorney General has held thatnonpro�t and municipal corporations may employ veterinariansto provide veterinary services. This interpretation bene�ts thepublic by allowing municipalities to hire veterinarians to assist intheir animal control and adoption programs.

One veterinarian stated that he was opposed to adoption of theamended section, but did not state the reasons for his opposition.No other comments were received.

The amendments are adopted under the authority of§801.151(a) of the Occupations Code which gives the Boardauthority to adopt rules necessary to administer the VeterinaryLicensing Act.



2006.

TRD-200605631Julie A. BarkerExecutive AssistantTexas Board of Veterinary Medical ExaminersEffective date: November 6, 2006Proposal publication date: July 14, 2006For further information, please call: (512) 305-7555

CHAPTER 577. GENERAL ADMINISTRATIVEDUTIESSUBCHAPTER B. STAFF AND MISCELLA-NEOUS22 TAC §577.15

The Texas Board of Veterinary Medical Examiners adoptsamendments to §577.15, concerning Fee Schedule, withoutchanges to the proposed text as published in the July 14, 2006,issue of the Texas Register (31 TexReg 5538).

The amended rule increases by $5.00 the Board’s annual feesfor current license renewals, inactive license renewals, and spe-cial licenses. Proportional increases are re�ected in delinquentrenewal fees. Adoption of the new fees will assure that the Boardcan cover the costs of its appropriations for FY 2007.

Three persons wrote in opposition to any fee increases. Two ofthem stated that license fees are already higher than in manystates. The Board notes that in 1991 the Legislature added a$200 professional fee to the licensing fee set by the Board. Theprofessional fee now accounts for the largest percentage of thetotal fee ($328). This professional fee does not directly bene�tthe Board’s programs, but instead goes directly to the state’sgeneral revenue fund. Without the professional fee, the regularrenewal fee would be comparable to most states. The Boardalso notes that an increase is needed to meet the revenues andcosts projected in the 2007 budget.

One person wrote in support of the amended rule.

The amendments are adopted under the authority of the Occupa-tions Code, §801.154(a) which permits the Board to adopt rulessetting reasonable license fees to cover the costs of administer-ing the Veterinary Licensing Act.



2006.

TRD-200605629Julie A. BarkerExecutive AssistantTexas Board of Veterinary Medical ExaminersEffective date: November 6, 2006Proposal publication date: July 14, 2006For further information, please call: (512) 305-7555

PART 29. TEXAS BOARD OFPROFESSIONAL LAND SURVEYING

CHAPTER 661. GENERAL RULES OFPROCEDURES AND PRACTICESSUBCHAPTER E. CONTESTED CASES22 TAC §661.99

The Texas Board of Professional Land Surveying (TBPLS)adopts an amendment to §661.99, concerning the Sanctionsand Penalty Matrix. The amendment is adopted withoutchanges to the proposed text as published in the September 8,2006, issue of the Texas Register (31 TexReg 7225) and willnot be republished.

The additions to the Sanctions and Penalty Matrix will clarifysanctions for §661.52 regarding Inactive Status, §661.55 regard-ing Certi�cate of Firm Name and §663.18 regarding what a sur-veyor can certify to. Section 661.45(g) was removed from theMatrix because there is not a rule regarding deception and/orcheating on an examination.

No comments were received regarding adoption of the amend-ment.

The amendment is adopted pursuant to §1071.151, Title 6, Oc-cupations Code, Subtitle C, which authorizes the Board to adoptand enforce reasonable and necessary rules to perform its du-ties and to comply with Sunset Commission requirements.





2006.

TRD-200605763Sandy SmithExecutive DirectorTexas Board of Professional Land SurveyingEffective date: November 12, 2006Proposal publication date: September 8, 2006For further information, please call: (512) 239-5263

TITLE 30. ENVIRONMENTAL QUALITY

PART 1. TEXAS COMMISSION ONENVIRONMENTAL QUALITY

CHAPTER 334. UNDERGROUND ANDABOVEGROUND STORAGE TANKSThe Texas Commission on Environmental Quality (agency,commission, or TCEQ) adopts amendments to §§334.2, 334.5,334.8, 334.71, 334.84, 334.301 - 334.303, 334.306, 334.310,and 334.313 without changes to the proposed text as publishedin the June 2, 2006, issue of the Texas Register (31 TexReg4562) and will not be republished.

BACKGROUND AND SUMMARY OF THE FACTUAL BASISFOR THE ADOPTED RULES

The purpose of the adopted amendments in this rulemaking isto incorporate into agency rules, changes to statute which wereeffective September 1, 2005, based on language in Senate Bill485, House Bill 1987, and Senate Bill 1863 (Article 5) from the79th Legislature, 2005, and to incorporate a change suggestedby stakeholders during and following a meeting of the PetroleumStorage Tank (PST) Rules Advisory Group held November 29,2005.

SECTION BY SECTION DISCUSSION

Throughout this rulemaking, administrative changes have beenmade as necessary in accordance with Texas Register require-ments.

Subchapter A - General Provisions

The following amendments are adopted to comply with statu-tory changes. Adopted §334.2 amends paragraph (41), thede�nition of "Free-product" by specifying that the term hasthe same meaning with or without a hyphen, and amendsparagraph (92), the de�nition of "Release" by adding languagede�ning the term "subsurface soils" as used in that de�nitionto re�ect the inclusion of the term "subsurface soil" in statutoryde�nitions. Adopted §334.5(b)(1)(A), (B), and (C), (2)(A), and(3) are amended by adding and/or deleting language as neces-sary to re�ect the statutory removal of common carrier liabilitywith respect to deliveries into underground storage tanks and

to specify clearly that liability regarding such deliveries restsentirely with underground storage tanks (USTs) system ownersand operators. Adopted §334.8(c)(2) is amended to add theinsertion of a descriptive opening sentence to provide textualconsistency. Adopted §334.8(c)(5)(A)(i) is amended to addlanguage applicable to delivery prohibitions to re�ect statutorylanguage which allows a UST owner/operator to provide veri�-cation to a common carrier of compliance with UST certi�cationrequirements by obtaining or by directing the common carrier toview a copy of the delivery certi�cate for a site from the agency’sWeb site.

Subchapter D - Release Reporting and Corrective Action

The following amendments are adopted to comply with statu-tory changes. Adopted §334.71(a) is amended by adding thephrase "unless otherwise provided in §350.2(g) of this title (re-lating to Applicability)" at the end of the subsection to providereference to that section for possible exceptions to §334.71(a).Adopted §334.71(b)(6) is amended to change the language andextend the deadline applicable to the submission of site closurerequests for eligible sites that require either a corrective actionplan or groundwater monitoring to re�ect statutory amendments.Adopted §334.84(a)(4) is added to provide language in accor-dance with statute allowing owners or operators who are eligiblefor an extension for corrective action reimbursement to apply tothe agency to have their sites placed in the Petroleum StorageTank State Lead Program administered by the commission andthe word "or" is moved from the end of paragraph (3) to the endof the new paragraph (4). The subsequent paragraph is renum-bered accordingly.

The following amendment is adopted to comply with stakeholderrequests. An adopted new §334.84(c) is added to place a prac-ticable time limit on the agency with regard to response to aproper written application to have an eligible corrective actionsite placed in the Petroleum Storage Tank State Lead Program.

Subchapter H - Reimbursement Program

The following amendments are adopted to comply with statutorychanges, or to correct minor errors and provide clarity. Adopted§334.301(c) is amended by adding language in accordancewith statute which extends the deadline for the performance ofcorrective action from September 1, 2005, to "before August 31,2007," for eligible owners/operators who have been granted anextension for corrective action reimbursement by the agency;by amending in accordance with statute the deadline for �ling aclaim for reimbursement from March 1, 2006, to March 1, 2008;and by amending in accordance with statute the �nal deadlinefor payment of reimbursements from September 1, 2006, toSeptember 1, 2008. Adopted §334.301(f) and (h) are eachamended to add the insertion of a descriptive opening sen-tence to provide textual consistency. Adopted §334.301(h)(2)is amended by adding language which allows the executivedirector to postpone considering, processing, or paying claimsfor reimbursement for corrective action work which was begunwithout prior commission approval and deletes language whichprevents such claims from being considered, processed, orpaid until all agency pre-approved claims for reimbursementhave been completed. Adopted §334.302(c)(5) is amended byadding language in accordance with statute which provides anextension of the �nal deadline for the performance of correctiveaction from September 1, 2005, to "before August 31, 2007,"with regard to the reimbursement of related corrective actionexpenses to an eligible owner or operator from the PetroleumStorage Tank Remediation Account. Adopted §334.302(c)(6)


is amended by changing in accordance with statute the dead-line for �ling a claim for corrective action reimbursement withthe agency from March 1, 2006, to March 1, 2008. Adopted§334.302(c)(7) is amended by changing the �nal deadline forpayment of any expenses related to corrective action reimburse-ments from September 1, 2006, to September 1, 2008. Adopted§334.303(a) is amended by changing the deadline for �ling anapplication (claim) for reimbursement from March 1, 2006, toMarch 1, 2008. Adopted §334.306(b)(7) is amended to changethe word "though" to the word "through" to correct an error.Adopted §334.306(f)(5) is amended by changing the phrase"within 120 days of the effective date of this subchapter" to theactual beginning and ending dates of that period to preventconfusion when current adopted amendments become effec-tive. Adopted §334.310(f) is amended by adding a reference tolanguage in §334.301(h)(2) and §334.313(d) as an additional ex-ception. Adopted §334.313(d) is amended by adding languagewhich allows the executive director to postpone considering,processing, or paying claims for reimbursement for correctiveaction work which was begun without prior commission approvaland deletes language which prevents such claims from beingconsidered, processed, or paid until all agency pre-approvedclaims for reimbursement have been completed.

FINAL REGULATORY IMPACT ANALYSIS DETERMINATION

The commission reviewed the rulemaking in light of the regula-tory impact analysis requirements of Texas Government Code,§2001.0225, and determined that the rulemaking is not subjectto §2001.0225 because it does not meet the de�nition of a "majorenvironmental rule" as de�ned in that statute. The rule changesadopted in this package are either minor de�nitional or proce-dural changes, or they are changes which bene�t the regulatedcommunity in the form of such things as extended reimburse-ment deadlines, expanded opportunity for the transfer of sites tothe state lead program, and removal of liability for common carri-ers regarding delivery certi�cates. The changes do not increaseburdens on regulated entities in particular or the economy in gen-eral.

A major environmental rule means a rule the speci�c intent ofwhich is to protect the environment or reduce risks to humanhealth from environmental exposure and that may adversely af-fect in a material way the economy, a sector of the economy, pro-ductivity, competition, jobs, the environment, or the public healthand safety of the state or a sector of the state. Even if the intent ofthese adopted rules is to protect the environment or reduce risksto human health from environmental exposure, the adopted ruleswill not adversely affect in a material way the previously-men-tioned areas (the economy, productivity, competition, jobs, theenvironment, or public health and safety). Further, it does notmeet any of the four requirements listed in §2001.0225(a). Thatsection states: "(a) This section applies only to a major envi-ronmental rule adopted by a state agency, the result of whichis to: (1) exceed a standard set by federal law, unless the ruleis speci�cally required by state law; (2) exceed an express re-quirement of state law, unless the rule is speci�cally required byfederal law; (3) exceed a requirement of a delegation agreementor contract between the state and an agency or representativeof the federal government to implement a state and federal pro-gram; or (4) adopt a rule solely under the general powers of theagency instead of under a speci�c state law." The rulemakingdoes not meet any of the requirements as previously described,and thus it is not subject to the regulatory analysis provision of§2001.0225.

TAKINGS IMPACT ASSESSMENT

The commission evaluated this rulemaking action and performedan analysis of whether the rules are subject to Texas Govern-ment Code, Chapter 2007. The rulemaking incorporates statu-tory changes which will not create a burden on private real prop-erty. The statutory changes being incorporated basically ex-tend the deadlines related to reimbursements from the Petro-leum Storage Tank Remediation (PSTR) Account. This shouldresult in the cleanup of more contaminated property in Texas. Asa whole, this rulemaking will not be the cause of a reduction inmarket value of private real property, does not create a burdenon private real property, and will not constitute a taking underTexas Government Code, Chapter 2007.

Promulgation and enforcement of the adopted rules is neithera statutory nor a constitutional taking of private real propertyby the commission. Speci�cally, the adopted rules do not af-fect a landowner’s rights in private real property because thisrulemaking does not burden (constitutionally) nor restrict or limitthe owner’s rights to property and reduce its value by 25% ormore beyond that which would otherwise exist in the absence ofthe adopted rules. The adopted rules implement statutes con-cerning the remediation of leaking petroleum storage tank sites.There are no burdens imposed on private real property fromthese adopted rules and the bene�ts to society are the adoptedrules’ speci�c procedures and requirements that should result inadditional cleanup of contaminated property.

CONSISTENCY WITH THE COASTAL MANAGEMENT PRO-GRAM

The commission reviewed the adopted rulemaking and found itto be a rulemaking identi�ed in the Coastal Coordination Act Im-plementation Rules (31 TAC §505.11(b)(2)) subject to the TexasCoastal Management Program (CMP) and will, therefore, requirethat goals and policies of the CMP be considered during the rule-making process.

CMP Goals: 31 TAC §501.12 states in part that "the goals ofthe Texas Coastal Management Program (CMP) are: (1) to pro-tect, preserve, restore, and enhance the diversity, quality, quan-tity, functions, and values of coastal natural resource areas (CN-RAs); (2) to ensure sound management of all coastal resourcesby allowing for compatible economic development and multiplehuman uses of the coastal zone; (3) to minimize loss of hu-man life and property due to the impairment and loss of protec-tive features of CNRAs"; and "(5) to balance the bene�ts fromeconomic development and multiple human uses of the coastalzone, the bene�ts from protecting, preserving, restoring, and en-hancing CNRAs, the bene�ts from minimizing loss of human lifeand property, and the bene�ts from public access to and enjoy-ment of the coastal zone."

The previously stated goals will not be adversely affected bythe rule changes described in this preamble for the reason thatalthough changes in rule language are adopted to incorporatestatutory changes and a change requested by stakeholders,none of these changes will ease or lessen regulatory require-ments for regulated underground or aboveground storagetanks. In fact, statutory changes which provide for extension ofthe sunset date of the PSTR Account and provide enhancedopportunity for owners/operators of eligible leaking petroleumstorage tank (LPST) sites to transfer them into the agency’sstate lead program will result in the proper cleanup of a greaternumber of contaminated LPST sites.


CMP Policies: 31 TAC §501.13, "Administrative Policies," statesin relevant part: "(a) Agency and subdivision rules and ordi-nances subject to §501.10 of this title (relating to Compliancewith Goals and Policies) shall: (1) require applicants to provideinformation necessary for an agency or subdivision to make aninformed decision on a proposed action listed in §505.11 of thistitle (relating to Actions and Rules Subject to the Coastal Man-agement Program) or §505.60 of this title (relating to Local Gov-ernment Actions Subject to the Coastal Management Program);(2) identify the monitoring established to ensure that activitiesauthorized by actions listed in §505.11 of this title (relating to Ac-tions and Rules Subject to the Coastal Management Program) or§505.60 of this title (relating to Local Government Actions Sub-ject to the Coastal Management Program) comply with all appli-cable requirements; (3) identify circumstances in which agenciesand subdivisions have the authority to issue variances from stan-dards or requirements for the protection of CNRAs, including thegrounds for granting variances."

The previously stated policies will not be adversely affected bythe rule changes described in this preamble for the reason thatthere are no substantive changes relating to provision of infor-mation, monitoring of compliance, or variances.

The commission sought written public comment on the consis-tency of the adopted rulemaking with the proposed CMP. No writ-ten comments were received.

PUBLIC COMMENT

The public comment period for this rulemaking closed at 5:00p.m., July 3, 2006. No comments were received by the commis-sion.

SUBCHAPTER A. GENERAL PROVISIONS30 TAC §§334.2, 334.5, 334.8

STATUTORY AUTHORITY

The amendments are adopted under Texas Water Code (TWC),§5.012, which provides that the commission is the agencyresponsible for implementing the constitution and laws of thestate relating to the conservation of natural resources and pro-tection of the environment; TWC, §5.103, which establishes thecommission’s general authority to adopt rules; TWC, §26.345,which authorizes the commission to develop a regulatory pro-gram and to adopt rules regarding underground storage tanks(USTs); §26.351, which directs the commission to adopt rulesestablishing the requirements for taking corrective action inresponse to a release from a UST or aboveground storagetank (AST); and §26.3573, which allows the commission to usefunds from the Petroleum Storage Tank Remediation (PSTR)Account to reimburse an eligible owner or operator or insurerfor the expenses of corrective action or to pay the claim of acontractor hired by an eligible owner or operator to performcorrective action. The amended sections are also adoptedunder the general authority of Texas Water Code, §5.103, whichauthorizes the commission to adopt any rules necessary tocarry out its powers and duties under this code and other lawsof this state; §5.105, which directs the commission to establishand approve all general policy of the commission by rule; and§26.011, which allows the commission to control the quality ofwater by rule.

The adopted rule package implements changes in laws of thisstate made during the 79th Legislature, 2005, with the passage

of Senate Bill 485, House Bill 1987, and Senate Bill 1863 (Article5).



2006.

TRD-200605695Mary RisnerDirector, Litigation DivisionTexas Commission on Environmental QualityEffective date: November 9, 2006Proposal publication date: June 2, 2006For further information, please call: (512) 239-0177

SUBCHAPTER D. RELEASE REPORTINGAND CORRECTIVE ACTION30 TAC §334.71, 334.84

STATUTORY AUTHORITY


The adopted rule package implements changes in laws of thisstate made during the 79th Legislature, 2005, with the passageof Senate Bill 485, House Bill 1987, and Senate Bill 1863 (Article5).



2006.

TRD-200605696


Mary RisnerDirector, Litigation DivisionTexas Commission on Environmental QualityEffective date: November 9, 2006Proposal publication date: June 2, 2006For further information, please call: (512) 239-0177

SUBCHAPTER H. REIMBURSEMENTPROGRAM30 TAC §§334.301 - 334.303, 334.306, 334.310, 334.313

STATUTORY AUTHORITY


The adopted rule package implements changes in laws of thisstate made during the 79th Legislature, 2005, with the passageof Senate Bill 485, House Bill 1987, and Senate Bill 1863 (Article5).



2006.

TRD-200605697Mary RisnerDirector, Litigation DivisionTexas Commission on Environmental QualityEffective date: November 9, 2006Proposal publication date: June 2, 2006For further information, please call: (512) 239-0177

TITLE 40. SOCIAL SERVICES AND ASSIS-TANCE

PART 19. DEPARTMENT OF FAMILYAND PROTECTIVE SERVICES

CHAPTER 702. GENERAL ADMINISTRATIONSUBCHAPTER G. TRAINING ANDEDUCATION40 TAC §§702.601, 702.605, 702.617, 702.618, 702.621

The Health and Human Services Commission adopts, on behalfof the Department of Family and Protective Services (DFPS),amendments to §§702.601, 702.605, 702.617, and 702.621; andnew §702.618, without changes to the proposed text in the Au-gust 4, 2006, issue of the Texas Register (31 TexReg 6193).Senate Bill 6, 79th Legislature, Regular Session, 2005, added§40.0322, Quali�cations for Adult Protective Services Person-nel; Recruitment, to the Human Resources Code (HRC). Thesection requires DFPS to develop and implement an incentiveprogram to encourage DFPS employees who provide adult pro-tective services to obtain professional credentials if they do notalready possess such. Section 702.605 adds the phrase "sub-ject to the availability of funds." New §702.618 provides for anincentive program for employees who provide adult protectiveservices to obtain professional credentials related to adult pro-tective services. In §702.621, DFPS is deleting subsection (c),which references the PRS Board. Also, subsection (d) is revisedto delete the reference to subsection (c). In the other sections,the agency’s name is updated to DFPS.

The amendments and new section will function by ensuring thatadult protective services staff will be better trained as a resultof obtaining professional credentials, increasing the quality ofservices provided to vulnerable adults.

No comments were received regarding adoption of the amendedand new sections.

The amendments and new section are adopted under HumanResources Code (HRC) §40.0505 and Government Code§531.0055, which provide that the Health and Human ServicesExecutive Commissioner shall adopt rules for the operationand provision of services by the health and human servicesagencies, including the Department of Family and ProtectiveServices; and HRC §40.021, which provides that the Family andProtective Services Council shall study and make recommen-dations to the Executive Commissioner and the Commissionerregarding rules governing the delivery of services to personswho are served or regulated by the department.

The amendments and new section implement §40.0322 of theHuman Resources Code (HRC), as added by §2.02 of SenateBill 6, 79th Legislature, Regular Session, 2005.



2006.

TRD-200605613


Gerry WilliamsGeneral CounselDepartment of Family and Protective ServicesEffective date: December 1, 2006Proposal publication date: August 4, 2006For further information, please call: (512) 438-3437

CHAPTER 704. PREVENTION AND EARLYINTERVENTION SERVICESThe Health and Human Services Commission adopts, on behalfof the Department of Family and Protective Services (DFPS),amendments to §§704.1, 704.3, 704.205, and 704.207; and new§§704.209, 704.701, and 704.703, in its Prevention and EarlyIntervention Services chapter. The amendment to §704.207is adopted with a change to the proposed text published inthe August 4, 2006, issue of the Texas Register (31 TexReg6194). The amendments §§704.1, 704.3, and 704.205; and new§§704.209, 704.701, and 704.703 are adopted without changesto the proposed text and will not be republished. Senate Bill6, 79th Legislature, Regular Session, 2005, requires DFPS toadminister a grant program to provide funding to communityorganizations, including faith-based or county organizations,to respond to (1) low-priority, less serious cases of abuse andneglect; and (2) cases in which an allegation of abuse or neglectof a child was unsubstantiated, but involved a family that hasbeen previously investigated for abuse or neglect of a child.These rules implement the Community-Based Family ServicesGrant Program in the Prevention and Early Intervention Servicesrule chapter. DFPS is also making the following clari�cations.Section 704.205 is revised to delete the reference to theCommunities In Schools Program because DFPS no longer ad-ministers the program. Section 704.207 is revised to referencethe Electronic State Business Daily, where PEI currently postsprocurements. New §704.209 explains how PEI administersgrants, which is according to the rules speci�ed in Chapter 732,Contracted Services. Chapter 732 also explains the submissionand approval of grant requests as well as cancellation of grants.And in several rules, references to Department of Protectiveand Regulatory Services are changed to Department of Familyand Protective Services.

The amendments and new sections will function by ensuringthat contractors and potential contractors will have a clearer un-derstanding of DFPS’s contracting procedures for procurement,awarding, and cancellation of grants. Also, the rules will furtherexplain the implementation parameters of the Community-BasedFamily Services Grant Program.

No comments were received regarding adoption of the amend-ments and new sections. DFPS is adopting §704.207 with achange to correct the website address.

SUBCHAPTER A. PURPOSE ANDDEFINITIONS40 TAC §704.1, §704.3

The amendments are adopted under Human Resources Code(HRC) §40.0505 and Government Code §531.0055, whichprovide that the Health and Human Services Executive Com-missioner shall adopt rules for the operation and provision ofservices by the health and human services agencies, includingthe Department of Family and Protective Services; and HRC

§40.021, which provides that the Family and Protective Ser-vices Council shall study and make recommendations to theExecutive Commissioner and the Commissioner regarding rulesgoverning the delivery of services to persons who are served orregulated by the department.

The amendments implement Texas Family Code §264.204, asamended by §1.53 of Senate Bill 6, 79th Legislature, RegularSession.



2006.

TRD-200605614Gerry WilliamsGeneral CounselDepartment of Family and Protective ServicesEffective date: December 1, 2006Proposal publication date: August 4, 2006For further information, please call: (512) 438-3437

SUBCHAPTER C. PREVENTION ANDINTERVENTION PRIMARY RESPONSIBILITIES40 TAC §§704.205, 704.207, 704.209

The amendments and new section are adopted under HumanResources Code (HRC) §40.0505 and Government Code§531.0055, which provide that the Health and Human ServicesExecutive Commissioner shall adopt rules for the operationand provision of services by the health and human servicesagencies, including the Department of Family and ProtectiveServices; and HRC §40.021, which provides that the Family andProtective Services Council shall study and make recommen-dations to the Executive Commissioner and the Commissionerregarding rules governing the delivery of services to personswho are served or regulated by the department.

The amendments and new section implement Texas FamilyCode §264.204, as amended by §1.53 of Senate Bill 6, 79thLegislature, Regular Session.

§704.207. How can a member of the public obtain more informationon speci�c PEI initiatives or funding opportunities?PEI procurements are posted on the Electronic State BusinessDaily (http://esbd.tbpc.state.tx.us), where the entire procurementpackage may be downloaded, including the Request for Proposals(RFP), budget pages, certi�cation forms, and any clari�cations.Hard copies of RFPs may also be requested from DFPS after theyare released. Information on PEI programs and initiatives may beaccessed on the agency’s website at: http://www.dfps.state.tx.us/Pre-vention_and_Early_Intervention.



2006.

TRD-200605615


Gerry WilliamsGeneral CounselDepartment of Family and Protective ServicesEffective date: December 1, 2006Proposal publication date: August 4, 2006For further information, please call: (512) 438-3437

SUBCHAPTER H. COMMUNITY-BASEDFAMILY SERVICES GRANT PROGRAM40 TAC §704.701, §704.703

The new sections are adopted under Human Resources Code(HRC) §40.0505 and Government Code §531.0055, whichprovide that the Health and Human Services Executive Com-missioner shall adopt rules for the operation and provision ofservices by the health and human services agencies, includingthe Department of Family and Protective Services; and HRC§40.021, which provides that the Family and Protective Ser-vices Council shall study and make recommendations to theExecutive Commissioner and the Commissioner regarding rulesgoverning the delivery of services to persons who are served orregulated by the department.

The new sections implement Texas Family Code §264.204, asamended by §1.53 of Senate Bill 6, 79th Legislature, RegularSession.



2006.


CHAPTER 705. ADULT PROTECTIVESERVICESSUBCHAPTER M. CONFIDENTIALITY ANDRELEASE OF RECORDS40 TAC §§705.7101, 705.7103, 705.7105, 705.7107,705.7109, 705.7111, 705.7113, 705.7115, 705.7117, 705.7119,705.7121, 705.7123

The Health and Human Services Commission adopts, on behalfof the Department of Family and Protective Services (DFPS),new §§705.7101, 705.7103, 705.7105, 705.7107, 705.7109,705.7111, 705.7113, 705.7115, 705.7117, 705.7119, 705.7121,and 705.7123, without changes to the proposed text publishedin the August 4, 2006, issue of the Texas Register (31 TexReg6196). The new sections are adopted in new Subchapter M,Con�dentiality and Release of Records, in Chapter 705, AdultProtective Services (APS). The justi�cation for the new sectionsis to outline to whom and under what circumstances DFPS maydisclose APS case records made con�dential under Chapter 48of the Human Resources Code.

The new sections will function by protecting the individual rightsto con�dentiality during an APS case. In order to avoid themisuse of con�dential information, the rules outline the circum-stances where persons have a right to APS case records.

No comments were received regarding adoption of the new sec-tions.

The new sections are adopted under Human Resources Code(HRC) §40.0505 and Government Code §531.0055, whichprovide that the Health and Human Services Executive Com-missioner shall adopt rules for the operation and provision ofservices by the health and human services agencies, includingthe Department of Family and Protective Services; and HRC§40.021, which provides that the Family and Protective Ser-vices Council shall study and make recommendations to theExecutive Commissioner and the Commissioner regarding rulesgoverning the delivery of services to persons who are served orregulated by the department.

The new sections implement §209 of Senate Bill 6, 79th Legis-lature, Regular Session, 2005, and HRC, §48.101 and §48.102.



2006.



Texas Department of InsuranceProposed Action on Rules

EXEMPT FILING NOTIFICATION PURSUANT TO THE INSUR-ANCE CODE CHAPTER 5, SUBCHAPTER L, ARTICLE 5.96

Notice is given that the Commissioner of Insurance (Commissioner)will consider a petition by the staff of the Texas Department of Insur-ance (TDI) proposing the adoption of revised Texas Workers’ Com-pensation Classi�cation Relativities (classi�cation relativities) to re-place those adopted in Commissioner’s Order No. 05-0906 dated Oc-tober 18, 2005; and the adoption of a revised table to amend the TexasBasic Manual of Rules, Classi�cations, and Experience Rating Planfor Workers’ Compensation and Employers’ Liability Insurance (Ba-sic Manual) concerning the Expected Loss Rates and Discount Ra-tios by class used in experience rating. Staff’s petition (Ref. No.W-1006-21-I) was �led on October 20, 2006. Article 5.96(d) pro-vides that any interested person may request the Commissioner to holda hearing before acting on a pending petition. Except as provided byArticle 5.96A, the Commissioner has discretion on whether to hold thehearing and a hearing will not be held unless requested. Any requestfor a public hearing should be submitted separately by 5:00 p.m. onDecember 4, 2006 to Gene Jarmon, General Counsel and Chief Clerk,Texas Department of Insurance, P.O. Box 149104, Mail Code 113-2A,Austin, Texas 78714-9104. If a hearing is held, written and oral com-ments presented at the hearing will be considered.

In its petition, the staff requests consideration of a schedule of revisedclassi�cation relativities and tables amending the Basic Manual. Therevised classi�cation relativities schedule is proposed to replace theclassi�cation relativities schedule adopted in Commissioner’s Order05-0906 effective January 1, 2006. The tables amending the BasicManual concern the Expected Loss Rates and Discount Ratios.

The staff requests that the proposed revised classi�cation relativitiesbe available for adoption by insurers immediately, but that their usebe mandatory for all policies with an effective date on or after March1, 2007 unless the insurer makes an independent �ling to justify in-surer speci�c classi�cation relativities. The staff further requests thatthe revised tables amending the Basic Manual be made effective forworkers’ compensation experience modi�ers with an effective date onor after March 1, 2007.

Article 5.60(a) of the Texas Insurance Code authorizes the Commis-sioner to determine hazards by classes and �x classi�cation relativi-ties applicable to the payroll in each class for workers’ compensationinsurance. Article 5.60(d) provides that the Commissioner revise theclassi�cation system at least once every �ve years.

The classi�cation relativities currently in effect were based on experi-ence data re�ecting workers’ compensation experience from policieswith effective dates in 1998 through 2002. The proposed classi�ca-tion relativities are based on the analysis of experience data from poli-cies with effective dates in 1999 through 2003. The staff’s proposedclassi�cation relativities re�ect changes in experience that occur overtime, due to factors such as technological advances and improvementsin safety programs. The indicated resulting relativities were balancedto the level of the current relativities through the application of off-bal-ance factors. This provides for a revenue neutral set of relativities inrelation to the current relativities. The staff proposes to limit changes inthe classi�cation relativities to +25% and -25%. These limited relativ-ities have been balanced overall to the level of the current relativities.This would help to minimize possible rate shock due to large indicatedchanges in the relativities.

Modi�cations to the classi�cation relativities require concurrentchanges in Table II of the Basic Manual concerning the ExpectedLoss Rates and Discount Ratios. The current Table II, which becameeffective on January 1, 2006, contains expected loss rates that werebased on the level of losses used to experience rate the average policythat would be subject to the new expected loss rates. Such a policywould be effective on July 1, 2006 and would re�ect the currentclassi�cation relativities. Staff proposes an adjustment to make theexpected loss rates more re�ective of the level of losses that would beused to experience rate policies that would be effective in 2007, andre�ect the proposed classi�cation relativities. Staff also proposes tocap changes in the expected loss rates to +25% and -25%.

Copies of the full text of the staff petition and the proposed revisedschedule and table are available for review in the Of�ce of the ChiefClerk of the Texas Department of Insurance, 333 Guadalupe Street,Austin, Texas 78714-9104. For further information or to request copiesof the petition and proposed revised schedule and table, please contactSylvia Gutierrez at (512) 463-6327 (refer to Ref. No. W-1006-21-I).

Comments on the proposed changes may be submitted in writing byDecember 4, 2006 to the Of�ce of Chief Clerk, P.O. Box 149104, MC113-2A, Austin, Texas 78714-9104. An additional copy of the com-ment should be submitted to Philip Presley, Chief Property and Casu-alty Actuary, P.O. Box 149104, MC 105-5F, Austin, Texas 78714-9104.

This noti�cation is made pursuant to the Texas Insurance Code, Article5.96, which exempts action taken under this article from the require-ments of the Administrative Procedure Act (Government Code, Title10, Chapter 2001).

TRD-200605762

EXEMPT FILINGS November 3, 2006 31 TexReg 9041

Gene C. JarmonGeneral Counsel and Chief ClerkTexas Department of InsuranceFiled: October 23, 2006


Proposed Rule ReviewTexas Racing Commission

Title 16, Part 8

The Texas Racing Commission �les this notice of intent to reviewChapter 303, General Provisions. This review is conducted in accor-dance with Government Code, §2001.039.

The Commission has conducted a review of the rules in Chapter 303and has preliminarily determined that the reasons for adopting the chap-ter continue to exist. Chapter 303 provides administrative requirementsof the Commission, the duties of the Commission, the duties of theComptroller of Public Accounts, and administrative requirements forthe Texas Bred Incentive Programs.

The preliminary review has revealed that the rules should be amendedto: formalize the public’s opportunity to comment at Commissionmeetings; clarify the Commission’s regulatory authority; correct atypographical error; expand the types of charities for which an associ-ation may designate one of its required charity race days; re�ect thedate of the Texas Arabian Breeders Association’s current rules; deletereferences to obsolete license classi�cations; and update the list ofoffenses that directly relate to certain types of occupational licenses.Therefore, the Commission is proposing amendments to §§303.4,303.31, 303.32, 303.42, 303.94, and the chart following §303.202(c).The proposed amendments are published elsewhere in this issue ofthe Texas Register. With the exception of the rules proposed foramendment, the Commission proposes to readopt without changes allremaining rules in Chapter 303.

All comments or questions regarding this notice of intent to reviewmay be submitted in writing within 30 days following publication ofthis notice in the Texas Register to Gloria Giberson, Assistant to theExecutive Secretary for the Texas Racing Commission, at P.O. Box12080, Austin, Texas 78711-2080, telephone (512) 833-6699, or fax(512) 833-6907.

TRD-200605621Mark FennerGeneral CounselTexas Racing CommissionFiled: October 16, 2006

Adopted Rule ReviewsTexas Department of Banking

Title 7, Part 2

The Finance Commission of Texas (commission) has completed thereview of Texas Administrative Code, Title 7, Part 2, Chapter 11,concerning Miscellaneous Provisions. Chapter 11 consists of only§11.37, concerning Providing Information to Consumers on How toFile a Complaint. Section 11.37 applies to a bank, foreign bank, bankholding company or trust company chartered, licensed or registeredby or with the Texas Department of Banking.

Notice of the review of Chapter 11 was published in the July 28, 2006,issue of the Texas Register (31 TexReg 6057). No comments werereceived in response to the notice.

The commission �nds that the reasons for initially adopting Chapter11, speci�cally §11.37, continue to exist and readopts the section with-out changes in accordance with the requirements of Government Code,§2001.039.

TRD-200605707Everette D. JobeCertifying Of¿cialTexas Department of BankingFiled: October 20, 2006

The Finance Commission of Texas (commission) has completed thereview of Texas Administrative Code, Title 7, Part 2, Chapter 26, con-cerning Perpetual Care Cemeteries. Chapter 26 consists of §26.1, con-cerning Perpetual Care Cemetery Fees; §26.2, concerning Records;§26.3, concerning Written Notice to Prohibit Interment of HomicidePerpetrator in the Same Perpetual Care Cemetery as the Homicide Vic-tim; §26.4, concerning Ordering and Setting Burial Markers or Mon-uments; §26.11, concerning Providing Information to Consumers onHow to File Complaints; and §26.12, concerning Responding to Writ-ten Consumer Complaints.


The commission �nds that the reasons for initially adopting Chapter 26continue to exist. However, the commission has determined that certainrevisions are appropriate and necessary. Proposed amended Chapter 26sections, with discussion of the justi�cation for the proposed changes,are published in this issue of the Texas Register.

Subject to the proposed amended sections in Chapter 26, the commis-sion �nds that the reasons for initially adopting these rules continue toexist and readopts these sections without changes in accordance withthe requirements of Government Code, §2001.039.

TRD-200605708

RULE REVIEW November 3, 2006 31 TexReg 9043

Everette D. JobeCertifying Of¿cialTexas Department of BankingFiled: October 20, 2006

The Finance Commission of Texas (commission) has completed thereview of Texas Administrative Code, Title 7, Part 2, Chapter 27, con-cerning Applications. Chapter 27 consists of only §27.1, concerningNotices to Applicants, Application Processing Times, and Appeals.Section 27.1 applies to an applicant for a prepaid funeral sellers per-mit or perpetual care cemetery certi�cate of authority.


The commission �nds that the reasons for initially adopting Chapter27, speci�cally §27.1, continue to exist and readopts the section with-out changes in accordance with the requirements of Government Code,§2001.039.


The Finance Commission of Texas (commission) has completed the re-view of Texas Administrative Code, Title 7, Part 2, Chapter 31 (PrivateChild Support Enforcement Agencies), speci�cally Subchapter A, con-cerning "General Provisions" and comprised of §31.1; Subchapter B,concerning "How do I Register My Agency to Engage in the Businessof Child Support Enforcement?" and comprised of §§31.11 - 31.19;Subchapter C, concerning "What Are My Agency’s ResponsibilitiesAfter Registration?" and comprised of §§31.31 - 31.39; SubchapterD, concerning "What Are the Department Requirements for Addingan Of�ce, Closing an Of�ce, Relocating an Of�ce, Transferring Con-trol of My Agency, Ceasing to do Business, or Changing My Email orWeb Site Addresses?" and comprised of §§31.51 - 31.56; SubchapterE, concerning "How Does the Department Exercise its EnforcementAuthority?" and comprised of §§31.71 - 31.76; Subchapter F, concern-ing "Foreign Agencies Registered in Other States" and comprised of§§31.91 - 31.96; and Subchapter G, concerning "Civil Remedies" andcomprised of §§31.111 - 31.115.


The commission concludes that the reasons for initially adopting Chap-ter 31 continue to exist. However, the commission has determined thatcertain revisions are appropriate and necessary. Proposed amended andrepealed Chapter 31 sections, with discussion of the justi�cation for theproposed changes, are published in this issue of the Texas Register.

Subject to the proposed amended and repealed sections in Chapter 31,the commission �nds that the reasons for initially adopting these rulescontinue to exist and readopts these sections without changes in accor-dance with the requirements of the Government Code, §2001.039.


Credit Union Department

Title 7, Part 6

The Credit Union Commission has completed the review of Texas Ad-ministrative Code, Title 7, Part 6, Chapter 95, Subchapter C, §95.303,relating to subrogation of right, title or interest. Notice of the proposedreview was published in the July 7, 2006, issue of the Texas Register(31 TexReg 5469).

The Commission received no comments with respect to the review ofthis rule.

The Department believes that the reasons for initially adopting this rulecontinue to exist. The Commission �nds that the reasons for initiallyadopting §95.303 continue to exist and readopts this section withoutchanges pursuant to the requirements of Government Code, §2001.039.

TRD-200605772Harold E. FeeneyCommissionerCredit Union DepartmentFiled: October 23, 2006

Finance Commission of Texas

Title 7, Part 1

The Finance Commission of Texas (the commission), on behalf of theOf�ce of Consumer Credit Commissioner (agency), has completed thereview of Texas Administrative Code, Title 7, Part 1, Chapter 1, Sub-chapter A (§§1.101 - 1.107), concerning General Provisions; Subchap-ter B (§1.201), concerning Interpretations and Advisory Letters; Sub-chapter C (§§1.301 - 1.310), concerning Application Procedures; andSubchapter D (§§1.401 - 1.407), concerning License, pursuant to TexasGovernment Code, §2001.039.

Notice of the review of 7 TAC, Chapter 1, Subchapters A - D waspublished in the June 30, 2006, Texas Register (31 TexReg 5365) asrequired. The agency received no comments in response to that notice.

The Of�ce of Consumer Credit Commissioner, which administers theserules, believes that the reasons for initially adopting the rules containedin these subchapters continue to exist. However, the agency determinedthat these rules should be relocated and that certain revisions are appro-priate and necessary. The proposed repeals of Subchapters A, C, andD, as well as the proposed new sections contained within new Chap-ter 83, are being concurrently published elsewhere in this issue of theTexas Register and will be open for an additional 31-day public com-ment period prior to �nal adoption or repeal by the commission.

Any questions or written comments pertaining to the proposedchanges (published elsewhere in this issue) resulting from thisrule review should be directed to Laurie Hobbs, Assistant GeneralCounsel, Of�ce of Consumer Credit Commissioner, 2601 NorthLamar Boulevard, Austin, Texas 78705-4207, or by e-mail to [email protected].

Subject to the proposed repeals of Subchapters A, C, and D, the com-mission �nds that the reasons for initially adopting these rules continueto exist, and readopts these sections without changes in accordancewith the requirements of Texas Government Code, §2001.039.

This concludes the review of 7 TAC, Chapter 1, Subchapters A - D.

TRD-200605736


Leslie L. PettijohnCommissionerFinance Commission of TexasFiled: October 20, 2006

RULE REVIEW November 3, 2006 31 TexReg 9045

TABLES AND GRAPHICS November 3, 2006 31 TexReg 9047





Texas Department of AgricultureNotice of Acceptance of Applications for the AquacultureAssistance Grant Program

In accordance with clause (3) of Section 32 of the Agricultural Act ofAugust 24, 1935, the Farm Service Agency of the United States Depart-ment of Agriculture (FSA) provided a grant to the Texas Department ofAgriculture (TDA) to distribute funds to eligible aquaculture producersadversely affected by Hurricane Rita in 2005 under an Aquaculture As-sistance Grant Program (Grant Program). From July 1, 2006 throughAugust 14, 2006, TDA accepted applications for the Grant Programfrom eligible Texas aquaculture producers. TDA is now reopeningthe application period for this Grant Program and will begin accept-ing applications from eligible Texas aquaculture producers beginningon November 3, 2006. This notice supersedes the notice published inthe June 30, 2006, issue of the Texas Register (31 TexReg 5377).

Eligibility Criteria. To be eligible for aquaculture assistance funds,the aquaculture producer must meet the following criteria:

1. Must have suffered an aquaculture loss from September 23, 2005 -November 22, 2005, as a direct result of Hurricane Rita;

2. Must have raised aquaculture species in a controlled environment aspart of a farming operation during the covered period;

3. Must have had a risk in the production of such aquaculture species;and

4. Must have not received, or receive in the future, assistance underother disaster programs for the same aquaculture loss.

5. Must have had an aquaculture operation suffering losses located inone of the 29 Texas counties that received a presidential or secretarialdisaster designation. These counties are: Angelina, Brazoria, Cham-bers, Cherokee, Fort Bend, Galveston, Gregg, Hardin, Harris, Harri-son, Houston, Jasper, Jefferson, Liberty, Marion, Montgomery, Nacog-doches, Newton, Orange, Panola, Polk, Rusk, Sabine, San Augustine,San Jacinto, Shelby, Trinity, Tyler, and Walker.

Covered Losses. Funds can only be paid for documented losses in-curred during Hurricane Rita related to the normal production of aqua-culture species. These losses include: crop loss, feed loss, equipmentand facility damage, generator/diesel fuel costs, water costs to replacewater spoiled by the storm, and clean-up costs. No "person" may re-ceive more than $80,000 in fund payments.

For purposes of this Grant Program, "Aquaculture Species" meansaquatic animal organisms including �sh, crustaceans, mollusks, rep-tiles, or amphibians reared or cultured under controlled conditions inan aquaculture facility.

Submitting an Application. Applications will be accepted begin-ning November 3, 2006. Applications will be available on TDA’s Website at: www.agr.state.tx.us, or available upon request from TDA bycalling (512) 936-0761. Applications must be mailed to TDA head-quarters in Austin by the deadline provided below and addressed to:Aquaculture Assistance Grant Program, Texas Department of Agri-culture, P.O. Box 12847, Austin, Texas 78711. Applications must becerti�ed by the applicant and include supporting documentation for

losses claimed. Applicants will not be reimbursed for losses alreadyclaimed and reimbursed under this Grant Program or any otherdisaster program.

Applicants will also be required to complete an application for a Stateof Texas Payee ID number, as part of the application for the aquacultureassistance funds, if they do not already have this number on �le withthe Of�ce of the State Comptroller.

Deadline for Submission of Applications. The postmark deadline formailing of applications for aquaculture assistance to TDA is December8, 2006.

TDA will distribute funds after all valid applications are processed. Inthe event that the amount of valid losses exceeds the amount of fundsavailable, funds may be distributed on a pro rata basis.

Further Information. Additional information about the aquacul-ture assistance program and application process can be found onTDA’s website. In addition, aquaculture producers may contact CaryDupuy, Federal and Trade Specialist, TDA at (512) 936-0761 [email protected], for more information.

TRD-200605766Dolores Alvarado HibbsDeputy General CounselTexas Department of AgricultureFiled: October 23, 2006

Coastal Coordination CouncilNotice and Opportunity to Comment on Requests forConsistency Agreement/Concurrence Under the Texas CoastalManagement Program

On January 10, 1997, the State of Texas received federal approval of theCoastal Management Program (CMP) (62 Federal Register pp. 1439 -1440). Under federal law, federal agency activities and actions affect-ing the Texas coastal zone must be consistent with the CMP goals andpolicies identi�ed in 31 TAC Chapter 501. Requests for federal con-sistency review were deemed administratively complete for the follow-ing project(s) during the period of October 13, 2006, through October19, 2006. As required by federal law, the public is given an opportu-nity to comment on the consistency of proposed activities in the coastalzone undertaken or authorized by federal agencies. Pursuant to 31 TAC§§506.25, 506.32, and 506.41, the public comment period for these ac-tivities extends 30 days from the date published on the Coastal Coordi-nation Council web site. The notice was published on the web site onOctober 25, 2006. The public comment period for these projects willclose at 5:00 p.m. on December 1, 2006.

FEDERAL AGENCY ACTIONS:

Applicant: Gulf Sulphur Services; Location: The project is locatedin the Galveston Ship Channel, at Pier 45, in Galveston, GalvestonCounty, Texas. The project can be located on the U.S.G.S. quadranglemap titled: Galveston, Texas. Approximate UTM Coordinates in NAD27 (meters): Zone 15; Easting: 323336; Northing: 3243422. Project

IN ADDITION November 3, 2006 31 TexReg 9053

Description: The applicant proposes to amend DA Permit 14833(11)to allow dredge material from their dock to be placed into an existingGalveston Wharves Board dredge material placement area on PelicanIsland and the placement of material dredged by hydraulic or mechani-cal means into all authorized placement areas for a period of ten years.CCC Project No.: 06-0382-F1; Type of Application: U.S.A.C.E. per-mit application #14833(12) is being evaluated under §10 of the Riversand Harbors Act of 1899 (33 U.S.C.A. §403).

Pursuant to §306(d)(14) of the Coastal Zone Management Act of 1972(16 U.S.C.A. §§1451 - 1464), as amended, interested parties are invitedto submit comments on whether a proposed action is or is not consis-tent with the Texas Coastal Management Program goals and policiesand whether the action should be referred to the Coastal CoordinationCouncil for review.

Further information on the applications listed above may be obtainedfrom Ms. Tammy Brooks, Consistency Review Coordinator, CoastalCoordination Council, P.O. Box 12873, Austin, Texas 78711-2873,or [email protected]. Comments should be sent to Ms.Brooks at the above address or by fax at (512) 475-0680.

TRD-200605792Larry L. LaineChief Clerk/Deputy Land CommissionerCoastal Coordination CouncilFiled: October 24, 2006

Comptroller of Public AccountsNotice of Contract Amendment

Notice of Award: Pursuant to Chapters 403, 2305; and Chapter 2254,Subchapter A, Texas Government Code, the Comptroller of Public Ac-counts (Comptroller) State Energy Conservation Of�ce (SECO) an-nounces the amendment and renewal of the following contracts forenergy engineering services for the Local Government Program: 1.Carter & Burgess, Inc., 777 Main Street, P.O. Box 901058, Fort Worth,TX 76101-2058. The total amount of this contract is not to exceed$400,000.00. The term of the contract is extended through August 31,2007; and 2. Texas Energy Engineering Services, Inc., 1301 S. Capitalof Texas Highway, Capital View Center, Suite B-325, Austin, Texas78746. The total amount of this contract is not to exceed $200,000.00.The term of the contract is extended through August 31, 2007.

The notice of request for proposals was published in the June 24, 2005,issue of the Texas Register (30 TexReg 3745) (RFP #172j). The noticeof award was published in the January 6, 2006, issue of the Texas Reg-ister (31 TexReg 192).

The project reviews will be completed on or before August 31, 2007.

TRD-200605863Pamela SmithDeputy General Counsel, ContractsComptroller of Public AccountsFiled: October 25, 2006

Of�ce of Consumer Credit CommissionerNotice of Rate Ceilings

The Consumer Credit Commissioner of Texas has ascertained the fol-lowing rate ceilings by use of the formulas and methods described in§§303.003, 303.009, and 304.003, Texas Finance Code.

The weekly ceiling as prescribed by §303.003 and §303.009for the period of 10/30/06 - 11/05/06 is 18% for Con-sumer1/Agricultural/Commercial2 credit through $250,000.

The weekly ceiling as prescribed by §303.003 and §303.009 for theperiod of 10/30/06 - 11/05/06 is 18% for Commercial over $250,000.

The judgment ceiling as prescribed by §304.003 for the period of11/01/06 - 11/30/06 is 8.25% for Consumer/Agricultural/Commercialcredit through $250,000.

The judgment ceiling as prescribed by §304.003 for the period of11/01/06 - 11/30/06 is 8.25% for Commercial over $250,000.

1 Credit for personal, family, or household use.

2 Credit for business, commercial, investment, or other similar purpose.

TRD-200605775Leslie L. PettijohnCommissionerOf¿ce of Consumer Credit CommissionerFiled: October 24, 2006

Court Reporters Certi�cation BoardCerti�cation of Court Reporters

Following the examination of applicants on September 29, 2006, theTexas Court Reporters Certi�cation Board certi�ed to the SupremeCourt of Texas the following individuals who are quali�ed in themethod indicated to practice shorthand reporting pursuant to Chapter52 of the Texas Government Code, V.T.C.A.:

MACHINE SHORTHAND: TERRALYN GENTRY - PLANO, TX;NATALIE MARTINEZ - EL PASO, TX; DEADRA LOGAN - KATY,TX; LAURA HELD BIEHL - RANCHO SANTA MARGARITA, CA;and SANDRA POWELL - ALVIN, TX.

Following the examination of applicants on September 29, 2006, theTexas Court Reporters Certi�cation Board certi�ed to the SupremeCourt of Texas the following individuals who are quali�ed in themethod indicated to practice shorthand reporting pursuant to Chapter52 of the Texas Government Code, V.T.C.A.:

ORAL STENOGRAPHY: LUKE WEISS - FT. WORTH, TX; andMICHELE RICHARDSON - BLUE RIDGE, TX.

TRD-200605744Sheryl JonesAdministrator of LicensingCourt Reporters Certi¿cation BoardFiled: October 20, 2006

Texas Commission on Environmental QualityAgreed Orders

The Texas Commission on Environmental Quality (TCEQ or commis-sion) staff is providing an opportunity for written public comment onthe listed Agreed Orders (AOs) in accordance with Texas Water Code(the Code), §7.075. Section 7.075 requires that before the commissionmay approve the AOs, the commission shall allow the public an op-portunity to submit written comments on the proposed AOs. Section7.075 requires that notice of the proposed orders and the opportunityto comment must be published in the Texas Register no later than the30th day before the date on which the public comment period closes,which in this case is December 4, 2006. Section 7.075 also requires


that the commission promptly consider any written comments receivedand that the commission may withdraw or withhold approval of an AOif a comment discloses facts or considerations that indicate that con-sent is inappropriate, improper, inadequate, or inconsistent with the re-quirements of the statutes and rules within the commission’s jurisdic-tion or the commission’s orders and permits issued in accordance withthe commission’s regulatory authority. Additional notice of changesto a proposed AO is not required to be published if those changes aremade in response to written comments.

A copy of each proposed AO is available for public inspection at boththe commission’s central of�ce, located at 12100 Park 35 Circle, Build-ing C, 1st Floor, Austin, Texas 78753, (512) 239-1864 and at the ap-plicable regional of�ce listed as follows. Written comments about anAO should be sent to the enforcement coordinator designated for eachAO at the commission’s central of�ce at P.O. Box 13087, Austin, Texas78711-3087 and must be received by 5:00 p.m. on December 4, 2006.Written comments may also be sent by facsimile machine to the en-forcement coordinator at (512) 239-2550. The commission enforce-ment coordinators are available to discuss the AOs and/or the commentprocedure at the listed phone numbers; however, §7.075 provides thatcomments on the AOs shall be submitted to the commission in writing.

(1) COMPANY: Ngocdung Thi Nguyen dba BP Cleaners; DOCKETNUMBER: 2006-1054-DCL-E; IDENTIFIER: Regulated EntityReference Number (RN) RN104962139; LOCATION: Dallas, CollinCounty, Texas; TYPE OF FACILITY: dry cleaner drop station;RULE VIOLATED: 30 Texas Administrative Code (TAC) §337.10(a)and Texas Health & Safety Code (THSC), §374.102, by failing tocomplete and submit the required registration form; PENALTY:$711; ENFORCEMENT COORDINATOR: Dana Shuler, (512)239-2505; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(2) COMPANY: Velia M. Martinez dba C Martinez Clean-ers; DOCKET NUMBER: 2006-0937-DCL-E; IDENTIFIER:RN104960083; LOCATION: Fort Worth, Tarrant County, Texas;TYPE OF FACILITY: dry cleaning drop station; RULE VIO-LATED: 30 TAC §337.10(a) and THSC, §374.102, by failing tocomplete and submit the required registration form; PENALTY:$948; ENFORCEMENT COORDINATOR: Marlin Bullard, (254)751-0335; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(3) COMPANY: Chriserin, Inc. dba McLendon Cleaners 3; DOCKETNUMBER: 2006-0844-DCL-E; IDENTIFIER: RN104098702; LO-CATION: Longview, Gregg County, Texas; TYPE OF FACILITY:dry cleaning drop station; RULE VIOLATED: 30 TAC §337.10(a)and THSC, §374.102, by failing to complete and submit the requiredregistration form; PENALTY: $711; ENFORCEMENT COORDINA-TOR: Deana Holland, (512) 239-2504; REGIONAL OFFICE: 2916Teague Drive, Tyler, Texas 75701-3756, (903) 535-5100.

(4) COMPANY: CIC Construction, Inc. dba CIC Construc-tion; DOCKET NUMBER: 2004-2049-PST-E; IDENTIFIER:RN104092887, Petroleum Storage Tank (PST) Facility Identi�ca-tion Number 76065; LOCATION: Louise, Wharton County, Texas;TYPE OF FACILITY: �eet refueling; RULE VIOLATED: 30 TAC§37.815(a) and (b), by failing to provide acceptable �nancial as-surance; PENALTY: $2,100; ENFORCEMENT COORDINATOR:Daniel Siringi, (409) 898-3838; REGIONAL OFFICE: 5425 PolkAvenue, Suite H, Houston, Texas 77023-1486, (713) 767-3500.

(5) COMPANY: Clark Products, Inc.; DOCKET NUMBER:2006-0959-AIR-E; IDENTIFIER: RN102891108; LOCATION:Grand Prairie, Tarrant County, Texas; TYPE OF FACILITY: �berglassand plastics manufacturing; RULE VIOLATED: 30 TAC §122.241(b)

and THSC, §382.085(b), by failing to submit a timely and completerenewal application for a federal operating permit (FOP); and 30 TAC§122.121 and THSC, §382.054 and §382.085(b), by failing to obtainauthorization to continue operation; PENALTY: $20,000; ENFORCE-MENT COORDINATOR: John Barry, (409) 898-3838; REGIONALOFFICE: 2301 Gravel Drive, Fort Worth, Texas 76118-6951, (817)588-5800.

(6) COMPANY: CLW Inc.; DOCKET NUMBER: 2006-1794-WQ-E;IDENTIFIER: RN102569860; LOCATION: Livingston, Polk County,Texas; TYPE OF FACILITY: lumber mill; RULE VIOLATED: 30TAC §281.25(a)(4), by failing to obtain a multi-sector general permitfor storm water; PENALTY: $875; ENFORCEMENT COORDINA-TOR: Melissa Keller, (512) 239-1768; REGIONAL OFFICE: 3870Eastex Freeway, Beaumont, Texas 77703-1892, (409) 898-3838.

(7) COMPANY: Don Adams & Associates Inc. dba Burleson Clean-ers, dba Kens Kleaners, and dba Olde Towne Cleaners; DOCKETNUMBER: 2006-1177-DCL-E; IDENTIFIER: RN101569978,RN104027842, and RN105007405; LOCATION: Burleson, Johnsonand Tarrant Counties, Texas; TYPE OF FACILITY: dry cleaningand/or drop station; RULE VIOLATED: 30 TAC §337.10(e) and§337.11(e) and THSC, §374.102, by failing to renew the facilitiesregistration by completing and submitting the required registrationforms for the facilities; and 30 TAC §337.14(c) and the Code,§5.702, by failing to pay dry cleaner registration fees; PENALTY:$2,844; ENFORCEMENT COORDINATOR: Samuel Short, (512)239-5363; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(8) COMPANY: ExxonMobil Oil Corporation; DOCKET NUMBER:2006-0797-MLM-E; IDENTIFIER: RN101975746; LOCATION: Jef-ferson County, Texas; TYPE OF FACILITY: intermediate tank storageterminal; RULE VIOLATED: 30 TAC §§122.143(4), 122.145(2)(A)and (B), and 122.146(2) and (5), FOP Number O-02754, General Termsand Conditions, and THSC, §382.085(b), by failing to submit a timelyand accurate annual compliance certi�cation and associated deviationreports; 30 TAC §116.115(c), §122.143(4), New Source Review Per-mit Number 49133 Special Conditions Number 3.E., FOP NumberO-2754, General Terms and Conditions and Special Terms and Con-dition Number 6, and THSC, §382.085(b), by failing to maintain theexterior color of uninsulated tanks exposed to the sun white or alu-minum; 30 TAC §335.4, by failing to prevent unauthorized discharges;30 TAC §335.62 and 40 Code of Federal Regulations §262.11, by fail-ing to complete a hazardous waste determination and classify indus-trial solid waste; and 30 TAC §335.6(c), by failing to notify the TCEQof industrial solid waste activities including waste generated and wastemanagement units; PENALTY: $10,800; ENFORCEMENT COORDI-NATOR: Jessica Rhodes, (512) 239-2879; REGIONAL OFFICE: 3870Eastex Freeway, Beaumont, Texas 77703-1892, (409) 898-3838.

(9) COMPANY: Exxon Mobil Corporation; DOCKET NUMBER:2006-0736-AIR-E; IDENTIFIER: RN102212925; LOCATION: Bay-town, Harris County, Texas; TYPE OF FACILITY: chemical plant;RULE VIOLATED: 30 TAC §116.715(a), Flexible Air Permit Number3452, Special Condition Number 1, and THSC, §382.085(b), by fail-ing to prevent an avoidable emissions event; 30 TAC §101.201(a)(1)and THSC, §382.085(b), by failing to submit the initial noti�cationfor the May 28, 2004, emissions event; PENALTY: $50,147; EN-FORCEMENT COORDINATOR: John Muennink, (361) 825-3100;REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas77023-1486, (713) 767-3500.

(10) COMPANY: Ae Cha Floyde dba Floyd’s Dry Cleaners; DOCKETNUMBER: 2006-1483-DCL-E; IDENTIFIER: RN104949763; LO-CATION: Harker Heights, Bell County, Texas; TYPE OF FACILITY:dry cleaning drop station; RULE VIOLATED: 30 TAC §337.10(a) and


THSC, §374.102, by failing to complete and submit the required regis-tration form; PENALTY: $711; ENFORCEMENT COORDINATOR:Tom Greimel, (512) 239-5690; REGIONAL OFFICE: 6801 SangerAvenue, Suite 2500, Waco, Texas 76710-7826, (254) 751-0335.

(11) COMPANY: City of Hallsville; DOCKET NUMBER: 2006-1180-MWD-E; IDENTIFIER: RN102181872; LOCATION: Hallsville, Har-rison County, Texas; TYPE OF FACILITY: domestic wastewater treat-ment; RULE VIOLATED: 30 TAC §305.125(1), Texas Pollutant Dis-charge Elimination System (TPDES) Permit Number 10460001, Ef-�uent Limitations and Monitoring Requirements Number 1, and theCode, §26.121(a), by failing to comply with the permitted ef�uent lim-itations for ammonia-nitrogen; PENALTY: $1,800; ENFORCEMENTCOORDINATOR: Carolyn Lind, (903) 535-5100; REGIONAL OF-FICE: 2916 Teague Drive, Tyler, Texas 75701-3756, (903) 535-5100.

(12) COMPANY: Amin M. Tirmizi dba Hassell’s Cleaners; DOCKETNUMBER: 2006-0784-DCL-E; IDENTIFIER: RN100547314; LO-CATION: Dallas, Dallas County, Texas; TYPE OF FACILITY:dry cleaners; RULE VIOLATED: 30 TAC §337.11(e) and THSC,§374.102, by failing to renew the registration by completing and sub-mitting the required registration form; PENALTY: $274; ENFORCE-MENT COORDINATOR: Jorge Ibarra, (817) 588-5800; REGIONALOFFICE: 2301 Gravel Drive, Fort Worth, Texas 76118-6951, (817)588-5800.

(13) COMPANY: Hereford-Custom Cleaners, L.C.; DOCKETNUMBER: 2006-0949-DCL-E; IDENTIFIER: RN103979753; LO-CATION: Hereford, Deaf Smith County, Texas; TYPE OF FACILITY:dry cleaning drop station; RULE VIOLATED: 30 TAC §337.10(a)and THSC, §374.102, by failing to renew the facility’s registration bycompleting and submitting the required registration form; PENALTY:$711; ENFORCEMENT COORDINATOR: Harvey Wilson, (512)239-0321; REGIONAL OFFICE: 3918 Canyon Drive, Amarillo,Texas 79109-4933, (806) 353-9251.

(14) COMPANY: Karl Tatsch dba Hill Country Cleaners anddba Hill Country Cleaners & Laundry; DOCKET NUMBER:2006-0919-DCL-E; IDENTIFIER: RN103958807 and RN104089891;LOCATION: Llano, Llano County, Texas; TYPE OF FACILITY:dry cleaners; RULE VIOLATED: 30 TAC §337.11(e) and THSC,§374.102, by failing to renew the facilities registrations by completingand submitting the required registration form; and 30 TAC §337.14(c)and the Code, §5.702, by failing to pay outstanding dry cleanersfees; PENALTY: $1,896; ENFORCEMENT COORDINATOR: DanaShuler, (512) 239-2505; REGIONAL OFFICE: 1921 Cedar BendDrive, Suite 150, Austin, Texas 78758-5336, (512) 339-2929.

(15) COMPANY: Sharon Dodd dba Hometown Cleaners; DOCKETNUMBER: 2006-1383-DCL-E; IDENTIFIER: RN104096516; LO-CATION: Boyd, Wise County, Texas; TYPE OF FACILITY: drycleaning drop station; RULE VIOLATED: 30 TAC §337.10(a) andTHSC, §374.102, by failing to complete and submit the required regis-tration form; PENALTY: $155; ENFORCEMENT COORDINATOR:Judy Kluge, (817) 588-5800; REGIONAL OFFICE: 2301 GravelDrive, Fort Worth, Texas 76118-6951, (817) 588-5800.

(16) COMPANY: Intergulf Corporation; DOCKET NUMBER: 2006-0953-IHW-E; IDENTIFIER: RN101517852; LOCATION: Pasadena,Harris County, Texas; TYPE OF FACILITY: industrial and hazardouswaste generation and storage; RULE VIOLATED: 30 TAC §305.64(g),by failing to secure acceptable �nancial assurance; PENALTY: $2,100;ENFORCEMENT COORDINATOR: Libby Hogue, (512) 239-1165;REGIONAL OFFICE: 5425 Polk Avenue, Suite H, Houston, Texas77023-1486, (713) 767-3500.

(17) COMPANY: Lee Van Cleaners, Inc. dba City Cleaners; DOCKETNUMBER: 2006-1278-DCL-E; IDENTIFIER: RN104000864; LO-

CATION: Addison, Dallas County, Texas; TYPE OF FACILITY:dry cleaning drop station; RULE VIOLATED: 30 TAC §337.11(e)and THSC, §374.102, by failing to renew the registration by com-pleting and submitting the required registration form; PENALTY:$711; ENFORCEMENT COORDINATOR: Libby Hogue, (512)239-1165; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(18) COMPANY: Lyondell-Citgo Re�ning LP; DOCKET NUMBER:2006-0811-AIR-E; IDENTIFIER: RN100218130; LOCATION: Hous-ton, Harris County, Texas; TYPE OF FACILITY: petroleum re�nery;RULE VIOLATED: 30 TAC §101.20(3) and §116.715(a), FlexibleAir Permit Number 2167/PSD-TX-985, Special Condition Number 1,and THSC, §382.085(b), by failing to prevent unauthorized emissions;PENALTY: $20,000; ENFORCEMENT COORDINATOR: KimberlyMorales, (713) 767-3500; REGIONAL OFFICE: 5425 Polk Avenue,Suite H, Houston, Texas 77023-1486, (713) 767-3500.

(19) COMPANY: M7 Aerospace LP; DOCKET NUMBER:2006-0920-IHW-E; IDENTIFIER: RN101446235; LOCATION:San Antonio, Bexar County, Texas; TYPE OF FACILITY: air-craft manufacturing and maintenance; RULE VIOLATED: 30 TAC§327.3(b), by failing to notify the TCEQ of a reportable discharge orspill within 24 hours of discovery; 30 TAC §327.5(a), by failing toabate and contain the discharge or spill; and 30 TAC §335.4(1) andthe Code, §26.121(a), by failing to prevent the unauthorized dischargeor spill of industrial waste into or adjacent to water in the state;PENALTY: $4,570; ENFORCEMENT COORDINATOR: HarveyWilson, (512) 239-0321; REGIONAL OFFICE: 14250 Judson Road,San Antonio, Texas 78233-4480, (210) 490-3096.

(20) COMPANY: NRG Texas LP; DOCKET NUMBER: 2006-1030-IWD-E; IDENTIFIER: RN100542927; LOCATION: Farrar,Limestone County, Texas; TYPE OF FACILITY: electric generation;RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit NumberWQ0002430000, Ef�uent Limitations and Monitoring RequirementsOutfall 001, Number 1, and the Code, §26.121(a), by failing tocomply with the permitted ef�uent limitations; PENALTY: $5,940;ENFORCEMENT COORDINATOR: Lynley Doyen, (512) 239-1364;REGIONAL OFFICE: 6801 Sanger Avenue, Suite 2500, Waco, Texas79901-1206, (915) 834-4949.

(21) COMPANY: NRG Texas LP; DOCKET NUMBER: 2006-1030-IWD-E; IDENTIFIER: RN100542927; LOCATION: Farrar,Limestone County, Texas; TYPE OF FACILITY: electric generation;RULE VIOLATED: 30 TAC §305.125(1), TPDES Permit NumberWQ0002430000, Ef�uent Limitations and Monitoring RequirementsOutfall 001, Number 1, and the Code, §26.121(a), by failing tocomply with the permitted ef�uent limitations; PENALTY: $5,940;ENFORCEMENT COORDINATOR: Lynley Doyen, (512) 239-1364;REGIONAL OFFICE: 6801 Sanger Avenue, Suite 2500, Waco, Texas79901-1206, (915) 834-4949.

(22) COMPANY: Scott D. Nguyen dba One Hour Champion DryCleaning; DOCKET NUMBER: 2006-1349-DCL-E; IDENTIFIER:RN102157245; LOCATION: Houston, Harris County, Texas; TYPEOF FACILITY: dry cleaning; RULE VIOLATED: 30 TAC §337.10(a)and THSC, §374.102, by failing to complete and submit the requiredregistration form; PENALTY: $948; ENFORCEMENT COORDINA-TOR: Shontay Wilcher, (512) 239-2136; REGIONAL OFFICE: 5425Polk Avenue, Suite H, Houston, Texas 77023-1486, (713) 767-3500.

(23) COMPANY: Patiala Petroleum, LLC dba Cherry Lane FoodStop; DOCKET NUMBER: 2006-0865-PST-E; IDENTIFIER:RN101642791; LOCATION: White Settlement, Tarrant County,Texas; TYPE OF FACILITY: convenience store with retail sales ofgasoline; RULE VIOLATED: 30 TAC §37.815(a) and (b), by failing


to demonstrate acceptable �nancial assurance; PENALTY: $2,464;ENFORCEMENT COORDINATOR: Cari-Michel LaCaille, (512)239-1387; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(24) COMPANY: Saipullai Imtiaz dba Polo Press Cleaners and dbaPolo Press II; DOCKET NUMBER: 2006-1137-DCL-E; IDENTI-FIER: RN103986352 and RN104094321; LOCATION: Dallas, TheColony; Denton County, Texas; TYPE OF FACILITY: dry cleanerstop stations; RULE VIOLATED: 30 TAC §337.10(a) and THSC,§374.102, by failing to complete and submit the required registrationforms; and 30 TAC §337.14(c) and the Code, §5.702, by failing topay dry cleaners registration fees and associated late fees; PENALTY:$1,896; ENFORCEMENT COORDINATOR: Suzanne Walrath, (512)239-2134; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(25) COMPANY: Jung Song dba Quality Cleaners and Shoe Re-pair; DOCKET NUMBER: 2006-1502-DCL-E; IDENTIFIER:RN104397807; LOCATION: Killeen, Bell County, Texas; TYPE OFFACILITY: dry cleaning drop station; RULE VIOLATED: 30 TAC§337.11(e) and THSC, §374.102, by failing to renew the facility’sregistration by completing and submitting the required registrationform; PENALTY: $948; ENFORCEMENT COORDINATOR: JudyKluge, (817) 588-5800; REGIONAL OFFICE: 6801 Sanger Avenue,Suite 2500, Waco, Texas 76710-7826, (254) 751-0335.

(26) COMPANY: Don French dba Riviera Mobile HomePark; DOCKET NUMBER: 2006-0800-PWS-E; IDENTIFIER:RN101256667; LOCATION: Denton, Denton County, Texas; TYPEOF FACILITY: public water supply; RULE VIOLATED: 30 TAC§290.109(c)(2)(A)(ii) and §290.122(c)(2)(A) and THSC, §341.033(d),by failing to conduct routine monthly bacteriological sampling ofthe public water supply and by failing to provide public noti�cationof the failure to conduct routine monthly bacteriological sampling;PENALTY: $4,320; ENFORCEMENT COORDINATOR: CarolynLind, (903) 535-5100; REGIONAL OFFICE: 2301 Gravel Drive, FortWorth, Texas 76118-6951, (817) 588-5800.

(27) COMPANY: Sam Yong Corporation dba Diamond Clean-ers; DOCKET NUMBER: 2006-0971-DCL-E; IDENTIFIER:RN100572429 and RN104967021; LOCATION: Dallas, DallasCounty, Texas; TYPE OF FACILITY: dry cleaner stop stations; RULEVIOLATED: 30 TAC §337.10(a) and THSC, §374.102, by failingto complete and submit the required registration forms; PENALTY:$1,422; ENFORCEMENT COORDINATOR: Craig Fleming, (512)239-5806; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(28) COMPANY: Thuy Nga Le dba Shop-N-Go Superette; DOCKETNUMBER: 2005-0226-PST-E; IDENTIFIER: RN102241247 and PSTFacility Identi�cation Number 43106; LOCATION: Vidor, OrangeCounty, Texas; TYPE OF FACILITY: convenience store with retailsales of gasoline; RULE VIOLATED: 30 TAC §37.815(a) and (b),by failing to provide acceptable �nancial assurance; PENALTY:$2,760; ENFORCEMENT COORDINATOR: Daniel Siringi, (409)898-3838; REGIONAL OFFICE: 3870 Eastex Freeway, Beaumont,Texas 77703-1892, (409) 898-3838.

(29) COMPANY: Summerside Cleaners Corporation; DOCKETNUMBER: 2006-0785-DCL-E; IDENTIFIER: RN100587542; LO-CATION: Dallas, Collin County, Texas; TYPE OF FACILITY:dry cleaner; RULE VIOLATED: 30 TAC §337.11(e) and THSC,§374.102, by failing to renew the facility’s registration by com-pleting and submitting the required registration form; PENALTY:$711; ENFORCEMENT COORDINATOR: Jorge Ibarra, (817)

588-5800; REGIONAL OFFICE: 2301 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(30) COMPANY: Sung Jin Corporation dba Lisa Cleaners 1; DOCKETNUMBER: 2006-1388-DCL-E; IDENTIFIER: RN104990924; LO-CATION: Coppell, Dallas County, Texas; TYPE OF FACILITY: drycleaning drop station; RULE VIOLATED: 30 TAC §337.10(a) andTHSC, §374.102, by failing to complete and submit the required regis-tration form; PENALTY: $381; ENFORCEMENT COORDINATOR:Judy Kluge, (817) 588-5800; REGIONAL OFFICE: 2301 GravelDrive, Fort Worth, Texas 76118-6951, (817) 588-5800.

(31) COMPANY: Trikut Devi, Inc. dba Dryclean Plus; DOCKETNUMBER: 2006-1238-DCL-E; IDENTIFIER: RN104026760 andRN104066774; LOCATION: Dickinson, Alvin; Galveston and Brazo-ria Counties, Texas; TYPE OF FACILITY: dry cleaning drop stations;RULE VIOLATED: 30 TAC §337.11(e) and THSC, §374.102, byfailing to renew the registration by completing and submitting therequired registration forms; PENALTY: $504; ENFORCEMENTCOORDINATOR: Craig Fleming, (512) 239-5806; REGIONALOFFICE: 5425 Polk Avenue, Suite H, Houston, Texas 77023-1486,(713) 767-3500.

(32) COMPANY: Yong Sun Mahony dba Yong’s Cleaners; DOCKETNUMBER: 2006-1459-DCL-E; IDENTIFIER: RN104962311; LO-CATION: San Antonio, Bexar County, Texas; TYPE OF FACILITY:dry cleaning drop station; RULE VIOLATED: 30 TAC §337.10(a)and THSC, §374.102, by failing to complete and submit the requiredregistration form; PENALTY: $711; ENFORCEMENT COORDINA-TOR: Shontay Wilcher, (512) 239-2136; REGIONAL OFFICE: 14250Judson Road, San Antonio, Texas 78233-4480, (210) 490-3096.

TRD-200605785Mary R. RisnerDirector, Litigation DivisionTexas Commission on Environmental QualityFiled: October 24, 2006

Notice of Opportunity to Comment on Default Orders ofAdministrative Enforcement Actions

The Texas Commission on Environmental Quality (TCEQ or commis-sion) staff is providing an opportunity for written public comment onthe listed Default Orders (DOs). The commission staff proposes a DOwhen the staff has sent an executive director’s preliminary report andpetition (EDPRP) to an entity outlining the alleged violations; the pro-posed penalty; and the proposed technical requirements necessary tobring the entity back into compliance; and the entity fails to request ahearing on the matter within 20 days of its receipt of the EDPRP orrequests a hearing and fails to participate at the hearing. Similar to theprocedure followed with respect to Agreed Orders entered into by theexecutive director of the commission, in accordance with Texas WaterCode (TWC), §7.075 this notice of the proposed order and the oppor-tunity to comment is published in the Texas Register no later than the30th day before the date on which the public comment period closes,which in this case is December 4, 2006. The commission will considerany written comments received and the commission may withdraw orwithhold approval of a DO if a comment discloses facts or considera-tions that indicate that consent to the proposed DO is inappropriate, im-proper, inadequate, or inconsistent with the requirements of the statutesand rules within the commission’s jurisdiction, or the commission’s or-ders and permits issued in accordance with the commission’s regula-tory authority. Additional notice of changes to a proposed DO is notrequired to be published if those changes are made in response to writ-ten comments.


A copy of each proposed DO is available for public inspection at boththe commission’s central of�ce, located at 12100 Park 35 Circle, Build-ing A, 3rd Floor, Austin, Texas 78753, (512) 239-3400 and at the ap-plicable regional of�ce listed as follows. Written comments about theDO should be sent to the attorney designated for the DO at the com-mission’s central of�ce at P.O. Box 13087, MC 175, Austin, Texas78711-3087 and must be received by 5:00 p.m. on December 4, 2006.Comments may also be sent by facsimile machine to the attorney at(512) 239-3434. The commission’s attorneys are available to discussthe DOs and/or the comment procedure at the listed phone numbers;however, §7.075 provides that comments on the DOs shall be submit-ted to the commission in writing.

(1) COMPANY: Dapino Watters dba Krystal Mart; DOCKET NUM-BER: 2006-0214-PST-E; TCEQ ID NUMBERS: RN101442572;LOCATION: 701 North Eastside Drive, Wichita Falls, WichitaCounty, Texas; TYPE OF FACILITY: convenience store with retailsales of gasoline; RULES VIOLATED: 30 TAC §334.49(c)(2)(C) and(c)(4)(C), and Texas Water Code (TWC), §26.3475(d), by failing toinspect the impressed current cathodic protection system at least onceevery 60 days to ensure that the recti�er and other system componentswere operating, and by failing to have the cathodic protection systemtested in accordance with a code or standard of practice developedby a nationally recognized corrosion association or independenttesting laboratory by a quali�ed corrosion specialist or corrosiontechnician at least once every three years; 30 TAC§37.815(a) and (b),by failing to demonstrate acceptable �nancial assurance for takingcorrective action and for compensating third parties for bodily injuryand property damage caused by accidental releases arising from theoperation of petroleum underground storage tanks (USTs); 30 TAC§334.50(b)(1)(A) and (d)(1)(B)(ii), and TWC, §26.3475(c)(1), byfailing to monitor the USTs for releases at a frequency of at least onceevery month (not to exceed 35 days between each monitoring), and byfailing to conduct inventory control reconciliation on a monthly basissuf�ciently accurate to detect a release as small as the sum of 1.0%of the total substance �ow-through for the month plus 130 gallons;30 TAC §334.10(b)(1)(B), by failing to maintain UST records andmake them immediately available for inspection upon request by theTCEQ investigator; and 30 TAC §334.8(c)(4)(B) and (c)(5)(B)(ii),by failing to renew his UST delivery certi�cate by failing to properlysubmit a UST registration and self-certi�cation form in a timelymanner; PENALTY: $12,500; STAFF ATTORNEY: Lena Roberts,Litigation Division, MC 175, (512) 239-0019; REGIONAL OFFICE:Abilene Regional Of�ce, 1977 Industrial Boulevard, Abilene, Texas79602-7833, (325) 698-9674.

(2) COMPANY: Marguerite’s, Inc.; DOCKET NUMBER: 2006-0437-PWS-E; TCEQ ID NUMBERS: RN101178507; LOCATION:3332 Avenue A, Santa Fe, Galveston County, Texas; TYPE OFFACILITY: public water supply; RULES VIOLATED: 30 TAC§290.109(c)(2)(A)(i) and §290.122(c)(2)(B), and THSC, §341.033(d),by failing to perform routine monthly bacteriological sampling of thepublic water supply and by failing to provide public noti�cation of thefailure to conduct monthly bacteriological sampling during the monthsof November 2003 - January 2004, and July 2004 - February 2006; and30 TAC §290.51(a)(3), and TWC, §5.702, by failing to pay all annualand late Public Health Services fees for TCEQ Financial Adminis-tration Account Number 90840215 for Fiscal Year 2006; PENALTY:$12,363; STAFF ATTORNEY: Lena Roberts, Litigation Division,MC 175, (512) 239-0019; REGIONAL OFFICE: Houston RegionalOf�ce, 5425 Polk Avenue, Suite H, Houston, Texas 77023-1486, (713)767-3500.

(3) COMPANY: Robert Arimond; DOCKET NUMBER: 2006-0438-WOC-E; TCEQ ID NUMBERS: RN104917133; LOCATION: 7403County Line Road, Willis, Montgomery County, Texas; TYPE OF FA-

CILITY: wastewater treatment facility; RULES VIOLATED: 30 TAC§30.331(b), and TWC, §26.0301(c), and §37.003, by failing to ob-tain a Category D or higher wastewater operator license prior to per-forming daily operations and maintenance of the facility; PENALTY:$2,500; STAFF ATTORNEY: Lena Roberts, Litigation Division, MC175, (512) 239-0019; REGIONAL OFFICE: Houston Regional Of-�ce, 5425 Polk Avenue, Suite H, Houston, Texas 77023-1486, (713)767-3500.

TRD-200605790Mary RisnerDirector, Litigation DivisionTexas Commission on Environmental QualityFiled: October 24, 2006

Notice of Opportunity to Comment on Settlement Agreementsof Administrative Enforcement Actions

The Texas Commission on Environmental Quality (TCEQ or commis-sion) staff is providing an opportunity for written public comment onthe listed Agreed Orders (AOs) in accordance with Texas Water Code(TWC), §7.075. Section 7.075 requires that before the commissionmay approve the AOs, the commission shall allow the public an op-portunity to submit written comments on the proposed AOs. Section7.075 requires that notice of the opportunity to comment must be pub-lished in the Texas Register no later than the 30th day before the date onwhich the public comment period closes, which in this case is Decem-ber 4, 2006. Section 7.075 also requires that the commission promptlyconsider any written comments received and that the commission maywithdraw or withhold approval of an AO if a comment discloses factsor considerations that indicate that consent is inappropriate, improper,inadequate, or inconsistent with the requirements of the statutes andrules within the commission’s jurisdiction or the commission’s ordersand permits issued in accordance with the commission’s regulatory au-thority. Additional notice of changes to a proposed AO is not requiredto be published if those changes are made in response to written com-ments.

A copy of each proposed AO is available for public inspection at boththe commission’s central of�ce, located at 12100 Park 35 Circle, Build-ing A, 3rd Floor, Austin, Texas 78753, (512) 239-3400 and at the ap-plicable regional of�ce listed as follows. Written comments about anAO should be sent to the attorney designated for the AO at the com-mission’s central of�ce at P.O. Box 13087, MC 175, Austin, Texas78711-3087 and must be received by 5:00 p.m. on December 4, 2006.Comments may also be sent by facsimile machine to the attorney at(512) 239-3434. The designated attorney is available to discuss theAO and/or the comment procedure at the listed phone number; how-ever, §7.075 provides that comments on an AO shall be submitted tothe commission in writing.

(1) COMPANY: Akram Rihani dba Oakland Shell; DOCKET NUM-BER: 2005-1989-PST-E; TCEQ ID NUMBERS: RN102780855;LOCATION: 1224 Oakland Boulevard, Fort Worth, Tarrant County,Texas; TYPE OF FACILITY: convenience store with retail salesof gasoline; RULES VIOLATED: 30 TAC §37.815(a) and (b), byfailing to demonstrate acceptable �nancial assurance for taking cor-rective action and for compensating third parties for bodily injuryand property damage caused by accidental releases arising from theoperation of petroleum underground storage tanks (USTs); and 30TAC §334.22(a), and Texas Water Code (TWC), §5.702, by failingto pay UST fees for TCEQ Financial Assurance Account Numbers0063966U and 0058976U and associated late fees for Fiscal Year2005; PENALTY: $1,090; STAFF ATTORNEY: Jacquelyn Boutwell,Litigation Division, MC 175, (512) 239-5846; REGIONAL OFFICE:


Dallas-Fort Worth Regional Of�ce, 2309 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(2) COMPANY: Antonio Vera and Roman Vera dba Jessie’s DriveThru; DOCKET NUMBER: 2005-1960-PST-E; TCEQ ID NUM-BERS: RN103993069; LOCATION: at corner of Kenyon andRichardson, Edinburg, Hidalgo County, Texas; TYPE OF FACILITY:convenience store with retail sales of gasoline; RULES VIOLATED:30 TAC §37.815(a) and (b), by failing to demonstrate acceptable�nancial assurance for taking corrective action and for compensat-ing third parties for bodily injury and property damage caused byaccidental releases arising from the operation of petroleum USTs;PENALTY: $1,050; STAFF ATTORNEY: Jacquelyn Boutwell, Lit-igation Division, MC 175, (512) 239-5846; REGIONAL OFFICE:Harlingen Regional Of�ce, 1804 West Jefferson Avenue, Harlingen,Texas 78550-5247, (956) 425-6010.

(3) COMPANY: KR Mina, Inc. dba Fuqua Power Fuel; DOCKETNUMBER: 2005-1748-PST-E; TCEQ ID NUMBERS: RN100642099;LOCATION: 10601 Fuqua Street, Houston, Harris County, Texas;TYPE OF FACILITY: convenience store with retail sales of gasoline;RULES VIOLATED: 30 TAC §37.815(a) and (b), by failing to demon-strate acceptable �nancial assurance for taking corrective action andfor compensating third parties for bodily injury and property damagecaused by accidental releases arising from the operation of petroleumUSTs; PENALTY: $3,280; STAFF ATTORNEY: Shana Horton,Litigation Division, MC 175, (512) 239-1088; REGIONAL OFFICE:Houston Regional Of�ce, 5425 Polk Avenue, Suite H, Houston, Texas77023-1486, (713) 767-3500.

(4) COMPANY: La Roca Ready Mix, Inc.; DOCKET NUMBER:2005-0937-AIR-E; TCEQ ID NUMBERS: RN104553359; LOCA-TION: 7696 Farm-to-Market Road 1960, Dayton, Liberty County,Texas; TYPE OF FACILITY: concrete batch plant; RULES VIO-LATED: 30 TAC §116.110(a)(2)(A), and Texas Health and SafetyCode (THSC), §382.085(b) and §382.0518(a), by failing to obtainproper authorization prior to commencing operation of an existingconcrete batch plant; PENALTY: $10,000; STAFF ATTORNEY:Justin Lannen, Litigation Division, MC R-4, (817) 588-5927; RE-GIONAL OFFICE: Houston Regional Of�ce, 5425 Polk Avenue,Suite H, Houston, Texas 77023-1486, (713) 767-3500.

(5) COMPANY: M & M General Contractors, Inc. dba M & MLimestone; DOCKET NUMBER: 2004-0996-WQ-E; TCEQ IDNUMBERS: RN102842424; LOCATION: on approximately 200acres of section 54, block 24 T & P Railway Company Survey nearLorraine, Big Springs, Mitchell County, Texas; TYPE OF FACILITY:rock crusher; RULES VIOLATED: 30 TAC §281.25(a)(4), and 40Code of Federal Regulations §122.26, by failing to have authorizationto discharge stormwater from an industrial activity requiring a per-mit; PENALTY: $8,000; STAFF ATTORNEY: Courtney St. Julian,Litigation Division, MC 175, (512) 239-0617; REGIONAL OFFICE:Abilene Regional Of�ce, 1977 Industrial Boulevard, Abilene, Texas79602-7833, (325) 698-9674.

(6) COMPANY: New Town Water Corporation; DOCKET NUMBER:2005-0135-PWS-E; TCEQ ID NUMBERS: RN101179109; LOCA-TION: on Old Altair Road, Eagle Lake, Colorado County, Texas;TYPE OF FACILITY: public water system; RULES VIOLATED:30 TAC §290.110(c)(5)(A) and (d)(3)(C) and §290.121, by failing todevelop and maintain an up-to-date system monitoring plan; 30 TAC§290.46(e)(3)(A), and THSC, §341.033(a), by failing to operate thefacility under the direct supervision of a water works operator whoheld an applicable, valid license issued by the executive director;30 TAC §290.110(c)(5)(A), by failing to perform a chlorine residualtest at the representative locations in the distribution system at leastonce every seven days; 30 TAC §290.110(d)(3)(C), by failing to use a

method that conformed to the requirements of 30 TAC §290.119, re-lating to analytical procedures; and 30 TAC §290.51(a)(3), and TWC,§5.702(a), by failing to pay Public Health Service fees; PENALTY:$1,500; STAFF ATTORNEY: Shawn Slack, Litigation Division,MC 175, (512) 239-0063; REGIONAL OFFICE: Houston RegionalOf�ce, 5425 Polk Avenue, Suite H, Houston, Texas 77023-1486, (713)767-3500.

(7) COMPANY: Rafael Padilla dba Ralphs Auto Service; DOCKETNUMBER: 2004-1416-PST-E; TCEQ ID NUMBERS: RN101654739;LOCATION: 2301 North Piedras Street, El Paso, El Paso County,Texas; TYPE OF FACILITY: automotive repair shop; RULES VIO-LATED: 30 TAC §334.49(a)(2) and TWC, §26.3475(d), by failing tohave installed a method of corrosion protection for the tank system; 30TAC §37.815(a) and (b), by failing to demonstrate acceptable �nancialassurance for taking corrective action and for compensating thirdparties for bodily injury and property damage caused by accidentalreleases arising from the operation of petroleum USTs; 30 TAC§334.50(a)(1)(A), and TWC, §26.3475(c)(1), by failing to provideproper release detection for tank Number 4; and 30 TAC §334.7(a)(1),and TWC, §26.346(a), by failing to register tank Number 4 with thecommission; PENALTY: $9,500; STAFF ATTORNEY: JacquelynBoutwell, Litigation Division, MC 175, (512) 239-5846; REGIONALOFFICE: El Paso Regional Of�ce, 401 East Franklin Avenue, Suite560, El Paso, Texas 79901-1212, (915) 834-4949.

(8) COMPANY: The City of Cockrell Hill; DOCKET NUMBER:2005-0702-PWS-E; TCEQ ID NUMBERS: RN101185320; LOCA-TION: 4125 West Clarendon Drive, Cockrell Hill, Dallas County,Texas; TYPE OF FACILITY: public water system; RULES VIO-LATED: 30 TAC §290.109(f)(3), and §290.122(b)(2)(A), and THSC,§341.031(a), by exceeding the maximum contaminant level for totalcoliform bacteria during the months of August 2003, August - De-cember 2004, and February 2005, and by failing to provide publicnotice of those violations within the statutorily required time frame;and 30 TAC §290.109(c)(3)(A)(i) and §290.122(c)(2)(A), by failing tocollect additional water samples as required after a positive coliformbacteria sample in October and November 2004, and by failing toprovide public notice of those violations within the statutorily requiredtime frame; PENALTY: $6,525; STAFF ATTORNEY: Lena Roberts,Litigation Division, MC 175, (512) 239-0019; REGIONAL OFFICE:Dallas-Fort Worth Regional Of�ce, 2309 Gravel Drive, Fort Worth,Texas 76118-6951, (817) 588-5800.

(9) COMPANY: Union Carbide Corporation; DOCKET NUMBER:2005-0233-AIR-E; TCEQ ID NUMBERS: RN100219351; LOCA-TION: 3301 Fifth Avenue South, Texas City, Galveston County,Texas; TYPE OF FACILITY: petrochemical manufacturing plant;RULES VIOLATED: 30 TAC §116.814(a) and §116.115(c), PermitNumber 49023, and THSC, §382.085(b), by failing to maintain emis-sion rates below allowable Maximum Allowable Emission Rate Tablelimits; PENALTY: $14,175; STAFF ATTORNEY: Shannon Strong,Litigation Division, MC 175, (512) 239-0972; REGIONAL OFFICE:Houston Regional Of�ce, 5425 Polk Avenue, Suite H, Houston, Texas77023-1486, (713) 767-3500.

(10) COMPANY: Valley Star, Inc. dba Mike’s Grocery; DOCKETNUMBER: 2005-1014-PST-E; TCEQ ID NUMBERS: RN102249604;LOCATION: 680 Buford Street, Beaumont, Jefferson County, Texas;TYPE OF FACILITY: convenience store with retail sales of gasoline;RULES VIOLATED: 30 TAC §334.72(3), by failing to report asuspected release to the TCEQ within 24 hours of the discovery; 30TAC §115.246(1) and (7)(A), and THSC, §382.085(b), by failing tomaintain and produce all current Stage II records for on-site review;and 30 TAC §115.248(1), and THSC, §382.085(b), by failing tomake each employee aware of the purposes and correct operation


procedures of the Stage II equipment; PENALTY: $4,000; STAFFATTORNEY: Deanna Sigman, Litigation Division, MC 175, (512)239-0619; REGIONAL OFFICE: Beaumont Regional Of�ce, 3870Eastex Freeway, Beaumont, Texas 77703-1892, (409) 898-3838.

(11) COMPANY: Wayne Bagley; DOCKET NUMBER: 2005-1764-MSW-E; TCEQ ID NUMBERS: RN104713078; LOCATION: approx-imately 1.2 miles north of United States Highway 79 off Country Road301, east of Carthage, Panola County, Texas; TYPE OF FACILITY:property involving management of municipal solid waste; RULES VI-OLATED: 30 TAC §330.5(c), by failing to prohibit solid waste dis-charges or activities which caused municipal solid waste to be dis-charged into or adjacent to waters in the state without obtaining speci�cauthorization for such a discharge from the commission; PENALTY:$7,500; STAFF ATTORNEY: Jacquelyn Boutwell, Litigation Division,MC 175, (512) 239-5846; REGIONAL OFFICE: Tyler Regional Of-�ce, 2916 Teague Drive, Tyler, Texas 75701-3756, (903) 535-5100.

(12) COMPANY: Wood Processing Services, Inc.; DOCKET NUM-BER: 2005-1314-MSW-E; TCEQ ID NUMBERS: RN104606801;LOCATION: 3236 Chambers Street, Venus, Johnson County, Texas;TYPE OF FACILITY: wood recycling facility; RULES VIOLATED:30 TAC §330.5(c), by disposing of municipal solid waste at anunauthorized disposal site; 30 TAC §328.5(b), by failing to submit aNotice of Intent to conduct recycling activities; 30 TAC §37.921 and§328.5(d), by failing to demonstrate �nancial assurance for closure ofthe facility; and 30 TAC §328.5(e), by failing to make available anapproved �re prevention and suppression plan for the managementof combustible materials; PENALTY: $3,600; STAFF ATTORNEY:Mark Curnutt, Litigation Division, MC 175, (512) 239-0624; RE-GIONAL OFFICE: Dallas-Fort Worth Regional Of�ce, 2309 GravelDrive, Fort Worth, Texas 76118-6951, (817) 588-5800.


Notice of Opportunity to Comment on Shut Down/DefaultOrders of Administrative Enforcement Actions

The Texas Commission on Environmental Quality (commission)staff is providing an opportunity for written public comment on thelisted Shutdown/Default Orders (S/DOs). Texas Water Code (TWC),§26.3475 authorizes the commission to order the shutdown of any un-derground storage tank (UST) system found to be noncompliant withrelease detection, spill and over�ll prevention, and/or, after December22, 1998, cathodic protection regulations of the commission, until suchtime as the owner/operator brings the UST system into compliancewith those regulations. The commission proposes a Shutdown Orderafter the owner or operator of a UST facility fails to perform requiredcorrective actions within 30 days after receiving notice of the releasedetection, spill and over�ll prevention, and/or, after December 22,1998, cathodic protection violations documented at the facility. Thecommission proposes a Default Order when the staff has sent anexecutive director’s preliminary report and petition (EDPRP) to anentity outlining the alleged violations; the proposed penalty; and theproposed technical requirements necessary to bring the entity backinto compliance; and the entity fails to request a hearing on the matterwithin 20 days of its receipt of the EDPRP or requests a hearing andfails to participate at the hearing. In accordance with TWC, §7.075,this notice of the proposed order and the opportunity to comment ispublished in the Texas Register no later than the 30th day before thedate on which the public comment period closes, which in this case

is December 4, 2006. The commission will consider any writtencomments received and the commission may withdraw or withholdapproval of a S/DO if a comment discloses facts or considerations thatindicate that consent to the proposed S/DO is inappropriate, improper,inadequate, or inconsistent with the requirements of the statutes andrules within the commission’s jurisdiction, or the commission’s ordersand permits issued in accordance with the commission’s regulatoryauthority. Additional notice of changes to a proposed S/DO is notrequired to be published if those changes are made in response towritten comments.

Copies of each of the proposed S/DO is available for public inspectionat both the commission’s central of�ce, located at 12100 Park 35 Cir-cle, Building A, 3rd Floor, Austin, Texas 78753, (512) 239-3400 andat the applicable regional of�ce listed as follows. Written commentsabout the S/DO shall be sent to the attorney designated for the S/DOat the commission’s central of�ce at P.O. Box 13087, MC 175, Austin,Texas 78711-3087 and must be received by 5:00 p.m. on December4, 2006. Written comments may also be sent by facsimile machine tothe attorney at (512) 239-3434. The commission attorneys are avail-able to discuss the S/DOs and/or the comment procedure at the listedphone numbers; however, comments on the S/DOs shall be submittedto the commission in writing.

(1) COMPANY: Plain-O-Gas, Inc. dba Fina; DOCKET NUMBER:2006-0321-PST-E; TCEQ ID NUMBERS: RN101542512; LOCA-TION: 1421 North Central Expressway, Plano, Collin County, Texas;TYPE OF FACILITY: convenience store with retail sales of gasoline;RULES VIOLATED: 30 TAC §334.10(b), by failing to maintainthe underground storage tank (UST) records as required; 30 TAC§115.244(2) and (3), and Texas Health and Safety Code (THSC),§382.085(b), failing to conduct daily and monthly inspections of theStage II vapor recovery system; 30 TAC §115.248(1), and THSC,§382.085(b), by failing to provide Stage II in-house training to ensurethat at least one station representative receives training and instructionin the operation and maintenance of the Stage II vapor recovery systemby successfully completing a training course approved by the executivedirector, and by failing to ensure that each such station representativeis then responsible for making every current and future employeeaware of the purposes and correct operating procedures of the system;30 TAC §115.246(1) and (3), and THSC, §382.085(b), by failing tohave a current copy of the California Air Resources Board (CARB)Executive Order for the Stage II vapor recovery system, by failingto provide and make available for review, the maintenance recordsfor the Stage II vapor recovery system, and by failing to maintainthe maintenance records for the Stage II vapor recovery system; 30TAC §115.245(2), and THSC, §382.085(b), by failing to verify properoperation of the Stage II equipment at least once every 12 months;30 TAC §115.242(3)(A), (3)(L), and (9), and THSC §382.085(b), byfailing to maintain the Stage II vapor recovery system in proper oper-ating condition, as speci�ed by the manufacturer and/or any applicableCARB Executive Order(s), and free of defects that would impair theeffectiveness of the system, including, but not limited to absence ordisconnection of any component that is a part of the approved system;30 TAC §334.49(c)(4), and Texas Water Code (TWC), §26.3475(d),by failing to have the corrosion protection system inspected and testedat least once every three years; 30 TAC §334.50(a)(1)(A), and TWC,§26.3475(a) and (c)(1), by failing to provide a method of releasedetection capable of detecting a release from any portion of the USTsystem which contained regulated substances including tanks, piping,and other ancillary equipment; 30 TAC §334.50(b)(2), and TWC,§26.3475(a), by failing to conduct proper release detection for the pip-ing associated with the UST system; 30 TAC §334.50(b)(2)(A)(i)(III),and TWC, §26.3475(a), by failing to conduct the annual line leakdetector test for all line leak detectors within every twelve months;


and 30 TAC §334.8(c)(4)(B), by failing to submit a true and accurateUST registration and self-certi�cation form to the TCEQ; PENALTY:$17,600; STAFF ATTORNEY: Deanna Sigman, Litigation Division,MC 175, (512) 239-0619; REGIONAL OFFICE: Dallas-Fort WorthRegional Of�ce, 2309 Gravel Drive, Fort Worth, Texas 76118-6951,(817) 588-5800.

(2) COMPANY: Speedys Mart Incorporated dba Speedy MartC-Stores, Formerly Known as National Mart Convenience Store;DOCKET NUMBER: 2003-0692-PST-E; TCEQ ID NUMBERS:RN101735496; LOCATION: 6643 Cullen Boulevard, Houston, HarrisCounty, Texas; TYPE OF FACILITY: convenience store with retailsales of gasoline; RULES VIOLATED: 30 TAC §334.8(c)(4)(B), andTWC, §26.346(a), by failing to submit an accurate UST registrationand self-certi�cation form to the TCEQ; 30 TAC §334.8(c)(5)(A)(i),and TWC, §26.3467(a), by failing to make available to a commoncarrier a valid, current delivery certi�cate prior to delivery of aregulated substance into the UST system; 30 TAC §37.815(a) and (b),by failing to demonstrate acceptable �nancial assurance for takingcorrective action and for compensating third parties for bodily injuryand property damage caused by accidental releases arising from theoperation of petroleum USTs; 30 TAC §334.50(b)(1)(A), (b)(2)(A)(i),and (d)(4)(A)(ii)(II); and TWC, §26.3475(a) and (c)(1), by failing toput the automatic tank gauge system into test mode at least once permonth, and by failing to equip the regular unleaded pressurized lineon the UST system with a functioning automatic line leak detector; 30TAC §334.51(b)(2)(C), and TWC, §26.3475(c)(2), by failing to haveover�ll prevention for the UST system; 30 TAC §334.48(c), by failingto conduct inventory control at the facility, regardless of which methodof release detection was used; and 30 TAC §334.50(a)(1)(C)(ii), andTWC, §26.3475(a), by failing to ensure that an automatic line leakdetector was capable of detecting a release such that the probability ofdetection was at least 95%, and the probability of false alarms was nogreater than 5%; PENALTY: $20,000; STAFF ATTORNEY: ShawnSlack, Litigation Division, MC 175, (512) 239-0063; REGIONALOFFICE: Houston Regional Of�ce, 5425 Polk Avenue, Suite H,Houston, Texas 77023-1486, (713) 767-3500.


Notice of Request for Public Comment and Notice of a PublicMeeting for Two Total Maximum Daily Loads

The Texas Commission on Environmental Quality (TCEQ or commis-sion) has made available for public comment two draft Total MaximumDaily Loads (TMDLs) for chloride and total dissolved solids in theColorado River Below E. V. Spence Reservoir (Segment 1426) of theColorado River Basin, in Coke and Runnels Counties. The TCEQ willconduct a public comment meeting to receive comments on the draftTMDLs. This announcement also constitutes notice that the TMDLwill become part of the State Water Quality Management Plan upon ap-proval by the United States Environmental Protection Agency (EPA).

Texas is required to develop TMDLs for impaired water bodies in-cluded in the State of Texas Clean Water Act, §303(d) list of impairedwater bodies. A TMDL is a detailed water quality assessment that pro-vides the scienti�c foundation to allocate pollutant loads in a certainbody of water in order to restore and maintain designated uses.

The TCEQ will conduct a public comment meeting on the draft TMDLsfor chloride and total dissolved solids in the Colorado River Below E.

V. Spence Reservoir (Segment 1426) of the Colorado River Basin, inCoke and Runnels Counties. The purpose of the public meeting is toprovide the public an opportunity to comment on the draft TMDLs. Thecommission requests comment on each of the six major components ofthe TMDL: problem de�nition, endpoint identi�cation, source analy-sis, linkage between sources and receiving waters, margin of safety, andpollutant loading allocation. After the public comment period, TCEQstaff may revise the TMDLs, if appropriate. The �nal TMDLs willthen be considered by the commission for adoption. Upon adoption ofthe TMDLs by the commission, the �nal TMDLs and a response to allcomments will be made available on the TCEQ Web site referenced be-low. The TMDLs will then be submitted to EPA Region 6 for approval.Upon approval, the TMDLs will be certi�ed as an update to the Stateof Texas Water Quality Management Plan.

The public comment meeting will be held on November 14, 2006, at7:00 p.m., at the Ballinger City Hall, 700 Railroad Avenue, Ballinger,Texas 76821. At this meeting individuals have the opportunity topresent oral statements when called upon in order of registration.There will be no agenda or presentations given, open discussion willnot occur during the meeting. However, an agency staff member willbe available to discuss the matter 30 minutes prior to the meeting andwill answer questions before and after all public comments have beenreceived.

Written comments should be submitted to Kerry Niemann, TCEQWater Programs Division, MC 203, P.O. Box 13087, Austin, TX78711-3087 or faxed to (512) 239-1414. All comments must bereceived by 5:00 p.m., December 4, 2006, and should reference, TwoTotal Maximum Daily Loads for Chloride and Total Dissolved Solids inthe Colorado River Below E. V. Spence Reservoir, For Segment Num-ber 1426. For further information regarding the draft TMDLs, pleasecontact Kerry Niemann, Water Programs Division, at (512) 239-0483or [email protected]. Copies of the draft TMDL documentwill be available and can be obtained via the commission’s Web siteat: http://www.tceq.state.tx.us/implementation/water/tmdl/index.htmlor by calling (512) 239-4900.

Persons who have special communication or other accommodationneeds who are planning to attend the meeting should contact thecommission at (512) 239-4900. Requests should be made as far inadvance as possible.

TRD-200605698Robert MartinezDirector, Environmental Law DivisionTexas Commission on Environmental QualityFiled: October 20, 2006

Notice of Water Quality Applications

The following notices were issued on October 19, 2006.

The following require the applicants to publish notice in a newspaper.Public comments, requests for public meetings, or requests for a con-tested case hearing may be submitted to the Of�ce of the Chief Clerk,Mail Code 105, P.O. Box 13087, Austin, Texas 78711-3087, WITHIN30 DAYS OF THE DATE OF NEWSPAPER PUBLICATION OF THENOTICE.

City of Tom Bean has applied for a renewal of TPDES Permit No.10057-001, which authorizes the discharge of treated domestic waste-water at a daily average �ow not to exceed 150,000 gallons per day.The facility is located approximately 0.5 mile southeast of the intersec-tion of State Highway 11 and Farm-to-Market Road 2729 in GraysonCounty, Texas.


City of Bells has applied to the Texas Commission on EnvironmentalQuality (TCEQ) for a renewal of TPDES Permit No. 10126-001, whichauthorizes the discharge of treated domestic wastewater at a daily aver-age �ow not to exceed 170,000 gallons per day. The facility is locatedapproximately 480 feet northwest of the intersection of U.S. Highway69 and Farm-to-Market Road 1897, north of Bells in Grayson County,Texas.

City of Fair�eld has applied for a renewal of TPDES Permit No.WQ0010168001, which authorizes the discharge of treated domesticwastewater at a daily average �ow not to exceed 200,000 gallonsper day. The facility is located approximately 4,000 feet north ofthe intersection of U.S. Highway 84 and Farm-to-Market Road 488,approximately 5,000 feet northeast of the intersection of U.S. Highway75 and 84 in Freestone County, Texas.

City of Corpus Christi has applied for a renewal of TPDES Permit No.WQ0010401004, which authorizes the discharge of treated domesticwastewater at an annual average �ow not to exceed 16,200,000 gallonsper day. The facility is located at 601 Nile Drive, at the intersectionof Nile Drive and Ennis Joslin Road in the City of Corpus Christi inNueces County, Texas.

City of Keene has applied for a renewal of TPDES Permit No. 10611-002, which authorizes the discharge of treated domestic wastewater ata daily average �ow not to exceed 830,000 gallons per day. The facilityis located approximately 0.6 mile south of U.S. Highway 67 on the eastside of County Road 318 at its intersection with State Highway 3136in Johnson County, Texas.

City of Terrell has applied for a renewal of TPDES Permit No.WQ0010747001, which authorizes the discharge of treated domesticwastewater at an annual average �ow not to exceed 4,500,000 gallonsper day. The facility is located approximately one mile south of theintersection of Interstate Highway 20 and Highway 34, south of Cityof Terrell in Kaufman County, Texas.

City of Byers has applied to the Texas Commission on EnvironmentalQuality (TCEQ) for a renewal of TPDES Permit No. 10890-001, whichauthorizes the discharge of treated domestic wastewater at a daily av-erage �ow not toto-Market Road 171 and State Highway 79 in ClayCounty, Texas.

Polk County Fresh Water Supply District No. 2 has applied for a re-newal of TPDES Permit No. 11298-001, which authorizes the dis-charge of treated domestic wastewater at a daily average �ow not to ex-ceed 260,000 gallons per day. The facility is located approximately 800feet east of the City of Onalaska and approximately 2,500 feet south-east of the intersection of U.S. Highway 190 and State Highway 356 inPolk County, Texas.

Horace Marion Peveto and Betty Jean Peveto have applied for a minoramendment to revise monitoring language in Section B on page 2 ofthe permit to read: monitoring shall be done after the �nal treatmentunit and prior to irrigation. The existing permit authorizes the disposalof treated domestic wastewater at a daily average �ow not to exceed12,000 gallons per day via surface irrigation of 18 acres of non-publicaccess agricultural land. This permit will not authorize a discharge ofpollutants into waters in the State. The facility and disposal site arelocated approximately 1,500 feet north of Interstate Highway 10 and2,300 feet east of State Highway 62 in Orange County, Texas. Thefacility and disposal site are located in the drainage basin of Cow Bayouin Segment No. 0511 of the Sabine River Basin.

Mildred Independent School District has applied for a renewal of Per-mit No. 11646-001, which authorizes the disposal of treated domesticwastewater at a daily average �ow not to exceed 20,000 gallons per dayvia surface irrigation of 20.0 acres of non-public access pasture land.

This permit will not authorize a discharge of pollutants into waters inthe State. The facility and disposal site are located approximately 5miles southeast of the City of Corsicana and 800 feet north of U.S.Highway 287 in Navarro County, Texas.

Town of Oak Ridge has applied for a renewal of TPDES Permit No.13514-001, which authorizes the discharge of treated domestic waste-water at a daily average �ow not to exceed 37,500 gallons per day.The facility is located approximately 1,700 feet south of U. S. High-way 82 and approximately 9,800 feet west of Farm-to-Market Road678 in Cooke County, Texas.

Trinity River Authority of Texas has applied for a renewal of TPDESPermit No. 13795-001, which authorizes the discharge of �lter back-wash ef�uent from a water treatment plant at a daily average �ow notto exceed 900,000 gallons per day. The facility is located on WallaceRoad, approximately 1.8 miles north of Farm-to-Market Road 2628 inWalker County, Texas.

Upper Trinity Regional WaterDistrict has applied for a renewal ofTPDES Permit No. WQ0014323001, which authorizes the dischargeof treated domestic wastewater at an annual average �ow not toexceed 2,000,000 gallons per day in the �nal phase. The draft permitauthorizes the discharge of treated domestic wastewater at an annualaverage �ow not to exceed 1,500,000 gallons per day. The facilityis located approximately 4,250 feet northeast of the intersection ofMar-Top Road and Naylor Road (Farm-to-Market Road 424), (a site500 feet east of Naylor Road) in Denton County, Texas.

Collin County has applied for a renewal of TPDES Permit No.WQ0014486001, which authorizes the discharge of treated domesticwastewater at a daily average �ow not to exceed 32,000 gallons perday. The facility is located 3,400 feet northeast of the intersection ofFarm-to-Market Road 2862 and County Road 511 in Collin County,Texas.

City of Stanton has applied for a new permit, Proposed Permit No.WQ0014609001, to authorize the disposal of treated domestic waste-water at a daily average �ow not to exceed 100,000 gallons per day viasurface irrigation of 34.2 acres of non-public access agricultural landwithin 40 acres of City owned ef�uent disposal area. This permit willnot authorize a discharge of pollutants into waters in the State. Autho-rization to discharge was previously permitted by expired Permit No.11043-001. The facility and disposal site are located one mile south-east of the intersection of State Highway 137 and U.S. Highway 80 and0.5 mile south of the City of Stanton in Martin County, Texas.

City of Seagraves has applied for a new permit, Proposed Permit No.WQ0014631001, to authorize the disposal of treated domestic waste-water at a daily average �ow not to exceed 280,000 gallons per day viasurface irrigation of 100 acres of non-public access agricultural land.This permit will not authorize a discharge of pollutants into waters inthe State. The facility and disposal site are located approximately 1,300feet north of State Highway 328, east of the City of Seagraves in GainesCounty, Texas. The facility and disposal site are located in the drainagebasin of Colorado River below Lake J. B. Thomas in Segment No. 1412of the Colorado River Basin.

Creek Park Corporation has applied for a new permit, proposedTexas Pollutant Discharge Elimination System (TPDES) PermitNo. WQ0014726001, to authorize the discharge of treated domesticwastewater at a daily average �ow not to exceed 12,000 gallons perday. The facility will be located 0.75 mile south of the intersection ofFarm-to-Market Road 917 and Farm-to-Market Road 1902, approx-imately two miles east-southeast of the City of Joshua, and .25 milewest from the intersection of Pleasant Oaks Road and Johnson CountyRoad 1022 in Johnson County, Texas.


The following do not require publication in a newspaper. Written com-ments or requests for a public meeting may be submitted to the Of�ceof the Chief Clerk, at the address provided in the information sectionabove, WITHIN 30 DAYS OF THE ISSUED DATE OF THE NO-TICE.

The Texas Commission on Environmental Quality (TCEQ) has ini-tiated a minor amendment of the Texas Pollutant Discharge Elimi-nation System (TPDES) Permit No. WQ0010589002 issued to Cityof Longview, P.O. Box 1952, Longview, Texas 75606, to reinstatethe 7-day biomonitoring testing frequency for Ceriodaphnia dubia andPimephales promelas from once per month to once per quarter. Theexisting permit authorizes the discharge of treated domestic wastewa-ter at an annual average �ow not to exceed 21,000,000 gallons per day.The facility is located approximately 2,500 feet west of the crossing ofGrace Creek by Farm-to-Market Road 1845, approximately 4,000 feetsouth of the intersection of Farm-to-Market Road 1845 and Farm-to-Market Road 2087 in Gregg County, Texas.

INFORMATION SECTION

To view the complete issued notices, view the notices on our web site atwww.tceq.state.tx.us/comm_exec/cc/pub_notice.html or call the Of�ceof the Chief Clerk at (512) 239-3300 to obtain a copy of the completenotice. When searching the web site, type in the issued date rangeshown at the top of this document to obtain search results.

If you need more information about these permit applications or thepermitting process, please call the TCEQ Of�ce of Public Assistance,Toll Free, at 1-800-687-4040. General information about the TCEQcan be found at our web site at www.TCEQ.state.tx.us. Si desea infor-mación en Español, puede llamar al 1-800-687-4040.

TRD-200605860LaDonna CastañuelaChief ClerkTexas Commission on Environmental QualityFiled: October 25, 2006

Notice of Water Rights Application

Notices issued October 24, 2006, and October 25, 2006.

APPLICATION NO. 12022; O. P. Leonard, Jr. Investment Company,LP; Nancy A. Leonard Investment Company, LP; Robert W. Leonard,Jr.; Ellen Leonard; Emily Leonard; Elizabeth Leonard; PA&M, Ltd;and Martha Jane Anthony, P.O. Box 1718, Fort Worth, Texas 76101,Applicant, have applied for a Water Use Permit to maintain two exist-ing dams and reservoirs on an unnamed tributary of Silver Creek, theTrinity River Basin and divert and use a total of 100 acre-feet of wa-ter per year from the reservoirs (50 acre-feet from each reservoir) forindustrial (including oil and gas operations), livestock, and domesticpurposes in Tarrant and Parker Counties. The application was receivedon February 10, 2006. Additional information and fees were receivedon April 10, May 31, 2006, August 18, 2006, and September 18, 2006.The application was accepted for �ling and declared administrativelycomplete on September 14, 2006. Written public comments and re-quests for a public meeting should be submitted to the Of�ce of ChiefClerk, at the address provided in the information section below, within30 days of the date of newspaper publication of the notice.

APPLICATION NO. 05-4712A; Lake Lydia, Inc., Applicant, P.O. Box1484, Quitman, Texas 75783, has applied for an amendment to Certi�-cate of Adjudication No. 05-4712 to divert and use not to exceed 100acre-feet of water per year for agricultural (irrigation) purposes fromLake Lydia in Wood County. The application was received on August10, 2006. Additional information and fees were received on September

21, 2006, October 3, 2006 and October 5, 2006. The application wasdeclared administratively complete and accepted for �ling on October10, 2006. Written public comments and requests for a public meetingshould be submitted to the Of�ce of Chief Clerk, at the address pro-vided in the information section below, within 30 days of the date ofnewspaper publication of the notice.

INFORMATION SECTION

To view the complete issued notices, view the notices on our web site atwww.tceq.state.tx.us/comm_exec/cc/pub_notice.html or call the Of�ceof the Chief Clerk at (512) 239-3300 to obtain a copy of the completenotice. When searching the web site, type in the issued date rangeshown at the top of this document to obtain search results.

A public meeting is intended for the taking of public comment, and isnot a contested case hearing.

The Executive Director can consider approval of an application unlessa written request for a contested case hearing is �led. To request a con-tested case hearing, you must submit the following: (1) your name (orfor a group or association, an of�cial representative), mailing address,daytime phone number, and fax number, if any: (2) applicant’s nameand permit number; (3) the statement "[I/we] request a contested casehearing;" and (4) a brief and speci�c description of how you would beaffected by the application in a way not common to the general public.You may also submit any proposed conditions to the requested applica-tion which would satisfy your concerns. Requests for a contested casehearing must be submitted in writing to the TCEQ Of�ce of the ChiefClerk at the address provided in the information section below.

If a hearing request is �led, the Executive Director will not issue the re-quested permit and may forward the application and hearing request tothe TCEQ Commissioners for their consideration at a scheduled Com-mission meeting.

Written hearing requests, public comments or requests for a publicmeeting should be submitted to the Of�ce of the Chief Clerk, MC 105,TCEQ, P.O. Box 13087, Austin, TX 78711-3087. For information con-cerning the hearing process, please contact the Public Interest Counsel,MC 103, at the same address. For additional information, individualmembers of the general public may contact the Of�ce of Public As-sistance at 1-800-687-4040. General information regarding the TCEQcan be found at our web site at www.tceq.state.tx.us. Si desea informa-ción en Español, puede llamar al 1-800-687-4040.

TRD-200605861LaDonna CastañuelaChief ClerkTexas Commission on Environmental QualityFiled: October 25, 2006

General Land Of�cePublic Notice of Proposed Settlement Agreement (NaturalResource and Damage Assessment Program)

AGENCIES: The Texas General Land Of�ce (TGLO), Texas Parksand Wildlife Department (TPWD), and the Texas Commission on En-vironmental Quality (TCEQ) (collectively, the Trustees).

ACTION: Notice of availability of a proposed Settlement Agreementfor Natural Resource Damages related to the tanker M/V Torm Mary("Torm Mary"), operated by D/S Torm A/S DampskibsselskabetTORM, fuel oil discharge and of a 30-day period for public commenton the Agreement beginning the date of publication of this notice.


SUMMARY: Notice is hereby given that the Trustees propose a Set-tlement Agreement to compensate for natural resource injuries, eco-logical service losses, and recreational service losses attributable to thedischarge of oil into the navigable waters of the Neches River and theBessie Heights Marsh within the Nelda Stark Unit of the TPWD LowerNeches Wildlife Management Area (Bessie Heights Marsh), Jeffersonand Orange Counties, Texas ("Incident"). The proposed Agreementcalls for the responsible party to provide $121,435.00 to the Trusteesto be used for the enhancement of river based recreational activitiesand the restoration of wetland habitat in the vicinity of the Incident.The opportunity for public review and comment on the proposed Set-tlement Agreement announced in this notice is required under the OilPollution Act of 1990 (OPA), 15 Code of Federal Regulations (C.F.R.)§990.26 (d) of the Natural Resource Damage Assessment regulations.

ADDRESSES: A copy of this Settlement Agreement may be obtainedby contacting: Keith Tischler, Texas General Land Of�ce, CoastalResources Division, Natural Resource Damage Assessment Program,P.O. Box 12873, Austin, Texas 78711-2873, Phone: (512) 463-6287,e-mail: [email protected].

DATES: Comments must be submitted in writing within 30 days ofthe publication of this notice to Keith Tischler of the Texas GeneralLand Of�ce at the address listed in the previous paragraph. The NaturalResource Trustees will consider all written comments received duringthe comment period prior to �nalizing the Draft Settlement Agreement.

SUPPLEMENTARY INFORMATION: On August 2, 2004, the an-chored ship M/V Torm Mary discharged approximately 600 barrels of#6 Fuel Oil (IFO-380) from the starboard number two fuel tank afterbeing struck by a barge attempting to moor alongside. The fuel oil wasdischarged into and on navigable waters of the Neches River, Gray’sBayou, Bessie Heights Marsh, and numerous small sloughs that termi-nate in the Neches River. Observed impacts include shoreline oilingof marsh vegetation along the Neches River, Gray’s Bayou, and BessieHeights Canals. Shoreline oiling was also noted along the southwest-ern edge of the Bessie Heights Marsh and within the TPWD LowerNeches Wildlife Management Area. The discharge of #6 Fuel Oil im-pacted open water, shoreline fringing vegetation, sand and shell mudbeach, freshwater marsh, and intermediate marsh habitats. The oilingof these habitats ranged from light to heavy, and resulted in bands offuel oil of varying widths on vegetation and on open water. Aerial sur-vey reports and shoreline surveys indicate that at least a sheen of fuel oilwas observed in the open water portions of the Bessie Heights Marshand along the Neches River from the point of collision just below theReserve Fleet anchorage to the mouth of Sabine Lake.

In addition to the impact to wildlife and wildlife habitat, the incidentresulted in the loss of public recreational �shing and boating opportu-nities. From the date of the incident, the Port Neches Park boat rampand adjacent infrastructure were used as a staging area for oil spill re-sponse activities as designated in the Land Of�ce’s Oil Spill ResponsePlan and were subsequently not available for public use from Monday,August 2, 2004 through Thursday, August 19, 2004.

The TGLO, TCEQ, TPWD, US Fish and Wildlife Service (USFWS)(representing the United States Department of the Interior), and the Na-tional Oceanic and Atmospheric Administration (NOAA) (represent-ing the United States Department of Commerce) are designated as the

natural resource trustees pursuant to OPA, 33 U.S.C. §2706(b), Ex-ecutive Order 12777, and the National Contingency Plan, 40 C.F.R.§300.600 and 300.605, with responsibility to conduct natural resourcedamage assessments on behalf of the public when discharges of oil af-fect natural resources and services. The Trustees are authorized to acton behalf of the public under these authorities to assess and restorenatural resources and related public use injured or lost as a result ofdischarges or releases of hazardous substances into the environment.

The Natural Resource Trustees have determined that resources subjectto their trust authority under these Acts were exposed to fuel oil andrecreational opportunities were lost as a result of the discharge. Thequantity and concentration of the material discharged was suf�cient toresult in the loss of shoreline vegetation and habitat. Closure of PortNeches Park to support oil spill response activities resulted in a loss ofrecreational opportunities to the public. Consequently the Trustees areseeking the restoration of coastal aquatic resources and services lostand enhancement of like public recreational opportunities as a result ofthe Incident.

Natural resources and associated services identi�ed as lost, injured,and/or interrupted by the Incident were quanti�ed through a HabitatEquivalent Analysis (HEA) which included habitats composed ofshoreline fringing vegetation, sand and shell mud beach, and an-thropologic hard substrate (rip-rap) utilized by encrusting organisms.Recreational service losses were evaluated by analyzing historicalusage data for the boat ramp located at the Port Neches Park anddetermining the value of lost recreational opportunity through ben-e�ts transfer methods. The USFWS and NOAA participated in andcontributed to the assessment but elected to withdraw from furtherparticipation in the assessment and settlement upon payment ofassessment costs incurred by their prospective agencies.

The Trustees and D/S Torm A/S Dampskibsselskabet TORM have re-viewed all of the available data and restoration scaling completed bythe Trustees, and agreed to settle natural resource liability for injuriesthat resulted from the incident. D/S Torm A/S DampskibsselskabetTORM has agreed to pay $121,435.00 to the Trustees for the construc-tion of wetland habitat and enhance like recreational opportunities inthe vicinity of the incident as well as pay all Trustees costs of assess-ment. The Trustees will prepare and notice a Restoration Plan detailingthe proposed use of these funds prior to the implementation of restora-tion actions.

For further information contact: Keith Tischler at (512) 463-6287, fax:(512) 475-0680, e-mail: [email protected].

TRD-200605793Larry L. LaineChief Clerk, Deputy Land CommissionerGeneral Land Of¿ceFiled: October 24, 2006

Department of State Health ServicesLicensing Actions for Radioactive Materials








TRD-200605802Cathy CampbellGeneral CounselDepartment of State Health ServicesFiled: October 25, 2006

Texas Department of InsuranceCompany Licensing

Application for admission to the State of Texas by AEQUICAP IN-SURANCE COMPANY, a foreign �re and/or casualty company. Thehome of�ce is in Fort Lauderdale, Florida.

Application for admission to the State of Texas by ARKANSASCOMMUNITY CARE, INC., a foreign health maintenance organiza-tion (HMO). The home of�ce is in Little Rock, Arkansas.

Application for admission to the State of Texas by BRENTWOODNATIONAL INSURANCE COMPANY, a foreign �re and/or casualtycompany. The home of�ce is in Brentwood, Tennessee.

Application for incorporation to the State of Texas by KS PLAN AD-MINISTRATORS, LLC, a domestic health maintenance organization(HMO). The home of�ce is in Houston, Texas.

Application to change the name of FIDELITY AND GUARANTYLIFE INSURANCE COMPANY to OM FINANCIAL LIFE INSUR-ANCE COMPANY, a foreign life, accident and/or health company.The home of�ce is in Baltimore, Maryland.

Any objections must be �led with the Texas Department of Insurance,within twenty (20) calendar days from the date of the Texas Regis-ter publication, addressed to the attention of Godwin Ohaechesi, 333Guadalupe Street, M/C 305-2C, Austin, Texas 78701.

TRD-200605864Gene C. JarmonChief Clerk and General CounselTexas Department of InsuranceFiled: October 25, 2006

Third Party Administrator Applications

The following third party administrator (TPA) applications have been�led with the Texas Department of Insurance and are under considera-tion.

Application of HEALTHNOW CONTRACTOR SERVICES, INC., aforeign third party administrator. The home of�ce is BUFFALO, NEWYORK.

Application of STANDARD FINANCIAL GENERAL ADJUST-MENT, INC., a domestic third party administrator. The home of�ceis DALLAS, TEXAS.

Any objections must be �led within 20 days after this notice is pub-lished in the Texas Register, addressed to the attention of Matt Ray,MC 107-1A, 333 Guadalupe, Austin, Texas 78701.

TRD-200605865Gene C. JarmonChief Clerk and General CounselTexas Department of InsuranceFiled: October 25, 2006

Texas Lottery CommissionInstant Game Number 766 "Bonus Cashword"

1.0 Name and Style of Game.

A. The name of Instant Game No. 766 is "BONUS CASHWORD".The play style is "crossword".

1.1 Price of Instant Ticket.

A. Tickets for Instant Game No. 766 shall be $3.00 per ticket.

1.2 De�nitions in Instant Game No. 766.

A. Display Printing - That area of the instant game ticket outside of thearea where the Overprint and Play Symbols appear.

B. Latex Overprint - The removable scratch-off covering over the PlaySymbols on the front of the ticket.

C. Play Symbol - One of the symbols which appears under the LatexOverprint on the front of the ticket. Each Play Symbol is printed inSymbol font in black ink in positive. The possible play symbols are:A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y,Z, and blackened square.

D. Play Symbol Caption - the small printed material appearing beloweach Play Symbol which explains the Play Symbol. One and only oneof these Play Symbol Captions appears under each Play Symbol andeach is printed in caption font in black ink in positive. The Play SymbolCaption which corresponds with and veri�es each Play Symbol is asfollows:


E. Retailer Validation Code - Three (3) letters found under the remov-able scratch-off covering in the play area, which retailers use to verifyand validate instant winners. These three (3) small letters are for val-idation purposes and cannot be used to play the game. The possiblevalidation codes are: Table 2 of this section.


Low-tier winning tickets use the required codes listed in Figure 2. Non-winning tickets and high-tier tickets use a non-required combination ofthe required codes listed in Figure 2 with the exception of ∅ , which willonly appear on low-tier winners and will always have a slash throughit.

F. Serial Number - A unique 13 (thirteen) digit number appearing un-der the latex scratch-off covering on the front of the ticket. There is aboxed four (4) digit Security Number placed randomly within the Se-rial Number. The remaining nine (9) digits of the Serial Number are theValidation Number. The Serial Number is positioned beneath the bot-tom row of play data in the scratched-off play area. The Serial Numberis for validation purposes and cannot be used to play the game. Theformat will be: 0000000000000.

G. Low-Tier Prize - A prize of $3.00, $5.00, $10.00 or $20.00.

H. Mid-Tier Prize - A prize of $100 or $500.

I. High-Tier Prize - A prize of $5,000 or $35,000.

J. Bar Code - A 22 (twenty-two) character interleaved two (2) of �ve(5) bar code which will include a three (3) digit game ID, the seven(7) digit pack number, the three (3) digit ticket number and the nine(9) digit Validation Number. The bar code appears on the back of theticket.

K. Pack-Ticket Number - A 13 (thirteen) digit number consisting of thethree (3) digit game number (766), a seven (7) digit pack number, anda three (3) digit ticket number. Ticket numbers start with 001 and endwith 125 within each pack. The format will be: 766-0000001-001.

L. Pack - A pack of "BONUS CASHWORD" Instant Game ticketscontain 125 tickets, which are packed in plastic shrink-wrapping andfanfolded in pages of one (1). Ticket 001 will be shown on the frontof the pack; the back of ticket 125 will be revealed on the back of thepack. Every other book will reverse i.e., reverse order will be: theback of ticket 001 will be shown on the front of the pack and the frontof ticket 125 will be shown on the back of the pack. All packs will betightly shrink-wrapped. There will be no breaks between the tickets ina pack.

M. Non-Winning Ticket - A ticket which is not programmed to be awinning ticket or a ticket that does not meet all of the requirementsof these Game Procedures, the State Lottery Act (Texas GovernmentCode, Chapter 466), and applicable rules adopted by the Texas Lotterypursuant to the State Lottery Act and referenced in 16 TAC, Chapter401.

N. Ticket or Instant Game Ticket, or Instant Ticket - A Texas Lottery"BONUS CASHWORD" Instant Game No. 766 ticket.

2.0 Determination of Prize Winners. The determination of prize win-ners is subject to the general ticket validation requirements set forth inTexas Lottery Rule 401.302, Instant Game Rules, these Game Proce-dures, and the requirements set out on the back of each instant ticket.A prize winner in the "BONUS CASHWORD" Instant Game is deter-mined once the latex on the ticket is scratched off to expose 141 (onehundred forty-one) possible play symbols. The player must scratch offall 18 (eighteen) boxed squares in the YOUR LETTERS play area toreveal 18 play symbol letters and the boxed squares in the BONUSplay area to reveal 2 play symbol letters; then scratch the correspond-ing letters found in the BONUS CASHWORD puzzle grid play area.If a player scratches at least three (3) complete "words" in the BONUSCASHWORD puzzle grid play area, the player will win the corre-sponding prize indicated in the prize legend. For each of the 20 playsymbol letters revealed in YOUR LETTERS and BONUS play ar-eas, the player must reveal the identical key play symbol letter in theBONUS CASHWORD puzzle grid play area. Letters combined to

form a complete "word" must appear in an unbroken horizontal (left toright) sequence or vertical (top to bottom) sequence of letters within theBONUS CASHWORD puzzle grid. Only letters within the BONUSCASHWORD puzzle grid that are matched with the YOUR LETTERSand BONUS LETTERS can be used to form a complete "word". Thethree (3) small letters outside the squares in the YOUR LETTERSarea are for validation purposes and cannot be used to play BONUSCASHWORD. In the BONUS CASHWORD puzzle grid, every let-tered square within an unbroken horizontal or vertical sequence mustbe matched with the YOUR LETTERS or BONUS LETTERS to beconsidered a complete "word". Words within a word are not eligiblefor a prize. For example, all the YOUR LETTERS play symbols "S,T, O, N, E" must be revealed for this to count as one complete "word".TON, ONE or any other portion of the sequence of STONE would notcount as a complete "word". A complete "word" must contain at leastthree letters. Letters combined to form a complete "word" must appearin an unbroken vertical (top to bottom) or horizontal (left to right) stringof letters in the BONUS CASHWORD. To form a complete word, anunbroken string of letters cannot be interrupted by a block space. Anyother words contained within a complete word are not added or countedfor purposes of prize legend. Every single letter in the vertical (top tobottom) or horizontal (left to right)‘ unbroken string must: (a) be oneof the 18 larger outlined play symbols letters revealed in the play area,YOUR LETTERS or be one of the 2 larger outlined play symbols let-ters reveals in the play area, BONUS LETTERS, and (b) be included toform a complete "word". The possible complete words for this ticketare contained in the BONUS CASHWORD play area. Each possiblecomplete word must consist of three (3) or more letters and occupy anentire word space. Players must match all of the play symbol lettersto the identical key play symbols in a possible complete word in orderto complete the word. If the letters revealed form three (3) or morecomplete words each of which occupy a complete word space on theBONUS CASHWORD play area, the player will win the correspondingprize shown in the prize legend for forming that number of completewords. No portion of the display printing nor any extraneous matterwhatsoever shall be usable or playable as a part of the Instant Game.

2.1 Instant Ticket Validation Requirements.

A. To be a valid Instant Game ticket, all of the following requirementsmust be met:

1. One hundred forty-one (141) possible Play Symbols must appearunder the latex overprint on the front portion of the ticket;

2. Each of the Play Symbols must have a Play Symbol Caption under-neath, 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 fullylegible;

4. Each of the Play Symbols must be printed in black ink;

5. The ticket shall be intact;

6. The Serial Number, Retailer Validation Code and Pack-Ticket Num-ber must be present in their entirety and be fully legible;

7. The Serial Number must correspond, using the Texas Lottery’scodes, to the Play Symbols on the ticket;

8. The ticket must not have a hole punched through it, be mutilated,altered, unreadable, reconstituted or tampered with in any manner;

9. The ticket must not be counterfeit in whole or in part;

10. The ticket must have been issued by the Texas Lottery in an autho-rized manner;

11. The ticket must not have been stolen, nor appear on any list ofomitted tickets or non-activated tickets on �le at the Texas Lottery;


12. The Play Symbols, Serial Number, Retailer Validation Code andPack-Ticket Number must be right side up and not reversed in any man-ner;

13. The ticket must be complete and not miscut, and have 141 (onehundred forty-one) possible Play Symbols under the latex overprint onthe front portion of the ticket, exactly one Serial Number, exactly oneRetailer Validation Code, and exactly one Pack-Ticket Number on theticket;

14. The Serial Number of an apparent winning ticket shall correspondwith the Texas Lottery’s Serial Numbers for winning tickets, and aticket with that Serial Number shall not have been paid previously;

15. The ticket must not be blank or partially blank, misregistered, de-fective or printed or produced in error;

16. Each of the 141 (one hundred forty-one) possible Play Symbolsmust be exactly one of those described in Section 1.2.C of these GameProcedures.

17. Each of the 141 (one hundred forty-one) possible Play Symbolson the ticket must be printed in the Symbol font and must correspondprecisely to the artwork on �le at the Texas Lottery; the ticket SerialNumbers must be printed in the Serial font and must correspond pre-cisely to the artwork on �le at the Texas Lottery; and the Pack-TicketNumber must be printed in the Pack-Ticket Number font and must cor-respond precisely to the artwork on �le at the Texas Lottery;

18. The display printing on the ticket must be regular in every respectand correspond precisely to the artwork on �le at the Texas Lottery;and

19. The ticket must have been received by the Texas Lottery by appli-cable deadlines.

B. The ticket must pass all additional validation tests provided for inthese Game Procedures, the Texas Lottery’s Rules governing the awardof prizes of the amount to be validated, and any con�dential validationand security tests of the Texas Lottery.

C. Any Instant Game ticket not passing all of the validation require-ments is void and ineligible for any prize and shall not be paid. How-ever, the Executive Director may, solely at the Executive Director’sdiscretion, refund the retail sales price of the ticket. In the event a de-fective ticket is purchased, the only responsibility or liability of theTexas Lottery shall be to replace the defective ticket with another un-played ticket in that Instant Game (or a ticket of equivalent sales pricefrom any other current Instant Lottery game) or refund the retail salesprice of the ticket, solely at the Executive Director’s discretion.

2.2 Programmed Game Parameters.

A. A ticket will only win as indicated by the prize structure.

B. Consecutive non-winning tickets within a book will not have iden-tical patterns.

C. Adjacent tickets in a pack will not have identical patterns.

D. Each ticket consists of a Your Letters area, Bonus Letters area andone Bonus Cashword Puzzle Grid.

E. The Bonus Cashword Puzzle Grid will be formatted with at least1000 con�gurations (i.e. puzzle layouts not including words).

F. All Bonus Cashword Puzzle Grid con�gurations will be formattedwithin a grid that contains 11 spaces (height) by 11 spaces (width).

G. Each word will appear only once per ticket on the Bonus CashwordPuzzle Grid.

H. Each letter will only appear once per ticket in the YOUR LETTERSplay area and BONUS LETTERS play area.

I. Each Bonus Cashword Puzzle Grid will contain the following: a) 4sets of 3 letter words b) 5 sets of 4 letter words c) 3 sets of 5 letter wordsd) 3 sets of 6 letter words e) 1 set of 7 letter words f) 2 sets of 8 letterwords g) 1 set of 9 letter words

J. There will be a minimum of three (3) vowels in the YOUR LETTERSand BONUS LETTERS play areas combined.

K. The length of words found in the Bonus Cashword Puzzle Grid willrange from 3-9 letters.

L. Only words from the approved word list will appear in the BonusCashword Puzzle Grid.

M. You will never �nd a word horizontally (in either direction), ver-tically (in either direction) or diagonally (in either direction) in theYOUR LETTERS play area that matches a word in the Bonus Cash-word Puzzle Grid.

N. No one (1) letter, with the exception of vowels, will appear morethan nine (9) times in the Bonus Cashword Puzzle grid.

O. No ticket will match eleven (11) words or more.

P. Each ticket may only win one (1) prize.

Q. Three (3) to ten (10) completed words will be revealed as per theprize structure.

R. NON-WINNING TICKETS: Sixteen (16) to eighteen (18) YOURLETTERS will open at least one (1) letter in the Bonus Cashword Puz-zle Grid. At least one of the two BONUS letters will open one or morepositions on the Cashword Puzzle Grid.

2.3 Procedure for Claiming Prizes.

A. To claim a "BONUS CASHWORD" Instant Game prize of $3.00,$5.00, $10.00, $20.00, $100 or $500, a claimant shall sign the back ofthe ticket in the space designated on the ticket and present the winningticket to any Texas Lottery Retailer. The Texas Lottery Retailer shallverify the claim and, if valid, and upon presentation of proper identi-�cation, make payment of the amount due the claimant and physicallyvoid the ticket; provided that the Texas Lottery Retailer may, but isnot, in some cases, required to pay a $100 or $500 ticket. In the eventthe Texas Lottery Retailer cannot verify the claim, the Texas LotteryRetailer shall provide the claimant with a claim form and instruct theclaimant on how to �le a claim with the Texas Lottery. If the claimis validated by the Texas Lottery, a check shall be forwarded to theclaimant in the amount due. In the event the claim is not validated, theclaim shall be denied and the claimant shall be noti�ed promptly. Aclaimant may also claim any of the above prizes under the proceduredescribed in Section 2.3.B and 2.3.C of these Game Procedures.

B. To claim a "BONUS CASHWORD" Instant Game prize of $5,000or $35,000, the claimant must sign the winning ticket and present it atone of the Texas Lottery’s Claim Centers. If the claim is validated bythe Texas Lottery, payment will be made to the bearer of the validatedwinning ticket for that prize upon presentation of proper identi�cation.When paying a prize of $600 or more, the Texas Lottery shall �le theappropriate income reporting form with the Internal Revenue Service(IRS) and shall withhold federal income tax at a rate set by the IRSif required. In the event that the claim is not validated by the TexasLottery, the claim shall be denied and the claimant shall be noti�edpromptly.

C. As an alternative method of claiming a "BONUS CASHWORD" In-stant Game prize, the claimant must sign the winning ticket, thoroughlycomplete a claim form, and mail both to: Texas Lottery Commission,


Post Of�ce Box 16600, Austin, Texas 78761-6600. The risk of send-ing a ticket remains with the claimant. In the event that the claim isnot validated by the Texas Lottery, the claim shall be denied and theclaimant shall be noti�ed promptly.

D. Prior to payment by the Texas Lottery of any prize, the Texas Lotteryshall deduct a suf�cient amount from the winnings of a person who hasbeen �nally determined to be:

1. delinquent in the payment of a tax or other money collected by theComptroller, the Texas Workforce Commission, or Texas AlcoholicBeverage Commission;

2. delinquent in making child support payments administered or col-lected by the Attorney General; or

3. delinquent in reimbursing the Texas Health and Human ServicesCommission for a bene�t granted in error under the food stamp pro-gram or the program of �nancial assistance under Chapter 31, HumanResources Code;

4. in default on a loan made under Chapter 52, Education Code; or

5. in default on a loan guaranteed under Chapter 57, Education Code

E. If a person is indebted or owes delinquent taxes to the State, otherthan those speci�ed in the preceding paragraph, the winnings of a per-son shall be withheld until the debt or taxes are paid.

2.4 Allowance for Delay of Payment. The Texas Lottery may delaypayment of the prize pending a �nal determination by the ExecutiveDirector, 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 ticket presentedfor payment; or

D. if the claim is subject to any deduction from the payment otherwisedue, as described in Section 2.3.D of these Game Procedures. No lia-bility for interest for any delay shall accrue to the bene�t of the claimantpending payment of the claim.

2.5 Payment of Prizes to Persons Under 18. If a person under the age of18 years is entitled to a cash prize of less than $600 from the "BONUSCASHWORD" Instant Game, the Texas Lottery shall deliver to anadult member of the minor’s family or the minor’s guardian a checkor 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 ofmore than $600 from the "BONUS CASHWORD" Instant Game, theTexas Lottery shall deposit the amount of the prize in a custodial bankaccount, with an adult member of the minor’s family or the minor’sguardian serving as custodian for the minor.

2.7 Instant Ticket Claim Period. All Instant Game prizes must beclaimed within 180 days following the end of the Instant Game orwithin the applicable time period for certain eligible military personnelas set forth in Texas Government Code Section 466.408. Any prize notclaimed within that period, and in the manner speci�ed in these GameProcedures and on the back of each ticket, shall be forfeited.

2.8 Disclaimer. The number of prizes in a game is approximate basedon the number of tickets ordered. The number of actual prizes availablein a game may vary based on number of tickets manufactured, testing,distribution, sales and number of prizes claimed. An Instant Gameticket may continue to be sold even when all the top prizes have beenclaimed.

3.0 Instant Ticket Ownership.

A. Until such time as a signature is placed upon the back portion ofan Instant Game ticket in the space designated therefor, a ticket shallbe owned by the physical possessor of said ticket. When a signatureis placed on the back of the ticket in the space designated therefor, theplayer whose signature appears in that area shall be the owner of theticket and shall be entitled to any prize attributable thereto. Notwith-standing any name or names submitted on a claim form, the ExecutiveDirector shall make payment to the player whose signature appears onthe back of the ticket in the space designated therefore. If more thanone name appears on the back of the ticket, the Executive Director willrequire that one of those players whose name appears thereon be des-ignated by such players to receive payment.

B. The Texas Lottery shall not be responsible for lost or stolen InstantGame tickets and shall not be required to pay on a lost or stolen InstantGame ticket.

4.0 Number and Value of Instant Prizes. There will be approximately30,000,000 tickets in the Instant Game No. 766. The approximatenumber and value of prizes in the game are as follows:


A. The actual number of tickets in the game may be increased or de-creased at the sole discretion of the Texas Lottery.

5.0 End of the Instant Game. The Executive Director may, at any time,announce a closing date (end date) for the Instant Game No. 766 with-out advance notice, at which point no further tickets in that game maybe sold.

6.0 Governing Law. In purchasing an Instant Game ticket, the playeragrees to comply with, and abide by, these Game Procedures for In-stant Game No. 766, the State Lottery Act (Texas Government Code,Chapter 466), applicable rules adopted by the Texas Lottery pursuantto the State Lottery Act and referenced in 16 TAC, Chapter 401, andall �nal decisions of the Executive Director.

TRD-200605794Kimberly KiplinGeneral CounselTexas Lottery CommissionFiled: October 24, 2006

Instant Game Number 767 "Lone Star Riches"


A. The name of Instant Game No. 767 is "LONE STAR RICHES".The play style is "key number match with tripler".






C. Play Symbol - The printed data under the latex on the front of theinstant ticket that is used to determine eligibility for a prize. Each PlaySymbol is printed in Symbol font in black ink in positive except fordual-image games. The possible black play symbols are: 1, 2, 4, 5, 6, 7,8, 9, 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, 3X, $1.00, $2.00, $4.00,$5.00, $10.00, $15.00, $20.00, $50.00, $100, $500, $1,000, $5,000,and $50,000.

D. Play Symbol Caption - The printed material appearing below eachPlay Symbol which explains the Play Symbol. One caption appearsunder each Play Symbol and is printed in caption font in black inkin positive. The Play Symbol Caption which corresponds with andveri�es each Play Symbol is as follows:



E. Retailer Validation Code - Three (3) letters found under the remov-able scratch-off covering in the play area, which retailers use to verifyand validate instant winners. These three (3) small letters are for val-

idation purposes and cannot be used to play the game. The possiblevalidation codes are:



G. Low-Tier Prize - A prize of $5.00, $10.00, $15.00, or $20.00.

H. Mid-Tier Prize - A prize of $50.00, $100, or $500.

I. High-Tier Prize - A prize of $5,000 or $50,000.

J. Bar Code - A 22 (twenty-two) character interleaved two (2) of �ve(5) bar code which will include a three (3) digit game ID, the seven(7) digit pack number, the three (3) digit ticket number, and the nine(9) digit Validation Number. The bar code appears on the back of theticket.


L. Pack - A pack of "LONE STAR RICHES" Instant Game ticketscontains 075 tickets, packed in plastic shrink-wrapping and fanfoldedin pages of one (1). The packs will alternate. One will show the frontof ticket 001 and back of 075 while the other fold will show the backof 001 and front 075.

M. Non-Winning Ticket - A ticket which is not programmed to be awinning ticket or a ticket that does not meet all of the requirementsof these Game Procedures, the State Lottery Act (Texas Government

Code, Chapter 466), and applicable rules adopted by the Texas Lotterypursuant to the State Lottery Act and referenced in 16 TAC Chapter401.

N. Ticket or Instant Game Ticket, or Instant Ticket - A Texas Lottery"LONE STAR RICHES" Instant Game No. 767 ticket.

2.0 Determination of Prize Winners. The determination of prize win-ners is subject to the general ticket validation requirements set forth inTexas Lottery Rule 401.302, Instant Game Rules, these Game Proce-dures, and the requirements set out on the back of each instant ticket.A prize winner in the "LONE STAR RICHES" Instant Game is de-termined once the latex on the ticket is scratched off to expose 45(forty-�ve) Play Symbols. If a player matches any of YOUR NUM-BERS play symbols to any of the LONE STAR NUMBERS play sym-bols, the player wins the prize shown for that number. If a player re-veals a "3X" play symbol, the player wins three (3) TIMES the prizeshown for that symbol. No portion of the display printing nor any ex-traneous matter whatsoever shall be usable or playable as a part of theInstant Game.



1. Exactly 45 (forty-�ve) Play Symbols must appear under the latexoverprint on the front portion of the ticket;

2. Each of the Play Symbols must have a Play Symbol Caption under-neath, unless speci�ed, and each Play Symbol must agree with its PlaySymbol Caption;


4. Each of the Play Symbols must be printed in black ink except fordual image games;



6. The Serial Number, Retailer Validation Code, and Pack-Ticket Num-ber must be present in their entirety and be fully legible;


8. The ticket must not have a hole punched through it, be mutilated,altered, unreadable, reconstituted, or tampered with in any manner;




12. The Play Symbols, Serial Number, Retailer Validation Code, andPack-Ticket Number must be right side up and not reversed in any man-ner;

13. The ticket must be complete and not miscut, and have exactly 45(forty-�ve) Play Symbols under the latex overprint on the front portionof the ticket, exactly one Serial Number, exactly one Retailer ValidationCode, and exactly one Pack-Ticket Number on the ticket;


15. The ticket must not be blank or partially blank, misregistered, de-fective, or printed or produced in error;

16. Each of the 45 (forty-�ve) Play Symbols must be exactly one ofthose described in Section 1.2.C of these Game Procedures;

17. Each of the 45 (forty-�ve) Play Symbols on the ticket must beprinted in the Symbol font and must correspond precisely to the artworkon �le at the Texas Lottery; the ticket Serial Numbers must be printedin the Serial font and must correspond precisely to the artwork on �le atthe Texas Lottery; and the Pack-Ticket Number must be printed in thePack-Ticket Number font and must correspond precisely to the artworkon �le at the Texas Lottery;






A. Consecutive non-winning tickets will not have identical play data,spot for spot.

B. The "3X" multiplier symbol will only appear once on intended win-ning tickets and only as dictated by the prize structure.

C. No more than three (3) identical non-winning prize symbols willappear on a ticket.

D. No duplicate LONE STAR NUMBERS play symbols on a ticket.

E. No duplicate non-winning YOUR NUMBERS play symbols on aticket.

F. Each LONE STAR NUMBER play symbol location will be approx-imately evenly used as the basis for a match.

G. Non-winning prize symbols will never be the same as the winningprize symbol(s).

H. No prize amount in a non-winning spot will correspond with theYOUR NUMBERS play symbol (i.e., 10 and $10).


A. To claim a "LONE STAR RICHES" Instant Game prize of $5.00,$10.00, $15.00, $20.00, $50.00, $100, or $500, a claimant shall signthe back of the ticket in the space designated on the ticket and presentthe winning ticket to any Texas Lottery Retailer. The Texas LotteryRetailer shall verify the claim and, if valid, and upon presentation ofproper identi�cation, make payment of the amount due the claimantand physically void the ticket; provided that the Texas Lottery Retailermay, but is not, in some cases, required to pay a $50.00, $100, or $500ticket. In the event the Texas Lottery Retailer cannot verify the claim,the Texas Lottery Retailer shall provide the claimant with a claim formand instruct the claimant on how to �le a claim with the Texas Lottery.If the claim is validated by the Texas Lottery, a check shall be for-warded to the claimant in the amount due. In the event the claim is notvalidated, the claim shall be denied and the claimant shall be noti�edpromptly. A claimant may also claim any of the above prizes under theprocedure described in Section 2.3.B and Section 2.3.C of these GameProcedures.

B. To claim a "LONE STAR RICHES" Instant Game prize of $5,000or $50,000, the claimant must sign the winning ticket and present it atone of the Texas Lottery’s Claim Centers. If the claim is validated bythe Texas Lottery, payment will be made to the bearer of the validatedwinning ticket for that prize upon presentation of proper identi�cation.When paying a prize of $600 or more, the Texas Lottery shall �le theappropriate income reporting form with the Internal Revenue Service(IRS) and shall withhold federal income tax at a rate set by the IRSif required. In the event that the claim is not validated by the TexasLottery, the claim shall be denied and the claimant shall be noti�edpromptly.

C. As an alternative method of claiming a "LONE STAR RICHES" In-stant Game prize, the claimant must sign the winning ticket, thoroughlycomplete a claim form, and mail both to: Texas Lottery Commission,Post Of�ce Box 16600, Austin, Texas 78761-6600. The risk of send-ing a ticket remains with the claimant. In the event that the claim isnot validated by the Texas Lottery, the claim shall be denied and theclaimant shall be noti�ed promptly.


1. delinquent in the payment of a tax or other money collected by theComptroller of Public Accounts, the Texas Workforce Commission, orTexas Alcoholic Beverage Commission;

2. delinquent in making child support payments administered or col-lected by the Of�ce of the Attorney General;

3. delinquent in reimbursing the Texas Health and Human ServicesCommission for a bene�t granted in error under the food stamp pro-


gram or the program of �nancial assistance under Chapter 31, HumanResources Code;


5. in default on a loan guaranteed under Chapter 57, Education Code.







2.5 Payment of Prizes to Persons under 18. If a person under the age of18 years is entitled to a cash prize of less than $600 from the "LONESTAR RICHES" Instant Game, the Texas Lottery shall deliver to anadult member of the minor’s family or the minor’s guardian a check orwarrant 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 ofmore than $600 from the "LONE STAR RICHES" Instant Game, theTexas Lottery shall deposit the amount of the prize in a custodial bankaccount, with an adult member of the minor’s family or the minor’sguardian serving as custodian for the minor.

2.7 Instant Ticket Claim Period. All Instant Game prizes must beclaimed within 180 days following the end of the Instant Game or

within the applicable time period for certain eligible military person-nel as set forth in Texas Government Code, §466.408. Any prize notclaimed within that period, and in the manner speci�ed in these GameProcedures and on the back of each ticket, shall be forfeited.

2.8 Disclaimer. The number of prizes in a game is approximate basedon the number of tickets ordered. The number of actual prizes availablein a game may vary based on number of tickets manufactured, testing,distribution, sales, and number of prizes claimed. An Instant Gameticket may continue to be sold even when all the top prizes have beenclaimed.


A. Until such time as a signature is placed upon the back portion of anInstant Game ticket in the space designated, a ticket shall be owned bythe physical possessor of said ticket. When a signature is placed on theback of the ticket in the space designated, the player whose signatureappears in that area shall be the owner of the ticket and shall be entitledto any prize attributable thereto. Notwithstanding any name or namessubmitted on a claim form, the Executive Director shall make paymentto the player whose signature appears on the back of the ticket in thespace designated. If more than one name appears on the back of theticket, the Executive Director will require that one of those playerswhose name appears thereon be designated by such players to receivepayment.


4.0 Number and Value of Instant Prizes. There will be approximately6,000,000 tickets in the Instant Game No. 767. The approximate num-ber and value of prizes in the game are as follows:


A. The actual number of tickets in the game may be increased or de-creased at the sole discretion of the Texas Lottery Commission.


6.0 Governing Law. In purchasing an Instant Game ticket, the playeragrees to comply with, and abide by, these Game Procedures for In-stant Game No. 767, the State Lottery Act (Texas Government Code,Chapter 466), applicable rules adopted by the Texas Lottery pursuantto the State Lottery Act and referenced in 16 TAC Chapter 401, and all�nal decisions of the Executive Director.


Instant Game Number 780 "Panda-Money-UM"


A. The name of Instant Game No. 780 is "PANDA-MONEY-UM".The play style is "key number match with auto win".






C. Play Symbol - The printed data under the latex on the front of theinstant ticket that is used to determine eligibility for a prize. Each PlaySymbol is printed in Symbol font in black ink in positive except fordual-image games. The possible black play symbols are: 1, 2, 3, 4, 5,6, 7, 8, 9, 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, 10X, $1.00, $2.00,$4.00, $5.00, $10.00, $15.00, $20.00, $25.00, $40.00, $50.00, $100,$500, $1,000 and $50,000.

D. Play Symbol Caption - The printed material appearing below eachPlay Symbol which explains the Play Symbol. One caption appearsunder each Play Symbol and is printed in caption font in black inkin positive. The Play Symbol Caption which corresponds with andveri�es each Play Symbol is as follows:



E. Retailer Validation Code - Three (3) letters found under the remov-able scratch-off covering in the play area, which retailers use to verifyand validate instant winners. These three (3) small letters are for val-

idation purposes and cannot be used to play the game. The possiblevalidation codes are:



G. Low-Tier Prize - A prize of $5.00, $10.00, $15.00 or $20.00.

H. Mid-Tier Prize - A prize of $50.00, $100 or $500.

I. High-Tier Prize - A prize of $1,000, $5,000 or $50,000.

J. Bar Code - A 22 (twenty-two) character interleaved two (2) of �ve(5) bar code which will include a three (3) digit game ID, the seven(7) digit pack number, the three (3) digit ticket number and the nine(9) digit Validation Number. The bar code appears on the back of theticket.


L. Pack - A pack of "PANDA-MONEY-UM" Instant Game tickets con-tains 075 tickets, packed in plastic shrink-wrapping and fan folded inpages of one (1). The packs will alternate. One will show the front ofticket 001 and back of 075 while the other fold will show the back of001 and front 075.

M. Non-Winning Ticket - A ticket which is not programmed to be awinning ticket or a ticket that does not meet all of the requirements

of these Game Procedures, the State Lottery Act (Texas GovernmentCode, Chapter 466), and applicable rules adopted by the Texas Lotterypursuant to the State Lottery Act and referenced in 16 TAC, Chapter401.

N. Ticket or Instant Game Ticket, or Instant Ticket - A Texas Lottery"PANDA-MONEY-UM" Instant Game No. 780 ticket.

2.0 Determination of Prize Winners. The determination of prize win-ners is subject to the general ticket validation requirements set forth inTexas Lottery Rule 401.302, Instant Game Rules, these Game Proce-dures, and the requirements set out on the back of each instant ticket.A prize winner in the "PANDA-MONEY-UM" Instant Game is de-termined once the latex on the ticket is scratched off to expose 44(forty-four) play symbols. If a player matches any of YOUR NUM-BERS play symbols to any of the WINNING NUMBERS play sym-bols, the player wins the prize shown for that number. If a player re-veals a "10X" play symbol, the player wins ten (10) TIMES the prizeshown for that symbol. No portion of the display printing or any ex-traneous matter whatsoever shall be usable or playable as a part of theInstant Game.



1. Exactly 44 (forty-four) Play Symbols must appear under the latexoverprint on the front portion of the ticket;

2. Each of the Play Symbols must have a Play Symbol Caption under-neath, unless speci�ed, and each Play Symbol must agree with its PlaySymbol Caption;


4. Each of the Play Symbols must be printed in black ink except fordual image games;



6. The Serial Number, Retailer Validation Code and Pack-Ticket Num-ber must be present in their entirety and be fully legible;


8. The ticket must not have a hole punched through it, be mutilated,altered, unreadable, reconstituted or tampered with in any manner;




12. The Play Symbols, Serial Number, Retailer Validation Code andPack-Ticket Number must be right side up and not reversed in any man-ner;

13. The ticket must be complete and not miscut, and have exactly 44(forty-four) Play Symbols under the latex overprint on the front portionof the ticket, exactly one Serial Number, exactly one Retailer ValidationCode, and exactly one Pack-Ticket Number on the ticket;


15. The ticket must not be blank or partially blank, misregistered, de-fective or printed or produced in error;

16. Each of the 44 (forty-four) Play Symbols must be exactly one ofthose described in Section 1.2.C of these Game Procedures;

17. Each of the 44 (forty-four) Play Symbols on the ticket must beprinted in the Symbol font and must correspond precisely to the artworkon �le at the Texas Lottery; the ticket Serial Numbers must be printedin the Serial font and must correspond precisely to the artwork on �le atthe Texas Lottery; and the Pack-Ticket Number must be printed in thePack-Ticket Number font and must correspond precisely to the artworkon �le at the Texas Lottery;






A. Consecutive non-winning tickets will not have identical play data,spot for spot.

B. The "10X" multiplier symbol will only appear once on intendedwinning tickets and only as dictated by the prize structure.

C. No more than three (3) identical non-winning prize symbols willappear on a ticket.

D. No duplicate WINNING NUMBERS play symbols on a ticket.

E. No duplicate non-winning YOUR NUMBERS play symbols on aticket.

F. Non-winning prize symbols will never be the same as the winningprize symbol(s).

G. No prize amount in a non-winning spot will correspond with theYOUR NUMBERS play symbol (i.e. 10 and $10).


A. To claim a "PANDA-MONEY-UM" Instant Game prize of $5.00,$10.00, $15.00, $20.00, $50.00, $100 or $500, a claimant shall signthe back of the ticket in the space designated on the ticket and presentthe winning ticket to any Texas Lottery Retailer. The Texas LotteryRetailer shall verify the claim and, if valid, and upon presentation ofproper identi�cation, make payment of the amount due the claimantand physically void the ticket; provided that the Texas Lottery Retailermay, but is not, in some cases, required to pay a $50.00, $100 or $500ticket. In the event the Texas Lottery Retailer cannot verify the claim,the Texas Lottery Retailer shall provide the claimant with a claim formand instruct the claimant on how to �le a claim with the Texas Lottery.If the claim is validated by the Texas Lottery, a check shall be for-warded to the claimant in the amount due. In the event the claim is notvalidated, the claim shall be denied and the claimant shall be noti�edpromptly. A claimant may also claim any of the above prizes under theprocedure described in Section 2.3.B and Section 2.3.C of these GameProcedures.

B. To claim a "PANDA-MONEY-UM" Instant Game prize of $1,000,$5,000 or $50,000, the claimant must sign the winning ticket andpresent it at one of the Texas Lottery’s Claim Centers. If the claim isvalidated by the Texas Lottery, payment will be made to the bearer ofthe validated winning ticket for that prize upon presentation of properidenti�cation. When paying a prize of $600 or more, the Texas Lotteryshall �le the appropriate income reporting form with the InternalRevenue Service (IRS) and shall withhold federal income tax at a rateset by the IRS if required. In the event that the claim is not validatedby the Texas Lottery, the claim shall be denied and the claimant shallbe noti�ed promptly.

C. As an alternative method of claiming a "PANDA-MONEY-UM" In-stant Game prize, the claimant must sign the winning ticket, thoroughlycomplete a claim form, and mail both to: Texas Lottery Commission,Post Of�ce Box 16600, Austin, Texas 78761-6600. The risk of send-ing a ticket remains with the claimant. In the event that the claim isnot validated by the Texas Lottery, the claim shall be denied and theclaimant shall be noti�ed promptly.


1. delinquent in the payment of a tax or other money collected by theComptroller, the Texas Workforce Commission, or Texas AlcoholicBeverage Commission;

2. delinquent in making child support payments administered or col-lected by the Attorney General;

3. delinquent in reimbursing the Texas Health and Human ServicesCommission for a bene�t granted in error under the food stamp pro-


gram or the program of �nancial assistance under Chapter 31, HumanResources Code;


5. in default on a loan guaranteed under Chapter 57, Education Code.







2.5 Payment of Prizes to Persons Under 18. If a person under theage of 18 years is entitled to a cash prize of less than $600 from the"PANDA-MONEY-UM" Instant Game, the Texas Lottery shall deliverto an adult member of the minor’s family or the minor’s guardian acheck or warrant in the amount of the prize payable to the order of theminor.

2.6 If a person under the age of 18 years is entitled to a cash prize ofmore than $600 from the "PANDA-MONEY-UM" Instant Game, theTexas Lottery shall deposit the amount of the prize in a custodial bankaccount, with an adult member of the minor’s family or the minor’sguardian serving as custodian for the minor.

2.7 Instant Ticket Claim Period. All Instant Game prizes must beclaimed within 180 days following the end of the Instant Game orwithin the applicable time period for certain eligible military personnelas set forth in Texas Government Code Section 466.408. Any prize notclaimed within that period, and in the manner speci�ed in these GameProcedures and on the back of each ticket, shall be forfeited.

2.8 Disclaimer. The number of prizes in a game is approximate basedon the number of tickets ordered. The number of actual prizes availablein a game may vary based on number of tickets manufactured, testing,distribution, sales and number of prizes claimed. An Instant Gameticket may continue to be sold even when all the top prizes have beenclaimed.


A. Until such time as a signature is placed upon the back portion of anInstant Game ticket in the space designated, a ticket shall be owned bythe physical possessor of said ticket. When a signature is placed on theback of the ticket in the space designated, the player whose signatureappears in that area shall be the owner of the ticket and shall be entitledto any prize attributable thereto. Notwithstanding any name or namessubmitted on a claim form, the Executive Director shall make paymentto the player whose signature appears on the back of the ticket in thespace designated. If more than one name appears on the back of theticket, the Executive Director will require that one of those playerswhose name appears thereon be designated by such players to receivepayment.


4.0 Number and Value of Instant Prizes. There will be approximately6,000,000 tickets in the Instant Game No. 780. The approximate num-ber and value of prizes in the game are as follows:


A. The actual number of tickets in the game may be increased or de-creased at the sole discretion of the Texas Lottery Commission.


6.0 Governing Law. In purchasing an Instant Game ticket, the playeragrees to comply with, and abide by, these Game Procedures for In-stant Game No. 780, the State Lottery Act (Texas Government Code,Chapter 466), applicable rules adopted by the Texas Lottery pursuantto the State Lottery Act and referenced in 16 TAC, Chapter 401, andall �nal decisions of the Executive Director.


Public Utility Commission of TexasAnnouncement of Application for State-Issued Certi�cate ofFranchise Authority

The Public Utility Commission of Texas received an application onOctober 16, 2006, for a state-issued certi�cate of franchise authority(CFA), pursuant to §§66.001 - 66.016 of the Public Utility RegulatoryAct (PURA). A summary of the application follows.

Project Title and Number: Application of North Texas Broadband,LLC for a State-Issued Certi�cate of Franchise Authority, ProjectNumber 33374 before the Public Utility Commission of Texas.

Applicant intends to provide cable service.

Information on the application may be obtained by contacting the Pub-lic Utility Commission of Texas by mail at P.O. Box 13326, Austin,Texas 78711-3326, or by phone at (512) 936-7120 or toll free at 1-888-782-8477. Hearing and speech-impaired individuals with text tele-phone (TTY) may contact the commission at (512) 936-7136 or tollfree at 1-800-735-2989. All inquiries should reference Project Num-ber 33374.

TRD-200605743Adriana A. GonzalesRules CoordinatorPublic Utility Commission of TexasFiled: October 20, 2006

Notice of Application for Amendment to Certi�cated ServiceArea Boundary

Notice is given to the public of an application �led on October 19, 2006with the Public Utility Commission of Texas, for an amendment to acerti�cated service area boundary in Kerr County, Texas.

Docket Style and Number: Application of Verizon Southwest for anAmendment to a Certi�cate of Convenience and Necessity for ServiceArea Boundary - Lasso Ranch Subdivision. Docket Number 33393.

The Application: The minor boundary amendment is being �led to re-align the boundary between the Fredericksburg exchange of Verizon,and the Comfort exchange of Hill Country Telephone Cooperative, Inc.(HCTC). The proposed boundary amendment will transfer a portion ofterritory from Verizon to Hill Country so that all of Lasso Ranch sub-

division will be within the service area of HCTC. HCTC has provideda letter of concurrence endorsing this proposed change.

Persons wishing to comment on the action sought or intervene shouldcontact the Public Utility Commission of Texas by November 10, 2006,by mail at P. O. Box 13326, Austin, Texas 78711-3326, or by phone at(512) 936-7120 or toll-free at 1-888-782-8477. Hearing and speech-impaired individuals with text telephone (TTY) may contact the com-mission at (512) 936-7136 or use Relay Texas (toll-free) 1-800-735-2989. All comments should reference Docket Number 33393.

TRD-200605800Adriana GonzalesRules CoordinatorPublic Utility Commission of TexasFiled: October 24, 2006

Notice of Application for Amendment to Service ProviderCerti�cate of Operating Authority

On October 19, 2006, Signatel Telephone Corporation �led an appli-cation with the Public Utility Commission of Texas (commission) toamend its service provider certi�cate of operating authority (SPCOA)granted in SPCOA Certi�cate Number 60441. Applicant intends todiscontinue the provision of home phone service.

The Application: Application of Signatel Telephone Corporation for anAmendment to its Service Provider Certi�cate of Operating Authority,Docket Number 33388.

Persons wishing to comment on the action sought should contact thePublic Utility Commission of Texas by mail at P.O. Box 13326, Austin,Texas 78711-3326, or by phone at (512) 936-7120 or toll free at 1-888-782-8477 no later than November 8, 2006. Hearing and speech-im-paired individuals with text telephones (TTY) may contact the commis-sion at (512) 936-7136 or toll free at 1-800-735-2989. All commentsshould reference Docket Number 33388.


Notice of Application for Amendment to Service ProviderCerti�cate of Operating Authority

On October 19, 2006, Broadwing Communications, LLC �led an ap-plication with the Public Utility Commission of Texas (commission) toamend its service provider certi�cate of operating authority (SPCOA)granted in SPCOA Certi�cate Number 60232. Applicant intends to re-�ect a change in ownership/control to Level 3 Communications, Inc.

The Application: Application of Broadwing Communications, LLC foran Amendment to its Service Provider Certi�cate of Operating Author-ity, Docket Number 33389.

Persons wishing to comment on the action sought should contact thePublic Utility Commission of Texas by mail at P.O. Box 13326, Austin,Texas 78711-3326, or by phone at (512) 936-7120 or toll free at 1-888-782-8477 no later than November 8, 2006. Hearing and speech-im-paired individuals with text telephones (TTY) may contact the commis-sion at (512) 936-7136 or toll free at 1-800-735-2989. All commentsshould reference Docket Number 33389.

TRD-200605799


Adriana GonzalesRules CoordinatorPublic Utility Commission of TexasFiled: October 24, 2006

Notice of Application for Sale, Transfer, or Merger

Notice is given to the public of a joint application for sale, transfer, ormerger �led with the Public Utility Commission of Texas (commission)on October 20, 2006, pursuant to the Public Utility Regulatory Act,Texas Utilities Code Annotated, §§14.101, 39.154, and 39.158 (Vernon1998 & Supplement 2005) (PURA).

Docket Style and Number: Application of TPF Generation Holdings,LLC and Rio Nogales Power Project, LP Pursuant to §39.158 of thePublic Utility Regulatory Act, Docket Number 33403.

The Application: TPF Generation Holdings, LLC (TPF Generation)and Rio Nogales Power Project, LP (Rio Nogales) (together, Appli-cants) �led an application for approval of the proposed indirect transferof existing generation facilities and associated assets from Constella-tion Power, Inc. (CPI) to TPF Generation (the Transaction). In theTransaction, CPI has agreed to sell, and TPF Generation has agreed topurchase, all of the shares of capital stock of Rio Nogales I and RioNogales II, a wholly-owned subsidiary of CPI. Rio Nogales I owns a1% general partnership interest, and Rio Nogales II owns a 99% lim-ited partnership interest, in Rio Nogales. Rio Nogales owns an elec-tric generating facility located in Texas. Pursuant to the Agreement,TPF Generation will also be purchasing all the shares of capital stockand all the membership interests in other wholly-owned subsidiaries ofCPI that own electric generating facilities in Virginia, West Virginia,Illinois, and California. The newly af�liated entities resulting after thesale will own and control 3,592.1 MW of installed generation capacityin the Electric Reliability Council of Texas (ERCOT), which represents4.28% of the total installed generation capacity located in, or capableof delivering to, ERCOT.

The Applicants are required to obtain commission approval beforeclosing the Transaction if the electricity to be offered for sale in theERCOT will exceed 1% of the total electricity for sale in ERCOT. Thecommission shall approve the Transaction unless the commission �ndsthat the Transaction results in a violation of §39.154 of PURA. Under§39.154, a power generation company may not own and control morethan 20% of the installed generation capacity located in, or capableof delivering electricity to ERCOT. The Applicants have stated that,since the newly af�liated entities will own and control 3,592.1 MW ofinstalled generation capacity within ERCOT, this will not exceed the20% limitation.

Persons who wish to intervene in the proceeding or comment upon theaction sought should contact the Public Utility Commission of Texas,P.O. Box 13326, Austin, Texas 78711-3326, or call the commission’sOf�ce of Customer Protection at (512) 936-7120 or (888) 782-8477 nolater than November 17, 2006. Hearing and speech-impaired individ-uals with text telephones (TTY) may contact the commission at (512)936-7136 or use Relay Texas (toll-free) 1-800-735-2989. All corre-spondence should refer to Docket Number 33403.


Notice of Application for Service Provider Certi�cate ofOperating Authority

Notice is given to the public of the �ling with the Public Utility Com-mission of Texas of an application on October 18, 2006, for a ser-vice provider certi�cate of operating authority (SPCOA), pursuant to§§54.151 - 54.156 of the Public Utility Regulatory Act (PURA). Asummary of the application follows.

Docket Title and Number: Application of Broadweave Networks ofTexas, LLC for a Service Provider Certi�cate of Operating Authority,Docket Number 33385 before the Public Utility Commission of Texas.

Applicant intends to provide plain old telephone service, ADSL, ISDN,HDSL, Optical Services, T1-Private Line, Frame Relay, Fractional T1,and long distance services.

Applicant’s requested SPCOA geographic area includes the exchangesof Texas served by AT&T, Verizon, and Valor.

Persons who wish to comment upon the action sought should contactthe Public Utility Commission of Texas by mail at P.O. Box 13326,Austin, Texas 78711-3326, or by phone at (512) 936-7120 or toll free at1-888-782-8477 no later than November 8, 2006. Hearing and speech-impaired individuals with text telephone (TTY) may contact the com-mission at (512) 936-7136 or toll free at 1-800-735-2989. All com-ments should reference Docket Number 33385.


Public Notice of Workshop - TXU Electric Delivery AdvancedMetering Deployment Plan

Staff will hold a workshop with TXU Electric Delivery at the PublicUtility Commission of Texas (commission) regarding Advanced Me-tering and its Deployment Plan on Wednesday, November 8, 2006, at9:00 a.m. in the Commissioners’ Hearing Room, located on the 7th�oor of the William B. Travis Building, 1701 North Congress Avenue,Austin, Texas 78701.

Questions concerning the workshop or this notice should be referredto Christine Wright, Electric Industry Oversight Division, (512) 936-7376. Hearing and speech-impaired individuals with text telephones(TTY) may contact the commission at (512) 936-7136.


Texas Residential Construction CommissionNotice of Application for Designation as a "Texas Star Builder"

The Texas Residential Construction Commission (commission)adopted rules regarding the procedures for designation as a "TexasStar Builder" at 10 TAC §303.300. The rules were adopted pursuantto §416.011, Property Code (Act effective Sept. 1, 2003), whichprovides that the commission shall establish rules and proceduresthrough which a builder can be designated as a "Texas Star Builder."The commission rules for application for designation can be found onthe commission’s website at www.trcc.state.tx.us.


10 TAC §303.300(i)(2) requires the commission to publish in the TexasRegister notice of the application of each person seeking to becomedesignated as a "Texas Star Builder" registered under this subchapter.The commission will accept public comment on each application fortwenty-one (21) days after the date of publication of the notice. In-formation provided in response to this notice will be utilized in eval-uating the applicants for approval. The Texas Star Builder designa-tion requires that a builder or remodeler demonstrate that its education,experience, and commitment to professionalism sets the builder or re-modeler apart from its peers and offers some assurance to its customersthat its quality of service and construction will be above average.

Pursuant to 10 TAC §303.300(i)(2) the commission hereby notices theapplication(s) for designation as a "Texas Star Builder" of:

Hunt & Sons Construction, L.P., dba Heritage Construction Services,9823-B Whithorn Drive, Houston, Texas 77095; TRCC builder reg-istration certi�cate # 1552; and the registered agent is James Jeffrey(Jeff) Hunt.

Interested persons may send written comments regarding this applica-tion to Susan K. Durso, General Counsel, The Texas Residential Con-struction Commission, P.O. Box 13144, Austin, TX 78711-3144. Com-ments regarding this application will be accepted for twenty-one daysfollowing the date of publication of this notice in the Texas Register.Thereafter, the comments will not be considered as timely �led.

TRD-200605827Susan K. DursoGeneral CounselTexas Residential Construction CommissionFiled: October 25, 2006

Texas Workforce CommissionResolution of the TexasWorkforce Commission Establishingthe Unemployment Obligation Assessment for Calendar Year2007

1. In accordance with the formula provided in 40 TAC §815.132 as setout in part in subsection (e):

"(e) The rate of the portion of the assessment that is to be used to paya bond obligation is a percentage of the product of the unemploymentobligation assessment ratio and the sum of the employer’s prior yeargeneral tax rate, the replenishment tax rate and the de�cit tax rate. Thepercentage to be determined by Commission resolution, shall not ex-ceed 200%." The "percentage" for 2007 is 98%.

2. The 2007 percentage will generate $325,277,339.00 that the TexasPublic Finance Authority has informed the Commission is needed topay bond obligation and bond administrative expenses.

TRD-200605859Don BallardGeneral CounselTexas Workforce CommissionFiled: October 25, 2006


How to Use the Texas RegisterInformation Available: The 14 sections of the Texas

Register represent various facets of state government.Documents contained within them include:

Governor - Appointments, executive orders, andproclamations.

Attorney General - summaries of requests for opinions,opinions, and open records decisions.

Secretary of State - opinions based on the election laws.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 bythe Texas Register six months after the proposal publicationdate.

Adopted Rules - sections adopted following publiccomment period.

Texas Department of Insurance Exempt Filings -notices of actions taken by the Texas Department of Insurancepursuant to Chapter 5, Subchapter L of the Insurance Code.

Texas Department of Banking - opinions and exemptrules filed by the Texas Department of Banking.

Tables and Graphics - graphic material from theproposed, emergency and adopted sections.

Transferred Rules- notice that the Legislature hastransferred rules within the Texas Administrative Code fromone state agency to another, or directed the Secretary of State toremove the rules of an abolished agency.

In Addition - miscellaneous information required to bepublished by statute or provided as a public service.

Review of Agency Rules - notices of state agency rulesreview.

Specific explanation on the contents of each section can befound on the beginning page of the section. The division alsopublishes cumulative quarterly and annual indexes to aid inresearching material published.

How to Cite: Material published in the Texas Register isreferenced by citing the volume in which the documentappears, the words “TexReg” and the beginning page numberon which that document was published. For example, adocument published on page 2402 of Volume 30 (2005) is citedas follows: 30 TexReg 2402.

In order that readers may cite material more easily, pagenumbers are now written as citations. Example: on page 2 inthe lower-left hand corner of the page, would be written “30TexReg 2 issue date,” while on the opposite page, page 3, inthe lower right-hand corner, would be written “issue date 30TexReg 3.”

How to Research: The public is invited to research rules andinformation of interest between 8 a.m. and 5 p.m. weekdays atthe Texas Register office, Room 245, James Earl RudderBuilding, 1019 Brazos, Austin. Material can be found usingTexas Register indexes, the Texas Administrative Code,section numbers, or TRD number.

Both the Texas Register and the Texas AdministrativeCode are available online through the Internet. The address is:http://www.sos.state.tx.us. The Register is available in an .html

version as well as a .pdf (portable document format) versionthrough the Internet. For website subscription information, callthe Texas Register at (800) 226-7199.

Texas Administrative CodeThe 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 TexasAdministrative Code. Emergency rules, which may be adoptedby an agency on an interim basis, are not codified within theTAC.

The TAC volumes are arranged into Titles and Parts (usingArabic numerals). The Titles are broad subject categories intowhich the agencies are grouped as a matter of convenience.Each Part represents an individual state agency.

The complete TAC is available through the Secretary ofState’s website at http://www.sos.state.tx.us/tac. The followingcompanies also provide complete copies of the TAC: Lexis-Nexis (1-800-356-6548), and West Publishing Company (1-800-328-9352).

The Titles of the TAC, and their respective Title numbersare:1. Administration4. Agriculture7. Banking and Securities10. Community Development13. Cultural Resources16. Economic Regulation19. Education22. Examining Boards25. Health Services28. Insurance30. Environmental Quality31. Natural Resources and Conservation34. Public Finance37. Public Safety and Corrections40. Social Services and Assistance43. Transportation

How to Cite: Under the TAC scheme, each section isdesignated by a TAC number. For example in the citation 1TAC §27.15: 1 indicates the title under which the agencyappears in the Texas Administrative Code; TAC stands for theTexas Administrative Code; §27.15 is the section number ofthe rule (27 indicates that the section is under Chapter 27 ofTitle 1; 15 represents the individual section within the chapter).

How to update: To find out if a rule has changed since thepublication of the current supplement to the TexasAdministrative Code, please look at the Table of TAC TitlesAffected. The table is published cumulatively in the blue-coverquarterly indexes to the Texas Register (January 21, April 15,July 8, and October 7, 2005). If a rule has changed during thetime period covered by the table, the rule’s TAC number willbe printed with one or more Texas Register page numbers, asshown in the following example.

TITLE 40. SOCIAL SERVICES AND ASSISTANCEPart I. Texas Department of Human Services40 TAC §3.704..............950, 1820The Table of TAC Titles Affected is cumulative for each

volume of the Texas Register (calendar year).