PROPOSED RULES 
 
 Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the  
Texas Register at least 30 days before action is taken. The 30-day time period 
gives interested persons an opportunity to review and make oral or written 
comments on the section. Also, in the case of substantive action, a public 
hearing must be granted if requested by at least 25 persons, a governmental 
subdivision or agency, or an association having at least 25 members. 
  Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of  bold text. [Brackets] indicate deletion of existing 
material within a section. 
 
   
  TITLE 1. ADMINISTRATION 
 Part V. General Services Commission 
  Chapter 113. Central Purchasing Division 
  
  Purchasing 
 
  1 TAC sec.sec.113.2, 113.4, 113.11, 113.12 
 
  The General Services Commission proposes amendments to  ssec.113.2, 113.4, 
113.11, and 113.12, concerning central purchasing. The amendments incorporate 
changes required by Chapter 684, sec.18, 73rd Legislature, Regular Session 
(1993), to create the centralized master bidders list. The proposed amendments 
also update definitions, delete the requirement to purchase a commodity code 
book, make the application valid for a two year period, amend the reference to 
agency bidders list, modify the requirement to solicit formal bids to correspond 
with current commission delegated purchasing rules, and require use of the 
centralized master bidders list by an institution or other agency of higher 
education for the purchase of supplies, materials, services or equipment for 
research projects. 
 Pat Martin, Director, Purchasing Division, has determined that for the first 
five years the sections are in effect there will be a fiscal implication as a 
result of enforcing or administering the sections. A reduction in costs to state 
agencies is anticipated as a result of administering the amendments; however, 
the amount of the anticipated reduced costs cannot be determined. There are no 
fiscal implications for local governments. 
 Ms. Martin also has determined that the public benefit that will be anticipated 
as a result of these amendments will be a centralized master bidders list, 
simplification of the application process and a lower per annum cost to the 
bidders. 
 Comments may be submitted to Judith M. Porras, General Counsel, General 
Services Commission, P.O. Box 13047, Austin, Texas 78711-3047. Comments must be 
received no later than 30 days from the date of publication of the proposal in 
the Texas Register. 
 The amendments are proposed under Texas Civil Statutes, Article 601b, Article 
3, which provides the General Services Commission with the authority to 
promulgate rules necessary to accomplish the purposes of the Article and 
Chapter. 
 The following statute is affected by these rules: Texas Civil Statutes, Article 
601b. 
 
 
  sec.113.2. Definitions.  The following words and terms, when used in this 
title, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
   Bidders List- <nl>The centralized master bidders list.<ol> [A list maintained 
by the commission containing the names and addresses of prospective bidders.] 
   
  <nl>   Centralized master bidders list-A list maintained by the commission 
containing the names and addresses of prospective bidders and qualified 
information systems vendors. 
 
   
  sec.113.4. <nl>Centralized Master Bidders List. 
 
  (a) The commission maintains a <nl>centralized master<ol> bidders list of the 
names and addresses of vendors which have applied and been accepted for 
inclusion on the list. The bidders list is maintained for the state's 
convenience in obtaining competitive bids for purchases <nl>and for registering 
vendors who wish to be designated as qualified information systems vendors<ol>. 
[Bid invitations and requests for proposals are mailed to vendors on the bidders 
list for the solicited commodity.] No vendor will be placed on the bidders list 
to receive bid invitations for information purposes only <nl>.<ol> [, nor may 
any vendor receive bids at different addresses for the same class or item within 
the same bidding district.] <nl>Bid invitations and requests for proposals are 
mailed to vendors on the bidders list for the solicited commodity for open 
market, term contracts, and competitive sealed proposal acquisitions made by the 
commission and delegated purchases in excess of $15,000. 
   
  (b) To be considered for inclusion on the <nl>centralized master<ol> bidders 
list, a vendor must: 
 
  (1) <nl>complete the application form provided by the commission which 
includes certification that the vendor has access to the class and item codes 
and is aware of the requirements and procedures regarding the provision of 
goods, services and other acquisitions to the State and its eligible entities; 
<ol> [purchase a commodity book;] 
   
  [(2) complete the application form provided by the commission with the 
commodity book; and] 
   
  <nl>(2)<ol>[(3)]  remit a check or money order in the amount of  <nl>$100<ol> 
[$75], which is the <nl>biennial<ol> [annual] <nl>maintenance<ol> [subscription] 
fee assessed to cover the commission's costs in maintaining the bidders list and 
mailing bids or proposals. This fee, less $15 for handling, will be refunded if 
the applicant is not accepted for inclusion on the bidders list. 
     
  (c) (No change.) 
   
  (d) A vendor may be removed or temporarily suspended from the bidders list for 
one or more of the following reasons: 
 
  (1)-(8) (No change.) 
   
  (9) failing to remit the <nl>biennial<ol> [annual] bidders list  
<nl>maintenance<ol> [subscription] fee; 
   
  (10)-(11) (No change.) 
     
  (e)-(f) (No change.) 
   
  (g) <nl>By June 1, 1995, state agencies that maintain bidders lists must 
provide the General Services Commission with all records and information in 
their custody that relate to those lists for inclusion in the centralized master 
bidders list. This information must be transmitted to the commission in a format 
specified by the commission. By September 1, 1995, affected agencies shall use 
the centralized master bidders list to select bidders for bids or proposals. 
<ol> [Each agency shall maintain a bidders list and annually register on the 
list the name and address of each vendor that applies and is accepted for 
registration in accordance with rules adopted by the agency. Agency rules should 
also provide procedures for maintaining the bidders list and for removing 
inactive vendors from the list. An agency may charge applicants a fee for 
registration and may charge an annual renewal fee to recover its costs in 
developing and maintaining the bidders list and in soliciting bids or proposals. 
An agency should set the amount of the fees by rule. An agency electing to use a 
bidders list maintained by the commission satisfies its statutory requirement to 
maintain an agency bidders list if the list reasonably covers the geographic 
area of the agency's business activity.] 
   
  <nl>(h) The commission may authorize an agency to maintain and use its own 
bidders lists for specialized needs only by approval of the commissioners in 
open meeting. Requests for such approval should be made in writing to the 
executive director and signed by the chief executive officer of the requesting 
agency. All such requests should clearly set out the reasons and justifications 
for the request. 
 
     
  sec.113.11. Delegated Purchases. 
 
  (a)-(b) (No change.) 
   
  (c) Provisions generally applicable to delegated purchases. 
 
  (1)-(3) (No Change) 
   
  (4) Agencies must solicit formal bids from all eligible vendors on the 
<nl>centralized master <ol> [agency's] bidders list when making purchases in 
excess of <nl>$15,000<ol> [$5,000]. However, for purchases of $25,000 or less, 
the commission may waive the requirement to solicit bids from all eligible 
vendors on the list if the agency certifies in writing that a solicitation of 
all eligible vendors is not warranted under the circumstances. 
   
  (5) (No change.) 
     
  (d)-(f) (No change.) 
 
     
  sec.113.12. Research in higher education. 
 
  (a)-(e) (No change.) 
   
  (f) An institution acting under this authority is required to <nl>use the 
centralized bidders list for purchases in excess of $15,000. <ol> [maintain a 
qualified bidders list containing an adequate number of suppliers of research 
items. Bids must be solicited from the qualified bidders list, supplemented as 
appropriate by other sources identified by the institution.] 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 15, 1994. 
 TRD-9450971 
  Judith Monaco Porras 
 General Counsel 
 General Counsel Commission 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-3960 
         
                   
  TITLE 16. ECONOMIC REGULATION 
 Part IV. Texas Department of Licensing and Regulation 
  Chapter 61. Boxing 
  
  Subchapter A. Professional and Amateur Boxing 
 
  16 TAC sec.sec.61.62, 61.70, 61.78, 61.80, 61.92, 61.100, 61.104, 61.106 
 
  The Texas Department of Licensing and Regulation proposes amendments to 
sec.sec.61.62, 61.70, 61.78, 61.80, 61.100, 61.104, and 61.106, and new 
sec.61.92, concerning professional and amateur boxing. The new section and 
amendments are being proposed to increase boxer's safety. 
 Section 61.62 adds the requirement for proper proof of identification and 
prohibits an individual from participating in an unapproved event. Section 61. 
70 clarifies the insurance responsibilities of the promoter. Section 61.78 
clarifies language and adds when the referee can call time to replace a 
mouthpiece. Section 61.80 increases the fees to help cover administration cost. 
Section 61.100 limits the number of rounds for a sparring or exhibition bout. 
Section 61.106 clarifies the language of a KO (knockout). 
 James D. Brush, II, director, Policies and Standards Division, has determined 
that for the first five-year period the sections are in effect there will be 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. The effect on state government for the first five 
years period the sections are in effect will be an estimated increase in revenue 
of $16,770 per year for fiscal years 1995-1999. There will be no fiscal 
implications on local government. 
 Mr. Brush also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be increased public welfare and consumer protection. The 
effect on small businesses, large businesses, and persons required to comply 
with the rules is an increase in the cost of annual licensing by the amount of 
the proposed increase on each individual fee. The increases are as follows, 
timekeepers and seconds-$10, boxers and judges-$15, referees-$25, managers and 
matchmakers -$75, and promoters-$500. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, 920 Colorado, Eighth Floor, Austin, Texas 78711. 
 The new section and amendments are proposed under Texas Civil Statutes, Article 
8501-1, which provide the Texas Department of Licensing and Regulation with the 
authority to promulgate and enforce a code of rules and take all action 
necessary to assure compliance with the intent and purposes of the act. 
 The following is the Article that is affected by these rules: Rule 61.62, Texas 
Civil Statutes, Article 8501-1; Rule 61.70, Texas Civil Statutes, Article 8501-
1; Rule 61.78, Texas Civil Statutes, Article 8501-1; Rule 61.80, Texas Civil 
Statutes, Article 8501-1; Rule 61.92, Texas Civil Statutes, Article 8501-1; Rule 
61.100, Texas Civil Statutes, Article 8501-1; Rule 61.104, Texas Civil Statutes, 
Article 8501-1; and Rule 61.106, Texas Civil Statutes, Article 8501-1. 
 
 
  sec.61.62. General Prohibitions. 
 
  (a)-(c) (No change.) 
   
  <nl>(d) No person shall be allowed to participate in a boxing event, unless 
the person shows to department personnel, proof of identification and a current 
license. 
   
  <nl>(e) No person shall be allowed to participate in a boxing event or bout 
unless the event or bout has been approved by the department. 
 
     
  sec.61.70. Responsibilities of Promoter. 
 
  (a)-(n) (No change.) 
   
  (o) It shall be the promoter's responsibility to ensure the safety of the 
boxers, officials, and spectators. 
 
  (1)-(3) (No change.) 
   
  (4)  The promoter shall provide insurance <nl>and pay all deductibles,<ol> to 
cover medical, surgical and hospital care with a minimum limit of $20,000 for 
injuries sustained while participating in a boxing contest and $20,000 to a 
boxer's estate if he dies of injuries received while participating in a contest. 
The insurance premium <nl>and deductibles shall <ol> [may] not be deducted from 
the boxer's purse. The promoter shall provide a certificate of insurance showing 
proper coverage at the same time he provides the Department his contracts with 
those participating in the event. <nl>The promoter shall supply those 
participating in the event with the proper information for filing a medical 
claim. 
 
       
  sec.61.78. Responsibilities-Boxers. 
 
  (a) (No change.) 
   
  (b) Boxers shall box in proper ring attire including protection cup, which 
shall be firmly adjusted before entering the ring. The trunks' waistband shall 
extend above the waistline and the hem may not extend below the knee. <nl>A 
fitted mouthpiece<ol> [mouthpieces] shall be worn at the beginning of each 
round. If a mouthpiece is knocked out, the referee shall call time <nl>during a 
break in the action<ol>, the boxer's second will clean and reinsert the 
mouthpiece. If the mouthpiece is spit out the same procedure will be followed 
and the referee can charge the boxer with a foul. Shoes shall be of soft 
material and shall not be fitted with spikes, cleats, or hard heels. Kickboxers 
shall not wear shoes of any type, except for protective padded foot gear. 
   
  (c) (No change.) 
 
     
  sec.61.80. Fees-Annual Application Fees. 
 
  (a) The promoter's license fee shall be <nl>$1,000 <ol> [$500]. 
   
  (b) Each license application shall be accompanied by the annual license fees 
as follows: 
 
  (1) boxer-<nl>$30<ol> [$15]; 
   
  (2) manager-<nl>$150<ol> [$75]; 
   
  (3) second-<nl>$20<ol> [$10]; 
   
  (4)  matchmaker-<nl>$150<ol> [$75]; 
   
  (5) referee-<nl>$50<ol> [$25] ; 
   
  (6) judge-<nl>$30<ol> [$15]; 
   
  (7)  timekeeper-<nl>$20<ol> [$10]. 
 
       
  sec.61.92. Sanctions-Indefinite Suspension. A complete neurological exam, 
stress test, EEG, EKG, comprehensive annual medical physical, ophthalmologic 
exam and administrative hearing shall be required before lifting an indefinite 
suspension. 
 
   
  sec.61.100. Technical Requirements -Conduct of Promotion. 
 
  (a)  Licensed promoters shall schedule no less than 25 rounds of boxing for 
each event. All boxing contests shall have no more than three-minute rounds with 
one-minute rest periods between rounds. No boxing [or sparring] event shall 
exceed 10 rounds, except a championship contest, which shall not exceed 12 
rounds. <nl>A sparring or exhibition event shall not exceed three rounds. 
   
  (b) Purses shall be paid to the boxer by the promoter immediately after each 
<nl>event<ol> [exhibition]. Payment of percentage contracts shall be made when 
the amount can be determined. Payments shall be made in the presence of an 
authorized Department representative. 
   
  (c) (No change.) 
 
     
  sec.61.104. Technical Requirements -Ringside Physician. 
 
  (a)  The pre-fight medical examinations shall be administered on the day of 
the event at the weigh-in. The department shall provide forms for recording the 
results of these examinations. The required annual comprehensive medical exam 
<nl>for licensing shall be submitted to department personnel before the weigh-
in<ol> [may not be done at the weigh-in]. 
   
  (b)-(k) (No change.) 
 
     
  sec.61.106. Technical Requirements -Judge Scoring. 
 
  (a)-(e)  (No change.) 
   
  (f) If the contestant who is knocked down does not rise before the count of 
10, the referee shall declare him the loser by a knockout. <nl>If the contestant 
appears to the referee to be seriously injured, the referee may summon the 
ringside physician into the ring, while continuing the count. 
   
  (g)-(h) (No change.) 
       
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451003 
  Jack W. Garison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-7357 
         
       
  Subchapter B. Elimination Tournaments 
 
  16 TAC sec.sec.61.200-61.212 
 
  The Texas Department of Licensing and Regulation proposes new sec.sec.61. 200-
61.212, concerning the regulation of elimination tournaments. The new sections 
regulate elimination tournaments in the State of Texas. 
 James D. Brush, II, director, Policies and Standards Division, has determined 
that for the first five-year period the sections are in effect there will be 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. The effect on state government for the first five 
years period the sections are in effect will be an estimated increase in revenue 
of $9,600 per year for fiscal years 1995-1999. There will be no fiscal 
implications on local government. 
 Mr. Brush also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be increased safety and consumer protection. The effect on 
small businesses, large businesses, and persons required to comply with the 
rules is a $50 registration fee for each contestant. 
 Comments on the proposal may be submitted to James D. Brush, II, Director, 
Policies and Standards Division, Texas Department of Licensing and Regulation, 
P.O. Box 12157, 920 Colorado, Eighth Floor, Austin, Texas 78711. 
 The new sections are proposed under Texas Civil Statutes, Article 8501-1, which 
provide the Texas Department of Licensing and Regulation with the authority to 
promulgate and enforce a code of rules and take all action necessary to assure 
compliance with the intent and purposes of the act. 
 Texas Civil Statutes, Article 8501-1 is the Article that is affected by these 
rules. 
 
 
  sec.61.200. General.  All rules set out in Chapter 61, Subchapter A of this 
title (relating to Professional and Amateur Boxing) apply to Elimination 
Tournaments unless specifically modified in this subchapter. 
 
   
  sec.61.201. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly suggests 
otherwise. 
   
   Championship contest -An elimination event at which the winners of previous 
elimination events fight to determine a champion for the stated level of the 
event. Championship events may be on a state, regional, national or 
international level. 
   
   Contestant-An elimination tournament contestant. 
   
   Elimination tournament -A contest where contestants fight a series of bouts 
until only one winner remains in each weight class. 
   
   Elimination tournament contestant-A person who is not a licensed professional 
boxer or has not competed in more than five sanctioned amateur bouts and who 
competes for a prize in elimination tournaments. 
 
   
  sec.61.202. Registration Requirements. 
 
  (a) The requirements for licensing as a promoter, referee, judge, timekeeper, 
manager, and second of elimination tournaments are as specified in 
sec.sec.61.20-61.26 of this title (relating to Licensing Requirements-Promoter, 
Referee, Matchmaker, Judge, Timekeeper, Manager, and Second). 
   
  (b) The fee for promoter, referee, judge, timekeeper, manager, and second of 
elimination tournaments are as specified in sec.61.80 of this title (relating to 
Fees-Annual Application Fees). 
   
  (c) Before an individual performs as an elimination tournament contestant, he 
shall be registered by the Commissioner. A registered elimination tournament 
contestant shall keep the registration receipt in his possession. The 
registration receipt expires seven days after the date of issuance. 
 
  (1) Each elimination tournament contestant applicant shall submit: 
 
  (A) a completed application form; 
   
  (B) state approved picture I.D.; 
   
  (C) registration fee of $50 as specified in sec.61.209 of this title (relating 
to Fees); and 
   
  (D) proof of a comprehensive medical examination as specified in sec.61.109 
this title (relating to Technical Requirements -Boxers). 
     
  (2) An applicant for registration as an elimination tournament contestant 
shall not have any previous professional boxing experience and shall not have 
over five sanctioned amateur wins in the last five years. Nothing in these rules 
shall prohibit a previous elimination tournament contestant from participating 
in future elimination tournaments and championships. 
   
  (3) The department will not issue a registration to anyone under age 17. 
Minors, age 17 but not yet 18 or over, applying for registration as an 
elimination tournament contestant must submit written consent from a parent or 
guardian. 
   
  (4) The department will not issue a registration to any applicant who has 
attained age 35 without a hearing. Before issuing any registration to an 
applicant who has attained age 35, the department shall require physical testing 
including, but not limited to, neurological examination, ophthalmological 
examination, EEG, EKG, and stress tests. 
   
  (5) An applicant must submit proof of proper training. Written certification 
outlining the training program for a minimum of four weeks prior to the 
tournament is required. 
 
       
  sec.61.203. Bond Requirements. <ol> Bond requirements for promoters of 
elimination tournaments are specified in sec.61.40 of this title (relating to 
Bond Requirements for Promoters). 
 
   
  sec.61.204. Reporting Requirements -Promoter. Reporting requirements for 
promoters are as specified in sec.61.41 of this title (relating to Reporting 
Requirements-Promoter). 
 
   
  sec.61.205. General Prohibitions. <ol> General prohibitions applicable to 
elimination tournaments, are as specified in sec.61.62 of this title (relating 
to General Prohibitions). 
 
   
  sec.61.206. Responsibilities of the Promoter. Responsibilities of the promoter 
of an elimination tournament are as specified in sec.61.70 of this title 
(relating to Responsibilities of Promoter). 
 
   
  sec.61.207. Responsibilities of the Ringside Physician.  Responsibilities of 
ringside physicians are as specified in sec.61.72 of this title (relating to 
Responsibilities -Ringside Physicians). 
 
   
  sec.61.208. Responsibilities of the Registrant-Female Contestant.  
Responsibilities of female contestants are as specified in sec.61.79 of this 
title (relating to Responsibilities -Female Boxer). 
 
   
  sec.61.209. Fees. 
 
  (a) License fees are as specified in sec.61. 80 of this title (relating to 
Fees-Annual Application Fees). 
   
  (b)  The registration fee for an elimination tournament contestant is $50. 
 
     
  sec.61.210. Technical Requirements. 
 
  (a) Elimination tournaments are two night events consisting of a minimum of 36 
scheduled rounds on each night. 
   
  (b) All of the contestants shall fight once the first night, except in 
championship tournaments where contestants may fight twice on the first night of 
the tournament. The second or final night contestants will continue fighting 
until a winner is declared, provided the contestant passed the between bout 
physical. 
   
  (c) If a contestant is disqualified during a pre-tournament physical 
examination, the physician shall notify the department and promoter immediately. 
   
  (d) Each bout will consist of three 60 second rounds with a minimum one minute 
rest period between rounds. 
   
  (e) Contestants who do not win the first evening can still compete on the 
second evening at the option of the promoter and with approval of the 
department. 
   
  (f) Any contestant who is knocked out on the first evening is not eligible to 
fight again in that tournament. 
   
  (g)  All contestants, on the first evening, are matched by random selection 
from the individual contestants within their weight classification. On the 
second night, during the preliminary bouts, the matches will again be made in 
the weight classifications. From that point on, in the quarter, semi-finals and 
finals it will be a case of who wins as they eliminate to the final winner, in 
each weight class represented. 
 
     
  sec.61.211. Technical Requirements -Contestant's Weigh-in and Time 
Requirements. 
 
  (a) Each contestant must be of the proper weight class in which he will 
compete pursuant to sec.61.110 of this title (relating to Technical 
Requirements-Boxer's Weigh-in and Time Requirements). 
   
  (b)  Each contestant shall be in appropriate dressing room 45 minutes before 
the first bout. 
 
     
  sec.61.212. Technical Requirements -Contestant Safety. 
 
  (a)  All contestants shall use 16 ounce gloves and wear approved headgear. 
   
  (b) Contestants must wear an approved groin guard, or a kidney-groin guard 
supplied by the promoter. 
   
  (c) On the second night of the tournament, a second physical shall be given to 
the remaining contestants to assure their fitness to compete. 
   
  (d) Each contestant shall be examined by the ringside physician between each 
bout. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451002 
  Jack W. Garison 
 Executive Director 
 Texas Department of Licensing and Regulation 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-7357 
         
                 Part IX. Texas Lottery Commission 
  Chapter 402. Bingo Regulation and Tax Rules 
  
  16 TAC sec.402.567 
 
  The Texas Lottery Commission proposes new sec.402.567, concerning the bingo 
advisory committee. The new section will set out the guidelines for the purpose, 
structure, and functions of the bingo advisory committee. 
 Richard Sookiasian, Budget Analyst, has determined that for the first five-year 
period the section will be in effect there will be fiscal implications on state 
government as a result of enforcing or administering the section. The effect on 
state government for the first five-year period the section will be an estimated 
additional cost of $8,500 (based on four quarterly meetings in Austin, Texas). 
 Mr. Sookiasian has determined that there will be no fiscal effect on local 
government for the first five-year period the section is in effect, and there 
will be no effect on small businesses. 
 Mr. Sookiasian also has determined that for each of the first five years the 
section as proposed is in effect, the public benefit anticipated as a result of 
enforcing the section as proposed will be to provide advice to the Texas Lottery 
Commission on the needs and problems of the state's bingo industry. There will 
be no anticipated economic cost to persons who are required to comply with the 
section as proposed. 
 Comments on the proposal may be submitted to Ridgely Bennett, Staff Attorney, 
Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78711-6630. 
 The new section is proposed under Texas Civil Statutes, Article 179d, sec.43, 
which provide the Texas Lottery Commission with the authority to adopt rules to 
govern the operations of the bingo advisory committee. 
 The new section implements Texas Civil Statutes, Article 179d, sec.43. 
 
 
  sec.402.567. Bingo Advisory Committee. 
 
  (a) Purpose. The purpose of the bingo advisory committee is to advise the 
Commission on the needs and problems of the state's bingo industry; report to 
the Commission on the committee's activities; and perform other duties as 
determined by the Commission. 
   
  (b) Composition. The following appointments shall be made representing a 
balance of interests: General Public-3; Charities that operate bingo games-3; 
Lessor, Charity -1; Lessor, Commercial-1; Distributor/Manufacturer-1. A total of 
nine members will be appointed by the Commission. Each member will be appointed 
for a one-year term and will serve at the pleasure of the Commission. 
   
  (c) Officers. Annually, the Commission shall appoint a Chair. Also, the 
Commission will appoint a vice-chair. The chair will conduct meetings and 
general business. The vice-chair will conduct meetings and general business in 
the absence of the chairperson. 
   
  (d) Reports. The Committee will report, at a minimum, quarterly to the 
Commission on the Committee's activities, and, more frequently as deemed 
appropriate and necessary by the committee chairperson. 
   
  (e) Meetings. The committee shall meet quarterly or at the call of the 
Commission. All committee meetings shall be held at the Texas Lottery Commission 
headquarters in Austin. The committee shall keep minutes of each meeting. The 
minutes shall be approved at the next following meeting, shall reflect all 
formal action taken by the committee, and shall be filed, upon approval, with 
the Executive Director, who is the custodian of all Commission records. 
   
  (f) Attendance. The failure by any committee member to attend two consecutive 
regular quarterly meetings, for any reason, may be cause for removal by the 
Commission. No proxy voting shall be allowed. A member may not substitute 
another person in his/her absence. 
   
  (g) Criminal History Review. All committee members must meet the criminal 
history standards set out in Texas Civil Statutes, Article 176d, sec.13(c)(2) 
(Bingo Enabling Act) to be qualified for appointment to the committee. A member 
who fails to meet such criminal history standards will be disqualified from 
serving on the committee and will be removed from the committee. 
   
  (h) Compensation and Travel Expenses. A member of the committee is entitled to 
reimbursement for reasonable expenses. Reasonable expenses shall be limited to 
those expenses set out in the current Appropriations Act and shall be reimbursed 
in accordance with the current Appropriations Act. Committee members shall 
submit expenses on a form provided by the Commission and shall be accompanied by 
appropriate receipts. Expenses, other than expenses incurred as a result of 
attending the four quarterly meetings, must be submitted to the Commission for 
prior approval. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451005 
  Ridgely G. Bennett 
 Staff Attorney 
 Texas Lottery Commission 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 323-3791 
         
             Chapter 403. General Administration 
  
  16 TAC sec.403.101 
 
  The Texas Lottery Commission proposes new sec.403.101, concerning procedural 
rules regarding the charges for public records, which implements the provisions 
of House Bill 1009, passed by the 73rd Legislature, which amended the Texas Open 
Records Act. 
 This rule is required in order for the agency to comply with House Bill 1009. 
The rule will inform the public of the charges the agency will make for copies 
of public records and will set out guidelines applicable to requests for records 
under the Open Records Act, Texas Government Code, Chapter 552. 
 Richard Sookiasian, Budget Analyst, has determined that for the first five-year 
period the rule will be in effect there will be no significant revenue impact on 
the state or local government. 
 Mr. Sookiasian also has determined that for each year of the first five years 
the rule is in effect the public benefit anticipated as a result of enforcing 
the rule will be to allow the Texas Lottery Commission to provide open records 
in a manner consistent with total public access and convenience while reducing 
government expenses. This rule will have no significant fiscal implications for 
small businesses. There is no significant anticipated economic cost to persons 
who are required to comply with the proposed rule. 
 Comments on the proposal may be submitted to Ridgely Bennett, Staff Attorney, 
Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78711-6630. 
 The new section is proposed under House Bill 1009, 73rd Legislature, Regular 
Session, which requires agencies to adopt rules setting forth the charges they 
will make for copies of public information. 
 The new section implements Texas Government Code, sec.552.261 and sec.552.262. 
 
 
  sec.403.101. Open Records. 
 
  (a) Charges for Copies of Public Records. The charges to any person requesting 
reproductions of any readily available record of the Texas Lottery Commission 
will be the charges established by the General Service Commission. 
   
  (b) The agency may furnish public records without charge or at a reduced 
charge if the agency determines that waiver or reduction of the fees is in the 
public interest. 
   
  (c) Open Records Requests. The following guidelines apply to requests for 
records under the Open Records Act, Texas Government Code, Chapter 552. 
 
  (1) Requests must be in writing and reasonably identify the records requested. 
   
  (2) Records access will be by appointment only. 
   
  (3) Records access is available only during the regular business hours of the 
agency. 
   
  (4) Generally, unless confidential information is involved, review may be by 
physical access or by duplication, at the requestor's option. Any person, 
however, whose request would be unduly disruptive to the ongoing business of the 
office may be denied physical access and will only be provided the option of 
receiving copies. 
   
  (5) When the safety of any public record is at issue, physical access may be 
denied, and the records will be provided by duplication as previously described. 
   
  (6) Confidential files will not be made available for inspection or for 
duplication except under certain circumstances, e.g., court order. 
   
  (7) All open records request appointments will be referred to the agency's 
Open Records Specialist before complying with a request. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451004 
  Ridgely Bennett 
 Staff Attorney 
 Texas Lottery Commission 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 323-3791 
         
                   
  TITLE 19. EDUCATION 
 Part II. Texas Education Agency 
  Chapter 75. Curriculum 
  
  Subchapter F. Graduation Requirements 
 
  19 TAC sec.75.152, sec.75.153 
 
  The Texas Education Agency (TEA) proposes amendments to  s75.152 and 
sec.75.153, concerning graduation requirements. The proposed amendments abolish 
the current advanced high school program and the advanced high school program 
with honors, and eliminate approval of honors courses by agency staff. The 
proposed new advanced high school program focuses on outstanding student 
performance as determined by an external source of evaluation. Specific advanced 
measures are not included in the rules, but would be proposed after the proposed 
advanced program is adopted. 
 Provisions in the proposed rules permit the board to review additional advanced 
measures and to modify the list as needed in the future. This should lead to a 
statewide advanced program that is more uniform, while still providing districts 
the flexibility to use those advanced measures that meet the needs of their 
students. The new program would replace the other advanced programs in 1999-2000 
and, upon adoption, would operate concurrently with the other programs until 
that date. 
 The proposed amendments also delete the current set of graduation seals and the 
academic achievement record form. 
 Linda Cimusz, executive deputy commissioner for curriculum, assessment, and 
professional development, has determined that for the first five-year period the 
rules are in effect there will be fiscal implications as a result of enforcing 
or administering the rules. There will be no effect on state government. The 
effect on local government (school districts) cannot be accurately determined at 
this time. Costs to a district will be determined largely by the advanced 
measures the local district may choose to use. 
 Ms. Cimusz and Criss Cloudt, executive associate commissioner for policy 
planning and information management, have determined that for each year of the 
first five years the rules are in effect the public benefit anticipated as a 
result of enforcing the rules will be that students who choose to pursue the 
advanced high school program will have a strong curricular foundation. Because 
of this foundation, the new program will focus on the quality of student work, 
rather than on the quantity of student work. The components being considered as 
advanced measures provide a broad mix of options for students and encourage the 
development of strong community/school district relations through the use of 
mentorships and panels that require professional expertise. 
 There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the rules as proposed. 
 Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and 
Information Management, 1701 North Congress Avenue, Austin, Texas 78701, (512) 
463-9701. All requests for a public hearing on the proposed rules submitted 
under the Administrative Procedure Act must be received by the commissioner of 
education not more than 15 calendar days after notice of a proposed change in 
the rules has been published in the Texas Register. 
 The amendments are proposed under the Texas Education Code, sec.21.257, which 
authorizes the State Board of Education to prescribe by rule standards for 
determining what constitutes an advanced high school program. The section also 
authorizes the board to adopt a transcript form for the advanced high school 
program which is designed to clearly distinguish it from a transcript used for 
the academic achievement record of a student who has not completed an advanced 
high school program. 
 The amendments implement Texas Education Code, sec.21.257. 
 
 
  sec.75.152. Advanced High School Program. 
 
  <nl>(a)  Subchapters (b)-(g) of this section shall expire at the end of school 
year 1998-1999. 
   
  <nl>(b)<ol>[(a)] <nl>A student<ol> [Students] who <nl>wishes<ol> [wish] to 
complete an advanced high school program and [to] have <nl>the<ol> [such] 
accomplishment recognized and distinguished on the academic achievement record 
(transcript) <nl>must <ol> [shall] complete requirements in addition to those 
prescribed in sec.75.151 of this title (relating to High School Graduation 
Requirements). Programs shall be of two types <nl>.<ol> [:] 
 
  (1) <nl>The<ol> advanced high school program <nl>shall consist of<ol> [-] 22 
credits selected from the provisions of subsection  <nl>(c)(1)-(11)[(b)(1)-(11)] 
of this section .<ol> [; and] 
   
  (2) <nl>The<ol> advanced high school honors program <nl>shall consist of<ol> 
[-] 22 credits selected from the provisions of subsection <nl>(c)(1)-(11)<ol> 
[(b)(1)-(11)] of this section. [(] Five of these  <nl>credits<ol> [units] must 
be designated by the board of trustees as honors courses <nl>under <ol> [and 
must be in accordance with] subsection  <nl>(e)<ol> [(d)] of this section. [)] 
<nl>(c)<ol> [(b)] The required <nl>credits <ol> [units] shall include the 
following. 
   
  (1) English language arts-four <nl>credits <ol> [units]. 
 
  (A) <nl>Three credits must consist of<ol> English I, II, and III  <nl>or 
English as a second language (ESL) I, II, and III<ol>. 
   
  (B) The fourth <nl>credit<ol> [unit] of English may be satisfied by English 
IV, English IV Honors, English IV (Academic),  <nl>ESL IV,<ol> English IV 
(Academic) Honors, or <nl>College Board<ol> [college board] advanced placement 
English literature and composition. 
     
  <nl>(2)<ol>[(4)] <nl>Languages <ol> [Other languages] -two <nl>credits. The 
credits must be earned for<ol> [units from] the same language. 
   
  <nl>(3)<ol>[(2)] Mathematics-three <nl>credits<ol> [units] . <nl>The credits 
must consist of<ol> Algebra I, Algebra II, <nl>and <ol> Geometry [, Precalculus 
(Trigonometry and either Elementary Analysis or Analytic Geometry may be taken 
in lieu of Precalculus), Computer Mathematics I and II, Probability and 
Statistics, Calculus, Number Theory, Linear Algebra, Linear Programming, History 
of Mathematics, and Survey of Mathematics]. 
   
  <nl>(4)<ol>[(3)] Science-three <nl>credits. The credits must be<ol> [units] 
selected from Physical Science  <nl>or Science III<ol>, Biology I <nl>or Science 
IV<ol>, Biology II, Chemistry I, Chemistry II, Physics I, Physics II, Geology, 
Meteorology, Astronomy, <nl>Aquatic <ol> [Marine] Science, Environmental 
Science, [Laboratory Management], or <nl>Anatomy and Physiology <ol> [Physiology 
and Anatomy]. 
   
  (5) Social studies-two and one-half <nl>credits. The credits must consist 
of<ol> [units as follows]: 
 
  (A) World History Studies or World Geography Studies-one <nl>credit<ol> 
[unit]; 
   
  (B) United States History-one <nl>credit <ol> [unit]; and 
   
  (C) United States Government-one-half <nl>credit <ol> [unit]. 
     
  (6) Economics with emphasis on the free enterprise system and its benefits-
one-half <nl>credit<ol> [unit]. 
   
  (7) Physical <nl>education<ol> [Education]-one and one-half  <nl>credits<ol> 
[units]. 
 
  (A) The school district board of trustees may allow  <nl>a student<ol> 
[students] to substitute certain physical activities for the one and one-half 
required  <nl>credits<ol> [units] of <nl>physical education<ol> [Physical 
Education]. <nl>The <ol> [Such] substitutions shall be based <nl>on<ol> [upon] 
the physical activity involved in drill team, marching band, and cheerleading 
during the fall semester; Reserve Officer Training Corps (ROTC); athletics; 
Dance I-IV; and <nl>two-<ol> [two] or three-hour block vocational gainful 
employment <nl>credits <ol> [units]. 
   
  (B) <nl>A student<ol> [Students] may <nl>not <ol> earn [no] more than two 
<nl>credits<ol> [units of credit] in <nl>physical education<ol> [Physical 
Education] toward state graduation requirements. 
   
  (C) <nl>A school district <ol> [School districts] may award state credit for 
physical education not  <nl>exceeding<ol> [to exceed] two <nl>credits<ol> [units 
of credit] for appropriate private or commercially sponsored physical activity 
programs conducted either on or off campus. <nl>A district must<ol> [Districts 
shall] apply to the commissioner of education for approval of such programs 
<nl>,<ol> which may be substituted for state graduation credit in <nl>physical 
education<ol> [Physical Education]. 
     
  (8) Health <nl>education<ol> [Education]-one-half <nl>credit<ol> [unit]. 
   
  (9) <nl>Computing proficiency <ol> [Computer science]-one  <nl>credit. The 
credit must be<ol> [unit] selected from a variety of computer-related courses 
<nl>listed<ol> [as provided for] in Subchapter D of this chapter (relating to 
Essential Elements-Grades 9-12), including: 
 
  (A)  Computer Mathematics [I or II]; 
   
  [(B) Business Data Processing and Introduction to Computer Programming]; 
   
  <nl>(B)<ol>[(C)]  Business Computer Applications I or II; 
   
  <nl>(C)<ol>[(D)] Business Computer Programming I or II; 
   
  [(E)  Advanced Typewriting/Word Processing;] 
   
  <nl>(D)<ol>[(F)] Computer Science I or II; 
   
  <nl>(E)<ol>[(G)] Business Information Processing; and 
   
  <nl>(F)<ol>[(H)] Microcomputer Applications. 
     
  (10) Fine arts or speech-one <nl>credit. The credit must<ol> [unit to] be 
selected from the list of <nl>courses approved by the<ol> State Board of 
Education <nl>(SBOE) in Subchapter D of this chapter (relating to Essential 
Elements-Grades 9-12)<ol> [approved courses]. 
   
  (11) Electives-three <nl>credits<ol> [units]. <nl>Each elective must<ol> [(All 
electives shall] be selected from the list of [State Board of Education 
approved] courses <nl>approved by SBOE in <ol> [, Grades 9-12. See] Subchapter D 
of this chapter (relating to Essential Elements-Grades 9-12). [)] 
     
  <nl>(d)<ol>[(c)]  When necessary and justified, the commissioner of education 
may authorize a substitution in the requirements for the advanced high school 
program under the following conditions. 
 
  (1) <nl>A student must <ol> [Students shall be required to] complete 22 
<nl>credits<ol> [units] from state-approved courses [as] specified in this 
section. 
   
  (2) <nl>A student must <ol> [Students shall be required to] complete the 
number of <nl>credits<ol> [units] in each subject area [as] specified in this 
section from courses listed in these subject areas in Subchapter D of this 
chapter (relating to Essential Elements-Grades 9-12). 
   
  (3) Any course substituted for another course <nl>must <ol> [shall] maintain 
the same level of academic excellence as the courses specified in this section. 
   
  (4) <nl>A<ol> [Under no circumstances shall any] course described as 
introductory, remedial, or compensatory  <nl>may not<ol> [be allowed to] 
substitute for any course specified in this section. 
   
  (5) The district <nl>must<ol> [shall] request in writing approval from the 
commissioner of education to substitute specific courses <nl>, <ol> citing 
justification for such requests. 
     
  <nl>(e)<ol>[(d)] <nl>A school<ol> [School] district <nl>board<ol> [boards] of 
trustees that <nl>wishes <ol> [wish] to offer the advanced high school honors 
program <nl>must<ol> [shall] adopt policies <nl>that <ol> [which] provide for 
[such] special honors courses and programs. <nl>The<ol> [Such] policies <nl>must 
<ol> [shall] provide for modification of the courses of study in subsection 
<nl>(c)<ol>[(b)] of this section by accelerating, providing greater depth, and 
expanding the courses and their essential elements described in this section and 
in Subchapter D of this chapter (relating to Essential Elements-Grades 9-12) 
<nl>. In addition, the courses must<ol> [and shall] be consistent with 
subsection <nl>(f)<ol>[(e)] of this section. <nl>A school district must<ol> 
[School districts shall] ensure that students participating in honors courses or 
programs are instructed in all essential elements and demonstrate an acceptable 
degree of mastery of those elements. 
   
  <nl>(f)<ol>[(e)] <nl>An honors course<ol> [Honors courses] shall be defined as 
[those courses] having <nl>:<ol> specific criteria for entry of highly motivated 
students; a definite scope and sequence that reflects the nature of the subject; 
a differentiated curriculum that includes a wider range and greater depth of 
subject matter than those of the regular course; an emphasis on higher level and 
critical thinking skills; provision for creative, productive thinking; a stress 
on cognitive concepts and processes; instructional strategies that accommodate 
the learning styles of the students involved; and independent as well as guided 
research. <nl>A school district<ol> [School districts] wishing to offer honors 
courses or programs <nl>under<ol> [in accordance with] subsection 
<nl>(e)<ol>[d)] of this section <nl>must<ol> [shall] submit descriptions of  
<nl>the<ol> [these] courses or programs to the commissioner of education, who 
shall review and may approve the descriptions. The commissioner of education 
shall inform <nl>SBOE<ol> [the State Board of Education] of <nl>the<ol> [such] 
actions. <nl>A district<ol> [Districts] that <nl>wishes<ol> [wish] to develop 
new honors courses or programs <nl>must <ol> [shall] submit descriptions for 
consideration for approval <nl>no later than March 31, 1995<ol> [at least six 
months prior to proposed implementation]. <nl>After that date, the Texas 
Education Agency (TEA) shall not approve additional honors courses, although 
school districts are encouraged to develop such courses based on the needs of 
students in the district.<ol> [College board advanced placement courses in 
English, mathematics, science, social studies, languages, and fine arts may be 
designated as honors courses. Districts shall not be required to submit these 
courses for approval. The commissioner of education shall designate the college 
board advanced placement courses which may be used to meet required and elective 
course requirements for state graduation in both high school and advanced high 
school programs.] 
   
  <nl>(g) All College Board advanced placement and International Baccalaureate 
courses are designed as honors courses. A district is not required to submit 
these courses for approval. 
   
  <nl>(h) Beginning in the 1999-2000 school year, a student who wishes to 
complete an advanced high school program and have the accomplishment recognized 
and distinguished on the academic achievement record (transcript) must complete 
the following requirements. 
 
  <nl>(1) Academic core components. College Board advanced placement and 
International Baccalaureate courses may be substituted for requirements in 
appropriate proficiency areas. The student must demonstrate proficiency in the 
following. 
 
  <nl>(A)  English-four credits. The credits must consist of: 
       
  <nl>(i) <nl> English I, English II, English III, English IV; or 
 
  <nl>(ii) <nl> a passing score on an appropriate end-of-course assessment. 
   
  <nl>(B) Mathematics-three credits. The credits must consist of: 
 
  <nl>(i)<nl> Algebra I, Geometry, Algebra II; or 
   
  <nl>(ii) <nl> a passing score on an appropriate end-of-course assessment. 
     
  <nl>(C) Science-three credits. The credits must consist of: 
 
  <nl>(i)<nl> three credits selected from Physical Science, Biology I and II, 
Chemistry I and II, Physics I and II, or Science III and IV. A student may not 
take more than two credits from any combination of Physical Science, Science III 
and IV, and Biology I; or 
   
  <nl>(ii)<nl> a passing score on an appropriate end-of-course assessment. 
     
  <nl>(D) Social studies-four credits. The credits must consist of: 
 
  <nl>(i)<nl> U. S. History (one credit), World History Studies (one credit), 
World Geography (one credit), U. S. Government (one-half credit), and Economics 
(one-half) credit; or 
   
  <nl>(ii)<nl> a passing score on an appropriate end-of-course assessment. 
     
  <nl>(E) Second language-three credits. The credits must consist of: 
 
  <nl>(i)<nl> three credits in the same language; or 
   
  (ii) a passing score on a second-language proficiency assessment. 
     
  <nl>(F) Health-one-half credit or a passing score on an appropriate end-of-
course assessment. 
   
  <nl>(G) Fine arts-one credit or a passing score on an appropriate end-of-
course assessment. 
   
  <nl>(H)  Physical education-one and one-half credits or a passing score on an 
appropriate end-of-course assessment. 
   
  <nl>(I) Computing-one credit. The credit must consist of: 
 
  <nl>(i)<nl> one credit in computer science; or 
   
  <nl>(ii)<nl> a passing score on an appropriate computing proficiency 
assessment. 
     
  <nl>(2) Additional components. College Board advanced placement and 
International Baccalaureate courses may be submitted for requirements in 
appropriate proficiency areas. The student must choose one of the following 
options for additional components. 
 
  <nl>(A) Option I: math, science, elective. The student must demonstrate 
proficiency in the following. 
 
  <nl>(i)<nl> Math-one credit. The credit must consist of: 
 
  <nl>(I) Precalculus (one credit); or 
   
  <nl>(II) Trigonometry (one-half credit) and either Elementary Analysis (one-
half credit) or Analytic Geometry (one-half credit). 
     
  <nl>(ii)<nl> Science-one credit. The credit must be selected from Biology I or 
II, Chemistry I or II, Physics I or II, or Science III or IV. A student may not 
take more than two credits from any combination of Physical Science, Science III 
and IV, and Biology I. 
   
  <nl>(iii)<nl> Elective-one credit. 
     
  <nl>(B) Option II: career and technology. The student must demonstrate 
proficiency equivalent to three credits in a state-approved, coherent sequence 
of courses for career and technology preparation. To be included in the 
recommended high school program, a technology preparation program approved by 
TEA must meet recommended high school program criteria in English language arts, 
mathematics, science, social studies, foreign language, health, fine arts, and 
computing proficiency. 
   
  <nl>(C) Option III: specialization. The student must demonstrate proficiency 
equivalent to three credits in a specialization consisting of state-approved, 
college-preparatory courses from language arts (including speech and 
journalism), science, social studies, mathematics, foreign language, fine arts, 
or computer science. 
     
  <nl>(3) Advanced measures. A student also must receive any combination of four 
of the advanced measures approved by SBOE. The measures must be reviewed at 
least once each biennium and meet the following standards. 
 
  <nl>(A) The measures must focus on demonstrated student performance at the 
college or professional level. 
   
  <nl>(B)  Student performance on advanced measures must be assessed through an 
external review process. 
 
         
  sec.75.153. Academic Achievement Record (Transcript). 
 
  (a)  <nl>Each<ol> [All] school <nl>district must <ol> [districts shall] use 
the academic achievement record (transcript) form <nl>designated by<ol> [, 
adopted by] the State Board of Education <nl>(SBOE)<ol> [in subsection (d) of 
this section]. Each district <nl>must reproduce<ol> [is responsible for 
reproducing] the form in sufficient quantities. The form shall serve as the 
academic record for each student and <nl>must<ol> [shall] be maintained 
permanently by the district. Each district <nl>must<ol> [shall] ensure that 
copies of the record are made available for <nl>a student<ol> [students] 
transferring from one district to another.  <nl>The<ol> [This] information may 
be provided to the student or to the district to which the student is 
transferring or both. To ensure appropriate placement of <nl>a<ol> transfer 
<nl>student<ol> [students], <nl>a district must<ol> [districts shall] respond 
promptly to <nl>each request<ol> [all requests] for student records from 
<nl>a<ol> receiving school <nl>district <ol> [districts]. 
   
  (b)  The commissioner of education shall develop and distribute to 
<nl>each<ol> [all] school <nl>district<ol> [districts] and <nl>institution <ol> 
[institutions] of higher education in the state a common academic achievement 
record and coding system for courses and instructions for recording information 
on the academic achievement record. <nl>Each<ol> [All] school <nl>district<ol> 
[districts] <nl>must<ol> [shall] use the system provided by the commissioner. 
   
  (c) <nl>A student<ol> [Students] who <nl>completes <ol> [complete] high school 
graduation requirements shall have attached to the academic achievement record 
<nl>a seal approved by SBOE <ol> [one of the following seals]. 
 
  [(1) Students who complete the high school program shall have the following 
seal attached to their academic achievement record.] 
 [Figure 1: 19 TAC sec.75.153(c)(1)] 
   
  [(2) Students who complete the advanced high school program shall have the 
following seal attached to their academic achievement record.] 
 [Figure 2: 19 TAC sec.75.153(c)(2)] 
   
  [(3) Students who complete the advanced high school honors program shall have 
the following seal attached to their academic achievement record.] 
 [Figure 3: 19 TAC sec.75.153(c)(3)] 
     
  [(d) The academic achievement record form shall be as follows.] 
 [Figure 4: 19 TAC sec.75.153(d)] 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 14, 1994. 
 TRD-9451011 
  Criss Cloudt 
 Executive Associate Commissioner for Policy Planning and Information Management 
 Texas Education Agency 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-9701 
         
               Chapter 101. Assessment 
  
  19 TAC sec.101.1 
 
  The Texas Education Agency (TEA) proposes an amendment to sec.101.1, 
concerning general provisions for student assessment. The amendment would 
prohibit school districts from developing policies on the use of an end-of-
course test that would cause a student to fail a course solely as a result of 
performance on the end-of-course test during either the benchmark year of the 
test or the subsequent school year. 
 Linda Cimusz, executive deputy commissioner for curriculum, assessment, and 
professional development, has determined that for the first five-year period the 
rule is in effect there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rule. 
 Ms. Cimusz and Criss Cloudt, executive associate commissioner for policy 
planning and information management, have determined that for each year of the 
first five years the rule is in effect the public benefit anticipated as a 
result of enforcing the rule will be that a student will not be penalized for 
his or her score on an end-of-course test during the benchmark year of the test 
or the subsequent school year. 
 There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the rule as proposed. 
 Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and 
Information Management, 1701 North Congress Avenue, Austin, Texas 78701, (512) 
463-9701. All requests for a public hearing on the proposed rule submitted under 
the Administrative Procedure Act must be received by the commissioner of 
education not more than 15 calendar days after notice of a proposed change in 
the rule has been published in the Texas Register. 
 The amendment is proposed under the Texas Education Code, sec.35.022, which 
authorizes the State Board of Education to create and implement by rule a 
statewide assessment program that is primarily performance-based to ensure 
school accountability for student achievement that achieves the goals provided 
under the Texas Education Code, sec.35.022. 
 The amendment implements Texas Education Code, sec.35.001. 
 
 
  sec.101.1. General Provisions. 
 
  (a)-(e) (No change.) 
   
  (f) End-of-course tests shall be used for institutional accountability <nl>. 
A<ol> [; however, a] school district may adopt policies regarding the use of an 
end-of-course test for purposes such as awarding course credit <nl>or<ol> [,] 
using the examination as a final examination or other test [, or placing out of 
the particular course]. <nl>However, during the benchmark year and the 
subsequent school year, a school district may not adopt policies that would 
allow a student to fail a course solely on the basis of failure on the state 
end-of-course examination. 
   
  (g) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 14, 1994. 
 TRD-9451010 
  Criss Cloudt 
 Executive Associate Commissioner for Policy Planning and Information Management 
 Texas Education Agency 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-9701 
         
             Chapter 137. Professional Educator Preparation and Certification 
  
  19 TAC sec.137.231 
   
  Subchapter H. Alternative Certification of Teachers 
 
  The Texas Education Agency (TEA) proposes an amendment to sec.137.231, 
concerning requirements for the alternative certification of teachers. The 
proposed amendment clarifies the following issues regarding alternative teacher 
certification: program administration and supervision; applicant screening 
procedures; intern preassignment training requirements and documentation; mentor 
selection, training, and assignment to intern; scheduled time for mentors and 
interns; advisory committee composition, function, and responsibilities; program 
assessment procedures; and appropriateness of college coursework to meet the 
needs of intern teachers. 
 Linda Cimusz, executive deputy commissioner for curriculum, assessment, and 
professional development, has determined that for the first five-year period the 
rule is in effect there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rule. 
 Ms. Cimusz and Criss Cloudt, executive associate commissioner for policy 
planning and information management, have determined that for each year of the 
first five years the rule is in effect the public benefit anticipated as a 
result of enforcing the rule will be enhanced safeguards to help ensure the 
quality of professionals teaching in Texas classrooms. 
 There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the rule as proposed. 
 Comments on the proposal may be submitted to Criss Cloudt, Policy Planning and 
Information Management, 1701 North Congress Avenue, Austin, Texas 78701, (512) 
463-9701. All requests for a public hearing on the proposed rule submitted under 
the Administrative Procedure Act must be received by the commissioner of 
education not more than 15 calendar days after notice of a proposed change in 
the rule has been published in the Texas Register. 
 The amendment is proposed under the Texas Education Code, sec.13.035, which 
authorizes the State Board of Education to provide by rule for teacher and 
administrator certification programs as an alternative to teacher education 
programs. 
 The amendment implements the Texas Education Code, sec.13.035. 
 
 
  sec.137.231. Requirements for the Alternative Certification of Teachers. 
 
  (a) General provisions. Approval of alternative certification of teachers by 
the State Board of Education (SBOE) is based on the following requirements. 
 
  (1) Alternative certification of teachers <nl>shall <ol> [is to] be a 
<nl>collaborative program among public schools, regional education service 
centers (ESC),<ol> [local education agency program or a cooperative program 
between local education agencies] and institutions of higher education and 
delivered through Texas public schools. 
   
  <nl>(2)  The collaborative entities shall develop and implement a 
comprehensive field-based teacher preparation program based on the state-
approved proficiencies for teachers, content competencies, current research, and 
best practice. 
   
  <nl>(3) The collaborative program shall have internal and external assessment 
procedures that focus on attainment of the proficiencies, student learning, and 
continuous improvement of program content and delivery. 
   
  <nl>(4)<ol>[(2)] <nl>The program administrator or the district superintendent 
shall recommend an individual for teacher certification<ol> [An individual may 
be recommended] to the commissioner of education [by the program administrator 
and/or the district superintendent for teacher certification] based on 
satisfactory completion of requirements of the approved program. 
   
  <nl>(5)<ol>[(3)] Certificates that may be earned through an alternative 
certification program include any certificate or endorsement for a teacher that 
may be earned through the completion of an approved teacher education program 
for which a bachelor's degree is required. The following additional certificate 
areas are unique to alternative certification: Grades prekindergarten-6 
<nl>elementary education<ol>, <nl>Grades<ol> prekindergarten-6 <nl>elementary 
bilingual<ol> [bilingual/English as a second language (ESL)], <nl>Grades <ol> 
prekindergarten-12 English as a second language <nl>(ESL)<ol>, and  
<nl>Grades<ol> prekindergarten-12 generic special education. 
   
  <nl>(6) <ol>[(4)] An individual admitted into an alternative teacher 
certification program that has been approved <nl>under<ol> [in accordance with 
the requirements of] this section <nl>shall be<ol> [is] issued a probationary 
certificate that is valid for one calendar year. The probationary certificate 
may be extended for one additional year only <nl>according to the<ol> [in 
accordance with] provisions <nl>of <ol> [set forth in] the Texas Education Code, 
sec.13.306. 
     
  (b) Requirements for an approved plan. <nl>A collaborative that prepares 
teachers, <ol> [Local education agencies or cooperatives] as described in 
subsection (a)(1) of this section<nl>, must <ol> [that choose to staff positions 
via the alternative certification process are required to] submit a 
collaboratively developed plan for <nl>SBOE <ol> approval [by the SBOE] before 
<nl>implementing the plan<ol> [implementation]. The plan must <nl>address <ol> 
[cover] the following. 
 
  (1) (No change.) 
   
  <nl>(2) The program shall address the educational needs of all children. 
   
  [(2) The alternative certification program must be developed collaboratively 
with all the major stakeholders, including teachers in the areas of 
certification being developed.] 
   
  (3) A committee consisting of the major stakeholders <nl>shall<ol> [must] 
assist <nl>and provide evidence of shared accountability<ol> in the design, 
delivery, [and] evaluation<nl>, and major policy decisions<ol> of the program. 
<nl>The committee shall: 
 
  <nl>(A) include teachers, administrators, ESC staff, faculty and 
administrators from institutions of higher education; 
   
  <nl>(B)  reflect the cultural diversity of the region served; 
   
  <nl>(C)  require that the teacher representation reflect each certification 
area offered; and 
   
  <nl>(D) meet on a regular basis to review program design and implementation 
and make program refinements based on evaluation data. 
     
  (4) The plan must include <nl>a description of available resources and <ol> an 
approved program budget that indicates commitment [to the program] through 
adequate funding <nl>for establishing, implementing, evaluating, and maintaining 
the program <ol>. <nl>The plan shall indicate the maximum number of interns to 
be admitted to the program to assess adequacy of resources allocated for program 
operation. The commissioner of education shall approve any increase beyond the 
SBOE-approved maximum number of interns to be admitted into the program<ol>. 
   
  (5) The plan must designate a program <nl>administrator <ol> [administration] 
with adequate, qualified staff to assure appropriate <nl>planning,<ol> 
screening<nl>,<ol> [;] training, [as indicated by vitae of personnel delivering 
this component; and] supervision, <nl>and assessment<ol> as indicated in a ratio 
of supervisors to interns. <nl>Lines of responsibility and communication with 
all entities involved must be clearly delineated. 
   
  (6) The plan must include a calendar of program activities for the duration of 
each school year for which the program is approved. The calendar must include a 
<nl>deadline <ol> [time line] for accepting candidates into a cycle to assure 
adequate time for preassignment screening  <nl>, preassignment<ol> and 
<nl>ongoing<ol> training [, scheduled training for interns, and orientation and 
training for mentor teachers]. 
   
  <nl>(7) The alternative certification plan must provide evidence of: 
 
  <nl>(A) state-approved teacher proficiencies integrated throughout the 
preparation program; 
   
  <nl>(B) a comprehensive delivery system through which proficiencies are 
acquired; 
   
  <nl>(C) a variety of teaching and learning experiences integrated into the 
delivery system; and 
   
  <nl>(D) an ongoing, comprehensive performance assessment system for the 
teacher candidates. 
     
  <nl>(8) The program must include: 
 
  <nl>(A) a supervised internship of at least one calendar year under the 
mentorship of an experienced, certified teacher or teachers in the subject area 
or areas or at the level for which the intern is to be certified; and 
   
  <nl>(B) provisions for release from teaching duties on a regularly scheduled 
basis: 
 
  <nl>(i)<nl> for each intern to observe the teaching of the mentor teacher or 
other teachers and to confer with the mentor teacher; and 
   
  <nl>(ii)<nl> for each mentor teacher to observe, coach, and formatively assess 
the teaching of the intern. 
       
  [(7) The alternative certification plan must include, but need not be limited 
to, training for the intern in: 
 
  [(A) teaching methods and classroom management; 
   
  [(B) instructional methods and strategies that emphasize practical 
applications of the teaching learning process; 
   
  [(C)  curriculum organization, planning, and evaluation that focus on the 
curriculum to be taught, especially the essential elements to be included; 
   
  [(D) legal and ethical aspects of teaching, including special responsibilities 
in recognizing and responding to signs of abuse and neglect in students and to 
dyslexia and related disorders; 
   
  [(E) knowledge and skills concerning the unique needs of all students, 
including emphasis on special learners, such as the impact of culture, 
ethnicity, language, and social differences upon the instructional processes; 
the characteristics, assessment, least restrictive alternatives, and admission, 
review, and dismissal processes for students requiring individualized or 
specialized education programs; characteristics and needs of gifted and talented 
students, especially at-risk gifted and talented learners; and growth and 
development of learners; and 
   
  [(F) use of technology in the management and delivery of instruction. 
     
  [(8) The program must include an internship of at least one calendar year 
under the mentorship of a teacher or teachers in the subject area or areas 
and/or at the level for which the intern is to be certified. Provisions shall be 
made for each intern to have scheduled time provided during the internship to 
observe the teaching of the mentor teacher and/or other teachers and to confer 
with the mentor teacher.] 
   
  (9) <nl>The program must provide for the selection <ol> [Selection], training, 
and support <nl>of<ol> [for the] mentor <nl>teachers <ol> [teacher must include 
the following]. 
 
  <nl>(A) Selection criteria must include best practices for identifying mentor 
teachers. 
   
  [(A) The mentor teacher must have attained level two or higher on the career 
ladder or have met all minimum requirements for placement on level two of the 
career ladder.] 
   
  (B)  <nl>An orientation to the roles and responsibilities of mentoring shall 
be provided to each mentor upon assignment as a mentor and no later than the 
intern's first week of teaching.<ol> [Mentor training must begin before 
assignment and continue throughout the internship period.] The <nl>mentor<ol> 
training program <nl>shall include <ol> [includes] best practices for supporting 
and assisting <nl>interns throughout the internship period<ol> [beginning 
teachers, in addition to any other requirement the collaborative committee 
designing the program deems appropriate]. <nl>The training shall include the 
following areas: adult learners, stages of teacher growth and development, self-
reliance and motivation, stress management, interpersonal skills, formative 
assessment strategies, counseling, peer coaching and direct support, 
communication with parents, school culture, and cultural diversity. 
   
  <nl>(C) The program plan shall provide a process for regularly scheduled times 
for each mentor to communicate with program staff to discuss the intern's 
performance and progress. 
   
  [(C) The mentor teacher must have scheduled time on a periodic, regular basis 
to observe, coach, and assess the actual teaching of the intern.] 
     
  <nl>(10) The program plan must provide evidence of equity in recruiting and 
retaining interns, especially among underrepresented populations, and a system 
of ongoing counseling, guidance, and support for interns. 
   
  <nl>(11) The program plan must delineate a comprehensive method for screening, 
admission, training, evaluation of intern performance, and recommendation for 
certification. 
   
  <nl>(12) The plan must provide evidence of ongoing, internal and external 
program assessment used to assure quality and continuous improvement. 
   
  [(10) The program must include preassignment training and a minimum of 20 
clock hours of student contact experiences in a classroom setting supervised by 
the program staff before assignment as a teacher of record. 
   
  [(11) Preassignment screening, including a criminal record review, must be 
initiated for interns. 
   
  [(12)  A procedure must be developed for program monitoring, review, and 
evaluation. 
   
  [(13) Ongoing counseling, guidance, and remedial preparation must be provided 
as needed.] 
   
  <nl>(13)<ol>[(14)]  Follow-up data that attest to program and intern 
effectiveness must be maintained. 
     
  (c) <nl>Requirements for admission <ol> [Admission], assignment, and 
certification. Each <nl>program must assure and document that an applicant meets 
<ol> [applicant must meet] meet the following minimum requirements for admission 
as an intern to the alternative teacher certification program. 
 
  <nl>(1) The program shall publish and disseminate specific admission and 
retention policies for program entry and internship, including academic and 
performance standards, as well as prerequisite field experience. 
   
  <nl>(2)<ol>[(1)] Each applicant must hold a bachelor's [degree] or <nl>a<ol> 
higher <nl>level<ol> degree from an institution of higher education that was 
accredited or otherwise approved by a state department of education, a 
recognized governmental entity, or a recognized regional accrediting 
organization at the time the degree was conferred. Each applicant must have 
maintained a grade point average of no less than <nl>2.50<ol> [2.5] on a four-
point system on all semester hours attempted and on semester hours required for 
the certificate as specified in paragraph <nl>(5)(A)-(F)<ol> [(3)(A)-(F)] of 
this subsection. 
   
  <nl>(3)<ol>[(2)] Applicants must possess basic skills in mathematics, reading, 
and writing as evidenced by acceptable scores on the state-mandated basic skills 
test [or its equivalent]. 
   
  <nl>(4) Applicants shall give evidence of state or national criminal record 
clearance before classroom assignment as interns. 
   
  <nl>(5)<ol>[(3)] Applicants must have appropriate semester hours <nl>of 
transcript credit <ol> in a subject or combination of subjects to be taught and 
related to the certificate to be earned. 
 
  (A) For <nl>the<ol> Grades 6-12 <nl>secondary<ol> certificate <nl>,<ol> 
applicants must have 24 semester hours in a subject included in Chapter 75 of 
this title (relating to Curriculum) for the secondary level of assignment. 
Twelve semester hours must be upper division. 
   
  (B) For <nl>the<ol> Grades prekindergarten-6 <nl>elementary <ol> certificate 
<nl>,<ol> applicants must have 24 semester hours in a combination of subjects 
taught in the elementary school that must include English, mathematics, a 
natural science, and a subject in the social studies. <nl>Applicants shall have 
at least three semester hours in each of the four areas. 
   
  (C) For <nl>the<ol> Grades prekindergarten-6 <nl>elementary bilingual<ol> 
[bilingual/English as a second language (ESL)] certificate <nl>, <ol> applicants 
must have evidence of oral and written proficiency <nl>on a validated test of 
English and<ol> [in] the language of the target population for bilingual 
education assignments <nl>. In addition, applicants must have<ol> [and] 24 
semester hours in a combination of subjects taught in the elementary school that 
must include English, mathematics, a natural science, and a subject in the 
social studies. <nl>Applicants shall have at least three semester hours in each 
of the four areas. 
   
  (D) For <nl>the<ol> Grades prekindergarten-12 ESL certificate <nl>,<ol> 
applicants must have 18 semester hours in English, six of which must be upper 
division. 
   
  (E) For <nl>the<ol> Grades prekindergarten-12 generic special education 
certificate <nl>, <ol> applicants must have 24 semester hours in a combination 
of subjects taught in the elementary school that must include English, 
mathematics, a natural science, and a subject in the social studies. 
<nl>Applicants shall have at least three semester hours in each of the four 
areas. 
   
  (F) Courses that focus on topics closely related to the semester hour 
requirements listed in subparagraphs (A)-(E) of this paragraph may be accepted 
for admission to the alternative certification program; however, such 
substitutions shall not exceed six hours for the Grades 6-12 certificate or 
three semester hours for all other certificates. 
     
  [(4) The following requirements for the certificate must be earned before 
assignment as a teacher of record. These requirements may be delivered through 
the following semester hours of course work or through a combination of semester 
hours and equivalent contact hours. 
 
  [(A) For Grades 6-12 certificate applicants must have six semester hours 
including, but not limited to, reading in the content areas and classroom 
discipline and management. 
   
  [(B) For Grades prekindergarten-6 certificate applicants must have six 
semester hours including, but not limited to, reading, early childhood-
elementary curriculum, and methods. 
   
  [(C) For Grades prekindergarten-6 bilingual/ESL certificate applicants must 
have six semester hours including, but not limited to, foundations of bilingual 
education, culture (concepts, patterns, contributions) of the target population, 
language acquisition and development in childhood, bilingual teaching methods 
(dual language instruction of language arts and reading, mathematics, science, 
and social studies), and methods of teaching ESL. 
   
  [(D) For Grades prekindergarten-12 ESL certificate applicants must have six 
semester hours including, but not limited to, awareness of cultural diversity 
and its effect on the teaching-learning process, language acquisition and 
development, methods of teaching ESL and applied linguistics. 
   
  [(E) For Grades prekindergarten-12 generic special education certificate 
applicants must have six semester hours including the concepts of the child-
centered process, infant/child development, task analysis, parental involvement, 
language development, survey of special education, classroom management and 
organization, behavior management, and development reading. 
     
  [(5) Additional requirements must be completed before certification. These 
requirements may be delivered through the following semester hours of course 
work or through a combination of semester hours and equivalent contact hours. 
 
  [(A) For Grades 6-12 certificate applicants must complete six additional hours 
including, but not limited to, the teaching-learning process and secondary 
teaching methods. 
   
  [(B) For Grades prekindergarten-6 certificate applicants must complete six 
additional semester hours including, but not limited to, reading and early 
childhood-elementary curriculum and methods. 
   
  [(C) For Grades prekindergarten-6 bilingual/ESL certificate applicants must 
complete six additional semester hours inclusive of topics listed in paragraph 
(4)(C) of this subsection. 
   
  [(D) For Grades prekindergarten-12 English as a second language certificate 
applicants must complete six additional semester hours inclusive of topics in 
paragraph (4)(D) of this subsection. 
   
  [(E) For Grades prekindergarten-12 generic special education certificate 
applicants must complete six additional semester hours emphasizing 
child/adolescent psychology, the teaching-learning process, measurement and 
evaluation, least restrictive alternative, vocational assessment, adaptive 
devices and adaptive physical education, transition, grading, curriculum 
adaptations to meet the unique needs of special learners, and reading across the 
curriculum.] 
     
  <nl>(6) The content, scope, and sequence of the teacher preparation curriculum 
shall be determined by the collaborative committee based on the state-approved 
teacher proficiencies, identified professional development and content area 
competencies, current research, best practice, and integrated field experiences 
for the certificate sought. 
 
  <nl>(A) The curriculum may be delivered through an identified number of 
semester hours and/or equivalent contact hours for preassignment and ongoing 
training. 
   
  <nl>(B)  A plan for assessing the proficiencies shall be included. 
     
  <nl>(7)<ol>[(F)] <nl>An intern<ol> [Applicants] must <nl>have<ol> [possess] 
acceptable scores on appropriate state-adopted <nl>examinations<ol> 
[examination(s)] of <nl>professional education and<ol> content knowledge in the 
teaching <nl>fields<ol> [field(s)] or delivery systems related to the 
certificate sought and the level of assignment. 
   
  <nl>(8)<ol>[(G)] <nl>An intern<ol> [Applicants] must meet full appraisal 
requirements of the state and the local district <nl>under <ol> [in accordance 
with] sec.149.41 of this title (relating to General Provisions). 
   
  <nl>(9) An intern must meet the performance levels as determined by the 
collaborative. 
     
  (d) Procedures for approval, review, and reapproval. 
 
  (1) <nl>An entity that chooses<ol> [School districts choosing] to <nl>prepare 
teachers using<ol> [staff positions by means of] the alternative certification 
process must direct the program administrator to submit to the commissioner of 
education, before implementing a program, a collaboratively developed plan that 
specifies <nl>the means by which the entity shall fulfill the requirements for 
an approved plan under<ol> [its means of fulfilling requirements for school 
district plans in accordance with] subsections (b) and (c) of this section. 
   
  (2) The commissioner of education may approve plans for alternative teacher 
certification. Initial approval of alternative teacher certification plans 
<nl>shall<ol> [will] not extend more than one year. <nl>Subsequent approval 
shall be contingent on satisfactory performance under the state-approved 
accountability system. The SBOE shall consider such performance when granting 
reapproval requests.<ol> [In subsequent years, after evaluation of the program 
by the SBOE, plans may be approved for a period not to exceed three years and 
shall be reviewed annually.] 
   
  (3) The administrator of an approved alternative teacher certification program 
must submit to the commissioner of education an annual report that includes the 
names of candidates in the program and other information that may be required, 
including results of internal monitoring, review, and <nl>assessment <ol> 
[evaluation] of the program. 
   
  (4) <nl>Alternative<ol> [Programs for alternative] teacher certification 
<nl>programs<ol> are subject to review by the Texas Education Agency (TEA). 
   
  [(5) Requests for reapproval of alternative teacher certification programs 
must include the percentage of interns receiving acceptable scores by test on 
the state-mandated tests for content specialization(s) and at least meets 
expectations on performance appraisals. The SBOE considers these program results 
when granting reapproval requests.] 
     
  (e) Alternative certification program options. 
 
  (1)  During the internship, the intern may pursue an additional [alternative] 
certificate [at the same level of assignment] or [to] additional subject areas 
at the <nl>same <ol> level of assignment [to the certificate] by taking the 
appropriate state-mandated test for certification  <nl>, provided that screening 
and all other requirements for the additional certificate or subject areas under 
this section are met<ol> [when the requirements stated in paragraph (3)(A)-(D) 
of this subsection are met for the certificate or subject area to be added]. 
   
  <nl>(2) If an intern fails to complete all training and certification 
requirements within the internship year, the program administrator may apply to 
retain the intern in the alternative certification program only until the 
deficiencies are met, but not to exceed one additional year. The program 
administrator shall provide rationale for extension and the conditions under 
which requirements must be met. 
   
  [(2)  If an intern fails to complete all program requirements within the 
internship year or wishes to add other areas of certification, the 
superintendent or a designee may apply to retain the intern in the alternative 
certification program for an additional year.] 
   
  (3) If the sponsor of an alternative certification program <nl>does<ol> 
[chooses] not [to] seek reapproval  <nl>of the program<ol> or [the] SBOE does 
not grant a reapproval request, interns currently enrolled in the program are 
provided an opportunity to complete requirements within a reasonable time. 
   
  [(4) If local conditions prevent the assignment of an intern as a teacher of 
record as provided in the approved program, the commissioner of education may 
recognize an alternative teaching assignment at the level and in the area 
appropriate for the certificate sought that fulfills internship requirements, so 
long as all requirements for supervision and appraisals are met.] 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 14, 1994. 
 TRD-9451009 
  Criss Cloudt 
 Executive Associate Commissioner, Policy Planning and Information Management 
 Texas Education Agency 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-9701 
         
                   
  TITLE 25. HEALTH SERVICES 
 Part I. Texas Department of Health 
  Chapter 29. Purchased Health Services 
  
  Subchapter CC. LoneSTAR [Lone Star] Select Contracting Program 
 
  25 TAC sec.29.2801 
 
  On behalf of the State Medicaid Director, the Texas Department of Health 
(department) proposes an amendment to sec.29.2801, concerning the LoneSTAR 
Select Contracting Program process for hospital inpatient services. 
 The amendment is proposed to implement Senate Bill 79, 73rd Texas Legislature, 
1993, which mandates medical assistance selective contracting for non-emergency 
inpatient hospital services. Generally, the amendment will enable the department 
to contract selectively with mental health facilities for inpatient services for 
Medicaid recipients, thereby improving the department's ability to act as a 
prudent purchaser of services and manage the program in a more effective and 
efficient manner. 
 Specifically, the amendment will modify the section as follows: replace the 
term "hospital" with the term "health care provider"; modify the definitions of 
"Hospital capacity to provide specialized service offerings" and "Potential 
Network" to include the LoneSTAR Select Contracting Program I and the LoneSTAR 
Select Contracting Program II; broaden the definition of "Health care provider"; 
add definitions of LoneSTAR Select Contracting Program I and LoneSTAR Select 
Contracting Program II; add a definition of inpatient mental health facility; 
distinguish acute care hospitals from mental health facilities; and add a 
provision concerning reimbursement under LoneSTAR Select Contracting Program II 
awards. 
 Gary Bego, budget director, Health Care Financing, has determined that for each 
year of the first five years the amendment as proposed is in effect there will 
be no additional fiscal implications as a result of enforcing and administering 
the section. Section 29.2801 was originally proposed in March 1994 with the 
following projected fiscal impact statement: The effect on state government will 
be an estimated reduction in general revenue costs of between $2-$5 million for 
fiscal year 1994 and between $30-$35 million each year for fiscal years 1995, 
1996, 1997, and 1998. The estimated reductions related to inpatient mental 
health facilities included in this original fiscal impact statement were between 
$2-$4 million each year for fiscal years 1995, 1996, 1997, and 1998. As the 
department will be negotiating with individual inpatient mental health 
facilities, the impact, if any to local governments is undeterminable at this 
time. 
 Steve Svadlenak, Bureau Chief of Purchased Health Services, and Mr. Bego also 
have determined that for each year of the first five years the proposed section 
is in effect, the public benefit anticipated as a result of enforcing the 
proposed section will be the increased ability of the department to assure 
adequate access to appropriate, high quality, cost-effective services for all 
medical assistance beneficiaries and the containment of overall expenditures for 
inpatient mental health facility services reimbursed by the Medical Assistance 
Program. There is no anticipated impact on small businesses, no expected 
economic cost to persons who are required to comply with the proposed amendment, 
and no anticipated impact on local government. 
 Written comments on the proposed amendment may be submitted to Larry Fisher, 
Program Specialist, Texas Department of Health, 1100 West 49th Street, Austin, 
Texas 78756-3168, (512) 794-6894. Mr. Fisher will accept comments for 30 days 
after publication of the proposed amendment in the Texas Register. 
 The amendment is proposed under the Human Resources Code, sec.32.027, which 
provides authority for the adoption of rules on selective contracting; the Human 
Resources Code, sec.32.021, and Texas Civil Statutes, Article 4413 (502), 
sec.16, which provide the Health and Human Services Commission with the 
authority to adopt rules to administer the state's Medical Assistance Program 
and is submitted by the Texas Department of Health under its agreement with the 
Health and Human Services Commission to operate purchased health services 
programs and as authorized under Chapter 15, sec.1.07, Acts of the 72nd 
Legislature, First Called Session (1991). 
 The proposed amendment will affect the Human Resources Code, Chapter 32; and 
Texas Civil Statutes, Article 4413 (502). 
 
 
  sec.29.2801. <nl>LoneSTAR  [Lone Star] Select Contracting Process for 
Inpatient Hospital Services. 
 
  (a) (No change.) 
   
  (b)  Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
 
  (1) Market area-A geographic subdivision of the State of Texas defined as a 
group of geographically contiguous counties in which the Texas Department of 
Health (department) determines that <nl>health care providers <ol> [hospitals] 
will be invited to apply for selective contracting agreements. In general, each 
Metropolitan Statistical Area (MSA) in the state will be considered for 
designation as a market area. Where warranted by historical patient migration 
patterns, the department may designate certain non-MSA counties that are 
geographically contiguous to an MSA to be included with MSA counties within a 
market area. 
   
  (2) Effective service area-For each <nl>health care provider<ol> [hospital] in 
a market area, the geographic area, as defined on a zip code basis, in which the 
<nl>health care provider<ol> [hospital] has historically provided inpatient 
hospital services to Medicaid patients. For purposes of subsection (f) of this 
section, the effective service area will be determined based on historical 
Medicaid inpatient claims data. 
   
  (3) (No change.) 
   
  (4) Hospital capacity to provide specialized service offerings- 
 
  <nl>(A) For the LoneSTAR Select Contracting Program I, <ol> the presence or 
absence of specific <nl>acute care<ol> hospital services, including but not 
limited to, trauma centers, burn units, neonatal intensive care unit services, 
and psychiatric services, that are required to be available in the market to 
ensure adequate access to quality care. 
   
  <nl>(B) For the LoneSTAR Select Contracting Program II, the presence or 
absence of specific inpatient psychiatric services, including but not limited 
to, separate units for young children and adolescents, separate psychiatric and 
substance abuse treatment services, closed and open units, and distinct programs 
(e.g., dual diagnosis, eating disorder) that may be required to be available in 
the market to ensure adequate access to quality. 
     
  (5) Potential network-Any combination of applicant <nl>health care 
providers<ol> [hospitals] (whether the result of a joint proposal or determined 
by the department) that offer a: 
 
  (A)  combined effective service area that provides geographic coverage of the 
market area to the same extent that coverage is provided under current practice; 
 
  <nl>(i)<ol>[(B)] combined service capacity equal to at least 115% of the most 
recently available historic service volume experience for the market area 
<nl>for the LoneSTAR Select Contracting Program I; or<ol> [; and] 
   
  <nl>(ii)<nl> combined service capacity equal to at least 125% of the most 
recently available historic service volume experience for the market area for 
the LoneSTAR Select Contracting Program II; and 
     
  <nl>(B) <ol>[(C)] combination of specialized services available within the 
market area that is at least as broad as the range of specialized services 
presently available to Medicaid recipients in that market area. 
     
  (6) Selective contracting-A method of contracting, granted through waivers of 
certain provisions of the Social Security Act, that allows the department to 
contract selectively with <nl>health care providers<ol> [hospitals] for non-
emergency inpatient services, thereby improving its ability to act as a prudent 
purchaser of services and to manage the Medical Assistance Program in a more 
effective and efficient manner, as required by Senate Bill 79. 
   
  (7)  Selective provider agreement-An agreement which includes an amendment to 
a <nl>health care provider's<ol> [hospital's] existing provider agreement with 
the department and involves selective contracting. 
   
  (8)  Disproportionate share hospital-A <nl>health care provider<ol> [hospital] 
participating in the Medicaid program that, according to state Medicaid 
criteria, meets the conditions of participation and serves a disproportionate 
share of indigent patients. Additional requirements for disproportionate share 
hospitals are specified in sec.29.609 of this title (relating to Additional 
Reimbursement to Disproportionate Share Hospitals) and sec.29.610 of this title 
(relating to Disproportionate Share Hospital Reimbursement Methodology for 
State-Owned Teaching Hospitals). 
   
  (9)  Health care provider- 
 
  <nl>(A) any<ol> [Any] <nl>acute care<ol> hospital that is eligible to provide 
inpatient hospital services to Medicaid recipients<nl>; or <ol>[.] 
   
  <nl>(B) any inpatient mental health facility, as defined within this section. 
     
  (10) Optional volume management activities-Those activities that <nl>acute 
care<ol> hospitals may propose to furnish to Medicaid recipients in a market 
area to expand access to primary care services and ensure more appropriate use 
of <nl>acute care<ol> hospital facilities. Such activities may include, but not 
be limited to, furnishing ambulatory primary care clinic services to Medicaid 
recipients, and furnishing nurse hotlines which Medicaid recipients may call to 
receive professional advice about the most appropriate means to obtain medical 
care. 
   
  (11) Hardship exemption procedure-A method for non-contracted <nl>health care 
providers<ol> [hospitals] to obtain prior authorization from the department to 
provide non-emergency inpatient services to Medicaid recipients who would 
experience an unreasonable travel burden under the LoneSTAR Select Contracting 
Program<nl>. 
   
  (12) Emergency inpatient services-An admission into a <nl>health care 
provider<ol> [hospital] with a diagnosis meeting the definition of a medical 
emergency. 
   
  (13) Non-emergency inpatient services-An admission into a <nl>health care 
provider <ol> [hospital] with a diagnosis not meeting the definition of a 
medical emergency. 
   
  (14) (No change.) 
   
  <nl>(15) LoneSTAR Select Contracting Program II-The selective contracting 
program designed and implemented for inpatient mental health facilities as 
defined in the Health and Safety Code, sec.571.003. 
   
  <nl>(16)  Inpatient mental health facility-A mental health facility that 
provides 24-hour residential and psychiatric services that is: 
 
  <nl>(A) a facility operated by the Texas Department of Mental Health and 
Mental Retardation; 
   
  <nl>(B) a private mental hospital licensed by the department; 
   
  <nl>(C) a community center; 
   
  <nl>(D) a facility operated by a community center or other entity the Texas 
Department of Mental Health and Mental Retardation designates to provide mental 
health services; 
   
  <nl>(E) an identifiable part of a general hospital in which diagnosis, 
treatment, and care for persons with mental illness is provided and that is 
licensed by the department; or 
   
  <nl>(F) a hospital operated by a federal agency. 
       
  (c) General design. The department shall select that subset of market areas 
that appears to indicate the most effective competition for selective provider 
agreements to serve Medicaid patients. The market areas shall be divided into 
two groups of solicitations that will avoid an overlap of contract evaluation 
and negotiation of solicitations. 
 
  (1) The department shall implement selective contracting by executing 
amendments to each <nl>health care provider's<ol> [hospital's] existing provider 
agreement with the department. <nl>Health care providers<ol> [Hospitals] that 
were not parties to provider agreements before implementation of the 
department's selective contracting are eligible to apply; however, they must 
enter into a provider agreement that ensures they are subject to all terms and 
conditions of the Medical Assistance Program. The amendments to the provider 
agreements, and the process by which the department solicited, evaluated, 
negotiated, and executed the amended agreements with <nl>health care 
providers<ol> [hospitals] under selective contracting are not subject to the 
laws and regulations governing acquisition of goods and services by state 
agencies. 
   
  (2)  <nl>Health care providers <ol> [Hospitals] shall be required to apply for 
selective provider agreements on an individual basis. Proposals by combinations 
of <nl>health care providers<ol> [hospitals] under common ownership in a market 
area shall be considered as individual proposals if the <nl>health care 
providers<ol> [hospitals] elect to apply on that basis. Proposals by 
combinations of <nl>health care providers <ol> [hospitals] in a market area that 
are not under common ownership will also be considered, provided that each 
<nl>health care provider<ol> [hospital] that is a party to a joint application 
in a market area also submits an independent application for a selective 
contracting agreement in that market area; and each such <nl>health care 
provider<ol> [hospital] provides written assurances that the terms of its 
individual proposal were arrived at independently without consultation with any 
other <nl>health care provider<ol> [hospital] or combination of <nl>health care 
providers<ol> [hospitals], and have not been communicated to any competitor or 
group of competitors. The department does not intend any action by the State of 
Texas in the contracting process to require or sanction any form of 
communication or joint action by competitors in the market for inpatient 
hospital services (with respect to either individual or joint applications) that 
fails to comply with the provisions of this section. 
   
  (3) The department shall send solicitation packages, inviting proposals for 
selective provider agreements, to each health care provider serving residents of 
the counties selected for participation. <nl>Health care providers <ol> 
[Hospitals] will be required at all times to be eligible to participate in the 
Medicare and Medicaid programs. <nl>Health care providers<ol> [Hospitals] that 
are not sent solicitation packages for Medicaid recipients of a particular 
market will be able to request a package after demonstrating their intent to 
offer services to Medicaid recipients in those markets. 
     
  (d) Proposals for selective provider agreements.  <nl>Health care 
providers<ol> [Hospitals] seeking selective provider agreements shall be 
required to submit the following information in their proposals: 
 
  (1) a schedule of proposed payment rates to be applied to all covered 
<nl>health care provider <ol> [hospital] inpatient services during the term of 
the agreement; 
   
  (2) a proposed level of volume of services to Medicaid recipients that the 
<nl>health care provider <ol> [hospital] would agree to serve during the 
contract period (this proposed level shall serve only as an estimate of services 
to assist the department in evaluating the availability of services within the 
relevant market area; it shall not serve as a limit on the amount of 
reimbursable services to be supplied by a contracting hospital); 
   
  (3) data to assist the department in evaluating the effective service area and 
specialized service offerings of the <nl>health care provider<ol> [hospital]; 
   
  (4) assurances and certifications required to ensure <nl>health care 
provider<ol> [hospital] compliance with the requirements of Federal and Texas 
law and regulations, and the requirements of the department's selective 
contracting process; 
   
  (5)  a narrative description of the proposed plans (if any) of the <nl>acute 
care<ol> hospital to furnish optional volume management programs for Medicaid 
recipients; and 
   
  (6) evidence that the application of the <nl>health care provider<ol> 
[hospital] constitutes a binding quotation authorized by the corporate 
governance of the <nl>health care provider<ol> [hospital]. 
     
  (e)  Evaluation of proposals for selective provider agreements. The department 
shall evaluate <nl>health care provider<ol> [hospital] proposals according to 
the following criteria. 
 
  (1) <nl>Health care provider <ol> [Hospital] proposals shall be due to the 
department within one month of the release of proposal packages. All <nl>health 
care provider <ol> [hospital] materials submitted to the department during the 
proposal process, and materials developed by the department or its contractors 
during the course of evaluation and negotiation, shall be confidential until all 
agreements are executed for all market areas in the state. 
   
  (2) The department shall evaluate <nl>health care provider<ol> [hospital] 
proposals on a market-by-market basis and determine a negotiation strategy to 
pursue in each market area following its evaluation of all market areas. Based 
on the application of pre-specified evaluation criteria for each market area, 
the department shall prepare a recommended strategy for contracting in each 
market area. Each market area strategy shall be subject to approval by the 
Executive Oversight Committee established by the department. 
   
  (3) The department shall retain the option to make awards without negotiation. 
In some circumstances, the department may accept the proposals offered by every 
<nl>health care provider<ol> [hospital] in the market area. In most cases, 
however, the department expects to enter into negotiations with those <nl>health 
care providers <ol> [hospitals] whose proposals, taken together, appear to 
represent the best combination of providers consistent with the overall 
objectives of the Medical Assistance Program. After negotiation, the department 
reserves the right not to award an agreement in a specific market area. In most 
cases, however, the department shall proceed to finalize and execute agreements 
with some subset of the <nl>health care<ol> [hospital] providers in each market 
area. In that event, coverage restrictions associated with the use of non-
contracted  <nl>health care providers<ol> [hospitals] by Medicaid recipients 
shall apply. 
     
  (f) Evaluation criteria and methodology. The department's evaluation of 
proposals for selective provider agreements for each market area shall be 
conducted in two phases. Phase One shall include determining minimally 
acceptable network combinations and Phase Two shall include cost evaluation. A 
description of each phase follows: 
 
  (1) In Phase One, the department shall enter the information included in 
<nl>health care provider <ol> [hospital] proposals in each market area into a 
personal computer based (PC-based) micro-simulation model designed to aid in the 
evaluation of the department's contracting options for each market. Data from 
<nl>health care provider<ol> [hospital] proposals shall be combined with data 
from the department's eligibility systems and claims processing records to 
construct the data base required for this phase of the evaluation. Each 
<nl>health care provider's<ol> [hospital's] record in the data base shall 
contain information necessary to determine each <nl>health care provider's<ol> 
[hospital's]: 
 
  (A) (No change.) 
   
  (B) capacity to provide specialized [hospital] services required by Medicaid 
recipients in the market area. 
     
  (2) The PC-based micro-simulation model shall be used to test all possible 
combinations of <nl>health care providers<ol> [hospitals] applying for selective 
provider agreements to determine potential networks that shall meet the 
department's requirements for access to services for Medicaid patients. Where  
<nl>health care providers<ol> [hospitals] have submitted a joint proposal for 
selective provider agreements, the department shall evaluate the proposed 
provider network and the proposed network in all possible combinations with 
remaining <nl>health care providers <ol> [hospitals] that submitted proposals. 
   
  (3) In Phase Two, each potential network shall be eligible for further 
consideration. If the Phase One evaluation fails to identify a potential network 
of applicant <nl>health care providers<ol> [hospitals] that meet the 
department's specified criteria, the department reserves the right to enter into 
direct negotiations with any <nl>health care provider<ol> [hospital] serving the 
market area. The purpose of these negotiations shall be to develop a minimally 
acceptable potential network, and allow the department to initiate negotiations 
with a <nl>health care provider<ol> [hospital] that failed to submit a proposal 
during the proposal period. 
   
  (4) In Phase Two, each potential network identified in a market area in Phase 
One shall be evaluated to determine the estimated reduction in program costs 
that would result from entering into selective provider agreements with all of 
the <nl>health care providers<ol> [hospitals] in that potential network, while 
excluding all other <nl>health care providers <ol> [hospitals] from serving non-
emergency cases. The department shall use the PC-based micro-simulation model to 
produce an estimate of the total change in Medicaid program costs that would 
result by entering into agreements with those <nl>health care providers<ol> 
[hospitals] during the base contract period. The estimate by the department 
shall consider: 
 
  (A)  (No change.) 
   
  (B) changes in the distribution of service volumes (and case mix) across 
<nl>health care providers <ol> [hospitals] that would result from the 
reallocation of service volume from non-selected to selected providers; and 
   
  (C) savings in Medicaid program costs likely to result from the changes in 
service volumes induced by optional volume management activities proposed by 
<nl>acute care <ol> hospitals, including both savings in aggregate  <nl>acute 
care<ol> hospital service use and offsetting increases in non-hospital service 
costs. 
     
  (5) (No change.) 
   
  (6)  Following the evaluation, the department shall prepare a recommendation 
to the Executive Oversight Committee that includes the outcome of both phases of 
the evaluation for each market area, as well as a proposed strategy for the 
department to meet the best interests of the Medical Assistance Program. 
Department options shall include: 
 
  (A) making an award without negotiations-including an award at the proposed 
price schedules to all <nl>health care providers<ol> [hospitals] in the market; 
   
  (B)  entering into negotiations with <nl>health care providers<ol> [hospitals] 
in a single potential network to improve proposed pricing, if possible, and to 
finalize an agreement about key program features; or 
   
  (C) entering into negotiations with one or more  <nl>health care providers<ol> 
[hospitals] to influence the department's choice among multiple potential 
networks by lowering the pricing terms offered by individual <nl>health care 
providers<ol> [hospitals]. These negotiations may result in identifying a single 
potential network that would differ in its <nl>health care provider<ol> 
[hospital] composition from potential networks initially identified in Phase 
One. 
       
  (g) Execution of selective provider agreements. The department shall execute 
selective provider agreements at the conclusion of negotiations by: 
 
  (1) requesting applicants to submit a binding revised application including 
the terms and conditions agreed to during negotiations with the department. The 
best and final offer of each <nl>health care provider <ol> [hospital] shall be 
forwarded to the department for approval. The provider agreements shall be 
executed following the approval of the department; and 
   
  (2) structuring the agreements as one year amendments to the provider 
agreement of each <nl>health care provider<ol> [hospital], with an option to the 
department of extending the amendments for up to two option years. The effective 
date of the reimbursement rates under the amendments may, by mutual agreement, 
be made retroactive to a date before the date of execution. At the conclusion of 
the first year, the department may adjust its exercise of options on a market-
by-market basis so as to place the system on a three-year rolling system of 
renegotiations. If the performance of any <nl>health care provider <ol> 
[hospital] under the contract is considered unsatisfactory, however, the 
department may elect not to exercise any subsequent options, even if it 
exercised options with all other selected <nl>health care providers <ol> 
[hospitals] in the market. 
     
  (h)  Reimbursement <nl>for acute care hospitals<ol>. <nl>Acute care<ol> 
hospitals in MSA's where the LoneSTAR Select Contracting Program  <nl>I<ol> 
awards amended provided agreements will have their inpatient services reimbursed 
as follows: 
 
  (1)-(2) (No change.) 
     
  <nl>(i)  Reimbursement for inpatient mental health facilities. Inpatient 
mental health facilities in MSA's where the LoneSTAR Select Contracting Program 
II awards amended provider agreements will have their inpatient psychiatric 
services reimbursed as follows: 
 
  <nl>(1) Inpatient mental health facilities awarded selective provider 
agreements will be reimbursed for all covered emergency services according to 
the proposed rates they submit with their proposals or according to the final 
negotiated rates that all parties agree will serve as the reimbursement 
mechanism for all covered emergency services rendered by the health care 
provider. 
   
  <nl>(2) Inpatient mental health facilities not awarded selective provider 
agreements will be reimbursed for covered emergency inpatient services as 
currently stated in the State Plan until the patient is stabilized. After a 
patient is stabilized in a non-contracted health care provider, inpatient 
services are no longer covered unless the non-contracted health care provider 
receives an exception for some additional days of stay. 
   
  <nl>(3) As in current policy, each case will continue to be subject to all 
relevant utilization review criteria. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 15, 1994. 
 TRD-9450987 
  Susan K. Steeg 
 General Counsel 
 Texas Department of Health 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 458-7236 
                     
  TITLE 28. INSURANCE 
 Part I. Texas Department of Insurance 
  Chapter 25. Insurance Premium Finance 
  
  The Texas Department of Insurance proposes the repeal of  ssec.25.1-25.12, 
25.101-25.205, 25.301-25.307, 25.401-25.404,, 25.501-25.509, 25.601-25.606, 
25.701-25.718, 25.801-25.806, concerning the licensing, regulation, and 
examination of insurance premium finance companies. This chapter must be 
repealed so that the commissioner can simultaneously adopt a new chapter. The 
proposed new chapter replaces the repealed sections with other provisions 
regarding the regulation of insurance premium finance companies. This repeal and 
adoption of a new chapter will provide more effective regulation of insurance 
premium finance companies and give consumers improved notice of the availability 
and services of insurance premium finance companies. The proposed new chapter, 
which would replace the chapter proposed for repeal, appears elsewhere in the 
Texas Register. The Department will consider the adoption of repeal 
sec.sec.25.1-25.12, 25.101-25.205, 25.301-25.307, 25.401-25.404, 25.501-25.509, 
25.601-25.606, 25.701-25.718, 25.801-25.806, in a public hearing under Docket 
Number 2131 scheduled for 9:00 a.m. on January 3, 1994 in Room 100 of the Texas 
Department of Insurance Building, 333 Guadalupe Street in Austin, Texas. 
 Beverly McVey, director of the licensing group, has determined that for each 
year of the first five years the proposed repeals will be in effect, there will 
be no fiscal implications for state or local government, or small business as a 
result of enforcing or administering the repeals. There will be no effect on the 
local economy or local employment. 
 Ms. McVey also has determined that for each year of the first five years the 
repeals are in effect, the anticipated public benefit of enforcing the repeals 
is that more effective regulation of insurance premium finance companies will 
result in improved service to consumers. On the basis of cost per hour of labor, 
there is no anticipated difference in cost of compliance between small and large 
businesses. There is no anticipated economic cost to persons required to comply 
with the repeals as proposed. 
 Comments on the proposal must be submitted within 30 days after publication of 
the proposed repeals in the Texas Register to the Chief Clerk, Texas Department 
of Insurance, P.O. Box 149104, MC 113-1C, Austin, Texas 78714-9104. An 
additional copy of the comment must be submitted to Beverly McVey, Director, 
Licensing Group, Texas Department of Insurance, MC 107-5A, P.O. Box 149104, 
Austin, Texas 78714-9104. Any requests for public hearing on this proposal 
should be submitted separately to the Office of the Chief Clerk. 
   
  Subchapter A. General Provisions 
 
  28 TAC sec.sec.25.1-25.12 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.1. Communications to the State Board of Insurance. 
 
   
  sec.25.2. Definitions. 
 
   
  sec.25.3. Responsibility for Acts of Employees. 
 
   
  sec.25.4. Employees: Knowledge of Laws and Regulations Required. 
 
   
  sec.25.5. Surplus Lines Insurance Agents and Agencies. 
 
   
  sec.25.6. Miscellaneous Charges. 
 
   
  sec.25.7. Installment Agreement Exception. 
 
   
  sec.25.8. Escheat Account. 
 
   
  sec.25.9. Unacceptable Loans. 
 
   
  sec.25.10. Motor Clubs. 
 
   
  sec.25.11. Savings Clause. 
 
   
  sec.25.12. Severability. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451012 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter B. Licensing 
 
  28 TAC sec.sec.25.101-25.111 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.101. Statutory Requirements. 
 
   
  sec.25.102. Banks and Savings and Loan Associations. 
 
   
  sec.25.103. License Application. 
 
   
  sec.25.104. Financial Responsibility. 
 
   
  sec.25.105. Display of License. 
 
   
  sec.25.106. Place of Business. 
 
   
  sec.25.107. Relocation of Licensed Offices or Accounts. 
 
   
  sec.25.108. Change in Ownership. 
 
   
  sec.25.109. Investigation. 
 
   
  sec.25.110. Insurance Premium Finance Agreement Form. 
 
   
  sec.25.111. Rate and Refund Charts. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451013 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter C. Insurance Premium Finance: Agreement 
 
  28 TAC sec.sec.25.201-25.205 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeal is proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.201. Acceptance or Rejection. 
 
   
  sec.25.202. Prompt Processing Required. 
 
   
  sec.25.203. Duplication of Loans. 
 
   
  sec.25.204. Quotation of Net Payoffs. 
 
   
  sec.25.205. Policies Issued Through the Texas Workers' Compensation Assigned 
Risk Pool and the Texas Medical Liability Insurance Underwriting Association. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451014 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter D. Increases or Decreases in the Amount of Insurance Premium 
Financed 

point=10.04p set=10.04p <nl>28 TAC  ssec.25.301-25.307 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.301. Notice of Additional or Return Premium Charge. 
 
   
  sec.25.302. Notification of Account Adjustment to Insured. 
 
   
  sec.25.303. Increase in Financed Premiums. 
 
   
  sec.25.304. Finance Charge on Additional Premium. 
 
   
  sec.25.305. Premium Decrease Due to Improper Rating. 
 
   
  sec.25.306. Changes in Finance Rate. 
 
   
  sec.25.307. Effective Date of Adjusted Premium Finance Changes. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451015 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
         
  Subchapter E. Finance Charges 
 
  28 TAC sec.sec.25.401-25.404 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.401. Computation of Finance Charge upon Cancellation. 
 
   
  sec.25.402. Finance Charge Earnings Upon Acceleration. 
 
   
  sec.25.403. Notification to Insured of Offset. 
 
   
  sec.25.404. Alternative Methods of Adjusting Accounts. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451016 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter F. Power of Attorney 
 
  28 TAC sec.sec.25.501-25.509 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.501. Cancellation of Policy Through Power of Attorney. 
 
   
  sec.25.502. Notice of Intent to Cancel Insurance Because of Default. 
 
   
  sec.25.503. Notice of Cancellation Because of Default. 
 
   
  sec.25.504. Premium Refunds by Insurance Companies. 
 
   
  sec.25.505. Collection Practices. 
 
   
  sec.25.506. Record of Contracts. 
 
   
  sec.25.507. Compliance with Statutory, Regulatory, or Contractual 
Requirements. 
 
   
  sec.25.508. Filing Power of Attorney on Assignment with Insurer. 
 
   
  sec.25.509. Notification to Insurers. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451017 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter G. Books and Records 
 
  28 TAC sec.sec.25.601-25.606 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.601. Individual Account Records. 
 
   
  sec.25.602. Filing of Account Records. 
 
   
  sec.25.603. Copy of Premium Finance Agreement, Memorandum of Agreement, 
Amendments. 
 
   
  sec.25.604. Records Maintained by Data Processing Systems. 
 
   
  sec.25.605. Retention of Records. 
 
   
  sec.25.606. File for Official Correspondence and Reports. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451018 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter H. Annual Reports, Examinations, and Assessments 
 
  28 TAC sec.sec.25.701-25.718 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.701. Annual Reports. 
 
   
  sec.25.702. Examinations. 
 
   
  sec.25.703. Examination Charges. 
 
   
  sec.25.704. Review of Records. 
 
   
  sec.25.711. General Administrative Expense Assessment, 1987. 
 
   
  sec.25.712. General Administrative Expense Assessment, 1988. 
 
   
  sec.25.713. General Administrative Expense Assessment, 1989. 
 
   
  sec.25.714. General Administrative Expense Assessment, 1990. 
 
   
  sec.25.715. General Administrative Expense Assessment, 1991. 
 
   
  sec.25.716. General Administrative Expense Assessment, Fiscal Year 1992. 
 
   
  sec.25.717. General Administrative Expense Assessment, Fiscal Year 1993. 
 
   
  sec.25.718. General Administrative Expense Assessment, for Calendar Year 1993. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451019 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter I. Deceptive Advertising 
 
  28 TAC sec.sec.25.801-25.806 
 
  (Editor's note: The text of the following sections proposed for repeal will 
not be published. The sections may be examined in the offices of the Texas 
Department of Insurance or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.) 
   
  The repeals are proposed pursuant to the Insurance Code, Articles 24.09 and 
1.03A, and the Government Code, sec.sec.2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the State Board of Insurance to adopt 
and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.801. Advertisements in General. 
 
   
  sec.25.802. Place of Loan. 
 
   
  sec.25.803. Advertisement File. 
 
   
  sec.25.804. Full Disclosure Requirements. 
 
   
  sec.25.805. Misleading Advertising. 
 
   
  sec.25.806. Multiple Page Advertisements. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451020 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
       
  The Texas Department of Insurance proposes new sec.sec.25.1-25.13, 25. 21-
25.33, 25.41-25.65, 25.71-25.76, and 25.81-25.90, concerning the licensing, 
regulation, and examination of insurance premium finance companies. The proposed 
new chapter replaces the old chapter which has been proposed for repeal 
elsewhere in the  Texas Register. The adoption of a new chapter will provide 
more effective regulation of insurance premium finance companies and give 
consumers improved notice of the availability and services of insurance premium 
finance companies. 
 Subchapter A-This subchapter sets out general provisions for the regulation of 
insurance premium finance companies. It includes a provision which states that 
an insurance premium finance company may not finance a policy submitted through 
the Texas Automobile Insurance Plan Association (TAIPA) unless the insurance 
agent discloses to the insured or prospective insured that a payment plan is 
available through TAIPA. This subchapter also contains a provision which 
prohibits an insurance premium finance company, or an agent which owns or is 
affiliated with an insurance premium finance company, from paying inducements to 
agents for submitting premium finance business to it. 
 Subchapter B-This subchapter addresses licensing and regulation of insurance 
premium finance companies. It establishes the types of activities which require 
a premium finance license, the procedures required to apply for a license, and 
the license renewal process. The subchapter contains a summary of the various 
fees collected by the Texas Department of Insurance for the licensing and 
regulation of insurance premium finance companies. The subchapter also contains 
the procedures for notifying the Texas Department of Insurance of relocation of 
a licensed office, change of mailing address, ownership change and name change. 
 Subchapter C-Subchapter C contains provisions regarding the operations of 
insurance premium finance companies. It sets out procedures for notification to 
insureds of unacceptable loans, acceptance or rejection of loans, account 
adjustments, increase or decrease in financed premiums, and information on 
finance rates and charges. The subchapter also sets out the procedures and 
notification requirements for cancellation of a policy by the insurance premium 
finance company. 
 Subchapter D-This subchapter sets out the procedures insurance premium finance 
companies must comply with when advertising their services. 
 Subchapter E-Subchapter E contains provisions for the examination of insurance 
premium finance companies and filing of annual reports. It also establishes the 
payment schedule for the general administrative expense assessment paid by 
insurance premium finance companies. 
 Proposal of this new chapter includes the adoption by reference of new forms 
and instructions to the forms for use by all insurance premium finance companies 
subject to this chapter and the Insurance Code, Chapter 24. The Texas Department 
of Insurance has filed a copy of the forms with the Texas Register . Persons 
desiring copies of the forms and instructions may obtain them from the Premium 
Finance Licensing Unit, Mail Code 107-5A, Texas Department of Insurance, 333 
Guadalupe, P.O. Box 149104, Austin, Texas, 78714-9104. 
 The Department will consider the adoption of repeal sec. s25.1-25.13, 25. 21-
25.33, 25.41-25.65, 25.71-25.76, 25.81-25.90, in a public hearing under Docket 
Number 2132 scheduled for 9:00 a.m. on January 3, 1994 in Room 100 of the Texas 
Department of Insurance Building, 333 Guadalupe Street in Austin, Texas. 
 Birny Birnbaum, Chief Economist, Associate Commissioner, Policy and Research, 
has determined that for each year of the first five years the proposed chapter 
will be in effect, there will be no fiscal implications for state or local 
government, or small business as a result of enforcing or administering the 
chapter. There will be no effect on the local economy or local employment. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
proposed chapter is in effect, the anticipated public benefit of enforcing the 
chapter is more effective regulation of insurance premium finance companies, 
which will result in improved service to consumers. Additionally, consumers will 
have access to more information regarding the financing of insurance premiums. 
On the basis of cost per hour of labor, there is no anticipated difference in 
cost of compliance between small and large businesses. 
 There is no anticipated new cost to insurance premium finance companies who 
comply with the proposed section setting out the summary of fees since the fees, 
which range from $20 to $400, are those currently paid by the companies. 
 Comments on the proposal must be submitted within 30 days after publication of 
the proposed chapter in the Texas Register to the Chief Clerk, Texas Department 
of Insurance, P.O. Box 149104, MC 113-1C, Austin, Texas 78714-9104. An 
additional copy of the comment must be submitted to Edna Ramun Butts, Senior 
Associate Commissioner, Regulation and Safety, Texas Department of Insurance, MC 
107-2A, P.O. Box 149104, Austin, Texas 78714-9104. Any requests for public 
hearing on this proposal should be submitted separately to the Office of the 
Chief Clerk. 
       
  Subchapter A. General Provisions 
 
  28 TAC sec.sec.25.1-25.13 
 
  The new sections are proposed pursuant to the Insurance Code, Articles 24. 09 
and 1.03A, and the Government Code, sec. s2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the Texas Department of Insurance to 
adopt and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.1. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings unless the context clearly indicates 
otherwise. 
   
   Affiliated-When any person is connected by commonality of interest or 
ownership with another person. 
   
   Agent-An individual licensed by the Texas Department of Insurance pursuant to 
Insurance Code, Article 21.07 (licensing of agents), Article 21.14 (local 
recording agents), Article 21.07-3 (managing general agents), and Article 1.14-2 
(surplus lines agents). 
   
   Annual percentage rate-That rate computed in accordance with the regulations 
issued by the Federal Reserve Board of the United States pursuant to the 
Consumer Credit Protection Act, sec.1606, 15 United States Code sec.sec.1601, et 
seq. 
   
   The Department -The Texas Department of Insurance. 
   
   Insurer-A company or other entity formally liable on an insurance risk. 
   
   Licensee-A person holding an insurance premium finance license. 
   
   Person-An individual, partnership, corporation, joint venture, trust, 
association, or any other legal entity, however organized. 
   
   Policy fee-A charge added to a policy, in addition to the premium, for 
issuance of the policy. 
   
   Premium finance company-An insurance premium finance company as defined by 
the Insurance Code, Article 24.01. 
   
   Ownership in a corporation-The possession of 10% or more stock in a 
corporation. 
 
   
  sec.25.2. Place of Business. Each licensed insurance premium finance company 
shall maintain a place of business accessible to the public. This place of 
business shall be located where the insurance premium finance company conducts 
transactions under the license. A licensee may not conduct the business of 
premium financing provided for by this chapter, or under the Insurance Code, 
Chapter 24, under any name or at any place of business other than that stated on 
the license. 
 
   
  sec.25.3. Responsibility for Acts of Employees. A licensee is responsible for 
the acts of its officers, directors and employees in the conduct of the 
licensee's business. 
 
   
  sec.25.4. Knowledge of Laws and Regulations Required. <ol> Each licensee and 
employee of a licensee who negotiates, makes, or collects loans under the 
Insurance Code, Chapter 24, shall have knowledge of the laws and regulations 
governing such business, including the Insurance Code, Chapter 24, the Credit 
Code, Chapters 3 and 4 (Texas Civil Statutes, Articles 5069-3.01 et seq and 
Article 5069-4.01 et seq), and the federal Truth in Lending Regulations 
(Regulation Z, 12 Code of Federal Regulations,  ssec.226.1 et seq), and shall be 
charged with knowledge of those laws. 
 
   
  sec.25.6. Motor Clubs. <ol> Motor clubs are not insurers regulated by the 
Department. Therefore, membership fees or dues for a motor club may not be 
financed with insurance policies by a premium finance company. 
 
   
  sec.25.7. Inducements.  An insurance premium finance company, or an agent 
which owns or is affiliated with an insurance premium finance company, shall not 
in any manner, either directly or indirectly, pay or allow to be paid or be part 
of a transaction that allows any valuable consideration to be paid to an agent 
or broker or any employee of an agent or broker or any other person for the 
purpose of inducing that agent or broker or employee of that agent or broker to 
submit premium finance business to it. 
 
   
  sec.25.8. Notice by Insurance Companies of Additional or Return Premium 
Charge. <ol> If an insurance company receives notice of a financed insurance 
premium, the insurer shall notify the insurance premium finance company whenever 
it notifies the insured or insurance agent of an additional or return premium 
arising under the financed policy. This section shall not apply to policies 
written pursuant to the provisions of the Texas Automobile Insurance Plan 
Association. 
 
   
  sec.25.9. Texas Automobile Insurance Plan Association Financing Disclosure and 
Premium Finance Comparison Disclosure Form. 
 
  (a) Before an insurance premium finance company may finance a policy insured 
through the Texas Automobile Insurance Plan Association (TAIPA), the insurance 
agent must disclose to the insured or prospective insured the payment plan 
available through TAIPA. The agent must also provide a comparison between the 
terms of financing the policy with an insurance premium finance company and the 
use of the payment plan available through TAIPA. Failure to make this disclosure 
constitutes an unfair method of competition and an unfair or deceptive act in 
violation of the Insurance Code, Article 21.21. 
   
  (b) This disclosure shall be made using the Premium Finance Comparison 
Disclosure Form (Disclosure Form), which the Department adopts and incorporates 
by reference. This form is published by the Department and may be obtained from 
the Premium Finance Licensing Unit, Mail Code 107-5A, Texas Department of 
Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas, 78714-9104. 
   
  (c) The insurance premium finance company shall maintain copies of the 
Disclosure Forms as evidence to an examiner that disclosure of the TAIPA payment 
plan was made to the insured. 
 
     
  sec.25.10. Premium Refunds. 
 
  (a) The insurer shall pay the entire unearned premium to be refunded as a 
result of cancellation of insurance policies to the insurance premium finance 
company. If the insurance premium finance company notified the insurer of the 
existence of the premium finance agreement pursuant to the Insurance Code, 
Article 24.22, then the entire unearned premium owed the insurance premium 
finance company (in trust for the insured) shall be paid within 60 days from the 
date notice of cancellation was received. If an audit of the insured's records 
is required to determine the amount of premiums, the time shall be extended to 
90 days. If the audit is delayed because of acts of the insured, the 90-day 
period shall be extended to provide a reasonable time to conduct the audit and 
determine the amount of premiums earned. 
   
  (b) If the insurance premium finance company does not give notice of the 
premium finance agreement to the insurer (as provided by the Insurance Code, 
Article 24.22), then the total unearned premium refund shall be paid directly to 
the insurance premium finance company within 120 days from the effective date of 
the cancellation. 
   
  (c) The insurance premium finance company shall return any monies due to the 
insured within 15 days from the date returned unearned premiums are received 
from the insurer or agent. 
   
  (d) This section shall apply to cancelled policies written through or in a 
statutory plan or pool. The agent who applied for the statutory plan or pool 
policy on behalf of the insured shall be solely responsible for the payment of 
any unearned commission owed to the insurance premium finance company unless the 
insuring company tenders the entire unearned premium including unearned 
commission. 
 
     
  sec.25.11. Surplus Lines Insurance Agents and Agencies. <ol> If an insurance 
premium finance company funds surplus lines insurance policy premiums or 
notifies a surplus lines agent or agency that its insurance policy premiums are 
financed, the surplus lines agent or agency shall return all gross unearned 
premiums to the insurance premium finance company within 60 days of notice of 
cancellation. 
 
   
  sec.25.12. Savings Clause. <ol> Any cause of action, hearing, or procedure 
already pending or arising out of an event occurring before the effective date 
of this chapter shall be determined under the statutes, rules, orders, or 
interpretations of the Department in effect when the event occurred. This 
section saves the application of past procedure and law to any such event from 
amendment, change, or repeal despite any conflicting provisions of this chapter. 
 
   
  sec.25.13. Severability.  Where any terms or provisions of this chapter are 
determined by a court of competent jurisdiction to be inconsistent with any 
statutes of this state or to be unconstitutional, the remaining terms and 
provisions of this chapter shall remain in effect. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451021 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter B. Licensing and Regulation 
 
  28 TAC sec.25.21-25.33 
 
  The new sections are proposed pursuant to the Insurance Code, Articles 24. 09 
and 1.03A, and the Government Code, sec. s2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the Texas Department of Insurance to 
adopt and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.21. When a Premium Finance License is Required. 
 
  (a) A premium finance license is required if a person: 
 
  (1) makes loans by entering into premium finance agreements with insureds and 
prospective insureds; 
   
  (2) acquires premium finance agreements from insurance agents, brokers, or 
other premium finance companies; or 
   
  (3) holds premium finance agreements made and delivered by insureds payable to 
the person or his order. 
     
  (b) A premium finance license is not required if a person is a properly 
licensed local recording agent and finances premiums in accordance with the 
Insurance Code, Article 24.20. 
 
     
  sec.25.22. Forms Relating to Regulation of Premium Finance Companies under the 
Insurance Code, Chapter 24. <ol> The Department adopts and incorporates by 
reference standard administration forms for use in the administrative regulation 
of premium finance companies. Applicants and licensed premium finance companies 
shall utilize the forms in preparing applications, statements, notices of 
required information, and other submissions required under the Insurance Code, 
Chapter 24, and this chapter. These forms are published by the Department and 
may be obtained from the Premium Finance Licensing Unit, Mail Code 107-5A, Texas 
Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas, 78714-
9104. These forms are identified as follows: 
 
  (1) FORM PF1-Premium Finance Company License Application (for NEW license). 
   
  (2) FORM PF1A-Premium Finance Supplemental Application (for additional 
location, relocation, name change and ownership change). 
 
  (A) SCHEDULE A-Additional Location Filing Requirements. 
   
  (B) SCHEDULE B-Relocation Filing Requirements. 
   
  (C) SCHEDULE C-Name Change Filing Requirements. 
   
  (D) SCHEDULE D-Ownership Change Filing Requirements. 
     
  (3) FORM PF1B-Application for an Insurance Premium Finance Company License by 
a Bank or Savings and Loan Association. 
   
  (4)  FORM PF1C-Premium Finance License Renewal Application. 
   
  (5) FORM PF2-List of Principals. 
   
  (6) FORM PF3-Questionnaire. 
   
  (7)  FORM PF4-Biographical Affidavit. 
   
  (8) FORM PF5-List of Other States of Licensure. 
   
  (9) FORM PF6-Appointment of Statutory Agent and Consent to Service. 
 
     
  sec.25.23. Bank and Savings and Loan Association Premium Finance Application.  
A bank or savings and loan association applying for an insurance premium finance 
license shall file Form PF1B with the Department. The application shall include 
the following as applicable: 
 
  (1) Copy of Charter issued by the State Banking Department or by the 
Comptroller of Currency. 
   
  (2) Franchise Tax Certificate of Good Standing or letter of exemption issued 
by the Texas Comptroller of Public Accounts. 
   
  (3)  $200 License Fee. 
 
     
  sec.25.24. License Application. 
 
  (a) An applicant for an insurance premium finance company license shall file 
an application Form PF1 with the Department. The application shall include the 
following as applicable: 
 
  (1) List of Principals (Form PF2); 
   
  (2) Premium Finance Application Questionnaire (Form PF3); 
   
  (3) Biographical Affidavit (Form PF4) for each individual named on Form PF2; 
   
  (4) General statement of experience giving applicant's qualifications; 
   
  (5) List of Other States of Licensure (Form PF5); 
   
  (6) Appointment of Statutory Agent and Consent to Service (Form PF6); 
   
  (7) Sworn financial statement; 
   
  (8)  Sample Business Operation forms; 
   
  (9) $400 Investigation Fee; 
   
  (10) Partnership agreement; 
   
  (11) Certified copy of Assumed Name Certificate as on file with the County 
Clerk(s) and/or Secretary of State; 
   
  (12) Originally certified copy of Articles of Incorporation from the Office of 
the Secretary of State or equivalent office in another state; 
   
  (13) Certified copy of By-Laws; 
   
  (14) Certified copy of Minutes; 
   
  (15) Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts; 
   
  (16)  Certified copy of Certificate of Authority issued by the Texas Secretary 
of State (foreign corporations only). 
     
  (b) Upon notification by the Department of approval of the application, the 
applicant shall submit a license fee as indicated in paragraphs (1) and (2) of 
this subsection: 
 
  (1)  Licenses issued January 1-June 30-$200; 
   
  (2) Licenses issued July 1-December 31-$100. 
 
       
  sec.25.25. Additional Location License Application. An applicant for an 
additional location insurance premium finance company license shall file a 
supplemental application Form PF1A with the Department. The application shall 
include the following as applicable: 
 
  (1) List of Principals (Form PF2); 
   
  (2) Premium Finance Application Questionnaire (Form PF3); 
   
  (3) Biographical Affidavit (Form PF4) for manager; 
   
  (4)  Appointment of Statutory Agent and Consent to Service (Form PF6); 
   
  (5)  Sworn financial statement; 
   
  (6) Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts; 
   
  (7) $200 License Fee. 
 
     
  sec.25.26. Relocation of Licensed Offices. 
 
  (a) A licensee may move its office from the licensed location to any other 
location by filing a supplemental application Form PF1A with the Department not 
less than 30 days prior to moving date. The application shall include the 
following as applicable: 
 
  (1) List of Principals (Form PF2); 
   
  (2) Current premium finance company license; 
   
  (3) $20 processing fee; 
   
  (4)  Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts; 
   
  (5) Copy of printed letter to be sent to the insureds; the notice letter shall 
include the following: 
 
  (A) Name of the insurance premium finance company; 
   
  (B)  Both the old and new addresses; 
   
  (C) Telephone number at the new location; 
   
  (D) Date the relocation is effective; and 
   
  (E)  Mailing address. 
       
  (b) An amended license shall be issued reflecting the new address upon 
approval of the required documentation. 
   
  (c) The relocation notice shall be approved by the Department prior to 
printing. The notice shall be mailed to all insureds of record at least 15 days 
prior to the date of relocation. 
   
  (d) After relocation is complete, the insurance premium finance company shall 
submit, within 30 days, copies of all new business forms used, with the new 
location listed on each form. 
 
     
  sec.25.27. Change of Mailing Address. 
 
  (a) Written notice of a change in business mailing address only shall be 
mailed to the Department and to all insureds of record at least 15 days prior to 
the change of mailing address. 
   
  (b) The notice shall include the exact name of the licensee, the old and new 
mailing addresses, the licensee's current physical address, the licensee's 
telephone number and the date the new mailing address is effective. 
 
     
  sec.25.28. Ownership Change. 
 
  (a) When there is an anticipated change in ownership of an insurance premium 
finance company, the new owner shall submit the following as applicable: 
 
  (1) Supplemental Application for an insurance premium finance company license 
(Form PF1A); 
   
  (2) List of Principals (Form PF2); 
   
  (3) Premium Finance Application Questionnaire (Form PF3); 
   
  (4) Biographical Affidavit (Form PF4) on all NEW individuals named on Form 
PF2; 
   
  (5) List of Other States of Licensure (Form PF5); 
   
  (6) Appointment of Statutory Agent and Consent to Service (Form PF6); 
   
  (7) Sworn financial statement; 
   
  (8)  $200 investigation fee; 
   
  (9) A copy of the contract of sale establishing refund and fee liability; 
   
  (10) Certified copy of Assumed Name Certificate as on file with the County 
Clerk(s) and/or Secretary of State; 
   
  (11) A copy of the resolution minutes authorizing the change of ownership; 
   
  (12) Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts; 
   
  (13) Partnership agreement. 
     
  (b) When there is a change in ownership of an insurance premium finance 
company resulting in no new owners, the following requirements may be omitted: 
 
  (1) Biographical Affidavit (Form PF4) on all NEW individuals named on Form 
PF2; 
   
  (2) $200 investigation fee; 
 
       
  sec.25.29. Name Change. 
 
  (a) A licensee may change the name of the licensed insurance premium finance 
company by filing a supplemental application, Form PF1A, with the Department not 
less than 30 days prior to name change. The application shall include the 
following as applicable: 
 
  (1) List of Principals (Form PF2); 
   
  (2) Current insurance premium finance company license; 
   
  (3) $20 processing fee; 
   
  (4)  Amended Appointment of Statutory Agent and Consent to Service (Form PF6); 
   
  (5) A copy of the notice to be mailed to all insureds notifying of the change 
of name. This notice must be approved by the Texas Department of Insurance prior 
to mailing and must include the old name, proposed new name, effective date, 
physical address, mail address and phone number; 
   
  (6)  Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts; 
   
  (7) A copy of the amendment to the Articles of Incorporation or Organization 
complete with original certification from the office of the Secretary of State 
or the equivalent office in other states; 
   
  (8) A certified copy of amendment to the By-Laws; 
   
  (9) A certified copy of the resolution minutes authorizing the name change; 
   
  (10) Certified copy of Assumed Name Certificate as on file with the County 
Clerk(s) and/or Secretary of State; 
   
  (11) A certified copy of the amendment to the partnership agreement 
authorizing the name change. 
     
  (b) The name of the insurance premium finance company shall not be so similar 
to that of any other insurance premium finance company as to be likely to 
mislead the public. 
   
  (c) All business forms used in accordance with sec.25.31 of this title 
(relating to Insurance Premium Business Operation Forms) shall be submitted to 
the Department within 30 days to show the effective name change. 
 
     
  sec.25.30. Renewal.  Each licensee shall file a renewal application, FORM 
PF1C, with the Department. The renewal form must be postmarked on or before 
December 31st and shall be accompanied by the following as applicable: 
 
  (1) $200 renewal fee; 
   
  (2) Current Franchise Tax Certificate of Good Standing or letter of exemption 
issued by the Texas Comptroller of Public Accounts. 
 
     
  sec.25.31. Insurance Premium Finance Business Operation Forms. 
 
  (a) The Department shall review and approve, prior to use, all insurance 
premium finance business forms submitted as part of the initial application for 
license. Thereafter, each licensee shall insure that any business form used 
complies with the requirements of the Insurance Code, Chapter 24, and this 
chapter. 
   
  (b) An Insurance Premium Finance Agreement form, a Memorandum of Agreement 
form, a notice of Premium Finance Agreement form, a Notice of Intent to Cancel 
form, a Notice of Cancellation form, and a Reinstatement Request form shall 
accompany each license application. The forms shall reflect the applicant's 
preprinted information including the insurance premium finance company's name, 
physical address, mailing address and telephone number. 
   
  (c) The format of the Insurance Premium Finance Agreement shall be in 
accordance with the Insurance Code, Article 24.11. 
   
  (d) The format of the Memorandum of Agreement form shall be in accordance with 
the Insurance Code, Article 24.11(h). 
   
  (e)  The format of the Notice of Premium Finance Agreement form shall be in 
accordance with the Insurance Code, Article 24.22. The form must include: 
 
  (1) Insured's name and mailing address; 
   
  (2) Agent's name and mailing address; 
   
  (3) Insurance company's name and mailing address; 
   
  (4) Policy number, term and inception date; 
   
  (5) Amount financed; and 
   
  (6) Person to whom the funds were paid. 
     
  (f)  The format of the Notice of Intent-to-Cancel form shall be in accordance 
with the Insurance Code, Article 24.17(c). The form must include: 
 
  (1)  Insured's name and mailing address; 
   
  (2) Agent's name and mailing address; 
   
  (3) Date of mailing; 
   
  (4) Date of cancellation; 
   
  (5) Policy number; 
   
  (6) Amount of payment due; and 
   
  (7)  Amount of late payment due if after ten days past due. 
     
  (g) The format of the Notice of Cancellation form shall be in accordance with 
the Insurance Code, Article 24.17(d). The form must include: 
 
  (1)  Insured's name and mailing address; 
   
  (2) Agent's name and mailing address; 
   
  (3) Insurance company's name and mailing address; 
   
  (4)  Date of mailing; 
   
  (5) Date of cancellation; and 
   
  (6) Policy number. 
     
  (h) The format of the Reinstatement Request form must include: 
 
  (1) Insured's name and mailing address; 
   
  (2) Agent's name and mailing address; and 
   
  (3) Insurance company's name and mailing address; 
   
  (4) Disclaimer, in bold face type, notifying that only a reinstatement has 
been requested and that the licensed insurance premium finance company cannot 
reinstate the policy. 
 
       
  sec.25.32. Financial Responsibility. 
 
  (a) Each license application shall be accompanied by a sworn financial 
statement for each individual, partner or corporation, as applicable, disclosing 
the applicant's financial condition and reflecting net assets for use in the 
insurance premium finance business of not less than $25,000. As used here, "net 
assets" means the total value of assets available for use in the business, less 
liabilities other than those liabilities secured by assets which are not 
acceptable for meeting the financial requirements under this section. The 
financial statement shall also disclose any existing or anticipated lines of 
credit for the applicant's use in the business or indicate that there are none. 
   
  (b)  Unacceptable assets include, but are not limited to, goodwill, unpaid 
stock subscription, lines of credit, property subject to the claim of homestead, 
and encumbered real or personal property to the extent of the encumbrance. 
Valuations of accounts receivable shall be adjusted by adequate reserves for 
unearned charges and bad debts. 
   
  (c) Each licensee shall at all times be required to maintain net assets for 
use in the insurance premium finance business of not less than $25,000 for each 
location that is licensed. 
 
     
  sec.25.33. Summary of Fees. The Department shall collect, and the person 
affected shall pay to the Department, the following fees: 
 
  (1)  $400-Initial license investigation fee; 
   
  (2) $200-Initial license fee for licenses issued January 1-June 30; 
   
  (3) $100-Initial license fee for licenses issued July 1-December 31; 
   
  (4)  $200-Investigation fee for change of ownership; 
   
  (5)  $200-Additional location license fee; 
   
  (6) $20-Relocation fee; 
   
  (7) $20-Name change fee; 
   
  (8) $20-Duplicate license fee; 
   
  (9) $200-License Renewal fee. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451022 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
             
  Subchapter C. Operations 
 
  28 TAC sec.sec.25.41-25.65 
 
  The new sections are proposed pursuant to the Insurance Code, Articles 24. 09 
and 1.03A, and the Government Code, sec. s2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the Texas Department of Insurance to 
adopt and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.41. Unacceptable Loans. <ol> Notice of adverse action shall be sent to 
the insured, giving reasons for denial of any insurance premium finance 
agreement, as required by Regulation B of the Equal Credit Opportunity Act, 15 
United States Code, sec.sec.1691 et seq. Notice that the loan was denied shall 
be sent to the agent, but shall not include the reasons for denial. 
 
   
  sec.25.42. Rate and Refund Chart. Each insurance premium finance company shall 
establish and maintain a rate and refund chart which complies with the 
authorized rates required by the Credit Code, Chapters 3 and 4, and the 
Insurance Code, Chapter 24. A copy of the rate and refund chart prepared by the 
insurance premium finance company shall be made available for review and 
inspection upon request by an examiner of the Department. The rate and refund 
chart shall also be made available to the insured. 
 
   
  sec.25.43. Acceptance or Rejection. An insurance premium finance company may 
not alter any insurance premium finance agreement unless agreed to by the 
insured. Upon receipt of an insurance premium finance agreement, the insurance 
premium finance company shall return any unacceptable agreement to the agent 
from whom it was received within three working days. 
 
   
  sec.25.44. Prompt Processing Required. An insurance premium finance company 
shall exercise reasonable care in the processing of insurance premium finance 
agreements and shall promptly pay amounts due under such agreements. Reasonable 
time for processing of insurance premium finance agreements shall be within five 
working days after acceptance. If this time limitation cannot be met, the 
insurance premium finance company shall give notice of the delay to both insured 
and agent before the expiration of the five day period. 
 
   
  sec.25.45. Duplication of Loans. A licensee may make more than one insurance 
premium finance loan agreement with the same insured. However, no licensee shall 
induce or permit any person to be obligated directly or indirectly under more 
than one insurance premium finance agreement concurrently, for the purpose of 
obtaining a higher authorized charge than would otherwise be permitted. 
 
   
  sec.25.46. Quotation of Net Payoffs. When an insured or co-obligor asks the 
licensee for the net amount necessary to pay the insured's indebtedness in full, 
the licensee shall quote the requested information to the person making such 
inquiry. 
 
   
  sec.25.47. Policies Issued Through the Texas Workers' Compensation Insurance 
Fund and the Texas Medical Liability Insurance Underwriting Association. <ol> 
Insurance coverage provided by authority of the Insurance Code, Articles 5.76-3 
(Texas Workers' Compensation Insurance Fund) and 21.49-3 (Texas Medical 
Liability Insurance Underwriting Association Act) may not be financed in 
conjunction with other types of insurance under a single insurance premium 
finance agreement, but must be financed by a separate agreement. 
 
   
  sec.25.48. Notification of Account Adjustment to Insured. <ol> The insured 
shall be promptly advised by the insurance premium finance company of any 
adjustments made to the account balance and of any changes in the repayment 
schedule. 
 
   
  sec.25.49. Increase in Financed Premiums. The insurance premium finance 
agreement may contain a provision for amendment if increased or additional 
premiums are financed through use of a memorandum of agreement. Otherwise, any 
amendment financing increased or additional premiums shall be authorized by the 
signature of the insured at the time the insurance premium finance agreement is 
amended. 
 
   
  sec.25.50. Premium Decrease Due to Improper Rating. <ol> Decrease in the 
premium due to an improperly rated policy, improperly calculated premium, or any 
other premium reduction shall be effective on the date the insurance premium 
finance company received the return premium from the insurance company and shall 
be handled as follows: 
 
  (1) credit the amount of return premium to the insured's account balance as a 
current payment and reduce in like amount the insured's next payment(s) due. No 
reduction of the original finance charge is necessary when the credit of return 
premium is given in this manner; or 
   
  (2) credit the return premium on the insured's account balance plus finance 
charge credit on the returned premium equal to the difference between the amount 
of finance charge initially charged and the amount that should have been charged 
at the same finance charge rate on the reduced amount financed. The insured's 
repayment schedule shall be revised to reflect smaller monthly payments due to 
the reduction of the account balance or the finance charge and premium credits 
shall be applied to the final maturing installments; 
   
  (3) the insurance premium finance company shall notify the insured of the 
decrease in premium, the effective date of the decrease and the method chosen to 
reflect the insured's reduced repayment obligation. 
 
     
  sec.25.51. Changes in Finance Rate. When amending an insurance premium finance 
agreement, the agent or insurance premium finance company may not charge the 
insured a rate which exceeds that permitted under the Credit Code. When an 
increase in the principal amount financed creates a total amount financed 
greater than that permitted on the original loan made under either Article 5069-
3.15 or 5069-3.16 of the Credit Code, the finance charge rate on the insurance 
premium finance agreement shall be reduced so as not to exceed the maximum 
amount permitted under the Texas Credit Code. This shall apply regardless of 
whether an additional finance charge is charged on the additional premium. 
 
   
  sec.25.52. Effective Date of Adjusted Premium Finance Changes.  Any increases 
or decreases in premiums of a policy financed under an insurance premium finance 
agreement due to changes in the policy subsequent to the inception date of the 
policy shall be considered effective, for finance charge adjustment purposes, on 
the date the insurance premium finance company receives the return premium from 
the insurance company or advances additional premium to the insurance company. 
 
   
  sec.25.53. Computation of Finance Charge upon Cancellation. <ol> If an 
insurance premium finance agreement is to be prepaid by return premium due to 
cancellation of the financed policy, the finance charge stops accruing on the 
date the return premium is received by the insurance premium finance company on 
that part of the outstanding indebtedness equal to the return premium. 
 
   
  sec.25.54. Finance Charge Earnings Upon Acceleration.  If an insurance premium 
finance agreement contains a provision whereby the insurance premium finance 
company may accelerate the maturity of the contract for reasonable cause, other 
than default of the insured in making payment, and the insurance premium finance 
company exercises this right, the insurance premium finance company shall credit 
the insured's account with the amount of unearned finance charge as of the date 
of acceleration. The insurance premium finance company shall be entitled to 
collect additional interest under the premium finance agreement, from the date 
of acceleration at the lawful rate of charge provided in the premium finance 
agreement for interest after maturity. Likewise, an insurance premium finance 
company is only entitled to earn and collect interest at the lawful rate 
stipulated in the premium finance agreement as interest after maturity (or 6.0% 
per annum as authorized by law) when the insurance premium finance company 
accelerates the maturity of a premium finance agreement because of the default 
in payment(s) by the insured. 
 
   
  sec.25.55. Notification to Insured of Offset. An insurance premium finance 
company may not offset monies paid to an insured by mistake unless it notifies 
the insured that it is offsetting against an insured's account. The insurance 
premium finance company shall preserve a copy of such notice in the individual 
file of the insured. 
 
   
  sec.25.56. Alternative Methods of Adjusting Accounts. 
 
  (a) Any amount found to be due an insured may be credited to the next 
payment(s) on the account of the insured when the insured has an existing 
obligation to the licensee. The licensee must notify the insured in writing of 
the date and amount of the next payment due after this credit has been given. 
   
  (b)  Alternatively, if the error correction or adjustment to an account is 
related to an improper charge or proceeds improperly held by licensee on which 
interest has been precomputed, the licensee may credit the final maturing 
installment(s) of the contract provided credit is also given the insured for the 
proportionate interest originally charged on the amount being credited. The 
licensee must notify the insured in writing of any amount being credited and the 
resulting change in the final maturing installments. 
 
     
  sec.25.57. Cancellation of Policy Through Power of Attorney.  When a premium 
finance agreement utilizes a power of attorney to effect the cancellation of a 
financed policy, the insurance premium finance company may require the insured 
to pay to it any unpaid amount on the account not covered by the gross unearned 
premium returned by the insurer. This is allowed only if the insurance premium 
finance company has not delayed in closing out the loan for the purpose of 
creating additional indebtedness. 
 
   
  sec.25.58. Notice of Intent to Cancel Insurance Because of Default. 
 
  (a) A notice of intent to cancel insurance because of default, as provided by 
the power of attorney agreement, shall be titled "Notice of Intent to Cancel" 
and shall be sent to the insured with a cancellation date not earlier than ten 
days after the mailing date of the notice of intent to cancel. The insurance 
premium finance company shall establish and maintain either a computer printout 
or a copy of the intent-to-cancel notice if the policy is subsequently 
cancelled. Such records shall provide evidence to an examiner that the notice 
was mailed. A copy of the notice of intent-to-cancel insurance because of 
default shall be sent to the insurance agent. 
   
  (b) If the insurance policy financed by an insurance premium finance company 
is written under the authority of the Texas Workers' Compensation Insurance Fund 
(Insurance Code, Article 5.76-3), or the Texas Medical Liability Insurance 
Underwriting Association (Insurance Code, Article 21.49-3), a copy of the notice 
of intent-to-cancel and the request for cancellation shall be sent to the Texas 
Workers' Compensation Insurance Fund and the Texas Medical Liability Insurance 
Underwriting Association. 
 
     
  sec.25.59. Notice of Cancellation Because of Default. 
 
  (a) A notice of cancellation because of default shall be titled "Notice of 
Cancellation" and may not be sent to the insurer before the ten-day waiting 
period of the notice of intent-to-cancel has expired. Copies of the Notice of 
Cancellation shall be sent to the insured, insurance agent, and insured's 
permanent account file. The insurance company policy cancellation date shall be 
the day following receipt of the notice of cancellation issued by the insurance 
premium finance company or the date specified on the notice of cancellation, 
whichever is later, unless otherwise stated in the insurance policy. 
   
  (b) If the insurance policy financed by an insurance premium finance company 
is written under the authority of the Texas Workers' Compensation Insurance Fund 
(Insurance Code, Article 5.76-3), or the Texas Medical Liability Insurance 
Underwriting Association (Insurance Code, Article 21.49-3), a copy of the notice 
of intent-to-cancel and the request for cancellation shall be sent to the Texas 
Workers' Compensation Insurance Fund and the Texas Medical Liability Insurance 
Underwriting Association. 
 
     
  sec.25.60. Collection Practices. <ol> In attempting to collect money due on an 
insurance premium finance loan from the insured, and prior to implementing the 
power of attorney, a licensee shall not use unfair debt collection practices, 
but only lawful remedies authorized under the laws of this state. 
 
   
  sec.25.61. Record of Contacts. An insurance premium finance company or its 
designee shall preserve written record of each oral or written contact made by 
the company with the insured or any other person for the purpose of collecting 
late insurance premium finance payments. The record shall also include contacts 
made by the insured with the insurance premium finance company. The record shall 
include the date, method of contact, contacted party, person initiating the 
contact and essence of the contact. Each record shall be maintained in a manner 
that is readily understood. 
 
   
  sec.25.62. Compliance with Statutory, Regulatory, or Contractual Requirements. 
If statutory, regulatory, or contractual restrictions provide that the insurance 
contract may not be cancelled unless notice is given to a governmental agency, 
mortgagee, certificate of insurance holder or other third party, the insurer 
shall give the required notice and calculate the cancellation date in conformity 
with the Insurance Code, Article 24.17(e). 
 
   
  sec.25.63. Filing of Power of Attorney on Assignment with Insurer. 
 
  (a) An insurance premium finance company may cancel an insurance policy 
pursuant to a power of attorney. However, it must notify the insurer in advance 
or at the time of financing that an insurance premium is being financed and that 
the insurance premium finance company has a power of attorney in accordance with 
the Insurance Code, Article 24.22. The cancellation notice shall advise the 
insurer that it has 60 days from the policy cancellation date to return the 
gross unearned premium. 
   
  (b)  Each premium financing check delivered to an insurance company shall 
contain with it a statement officially notifying the insurance company that the 
insurance policy has been financed and that the financier holds a power of 
attorney enabling it to recover monies in case of default by the insured. This 
document shall accompany the insurance application and premium finance company 
check as part of the total insurance application. These requirements shall also 
apply to the financing of insurance policies written through the Texas Workers' 
Compensation Insurance Fund and the Texas Medical Liability Insurance 
Underwriting Association. 
 
     
  sec.25.64. Notification to Insurers. 
 
  (a) An insurance premium finance company which enters into an insurance 
premium finance agreement with an insured to finance an insurance policy or 
policies shall notify the insurer whose premiums are being financed of the 
existence of such agreement within a reasonable period of time not to exceed 30 
days after the date such agreement is received by the insurance premium finance 
company. 
   
  (b) The word "insurer", as used in the Insurance Code, Articles 24.17 and 
24.22, means the company or other entity formally liable on the insurance risk. 
It does not mean an insurance agent. Accordingly, notice to an insurance agent 
or to a managing general agency of the insurer is not notice under the Insurance 
Code, Article 24.22. If the insurance premium finance company gave notice to the 
insurer in accordance with the Insurance Code, Article 24.22, the insurer shall, 
as provided in the Insurance Code, Article 24.17, return whatever unearned 
premiums are due under the insurance contract directly to the insurance premium 
finance company within 60 days. Return of unearned premium through an accounts 
current with an agent or agency does not satisfy the insurer's obligation under 
the Insurance Code, Article 24.17. 
 
     
  sec.25.65. Relocation of Accounts. When accounts are relocated to an 
affiliated office, both licensed offices shall maintain current records of the 
accounts relocated. A copy of the Notification of Relocation letter to the 
insured shall be filed with the Department at the time it is mailed to the 
insured. This notice shall include the following: 
 
  (1) exact name of the company as licensed; 
   
  (2) present physical address; 
   
  (3) new physical address; 
   
  (4) present mailing address; 
   
  (5) new mailing address; 
   
  (6) present phone number; 
   
  (7) new phone number; and 
   
  (8) date of relocation of account. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451023 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
             
  Subchapter D. Advertising 
 
  28 TAC sec.sec.25.71-25.76 
 
  The new sections are proposed pursuant to the Insurance Code, Articles 24. 09 
and 1.03A, and the Government Code, sec. s2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the Texas Department of Insurance to 
adopt and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.71. Advertisements in General. An insurance premium finance company may 
not engage in deceptive advertising as set forth in the Insurance Code, Article 
24.13, and further defined in these sections. 
 
  (1)  Advertisements by an insurance premium finance company shall be truthful, 
not misleading in fact or in implication, or fail to disclose material facts. 
   
  (2) No advertisement shall be used by an insurance premium finance company 
which, because of words, phrases, statements, or illustrations therein or 
information omitted therefrom, have the tendency to mislead or deceive 
borrowers. Words or phrases which are misleading or deceptive because the 
meaning is unclear, or clear only to persons familiar with insurance premium 
finance terminology, may not be used. This paragraph does not prohibit use of 
trade or technical terms in advertisements directed exclusively at commercial 
insureds. 
   
  (3) All information required to be disclosed by these guidelines shall be set 
out conspicuously and in close conjunction with the statements to which such 
information relates or under appropriate captions of such prominence that it is 
not minimized, rendered obscure, presented in an ambiguous fashion, or 
intermingled with the context of the advertisement so as to be confusing or 
misleading. 
 
     
  sec.25.72. Place of Loan. No licensee shall advertise that loans will be made 
at any place other than that named in its license. Each such advertisement shall 
state or clearly indicate the identity of the licensee in such a manner as to 
prevent confusion with the name of any unrelated licensee. A licensee shall not 
use any loan advertisement which gives only telephone numbers or addresses. 
 
   
  sec.25.73. Advertisement File. <ol> Between examinations by the Department, 
each licensee shall maintain a file or other complete record of all written 
communications soliciting the financing of insurance premiums, and of all other 
advertising material used (including scripts of radio and television broadcasts 
and reproductions of billboards and signs not at the licensed place of 
business). The file shall be maintained at the licensed office or at a principal 
Texas office, as designated to the Department. The date or period of use of each 
solicitation or advertisement shall be indicated. If any language other than 
English is used in any such advertising material, a true and correct translation 
of it shall appear in the file along with such material. 
 
   
  sec.25.74. Full Disclosure Requirements in Advertising. 
 
  (a)  If rates or charges are stated in advertising, they shall be expressed in 
terms of an "annual percentage rate" (simple annual interest rate). Any 
advertisement that states the amount of any installment payment, the dollar 
amount of any finance charge or the number of installments or the period of 
repayment shall also state: 
 
  (1) the amount of the loan expressed as "amount financed"; 
   
  (2) the number, amount, and due dates or periods of payments scheduled to 
repay the indebtedness if credit is extended; 
   
  (3) the rate of the finance charge; and 
   
  (4) the sum of the payments expressed as "total of payments". 
     
  (b) The foregoing information shall be clearly shown in such a manner as not 
to be deceiving or misleading. 
   
  (c) If any licensee advertises that the first installment on a loan may be 
extended beyond one month from the loan date, he shall also clearly state 
whether a charge is to be made for such extension. 
   
  (d)  The advertisement shall state that a licensed insurance agent can take 
application from the insured for insurance premium financing. 
   
  (e) The advertisement shall specifically state that the advertisement pertains 
to insurance premium finance only. 
 
     
  sec.25.75. Misleading Advertising. <ol> In determining whether any particular 
advertising matter violates the Insurance Code, Article 24.13, the relevant 
factors include general arrangement of copy and whether, from statements or 
representations made, there may be a reasonable inference or impression that 
such statements or representations are inaccurate, deceptive, or misleading. 
 
  (1) No advertisement may use phrases such as "lowest costs" or "quickest 
service" unless such phrases are in fact accurate with respect to the licensee's 
business. 
   
  (2) No advertisement may state "new reduced rate" or "a new type of service" 
or any such similar comparative expression unless such statement is in fact 
accurate with respect to the business of the licensee so advertised and unless 
such advertisement clearly indicates that such new plan refers specifically to a 
change in the particular licensee's plan of operation. The change referred to 
must be of more than minor importance with respect to the business of the 
licensee. Any such advertisement may not be used for a period longer than 60 
days after such plan has been put into effect. 
   
  (3) An advertisement may not contain any statement or representation with 
reference to the ease of procuring insurance premium financing, the speed with 
which it may be effected, the freedom from credit inquiries addressed to 
particular sources of information, or to any other implied differentiation in 
policy or loan service, unless the licensee shall comply with the representation 
so made. 
   
  (4) An advertisement may not contain offers to insureds for insurance premium 
financing in general unless, in general practice, the licensee actually makes a 
reasonable number of such loans within such limited time and upon the basis of 
such offer. 
   
  (5) A licensee other than a lawfully chartered banking institution may not use 
the word "bank" or any derivative in any advertisement where its use might 
mislead the public to believe that the licensee is an authorized banking 
institution or is conducting a banking business. 
   
  (6) Any advertisement which omits material facts shall be deemed deceptive or 
misleading. 
 
     
  sec.25.76. Multiple Page Advertisements. For the purposes of this subchapter, 
a catalog or other multiple page advertisement shall be considered a single 
advertisement if it clearly and conspicuously displays a credit terms table or 
chart on which the information required to be stated under these regulations is 
clearly set forth. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451024 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327 
         
           
  Subchapter E. Examinations and Annual Reports 
 
  28 TAC sec.sec.25.81-25.90 
 
  The new sections are proposed pursuant to the Insurance Code, Articles 24. 09 
and 1.03A, and the Government Code, sec. s2001.004 et seq (Administrative 
Procedure Act). Article 24.09 authorizes the Texas Department of Insurance to 
adopt and enforce rules necessary to carry out the provisions of Chapter 24 
(regulating insurance premium finance companies). Article 1.03A provides that 
the Commissioner of Insurance may adopt rules and regulations to execute the 
duties and functions of the Texas Department of Insurance only as authorized by 
a statute. The Government Code, sec.sec.2001.004 et seq authorize and require 
each state agency to adopt rules of practice setting forth the nature and 
requirements of available procedures and to prescribe the procedures for 
adoption of rules by a state agency. 
 The following article is affected by this proposal: Insurance Code, Chapter 24. 
 
 
  sec.25.81. Examinations.  Examiners appointed by the Department may conduct 
periodic examinations to determine if a licensee is in compliance with the 
Insurance Code, Chapter 24, and the provisions of this chapter. Examinations of 
banks and savings and loan associations doing business under the laws of this 
state or the United States will not be conducted by the Department, unless the 
annual report indicates irregularities or complaints received by the Department 
indicate concerns. 
 
   
  sec.25.82. Examination Charges. <ol> A licensee shall reimburse the Department 
for the expense of an examination. The charges to be invoiced to the insurance 
premium finance company shall include the actual salaries and expenses of the 
examiners allocable to each examination. The expenses assessed shall be those 
actually incurred by the examiner to the extent permitted by law. 
 
   
  sec.25.83. Access to Books and Records. Examiners shall have free access, 
including the right to make copies, to all the books and records of the 
insurance premium finance company for the purpose of determining the financial 
condition, as well as compliance with the Insurance Code, Chapter 24, affecting 
the conduct of its business. 
 
   
  sec.25.84. Individual Account Records. Individual account records on each 
insured shall be maintained to reflect the complete account history as to 
funding, charges, payments, and adjustments, if any, and shall include the 
accurate dates of all entries to the account. The records shall also reflect the 
date the finance charge began to accrue. Individual account records shall 
disclose the date that the insurance premium finance company requested 
cancellation of the financed insurance policies. The individual's file shall 
contain copies of premium finance agreements, memoranda, notices of intent to 
cancel, cancellation notices, and declaration pages of financed policies. A 
complete account history shall be maintained by the licensee in all closed 
account files. All records of proof-of-funding must be available for examination 
by the Department. 
 
   
  sec.25.85. Retention of Records. All documents required by the Insurance Code 
to be retained by the insurance premium finance company, and copies of documents 
signed by the borrower, shall be available for inspection at any time by the 
Department or its authorized representatives. These documents shall be retained 
for a period of four years from the date a final entry is made thereon. Records 
of paid out loans shall be retained in original form for a period of at least 
one year following the date of the last examination by the Department after 
which such records may be microfilmed for the remainder of the statutory period 
under the Insurance Code. 
 
   
  sec.25.86. Filing of Account Records. All filing of account records shall be 
systematic, maintained on a current basis, and appropriately cross-referenced 
for access to other files. 
 
   
  sec.25.87. Annual Reports. 
 
  (a) Each licensee shall file an annual report as prescribed by the Department. 
The annual report shall include information on the ownership, operation, and 
statistical data sufficient to aid in determining compliance with the Insurance 
Code, Chapter 24. 
   
  (b)  The annual report shall also include a sworn financial statement. 
   
  (c)  Each insurance premium finance company licensed at any time during the 
preceding calendar year shall complete the annual report form and return it to 
the Department on or before April 1 of each year. The affidavit certifying the 
annual report shall be executed by an officer or director of the insurance 
premium finance company. 
 
     
  sec.25.88. General Administrative Expense Assessment. On or before April 1 of 
each year, each insurance premium finance company holding a license issued by 
the Department under the Insurance Code, Chapter 24, shall pay to the Department 
an assessment to cover the general administrative expense attributable to the 
regulation of insurance premium finance companies. Payment shall be by check, 
payable to the Department, Mail Code 305-2E, 333 Guadalupe, P.O. Box 149104, 
Austin, Texas 78714-9104. The assessment to cover general administrative expense 
shall be computed and paid as follows. 
 
  (1)  The amount of the assessment shall be computed as .0150 of 1.0% of the 
total loan dollar volume of the company for the calendar year. 
   
  (2) If the amount of assessment computed under paragraph (1) of this section 
is less than $250, the amount of the assessment shall be $250. 
 
     
  sec.25.89. File for Official Correspondence and Reports. <ol> All 
communications between the licensee and the Department shall be maintained by 
the licensee in a separate file. The file shall include, but not be limited to, 
complaints, annual reports, examination reports, and any other correspondence 
with the Department. 
 
   
  sec.25.90. Escheat Account. <ol> An escheat or unclaimed property account 
shall be established as required by the Property Code, Chapters 72 and 74, for 
monies due an insured who cannot be located. These monies must remain in an 
account for three years and then be reported to the Texas Department of 
Treasury. Copies of the escheat account reports shall be placed in an 
examination file to be available at the time of the insurance premium finance 
company's examination by the Department. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 16, 1994. 
 TRD-9451025 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 23, 1994 
 For further information, please call: (512) 463-6327